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Real Estate Rules, Bureaucracy Obeys, Communities Rise Up

Issue 246

Tom Angotti May 7

Outrageous rent increases. Illegal evictions and buyouts. It’s not just bad landlords doing this. It’s big real estate. And real estate has trusty allies in government. The only thing that stops them is when tenants organize and communities rise up.

New York City, the historic center of global finance, claims to be “The real estate capital of the world.” The Real Estate Board of New York (REBNY), whose members are the biggest contributors to elected officials, shapes city housing and planning policies through campaign contributions and aggressive lobbying. Big real estate also includes corporations and investors who profit from “affordable housing” development. This broad umbrella encompasses all development — from luxury high-rises to subsidized, income-limited apartments — and provides perfect cover for the real estate industry and a  wealthy political class that presumes to represent the public interest. Private and public sectors make up this powerful growth machine that is built on the myth — the neoliberal fantasy — that the city needs private capital and “flexible” government regulation to sustain itself.

New York City has one of the highest rates of housing displacement in the country.

Two government agencies are critical to the growth machine. The Department of City Planning (DCP) regulates how land is used through its zoning powers. Zoning sets limits on how much can be built in any location. The agency is misnamed because it doesn’t really plan; it helps configure development, mostly in response to the interests of real estate investors.

Housing Preservation and Development (HPD) runs programs that are supposed to promote “affordable housing” in partnership with for-profit and non-profit developers. Along with the State of New York, it is responsible for enforcing rent regulations. The New York City Housing Authority (NYCHA), an authority set up by the federal government and run by mayoral appointees, is the largest provider of subsidized housing.

After New York City’s fiscal crisis of the mid-1970s and the global shift toward neoliberalism, these agencies and the city’s political leadership have increasingly functioned as a well-oiled machine that makes way for luxury towers, abandons low-income housing in favor of “affordable housing” that isn’t affordable and turns its back on violations of the rent laws. New York City has one of the highest rates of housing displacement in the country.

Real Estate & The Growth Machine

For real estate and its government allies, rent regulations, strict zoning rules, community boards, preservationists and environmentalists are responsible for the housing crisis. Their solution is more growth, more tax subsidies, fewer regulations and defeat of what they call “Not In My Backyard” (NIMBY) sentiment — opposition to new development. Their alternative is YIMBY (“Yes In My Backyard”), real estate-funded attack squads that opportunistically accuse those objecting to new development. While low-income people of color are displaced, YIMBYs blame the victims, implying that they stand in the way of “integration” and advocate a form of reverse racism.

In this real estate world, elected and government officials compete with one another to demonstrate how much housing has been built under their watch. Jobs are the other big treasure. The criterion for judging “progress” is always based on how many housing units and how many jobs have been created. Never mind whether the housing is for those who need it most or that the jobs are temporary, unsafe or poorly paid. Nobody in government ever checks to see if the numbers ever materialize, who benefits and who loses.

For real estate, more housing is always the solution. It’s pure trickle-down economics: the market builds for the wealthy and as their needs are met the benefits filter down to lower-income people in the form of lower rents. Or government-subsidized “affordable housing.” It sounds neat but it never works that way. Instead higher land values and rents trickle down and make everything more expensive, displacing tenants and homeowners with the lowest incomes. New York is one of the most racially segregated cities in the world and low-income communities of color face intense displacement pressures while having fewer alternatives because of pervasive discrimination in housing. Yet nobody in government is responsible for dealing with displacement, historically the greatest threat to the survival of communities of color.

Public Housing

It wasn’t always like this. During the Great Depression, the New Deal financed the construction of housing for working people throughout the nation and provided capital and operating subsidies to local housing authorities. NYCHA was the largest and arguably one of the better-managed authorities in the nation. In the 1970s, the Nixon administration cut subsidies and channeled funds toward public-private partnerships. This became the foundation of neoliberal housing policy and was embraced by a national bipartisan consensus. While cutting funds for public housing, policymakers  accepted the conservative idea, promoted by reactionary southern Democrats during the New Deal, that public housing was a socialist project that promoted poverty and interfered with the private market.

Signs of long-overdue changes are emerging.

