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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.

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Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.

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Speaker 2: Tracy, I don't want the podcast to be like an

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Speaker 2: entirely New York City focused podcast, but like, in our defense,

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Speaker 2: not only do we live here, but you know, what

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Speaker 2: happens in New York City. It has problems, and it

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Speaker 2: has challenges that are seen really all around the world.

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Speaker 2: So it's not terrible to do a few episodes related to,

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Speaker 2: you know, what's happening around in our neighborhood.

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Speaker 3: I don't think it's terrible at all. And in fact,

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Speaker 3: one specific area where New York really does have national,

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Speaker 3: maybe even global relevance is in the housing arena. Right,

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Speaker 3: so we know New York City has a shortage of

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Speaker 3: how housing people have been trying to come up with

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Speaker 3: ways to improve that, build more supply for a long

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Speaker 3: time and also lower rents, and so that has you know,

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Speaker 3: implications for a lot of other cities and places, so

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Speaker 3: it might also be capacity constrained totally.

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Speaker 2: I mean, like New York is sort of an egregious

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Speaker 2: levels of housing on affordability, but every city around the world.

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Speaker 2: I think every city that's booming has some challenges of

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Speaker 2: affordability and building more at least in the West, but

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Speaker 2: I sort of think basically everywhere, and so you know,

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Speaker 2: people always talk about trying to solve it, et cetera. Anyway,

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Speaker 2: of course, past odd Lot's guest Zoronmmdannie has his proposals

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Speaker 2: for how to address housing affordability, including a rent freeze

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Speaker 2: on a significant chunk of the housing stock in the city.

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Speaker 2: And so we sort of need to get a sense

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Speaker 2: of like what that means and how that you know,

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Speaker 2: what the implication is for business weather could work.

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Speaker 1: You know.

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Speaker 3: Well, the broader theme here, I guess, is the role

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Speaker 3: of the public sector in the private market, right, Like,

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Speaker 3: if we want to get really really conceptual with us,

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Speaker 3: that's basically what we're talking about.

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Speaker 2: Yeah, and of course Mom Donnie has a slew of

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Speaker 2: proposals and ideas free buses, faster buses, also is a

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Speaker 2: public grocery store trial, et cetera. But you know, we

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Speaker 2: did that recent episode with Kathy Wilde that head in

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Speaker 2: the partnership for New York, which represents a lot of

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Speaker 2: major employers in the city. I'm sure they're anxious about

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Speaker 2: him for a number of reasons, but she said within

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Speaker 2: their community, it's really the real estate industry that is

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Speaker 2: the most freaked out, so to speak.

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Speaker 3: Yeah, and I'm really interested in this because people talk

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Speaker 3: about the real estate industry as the sort of monolith,

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Speaker 3: but of course it isn't right. There's residential, there's commercial,

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Speaker 3: there's luxury, there's more affordable. So I want to dig

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Speaker 3: into this a bit more and understand exactly what the

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Speaker 3: concerns are and whether they're coming from different parts of

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Speaker 3: the real estate all work.

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Speaker 2: Yeah, and then there's you know, even within real estate,

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Speaker 2: there's brokers, and then there's developers who are separate from landlords, etcetera. Anyway,

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Speaker 2: we do have the perfect guest, someone we've had on

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Speaker 2: a few times every time New York City real estate

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Speaker 2: is in the news, a guy we like to chat with.

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Speaker 2: We are going to be speaking with Ben Carlos Taipan.

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Speaker 2: He is the founder of a firm called Quantierra Channalyze

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Speaker 2: the real estate. He is also a New York City

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Speaker 2: landlord and broker.

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Speaker 3: Interesting idea is that the most like hated demographic in

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Speaker 3: all of New York.

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Speaker 2: Yes, thanks for coming back on the show, Ben.

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Speaker 4: Thanks for having me.

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Speaker 2: Kathy Wilde, when we talked to her, did say that

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Speaker 2: the real estate industry is the of all of the

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Speaker 2: sectors of the economy, the most anxious. What specifically, you know,

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Speaker 2: who's really anxious or what about Mamdanni's sort of vision

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Speaker 2: most sends chills down the spine of landlords or other

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Speaker 2: players in the real estate industry.

