Monday, April 4, 2011

Articles 04.07.11

Why New York City Still Rocks!

Great article about why New York is such a unique place. For those of you who are diehard urbanites I also suggest the recently published book "Triumph of the City" by Nathan Glaeser, a Harvard economist. A quick and thought provoking read about the advantages of city living and how public policy has failed our cities over the past five decades.

Tips for Saving Time

Probably the best tip is to stop reading blogs! However, this article has some good ideas. I recently started using the web tool "Dropbox” as a way of being able access my files from any computer and to share them with others.

Quick Solution to New York City's Rat Infestation Problem

3 words.

“Neutered feral ferrets.”

If the city were to release these vicious little rat killers into the subway system the city's rat problem could be solved in less than a year. Not exactly the most politically correct solution but certainly effective!

Public Buildings, "Super Development Rights" and an Affordable Housing Solution

Creating affordable housing in New York has been an serious issue since the Dutch settlers first discovered Manhattan (good opening sentence but a bit of an exaggeration). Some of significant obstacles to the creation of affordable housing include high acquisition and construction costs, high real estate taxes and a limited supply of appropriate sites. Many programs have been devised to attempt to address these concerns but the problem still exists. A proposed solution: There exist a large inventory of excess development rights associated with city and state own properties throughout the city. To allow each governmental entity to realize the maximum benefit from these excess development rights and to also encourage the creation of affordable housing, the zoning resolution should be modified to create a "super development right" that would permit these excess development rights to be transferable to any property within a certain radius of the subject site so long as they are used for the construction of affordable housing. This would help average down the acquisition costs associated with the creation of affordable housing, increased significantly the number of potential sites and, if coupled with real estate tax abatements etc. would help reduce the operating costs of the buildings.

In addition, if developers were allowed to vacate older tenement style buildings and replace them with larger buildings (by either using the "super development rights" described above or other available techniques to increase density) containing an equal or number of affordable units this would increase significantly the number of sites available for affordable housing. For example, a developer should be permitted to demolish a 20 unit walk-up tenement style building and, by utilizing a combination of the excess development rights associated with that building and the acquisition of additional "super development rights,"to construct a 100 unit property containing 20 affordable units and 80 market rate units.

In order to accomplish this, the developer would have to be allowed to relocate the rent regulated tenants within these buildings. Not only would this result in the replacement of old decrepit housing stock with new, it would significantly increase increased the city's tax base. In addition, it would also generate additional revenues to the city or

the state from the purchase of the "super development rights" by the developer.

Means Testing and Rent Regulations

Perhaps one of the most perplexing questions about the current system of rent regulations is why there is no system of means testing to ensure that those who are receiving the benefits of the rent laws are actually those in need of affordable housing. The argument always made in support of rent regulations is that it is needed to preserve affordable housing. However, without a means test the system does not guarantee that regulated housing necessarily goes to those in need. In fact, it is truly ironic that many of our elected officials (US Congressman Charlie Rangel, City Council President Christine Quinn, former Governor Patterson, to name just a few) occupy rent regulated apartments while trumpeting the need to maintain the rent laws to preserve affordable housing for the needy.

To eliminate the hypocrisy in the system and to create a fund for the creation of additional affordable housing a means test should be established for rent regulated housing . For those current tenants whose income exceeds the threshold, the landlord would be permitted to not renew their lease, deregulate the apartment and then charge a market rent provided that the landlord makes a contribution to a city fund that would be utilize to the finance the creation of affordable housing. The amount of the

contribution would be a formula based upon the amount by which the landlord was able to increase its rent upon the vacancy.

Are you


Closet Republican?

I think this billboard on the West Side Hwy. says it all.

The Madness of City Real Estate Taxes

Surprise! Even as the net operating income of City properties declined over the past several years, our tax assessments have increased, in some cases quite significantly (see the article "The Madness of City Property Taxes"). Of course , on the face of it, this makes no sense but a careful analysis of the system of calculating real estate taxes makes it clear that tax assessments are a significantly lagging indicator. The reason, the determination of real estate taxes are based upon income and expense statements owners have to file about their properties. The information on these forms are from a previous year and are the basis of the calculation of tax assessments for the current year. The result is that tax assessments lag the market. This works the disadvantage of property owners in a bad market but to their advantage in an improving market as tax assessments decline even as the income of the building is going up.

The World Loves New York

In a world that seems to be going mad, New York is viewed as an island of stability (maybe it's because of all the schist on which our buildings are built!) The most recent example of this is the purchase of the former NBA store at 666 Fifth Avenue by a Spanish retailer for over $8000 a foot. Foreign money is fueling a resurgence of the real estate investment market in our city. The foreigners (who often have a much better world view than us) appreciate the political and economic stability that New York City offers relative to the rest of the world.

Negotiating 101

For some useful negotiating tips take a look at the article "Five things you should never say while negotiating." Strangely, "I love you" isn't included.

Web Site

As part of Sierra's rebranding of an office building that we took over last year, we created a website that has generated a tremendous amount of interest in the property. Last year the property suffered with a vacancy rate in excess of 30%. Today, the building is 98 % leased in no small part due to the rebranding of the building. Take a look at the website at

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