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Urban[ism] Legend: Positive NPV Infrastructure

As Washington debates how many hundreds-of-billions of the nearly trillion-dollar stimulus will go towards infrastructure or to other spending/tax cut schemes, pundits claim that spending billions on “shovel ready” public works projects can effectively create jobs that will lead to recovery. As readers probably know, I am skeptical that the anticipated spending could be activated so quickly. As Bruce Bartlett put it: Despite claims by the Conference of Mayors and the transportation lobby that there is as much as $96 billion in construction “ready to go,” the fact is that it takes a long time before meaningful numbers of workers can be hired for such projects. As a recent Congressional Budget Office study explains, “Practically speaking … public works involve long start-up lags. … Even those that are ‘on the shelf’ generally cannot be undertaken quickly enough to provide timely stimulus to the economy.” The prospects for unconventional projects such as alternative energy sources are even worse. The CBO calls them “totally impractical for counter-cyclical policy” because they take even longer to come online… Finally, the impact of increased public works spending on state and local governments cannot be ignored. Most federal transportation spending goes for projects initiated by them. When they think there is a chance that the federal government will increase its funding, they tend to cut back on their own spending in hopes that the feds will foot the bill. A study by economist Edward Gramlich found that the $2 billion appropriated by the Local Public Works Act of 1976 postponed $22 billion in total spending as state and local governments competed for federal funds and actually reduced GDP by $30 billion ($225 billion today). Meanwhile, proponents of infrastructure spending claim that Congress should sift through the shelved projects to identify those projects that will be economically […]

MTA Rider Report Card: an F for Incentive Structure

This morning, as I stepped to the stairway that brings me into Brooklyn’s 86th street subway station on the R line, I was greeted by two MTA employees who handed me MTA’s ‘Rider Report Card’ to fill out and mail in. As I started down the steps, I noticed something different than the usual routine; the stairway was an absolute mess. The turnstile level was just as messy. Litter was strewn about the steps and floor of the station. This wasn’t the normal subway station clutter; it caught me off guard immediately. Several other employees stood by the turnstiles handing out report cards. I bought a new monthly pass and headed through the turnstile. Above the stairs leading down to the platform there were another 10 or so MTA employees holding stacks of report cards, just socializing with each other amongst the litter. When I saw this, I became disgusted. Why were they all standing around while there was a huge cluttered mess throughout the station? Why couldn’t they even pick up the report cards that had been discarded? Then I got more upset as my cynical side kicked in. Could there be some perverse incentive for the MTA employees to want the station cluttered? Would a failing grade for cleanliness cause hiring of more maintenance employees? Strangely, the train platform was its usual shape, with limited clutter. No employees were present on the platform. As the train arrived and I took my seat, I decided to blog this incident. I wished I had taken pictures, but it was too late for that. I will be prepared to photograph tonight and tomorrow if this peculiar incident repeats itself. Is anyone familiar with how the report cards are used? Is the fact the 10-20 employees weren’t cleaning the mess just a […]

Using eminent domain to blight neighborhoods

by Stephen Smith The Weekly Standard has a comprehensive and compelling piece of investigative reporting on Columbia University’s attempt to acquire 17 acres in the heart of the Manhattanville section, north of its Morningside campus. The tale is a classic example of eminent domain abuse – the university worked hand-in-glove with the government to designate the area as blighted and eligible for eminent domain action, and the university’s lawyers pushed the limits of rational argument so far and yet look like they’ll probably come out on top. But perhaps more importantly in this process of acquiring the necessary Manhattanville land on which to build its gleaming new Campus upon a Hill (and under which to build a mammoth garage complex) is not the explicit use of eminent domain, but rather the threat of the land being taken by force. Whereas Columbia’s initial land acquisitions before the expansion plans were made public were probably not made under duress, as time went on, Columbia’s plans became known, and, as a holdout landlord’s leasing agent put it: “At some point along the line, with all of these concerns, the knowledge that Columbia University can or will invoke eminent domain has caused [ground floor retail renters] to seek out alternative space arrangements.” This is a phenomenon that affects all negotiations with the government and big institutions like Columbia – and, post–Kelo, even private buyers – and which makes it very difficult to be sure that the owner didn’t sell for less than they’d have liked (or, indeed, might not have wanted to sell at any price). As it is, the land that Columbia has already acquired – 70% of what it wants – is largely vacant and most definitely more “blighted” than the land it wants to buy, however the relevant (and irrelevant) acronymed […]