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Speaker 4: Well, I mean, I think the reaction to Mamdanni is

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Speaker 4: actually not that different from the reaction to build a

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Speaker 4: Blasio eight years ago when when he came in, or

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Speaker 4: excuse me, twelve years ago. I think it's been amplified

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Speaker 4: by you know, the political environment we're in, Mamdani's political identity,

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Speaker 4: his you know, his race, his ethnicity and religion. But

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Speaker 4: you know what scares these people I think the most.

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Speaker 4: And when I say these people, I mean the people

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Speaker 4: that are you know, vocalizing their their fear, which I

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Speaker 4: think don't necessarily speak for every portion of the real

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Speaker 4: estate industry. As as Tracy pointed out, I think what

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Speaker 4: most scares them is that Mam Donnie's sort of premise

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Speaker 4: of city management does not revolve around them. And you know,

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Speaker 4: this was a major issue during the DBASA administration that

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Speaker 4: the press covered a lot where you know, to basio,

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Speaker 4: despite you know, appointing you know, some real estate friendly

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Speaker 4: commissioners and generally having a pretty good administration that was

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Speaker 4: pretty good for real estate. He didn't. He wasn't in

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Speaker 4: the habit of kissing the ring and sort of showing

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Speaker 4: up to their galas and calling on them and stroking

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Speaker 4: them in a way that you know. In contrast, Eric Adams,

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Speaker 4: the current mayor, has been very you know good at

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Speaker 4: doing so. I think a lot of this is sort

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Speaker 4: of meta feelings about you know, their place in the city,

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Speaker 4: their influence in city Hall, and the you know, depending

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Speaker 4: on the policy there could be you know, there's varying

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Speaker 4: degrees of tenuousness to actual policy and market implications.

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Speaker 3: So who is most scared? Give us some nuance on

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Speaker 3: on the vibes.

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Speaker 4: Sure, So, I think the most scared groups are rent

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Speaker 4: stabilized landlords because you know, Mom Donnie has pledged to

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Speaker 4: freeze rents on rent stabilized apartments. And then large developers,

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Speaker 4: these sort of you know, the biggest developers who not

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Speaker 4: only have business models that largely depend on sort of

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Speaker 4: being in a you know, informal cartel well and having

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Speaker 4: you know, the best possible best relationships with the people

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Speaker 4: that you know, make policy in the city and you know,

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Speaker 4: the most powerful players, but also you know, have a

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Speaker 4: greater sense of civic duty and their role in civic society,

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Speaker 4: and I think mom Nani's rhetoric and some of his

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Speaker 4: policies threaten their sense of their own place with the city.

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Speaker 2: You know, it's interesting, Tracy, I'm thinking back. You know,

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Speaker 2: we did that not long after we interviewed Mamdanie. We

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Speaker 2: interviewed the Jersey city who didn't win his primary nomination

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Speaker 2: for governor. So not everyone who comes on odd lots automatically.

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Speaker 2: But one of the things he said that was really

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Speaker 2: interesting is that by you know, he said, he talked

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Speaker 2: about depoliticizing, Yeah, and that you know, essentially by making

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Speaker 2: it sort of more streamlined the process to get approvals.

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Speaker 2: That there are these developers who maybe their edge was

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Speaker 2: that they really knew how to play the game within

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Speaker 2: these boards, within you know, the community. Suddenly like that

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Speaker 2: is a marginal edge that disappears in a system that

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Speaker 2: is much more straightforward. And macdonni himself, if I'm not mistaken,

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Speaker 2: Ben has also talked about he does want more development.

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Speaker 2: He's talked about market rate development, and he's also talked

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Speaker 2: about just sort of making that process if the developer

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Speaker 2: meets certain requirements labor pay, et cetera, just much more straightforward,

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Speaker 2: which again would seem to speak to your point that

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Speaker 2: perhaps some of the most threatened entities would be those

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Speaker 2: ones who are big in best positioned to sort of

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Speaker 2: play the politics side of the game.