NYCHA, the single largest provider of low-income housing in the city and nation, is on the way to becoming a public-private partnership in which the private partner will ultimately rule. While billionaire mayor Michael Bloomberg tried and failed to implant luxury housing in eight Manhattan projects, Mayor Bill de Blasio created Next Generation NYCHA, a plan to turn all of NYCHA into a playground for real estate developers. While the city and state consistently failed to fill the gap in funding due to federal cutbacks, the bipartisan consensus is now that the solution is to take the public out of public housing and bring in private investment.

The 1970s saw massive housing abandonment and service cutbacks as industry fled to low-wage regions. Local tax revenues declined and real estate promoted the notion that new private investment would save the city. Community groups fought abandonment by taking over buildings and lobbying government for financial support. Thus was born the partnership between community-based nonprofit developers, big real estate and government – though the community partners were and still are junior partners.

While much attention has been paid to the city’s program for creating new “affordable housing,” community advocates have pointed out how the income requirements for this housing make them unaffordable for those who need housing the most, including the more than 60,000 people living in shelters. At the same time, funding for NYCHA has declined and it too is becoming a “public-private partnership.” The struggle to keep the public in public housing is one of the most important facing us today.

Communities, Organizing & Government

Despite this gloomy picture, signs of long-overdue changes are emerging. Thanks to tenant organizing, an overhaul of rent regulations that increases tenant protections may soon be approved in Albany. Tough community organizing forced Amazon, one of the biggest corporations in the world, to back out of a sweetheart deal to move part of their headquarters to Queens. And every one of Mayor de Blasio’s community rezonings to promote development in communities of color has faced fierce opposition, slowing down developers.

Too often reformers have underestimated the depth of the problem and relied only on getting better candidates in office. This can lead to minor advances while leaving in place real estate’s power, the highly centralized city bureaucracy and powerful agencies. They are indebted to one of the two major party machines and, more importantly, their donors from real estate and finance. The more diverse and representative City Council can only respond to mayoral initiatives and chip away at power. Control of the budget is concentrated in the Mayor’s Office of Management and Budget and the Council negotiates around the edges.

The permanent government has deep roots in the city’s history as a global center of finance and real estate. But it has always faced opposition from communities and labor. This opposition gave us the first rent laws over a century ago and workplace health and safety laws following the disastrous Triangle Shirtwaist Factory fire in 1911.

Important reforms came out of civil rights struggles, although most of these were incomplete and subverted by real estate. Following protests in the 1960s against urban renewal (then known as “Negro removal”), a major reform of the city charter that took effect in 1975 established 59 community boards and mandated that all major changes in zoning and land use go through the Uniform Land Use Review Procedure (ULURP), in which community boards had a vote (without control over the final outcome). Another reform in 1989 spurred by civil rights challenges eliminated the Board of Estimate as the main decision-making body. Each of the five borough presidents had an equal vote on that board. Multiracial, populous Brooklyn had one, as did tiny, mostly-white Staten Island. The more representative City Council gained some additional power through the ’89 reform but overall the system remained as it is today, with power concentrated in the mayor’s office and executive branch. The Council is now leading another major review of the city charter, but powerful special interests, led by real estate and finance, abetted by elite civic groups and city agencies, control the agenda.

The city faces the enormous challenges of coastal flooding and climate change. The question now is whether the community and social justice movements can rise with the tides. The environmental and climate justice movements are consciously building on the radical roots of the civil rights, community and labor movements. A new generation is starting to cross the historic racial, class, gender, ethnic and other divides, bringing together tenants, homeowners, and other groups that have often been pitted against each other. Occupy, Black Lives Matter and other radical initiatives that seek to value differences instead of reinforcing inequalities are generating hope.

A major challenge we face is deeply understanding this monster of a permanent government so we can change it. It is not good enough to get a seemingly progressive figure elected as mayor or city council representative. We need more radical community activism. We need more “guerillas in the bureaucracy” to cripple the institutional resistance to real democratic and just alternatives. When brave leaders like Alexandria Ocasio-Cortez step forward to run for office, they need more allies in government. Veteran community activists know that a strong “inside-outside” strategy is essential to every struggle against the powerful real estate machine.

Tom Angotti is Professor Emeritus of Urban Policy and Planning at Hunter College and the Graduate Center and editor with Sylvia Morse of Zoned Out: Race, Displacement and City Planning in New York City.


Illustration by David Hollenbach.