Rangel Now Only Hoards Three Rent Controlled Apartments

[flickr photo: aznatca68] Democratic Congressman Charlie Rangel has announced that he will vacate the rent controlled apartment he has been using as a campaign office. This apartment is just one of four rent controlled apartments he is hoarding in the Lenox Terrace apartment building in Harlem. NY Times – Rangel to Relinquish Apartment Used as Office: Representative Charles B. Rangel has decided to move his campaign office out of one of four rent-stabilized apartments he leases in Harlem, his spokesman said on Monday. One of the units — a one-bedroom apartment that he paid for with money from his re-election fund and from a political action committee — had been used as a campaign office, despite city and state guidelines that require rent-stabilized apartments to be used solely as a primary residence. Because that apartment is rent-stabilized, Mr. Rangel paid $630 per month, while similar market-rate units in the building rent for $1,700 a month and higher. Under House ethics rules, a gift is defined as any “gratuity, favor, discount, entertainment, hospitality, loan, forbearance, or other item having monetary value.” And some suggest that the difference between what Mr. Rangel pays for the second, third and fourth apartments and the market rate could fit that definition. . But Mr. Rangel said that it was ludicrous to consider the rent-stabilized apartments a gift because he paid rent for them. He also said that two of the units were combined by a previous tenant. Rangel should either resign or return every penny he saved by hoarding this apartment while using it as a campaign office. For this apartment alone, that should be $1,000 per month for as long as he has used it as a campaign office. Also: Reason – Rangel’s Down, But He’s Not Out

Congressman Rangel Legally Plunders $30,000/year in Four Rent Controlled Apartments

[update! Rangel Now Only Hoards Three Rent Controlled Apartments] In case you missed it, powerful New York Congressman Charlie Rangel has been hoarding four apartments in Harlem’s Lenox Terrace. Coincidently (perhaps not so coincidently) Lennox Terrace is the same building where New York’s Governor Patterson, Patterson’s father, former Manhattan Borough President, Percy E. Sutton, and Rangel’s Cheif of Staff, Jim Capel hoard rent-controlled (ahem, Rent Stabilized as it’s referred to by NY politicians) apartments. Not only does Rangel have four rent-controlled apartments in the building, but he has been using one of those apartments as a campaign office! [flickr photo: jschumacher] New York Times – Rangel Defends Use of Rent-Stabilized Apartments: The Times reported on Friday that Mr. Rangel has four rent-stabilized apartments at Lenox Terrace, including three adjacent units on the 16th floor overlooking Upper Manhattan, in a building owned by one of New York’s premier real estate developers. (The apartment is featured in “Style and Grace: African Americans at Home,” a book published by Bulfinch Press.) Mr. Rangel, the powerful Democrat who is chairman of the House Ways and Means Committee, uses his fourth apartment, six floors below, as a campaign office, despite state and city regulations that require rent-stabilized apartments to be used as a primary residence. Mr. Rangel, who has a net worth of $566,000 to $1.2 million, according to Congressional disclosure records, paid a total rent of $3,894 monthly in 2007 for the four apartments at Lenox Terrace, a 1,700-unit luxury development of six towers, with doormen, that is described in real estate publications as Harlem’s most prestigious address. The current market-rate rent for similar apartments in Mr. Rangel’s building would total $7,465 to $8,125 a month, according to the Web site of the owner, the Olnick Organization. The use of multiple apartments that might […]