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Speaker 4: Yeah, I think streamlining does not necessarily benefit the most

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Speaker 4: entrenched incumbents. I think that they wouldn't necessarily fare badly

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Speaker 4: under a Mond Donnie administration, but they, at least, if

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Speaker 4: one takes Mam Donnie's policy pronouncements at face value, would

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Speaker 4: not be in the driver's seat. You know, the Albanian

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Speaker 4: guy in the Bronx who's building a small, multi family building,

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Speaker 4: he's going to be in a lot more position to

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Speaker 4: benefit from these streamline policies than you know, the type

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Speaker 4: of people that are being quoted in the New York Times.

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Speaker 2: By the way, Tracy, before I forget, you know, Ben

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Speaker 2: talked about the similarities with Deblasio. It's funny because I

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Speaker 2: think there was a quote we're recording this July sixteenth,

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Speaker 2: I think I saw a quote yesterday from Kathy Wilde

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Speaker 2: in the News there was basically like, Mam Donnie is

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Speaker 2: like Bill de Blasio, except we like him, like he's

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Speaker 2: likable essentially. But you know that's pretty fair.

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Speaker 3: Yeah, I mean, yeah, I get it. Okay, So part

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Speaker 3: of this discussion, I understand why developers might be concerned about,

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Speaker 3: like losing their competitive advantage when it comes to navigating

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Speaker 3: city Hall and.

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Speaker 4: All of that.

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Speaker 3: Are there any concerns beyond initial approval for projects? Is

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Speaker 3: there a concern, for instance, about an emphasis on public

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Speaker 3: housing perhaps crowding out private development.

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Speaker 4: I think there's a generalized concern that the Mam Donnie

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Speaker 4: administration and its vibes are going to depress private investment,

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Speaker 4: whether that's in existing housing or building new private housing. However,

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Speaker 4: even under that scenario, which I don't really agree with

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Speaker 4: and I think is kind of a cynical view, there

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Speaker 4: would be beneficiaries of that scenario. So let's say that

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Speaker 4: does happen. Rent stabilized rents are frozen and private investment

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Speaker 4: in new development and new housing plummets.

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Speaker 2: They're going to up charge the market.

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Speaker 4: Right exactly. Market rate rents would increase considerably, So under

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Speaker 4: that scenario, the market rate landlords would do very well,

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Speaker 4: and the rend stabilized landlords who are already not doing

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Speaker 4: well would continue to not do well. And the affordable

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Speaker 4: developers who only build housing with public subsidy, which you

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Speaker 4: know Mom Donnie wants to spend considerably more on subsidized housing,

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Speaker 4: would also benefit. So you know, it really speaks to

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Speaker 4: the many different stakeholders within the real estate industry who

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Speaker 4: have different and sometimes conflicting interests.

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Speaker 2: If demand for residents in New York City broadly is

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Speaker 2: stable or continues to grow as it has been in

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Speaker 2: this scenario where in theory developers just want to pull

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Speaker 2: back the landlords who have exposure to the market rate

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Speaker 2: market rate units, you'd think they would do very well.

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Speaker 4: Yeah, And in fact, I have clients who are market

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Speaker 4: rate developers who are out in the market fundraising right

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Speaker 4: now with this argument say that if we should, you

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Speaker 4: should fund this project of ours right now, because we're

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Speaker 4: going to be the last buildings to be developed before

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Speaker 4: Mom Donnie comes in and freezes everything, and therefore we're

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Speaker 4: going to have the best product in the market and

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Speaker 4: be able to charge the highest pricing power.

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Speaker 3: That's amazing, So the cost shift is already happening basically.

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Speaker 4: Yeah, but like again, where people are freaking out. I'm

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Speaker 4: not sure that that is necessarily grounded in reality. But

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Speaker 4: I think a lot of the rhetoric, both public and private,

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Speaker 4: we've seen in light of mom Donnie's primary victory has

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Speaker 4: is pr and spin. You know, in real estate, everyone's

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Speaker 4: always trying to find an angle to say why their

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Speaker 4: project is best or why their projects should be funded,

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Speaker 4: or why I'm not making this decision and why you know,

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Speaker 4: why I look smart because of that. Yeah, so you know,

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Speaker 4: we're still very much in the spin zone.

