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Over 200 Illegal Hotel Buildings in NYC

From AMNY: Report: 200 illegal hotels exist in the city There are more than 200 apartment buildings in the city that have been illegally converted to hotels, according to a report released Sunday, significantly reducing the number of rent-stabilized units available. … Illegal hotel operators frequently take advantage of tax loopholes designed to encourage the construction of residential units, according to Raskin. … Advocates are calling for increased penalties and changes in the zoning laws to clarify where hotels can and cannot operate. And today’s Sun: Crackdown Sought on Illegal Hotels in the City What does this tell us about the housing/hotel markets? It seems to me that tax structures (and probably zoning) favor housing, while there is significant unmet demand for hotel rooms. Nonetheless, there is definitely a shortage of built space in NYC, which could be better accommodated by loosening zoning restrictions on new development. Any other thoughts?

Rent Control Part 4: Conclusion and Solutions

Welcome to the final post in the series discussing the consequences of rent control. Thank you to the subscribers who have patiently awaited each new post. I hope everyone found it enlightening. If you haven’t read the entire series, you can catch up with these links: Rent Control Part One: Microeconomics Lesson and Hording Rent Control Part Two: Black Market, Deterioration, and Discrimination Rent Control Part Three: Mobility, Regional Growth, Development, and Class Conflict Conclusion Rent control is not just a simple price control setting the price at which willing renters and landlords are permitted to do business, it is much worse.  It is a coercive act that gives landlords no legal option, but to rent to a tenant against his will, often at a financial loss.  Rent control adds a non-voluntary burden to landlords which deepens over time because landlords do not have the option to rent to a tenant at below market rates.  Not only does rent control cause huge distortions in the housing market, but the burdens fall disproportionately on the poor and underprivileged people it was intended to benefit. Although particular people are able to live with the comfort of low rent payments, even those renters will see their living conditions deteriorate as landlords neglect repairs and maintenance. As the situation gets worse, middle class residents are able to move away, leaving behind the poorest residents who have become reliant on the reduced rent. In effect, rent control grants property rights to renters, that originally belonged to the original property owners. Rent control becomes a redistribution of wealth to rent control tenants away from apartment owners, market apartment renters, and newcomers to the area. Nonetheless, over time the quality of life decreases for all residents of a city where rent control is imposed. Solutions So, it […]

Rent Control Part 3: Mobility, Regional Growth, Development and Class Conflict

Part One of this series was a refresher on the Microeconomics of Rent Control and touched on how it encourages hoarding Part Two discussed rent controls influence on the black market for apartments, rental property deterioration and housing discrimination. Here in Part Three, we will discuss how rent control hampers mobility, regional growth, tax revenue, apartment development, and becomes a catalyst for class conflict. Mobility As mentioned in Rent Control Part One, duration of residence in a rent-controlled apartment has been observed to be three times as long as duration at market-rate apartments. One can see that the incentive to hoard rent-controlled apartments is also disincentive to relocate. The mobility of both the tenants and newcomers are drastically hampered by rent control. Unless the tenant has the money to rent a second apartment (or Governor’s mansion), it will be difficult for him to relocate closer to better employment. The tenant may rather endure a very long commute in order to maintain the rent-controlled apartment. As Walter Block put it, "They are, in a sense, trapped by the gentle and visible hand that keeps them where they are rather than where they might do better." Difficulties are multiplied if the local economy takes a turn for the worse. A downturn in local employment would not be relieved by people relocating for jobs, thus making the unemployment and poverty situation worse. Employees looking to relocate in the city with rent control are hurt the worst as they will have a difficult time finding available apartments. The drawbacks to the local economy are discussed in the section on regional growth and adaptation. The reduction in mobility is especially burdensome on families with children, since public schools tend to be local. If the local school is under performing, a family under rent-control will lose […]

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?

A Recipe to Destroy Affordability in Any City.

Austin Contrarian discusses an article that describes how Seattle has become less affordable in recent years. He prescribes a recipe for Austin to become what he calls a “Superstar City” such as New York, Boston, San Francisco, or Seattle. By “Superstar City”, I assume he means an ultra-hip place where housing prices rise rapidly, NIMBY activism grows, and development is restricted, making it even less affordable for many, except the wealthy and subsidized. The agenda would work for any city: Here’s the agenda I’d propose for propelling Austin into the “Superstar City” pantheon: (1) discourage the construction of traditionally affordable housing like garage apartments and duplexes; (2) restrict the amount of land available for multi-family housing; (3) strictly limit multi-family density; (4) limit the construction of upscale condos and townhomes in order to force affluent homebuyers to compete for the scarce supply of close-in housing; (5) ban small-lot and “urban home” zoning; (6) require property owners/developers who build dense developments to shoulder the financial burden for things like affordable housing, parks and infrastructure; and (7) impose onerous design standards to increase the cost of new construction. We can call it the “progressive” agenda. We’ll be in the superstar ranks in no time. Austin Contrarian: Sound familiar?

NIMBYs sue to force developer to “protect character”

Nearby residents want to stall Columbus Village from being their Upper West Side neighbor. The myth that dense development is bad for the environment continues… Maybe high-priced attorneys help propagate these myths at the expense of the environment and supply of housing for the sake of their clients’ Legal Plunder. GlobeSt: Resident Files Suit Seeking Environmental Review

125th Street Rezoning

Collectivists planned to join “Hands Across Harlem” to stop developers from further exercising their property rights. However, they only managed to gather a small crowd. New York Observer: 125th Street Rezoning Rally: 1968 Tries Again City Council Could Approve 125th Street Rezoning Tomorrow The Real Deal: Harlem rezoning critics want changes Latest: The Real Deal: City Council subcommittee approves Harlem rezoning NY Times

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