NYC Crane Inspector Corruption

Associated Press – Senior NYC crane inspector accused of corruption: A senior city buildings official took bribes in exchange for falsely reporting that cranes had been inspected and that crane operators had been certified, but his actions did not appear to be connected to two recent crane collapses that killed nine people, authorities said Friday. James Delayo, an assistant chief inspector with the Department of Buildings’ cranes and derricks division, accepted thousands of dollars in bribes from a crane company, Department of Investigation Commissioner Rose Gill Hearn said in a statement. As Manual Lora at the LRC blog put it: So will the Department of Buildings suffer a market loss? Perhaps its stock will go down? Maybe they will take a hit in subscribers? Will its certification suffer? Will insurance companies still use their services? Oh wait. This is the state we’re talking about. Nothing to see here…move along… I guess I couldn’t put it any better than Manual….. photo by flickr user Alexandry Augustin

Watch as “Expediters” Become Scapegoats of Corruption and Incompetence

It’s easier to look at the symptom: corruption, than treat the disease: government over-regulation: Chicago Tribune: Role of expediters under scrutiny as federal probe targets City Hall corruption The unsung and highly specialized role these private individuals play in the workings of city government gained notoriety last week when investigators revealed that for the last year, an expediter had been secretly recording conversations to help build an ongoing bribery case that so far has led to federal charges against 15 people. Expediters have multiplied and become fixtures at City Hall in recent years. During the height of the building boom a few years ago, the permit process stretched for many months, creating a cottage industry of people offering their expertise in the byzantine ways of the city’s zoning and building codes. These expediters will be made out as the bad guys, though most serve a valuable roll: wait in line, deal with city staff and other menial things professionals don’t want to waste valuable time doing. These guys are not squeaky clean – many expediters are people you wouldn’t want your daughter dating, but dig deeper to find the real bad guys: the bureaucrats who thrive on bad bureaucracy. The harder it is to do your business, the more it’s worth to hire someone to “expedite” the approval process. They get their kickbacks, campaign contributions, and SkyBox tickets just because they are not competent enough to get the job done quickly, and/or aren’t properly funded to do the job properly. Meanwhile, important projects are delayed, investment capital sits idle, materials wait in a warehouse, and people wait for their homes, offices, or stores to be built. Dig deeper below the surface, and you’ll see the whole crooked system of patronage, political contributions, payoffs, and deal-making fueled by government regulation, lobbying, […]

Bribery for Property Rights: Federal Charges in Chicago

NBC5 has an update listing the people involved and video here: New Corruption Charges Hit Building, Zoning Departments Chicago Tribune: U.S. to announce charges against 15 in city bribe-taking probe (thanks to Dan M. for the tip) Federal authorities are set to announce charges Thursday against 15 people, including seven City of Chicago employees, after an investigation into bribe-taking at the city’s Zoning and Building Departments. City Hall’s zoning process is the subject of the Tribune’s ongoing “Neighborhood for Sale” series. The stories detail how millions of dollars in campaign donations greased zoning changes that transformed the city during the real estate boom of the past decade. What’s scary is that land use is so regulated and the stakes are so high, that developers have to bribe government employees in order to exercise their own property rights. But, that’s how it works: politicians downzone areas, knowing that developers will have to scratch the politicians’ backs to build what the market tells them. There’s often the added political bonus of downzoning to pander to NIMBY factions. The downzoning creates a barrier to entry so that only the developers who are politically savvy can get things done. (see Tony Rezko) It makes the whole planning/development system corrupt. Should we be a bit surprised bribery is happening?

NY Gov. Patterson’s Rent-Stabilized Apartment in Harlem

NY Sun: Paterson Pays A Stabilized Rate of Rent The governor of New York pays about $1,250 a month for a two-bedroom, rent-stabilized apartment in central Harlem, even while owning a home upstate in Guilderland and having unfettered access to the 40-room Governor’s Mansion in Albany. Governor Paterson and his wife, Michelle, made about $270,000 last year, according to their tax returns. This is a classic example of hoarding. He should be ashamed of his Lenox Terrace apartment that someone would gladly pay market rate to rent, but seems to think it’s ok. Can’t we at least deregulate apartments when the inhabitant can afford to live in a market-rate apartment? I hope the media pays attention to this, and properly scrutinizes the dark-side of rent regulation.

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