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Speaker 2: Let's talk more about that, because you know, I feel

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Speaker 2: like one of those cliches, which probably has some truth,

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Speaker 2: is that, yeah, people who freak out and like let

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Speaker 2: themselves get hysterical don't do as well as business as

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Speaker 2: people who adapt to the new environment and sense the opportunity.

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Speaker 2: So you've described one set of people who may be

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Speaker 2: thinking opportunistically right now, which is the people who might

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Speaker 2: have the opportunity to build something before rent freezes come

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Speaker 2: into place. They're going to have the pricing power by this.

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Speaker 2: What else are the opportunities that people send about? Yeah, Okay,

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Speaker 2: maybe we don't like the policies, but there is a

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Speaker 2: money making opportunity under the Mumdani administration. Who else is

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Speaker 2: sort of locking their chop so to speak.

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Speaker 4: One other group that's like in their chops is the

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Speaker 4: developers that specialize in building affordable housing, which are both

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Speaker 4: for profit and nonprofit developers. And you know, they have

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Speaker 4: done pretty well, or they did very well in the

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Speaker 4: Bose administration, They've done well during the Adam administration. They

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Speaker 4: consistently do well because you know, the Mamdani wants to

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Speaker 4: build more government subs is housing than any previous mayor.

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Speaker 4: But it's not like the the developers and the labor

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Speaker 4: for building that housing is just going to materialize out

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Speaker 4: of the government. You're going to be using private sector

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Speaker 4: players to do this. So these groups or these players

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Speaker 4: are taking a different approach than some other you know,

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Speaker 4: pure market rate developers in the real estate industry and

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Speaker 4: trying to craft sort of a separate piece with the

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Speaker 4: Mamdani administration to say like, hey, you know, we want

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Speaker 4: to help you meet your goals. We know you want

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Speaker 4: to spend a lot of money. This is good for

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Speaker 4: you know, for for both of us. And I think

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Speaker 4: another group ironically, and they're not so much licking their

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Speaker 4: chops because I think they're they're very scared. Is the

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Speaker 4: rent stabilize building owners because you know, as we've discussed

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Speaker 4: on one of our previous podcasts, you know, this is

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Speaker 4: a distress sector and it's sort of been heading for

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Speaker 4: a reckoning, and I think Mamdani's policies are going to

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Speaker 4: lead to an acceleration of that trend, so that something

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Speaker 4: gives here, and I think it could give in a

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Speaker 4: in a sort of cynical way, you know that the

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Speaker 4: Supreme Court, or or it could give in a more

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Speaker 4: optimistic way by sort of Mamdani being something like Nixon

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Speaker 4: to China and going to allbody and crafting some sort

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Speaker 4: of new regime for these buildings that you know, does

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Speaker 4: not burden tenants but also stabilize them and make sure

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Speaker 4: that they don't collapse, which is not really in the

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Speaker 4: interest of anyone.

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Speaker 3: Yeah, this is good context because the long suffering rent

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Speaker 3: stabilized building owners have been trying to loosen regulation for

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Speaker 3: a long time, and I think they even sued on

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Speaker 3: a constitutional basis, and clearly the goal is to try

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Speaker 3: to get those to the Supreme Court. But in that context.

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Speaker 3: You mentioned labor really quickly, and I want to go

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Speaker 3: back to that because one of the proposals that Mum

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Speaker 3: Donnie has is using unionized labor to build all this

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Speaker 3: affordable housing. And I'm curious how feasible that is, what

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Speaker 3: the availability is, and how that actually feeds into costs.

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Speaker 4: Sure, So when talking about this issue, I think it's

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Speaker 4: important to keep in mind that this is not a

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Speaker 4: Mum donnie issue. The construction unions all were back in Cuomo.

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Speaker 4: This is really a New York issue. Writ large, We'll

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Speaker 4: see how how Mam donnie. You know, they, unlike most

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Speaker 4: of the other powerful unions, the construction unions still have

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Speaker 4: not abandoned Cuomo. They have not endorsed Mom Donni yet.

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Speaker 4: That said, there's obviously organized labor's job is to advocate

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Speaker 4: for the most wages and best benefits for their members.

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Speaker 4: They also need to make sure that their members keep working.

