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Commentary By Alex Armlovich

How to Boost City Housing, and Help Fund the MTA

Cities, Cities, Cities New York City, Infrastructure & Transportation, Housing

New York’s housing troubles are so familiar they’re almost cliché: Strict regulations limiting the housing supply have chased upper-middle-income folks out of Manhattan into Brooklyn and Queens. At the same time, overdevelopment in and around transit hubs would worsen the strain on the city’s subways.

To begin to relieve both problems, I propose in a new Manhattan Institute report to permit some 40,000 new housing units each year for the next 10 years near public transit — and to use the tax revenue from this new housing to boost the MTA’s coffers.

Gov. Andrew Cuomo has proposed a similar type of “value capture” to grab property taxes near new MTA subway stops to pay off construction debt. Mayor Bill de Blasio has pushed rezoning to ease housing restrictions. Both leave something to be desired.

“New York City needs more housing. It needs to fix and upgrade public transit.”

I propose that residential skyscrapers be allowed in “Transit Growth Zones” within a quarter-mile of the subway, Select Bus Service or commuter trains that come at least every 15 minutes. The property taxes on any new residential building in these areas would be negotiated between the city and MTA as a temporary 15-year “payment in lieu of taxes” (PILOT) to be sent to the MTA.

The plan would generally allow buildings up to 10 stories high near frequent transit. This relaxation of land-use regulations near transit would unleash a windfall: New building in Midtown costs about $400 per square foot, and over $200 in some Brooklyn neighborhoods.

My plan would charge fees below these averages in popular neighborhoods. New buildings in weaker markets would pay no extra fee.

This proposal would address a key objection to de Blasio’s proposals: Out of political expediency, most have been proposed in lower-income areas. Low-income neighborhoods have to make room for more housing because, if they don’t, their residents will lose the bidding war over a fixed housing stock as prices rise.

My plan, by redirecting inflows of new high-income professionals to the most expensive, transit-rich neighborhoods in Manhattan, Brooklyn and Queens, asks the wealthiest New Yorkers to do their fair share by simply not blocking the housing of incoming high-income workers they have thus far foisted upon poorer neighborhoods.

In contrast to de Blasio’s plan, Cuomo’s evokes Daniel Day-Lewis’ “I drink your milkshake” line from “There Will Be Blood”: It permanently seizes incremental property taxes from the city, without the city’s input, on new and old buildings alike up to a mile away from new MTA projects — and seeks no zoning changes with the city to grow the shared tax base.

My plan would grow the property tax base systemwide with city input, temporarily collecting PILOTs for the MTA on new buildings without seizing city taxes on old buildings.

Indeed, my 15-year PILOTs would return new construction to the city’s regular tax base faster than New York state’s current 421-a property-tax exemption, which forgives incremental property taxes on new housing for up to 30 years.

New York City needs more housing. It needs to fix and upgrade public transit.

This proposal would fund up to $54 billion worth of new and improved public transit by permitting and capturing value from hundreds of thousands of new housing units over a decade.

It’s that simple — and all we need to move some version of the plan forward is for New York’s most expensive, transit-rich, job-rich neighborhoods to say the same magic words we ask of poor neighborhoods: “Yes, in my back yard.”

This piece originally appeared in the New York Post


Alex Armlovich is an adjunct fellow at the Manhattan Institute and author of a new report, More Housing For Better Public Transit: A Grand Bargain For New York City. Follow him on Twitter here.

This piece originally appeared in New York Post