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Speaker 4: So right now, we're in situation with this tax program

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Speaker 4: that was negotiated in two legislative sessions ago, where in

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Speaker 4: for particularly large projects, the labor requirements are viewed as

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Speaker 4: too onerous, and no one is building buildings that qualify

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Speaker 4: under this wage standard. So there needs to be some

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Speaker 4: sort of peace that is broken here, and I think

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Speaker 4: this could be an opportunity, you know, with all the

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Speaker 4: credibility that Mamdani has built on the left, to craft

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Speaker 4: a piece between labor and developers, to make it so

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Speaker 4: that we can build housing with unionized labor, but it

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Speaker 4: doesn't break the bank.

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Speaker 2: It's interesting you point out this is something I've been

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Speaker 2: thinking about you but you point out that, for example,

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Speaker 2: most of the unions supported Cuomo. Some of them, such

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Speaker 2: as the construction Union, which I hadn't realized, still backing Cuomo.

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Speaker 2: Cuomo also won the endorsement I think, although they've switched

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Speaker 2: of the Hotel Workers Union, which I also want to

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Speaker 2: talk about. But it's interesting to me because when people

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Speaker 2: think about a left wing mayor and how it can

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Speaker 2: go wrong, they reach for the example of Brandon Johnson

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Speaker 2: in Chicago. Brandon Johnson came out of the union machine.

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Speaker 2: I mean, he was part of the teachers Union in Chicago.

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Speaker 2: Mom Donney for all, is I'm sure ideological affinity for

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Speaker 2: organized labor. He doesn't come out of that machine the

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Speaker 2: same way Brandon Johnson let alone to some extent, Cuomo did.

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Speaker 2: So it does feel like there is a potential for

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Speaker 2: some sort of you know, shifting of the plate, so

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Speaker 2: to speak.

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Speaker 4: Yeah, I mean, who knows what's going to happen, But

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Speaker 4: I think the it's hard to argue that our coalition

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Speaker 4: politics and politics generally in New York City have not

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Speaker 4: been scrambled by this event. And I think it it

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Speaker 4: remains to be seen how how all that shakes out,

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Speaker 4: and whether these groups that you know, have been operating

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Speaker 4: in relative concert, you know, perhaps at the expense of

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Speaker 4: other constituencies, remain a lot, or whether new alliances reformed

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Speaker 4: to solve some of the city's problems.

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Speaker 3: How much of this just boils down to people, wealthier

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Speaker 3: people not liking higher taxes because I imagine, you know, if

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Speaker 3: they're trying to get a message out there, saying that

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Speaker 3: they don't like taxes probably doesn't resonate with a lot

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Speaker 3: of New Yorkers. But saying that because of higher taxes

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Speaker 3: or because of all these other policies, there's going to

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Speaker 3: be less development of property, less affordable housing, is that

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Speaker 3: just them trying to spin it that way?

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Speaker 4: I personally I think so. And you know, our media

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Speaker 4: environment is structured is such that there's not really much

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Speaker 4: downside in doing that, so you know, you hear about

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Speaker 4: Remember a couple of years ago, there was a lot

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Speaker 4: of stories about David Tepper for Apple USA Capitla Management

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Speaker 4: moving to Florida to duck a income tax increase in

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Speaker 4: New Jersey. We know there's a media frenzy about this,

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Speaker 4: but no one covered that he moved back. And I'm always.

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Speaker 2: Saying this, no one's going to stay in Florida, give

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Speaker 2: me a break.

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Speaker 4: And you know, I think you know, the data are

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Speaker 4: an analysis that has been done as this shows that

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Speaker 4: like millionaire tax flight actually is largely a myth, and

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Speaker 4: it occurs at a much lower rate than it does

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Speaker 4: for middle and lower income people. And you know, there's

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Speaker 4: all sorts of groups that sort of take advantage of

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Speaker 4: this dynamic. So for instance, a luxury real estate broker

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Speaker 4: will be, you know, pub going to the press and say,

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Speaker 4: you know, I'm getting my phone is ringing off the

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Speaker 4: hook on people that want to sell their apartments here

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Speaker 4: or move to Palm Beach. You know, does that get

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Speaker 4: them the attention of more people who might be thinking

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Speaker 4: that way? Yeah, but does it reflect market reality or

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Speaker 4: or is anyone you know, testing to see if that

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Speaker 4: they've been proven wrong. No, And I think you know,

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Speaker 4: we're this isn't just a New York City phenomenon. We're

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Speaker 4: seeing a lot of dissonance between people sort of ideological

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Speaker 4: and policy priors and actual economic analysis. And I think

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Speaker 4: a really good example is a mayor who raised taxes,

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Speaker 4: including on upper earners, several times in New York City,

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Speaker 4: friend of the Pod Michael Bloomberg, and a lot of

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Speaker 4: these same people who are complaining about Zoran think that

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Speaker 4: Bloomberg was their model mayor and and really want to

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Speaker 4: go back to the Bloomberg economy. So you know, people

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Speaker 4: are sort of flailing about looking for any possible way

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Speaker 4: to spin, you know, their own preferences.

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Speaker 2: A friend of the pod is a how are you

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Speaker 2: going to put?

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Speaker 3: Well, I was going to do the standard disclaimer, it

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Speaker 3: has become standard. But Michael Bloomberg is, of course the

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Speaker 3: owner of Bloomberg LP, which runs Bloomberg Media and Bloomberg News.

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Speaker 3: So there we go. That's the disclaimer.

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Speaker 2: I like describing him as friend of the pod. But

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Speaker 2: this is a really important point, Like you're always going

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Speaker 2: to go to Florida, like you if you go to Florida,

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Speaker 2: you can't be an in studio, guest on The Odd

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Speaker 2: Laws podcast, and do all the wonderful things that being

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Speaker 2: in New York City affords you. It really is. I mean,

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Speaker 2: I don't know actually the stats on who leaves New

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Speaker 2: York City, but it's not the rich. I mean, it's

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Speaker 2: like people who just find the city unaffordable, right.

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Speaker 4: Right, And I would encourage everyone to go Crystal Ball Young,

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Speaker 4: who's a professor at Cornell who's done a lot of

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Speaker 4: work on this very issue. And the something you hear,

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Speaker 4: you know, Kathy Wilde mentioned in your interview, and something

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Speaker 4: you hear across business leaders generally and particularly commercial real

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Speaker 4: estate rather than than multifamily, is the importance of our workforce.

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Speaker 4: And if if people who the talent that fuels New

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Speaker 4: York City cannot afford to live here, that is bad

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Speaker 4: for New York City's economy. And would you know lowering

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Speaker 4: the cost of housing, uh be bad for some landlords, yes,

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Speaker 4: but it would would it be good for a lot

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Speaker 4: of other sectors of the city, including you know, the

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Speaker 4: office real estate sector. Yes. Similarly with childcare, would I

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Speaker 4: don't know anyone who's really opposed to childcare, Like I

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Speaker 4: think that's a problem for everyone and it would help

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Speaker 4: employees and employers, but also help real estate owners because

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Speaker 4: if you remember they're any Bosimus, they rolled out Universal

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Speaker 4: pre k. It's not like there's all this empty space

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Speaker 4: in public buildings near people's houses that you're going to put,

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Speaker 4: you know, childcare facilities. These are going to be rented

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Speaker 4: in private buildings and result in a huge amount of

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Speaker 4: leasing velocity that will often occur in space that is

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Speaker 4: otherwise hard to lease.

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Speaker 3: When we spoke to Kathy, she did bring up crime,

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Speaker 3: and you know, initially, maybe you don't make a direct

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Speaker 3: connection between economic policy and crime, but the argument is,

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Speaker 3: if there's lots of crime going on in the city,

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Speaker 3: people are going to want to move away to that

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Speaker 3: New York City flight exodus point. How are landlords or

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Speaker 3: the real estate industry thinking about that particular aspect. Is

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Speaker 3: it important to them, because that would be maybe a

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Speaker 3: reason to go for someone like an Eric Adams, right.

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Speaker 4: I think it's very important to the real estate industry.

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Speaker 4: And you know, a lot of people are scarred by

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Speaker 4: the experience of the nineteen seventies and eighties in New York.

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Speaker 4: Even if the contributing factors for New York's issues back

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Speaker 4: then are myriad and complicated. You know, everyone agrees that,

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Speaker 4: you know, having a crime wridden city is not in

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Speaker 4: the interests of building owners and property values and really

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Speaker 4: the city at large, given how much of our budget

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Speaker 4: is based on property taxes. And you know, Mam Donnie

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Speaker 4: has said that he's, you know, considering keeping on Jessica Tish,

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Speaker 4: the current police commissioner, that and that he's not going

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Speaker 4: to reduce NYPD headcount. I think the real estate industry

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Speaker 4: is very skeptical of this, but you know, the cooler

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Speaker 4: heads within it are are sort of keeping in mind

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Speaker 4: that New York City is ultimately a creature of the state,

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Speaker 4: and we have a very moderate governor. We have a

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Speaker 4: more moderate than Mam donni legislature and the legacy or

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Speaker 4: you know, of the New York State Constitution, but also

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Speaker 4: the fiscal crisis in the nineteen seventies provides all but

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Speaker 4: with a lot of ways to make sure that the

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Speaker 4: city does not go off the deep end on issues

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Speaker 4: like this.

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Speaker 2: Can we talk about the last four years? I mean,

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Speaker 2: it's a weird four years because you know, you're starting

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Speaker 2: the baseline in twenty twenty one, sort of during the

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Speaker 2: worst of the post pandemic chaos. There's been a decent

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Speaker 2: amount of building. I think. However, it's a really expensive city.

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Speaker 2: There's a reason the affordability line was I think so

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Speaker 2: effective in this recent mayoral primary. Like, well, you know,

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Speaker 2: do you have a scorecard for how Mayor Adams did

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Speaker 2: on housing.

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Speaker 4: I'd give him a see. I think C plus maybe

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Speaker 4: be minus all right. I think the land use policy.

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Speaker 2: My children go to a progress one of my children

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Speaker 2: goes to a very progressive school. They don't have grades,

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Speaker 2: they just have this kind of stuff. So you could

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Speaker 2: give the this sort of like a qualitative associate feedback.

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Speaker 4: Sure, I think the land use policy was generally pretty good.

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Speaker 4: You know, the City of Yes which which you may

434
00:24:09,920 --> 00:24:11,760
Speaker 4: have heard of, which is, you know, the biggest change

435
00:24:11,800 --> 00:24:17,719
Speaker 4: to the zoning code in probably seventy years, the income

436
00:24:17,760 --> 00:24:20,359
Speaker 4: support policy or which you know a lot of our

437
00:24:20,600 --> 00:24:24,359
Speaker 4: housing woes are. You know, obviously the rents are too

438
00:24:24,440 --> 00:24:26,639
Speaker 4: damn high and prices are too high, but also wages

439
00:24:26,680 --> 00:24:30,840
Speaker 4: are too damn low, and you know, we need to

440
00:24:30,880 --> 00:24:34,199
Speaker 4: make sure that people can afford to pay rents. We

441
00:24:34,240 --> 00:24:35,680
Speaker 4: need to make sure that people can afford to pay

442
00:24:35,680 --> 00:24:38,639
Speaker 4: the rent that it costs to finance new new building,

443
00:24:38,800 --> 00:24:41,240
Speaker 4: and the ad administration has fought sort of the expansion

444
00:24:41,240 --> 00:24:44,719
Speaker 4: of voucher funding. Where I think it's fallen short on

445
00:24:44,800 --> 00:24:50,399
Speaker 4: housing is dealing with sort of structural issues with our

446
00:24:50,440 --> 00:24:54,320
Speaker 4: housing market, particularly the property tax system. And they are

447
00:24:54,320 --> 00:24:57,359
Speaker 4: not the first administration to fall short on this issue,

448
00:24:57,720 --> 00:25:02,520
Speaker 4: but I think it speaks to how much Adams's non

449
00:25:02,600 --> 00:25:06,919
Speaker 4: housing policies and sort of extracurricular activities have impacted his

450
00:25:07,000 --> 00:25:10,679
Speaker 4: ability to address structural issues like property tax Can you

451
00:25:10,720 --> 00:25:14,880
Speaker 4: just explain so? New York City's property taxes property tax

452
00:25:14,920 --> 00:25:19,280
Speaker 4: system has two sort of major distributional issues. One is

453
00:25:19,320 --> 00:25:23,760
Speaker 4: that a neighborhood like Park Slope is way under taxed

454
00:25:24,160 --> 00:25:29,440
Speaker 4: relative to a poorer neighborhood like Canarsie. So the two

455
00:25:29,440 --> 00:25:32,800
Speaker 4: properties paying the same amount of property taxes in those neighborhoods,

456
00:25:33,080 --> 00:25:36,320
Speaker 4: the property in Crown Heights will be worth five times

457
00:25:36,320 --> 00:25:37,639
Speaker 4: war and it is paying the same amount of property

458
00:25:37,640 --> 00:25:41,480
Speaker 4: taxes as the property in Canarsie. The other distributional issue

459
00:25:41,600 --> 00:25:46,520
Speaker 4: is multifamily versus single family or one to three family,

460
00:25:47,160 --> 00:25:51,480
Speaker 4: and multifamily and commercial are taxed way more than their

461
00:25:51,520 --> 00:25:54,840
Speaker 4: relative value contribution to the city's total property tax role.

462
00:25:55,560 --> 00:25:58,680
Speaker 4: And this is a long standing issue. There's been report

463
00:25:58,720 --> 00:26:01,320
Speaker 4: after report and commission saying, you know, here's what we

464
00:26:01,320 --> 00:26:05,879
Speaker 4: should do, and no one has sort of figured out

465
00:26:05,920 --> 00:26:09,840
Speaker 4: how to go to Albany to craft a new regime

466
00:26:10,359 --> 00:26:13,040
Speaker 4: that you know, addresses these issues which you know, in

467
00:26:13,040 --> 00:26:17,720
Speaker 4: addition to producing a lot of discriminatory impacts, are really

468
00:26:17,760 --> 00:26:22,080
Speaker 4: hampering our housing production and on existing housing operating costs.

469
00:26:22,200 --> 00:26:26,000
Speaker 4: And I think this is a particularly ripe time when

470
00:26:26,240 --> 00:26:30,119
Speaker 4: to address this issue because of the crisis with a

471
00:26:30,160 --> 00:26:33,080
Speaker 4: certain segment of the rent stabilized buildings, because these buildings

472
00:26:33,119 --> 00:26:36,000
Speaker 4: are way over taxed, so one could see, you know,

473
00:26:36,920 --> 00:26:40,520
Speaker 4: in a best case scenario, the Mamdani administration is you know,

474
00:26:40,680 --> 00:26:43,919
Speaker 4: it's instituted, it's rent rent freeze. You know, buildings are

475
00:26:43,960 --> 00:26:47,000
Speaker 4: starting to have trouble. The Mamdani administration doesn't want to

476
00:26:47,040 --> 00:26:49,240
Speaker 4: see these buildings, you know, they don't want collapsing buildings

477
00:26:49,240 --> 00:26:50,639
Speaker 4: that it's not good for tenants, it's not good for

478
00:26:50,680 --> 00:26:54,040
Speaker 4: their their political optics, it's not good for city, the

479
00:26:54,040 --> 00:26:58,760
Speaker 4: city's you know image. So Albany says, all right, we're

480
00:26:58,760 --> 00:27:01,520
Speaker 4: gonna craft you know, create a new class for these

481
00:27:01,560 --> 00:27:03,760
Speaker 4: rent stabized buildings. And it's going to lower their taxes,

482
00:27:04,000 --> 00:27:06,879
Speaker 4: and that's going to alleviate you know, the burden on

483
00:27:06,960 --> 00:27:09,280
Speaker 4: these owners from keeping their rents very low.

484
00:27:09,359 --> 00:27:13,440
Speaker 3: How much of this sort of existential concern being expressed

485
00:27:13,480 --> 00:27:17,040
Speaker 3: by the real estate industry goes away if interest rates

486
00:27:17,160 --> 00:27:19,080
Speaker 3: come down significantly.

487
00:27:19,119 --> 00:27:22,280
Speaker 4: I think a lot of it, but it's still it

488
00:27:22,280 --> 00:27:25,360
Speaker 4: would still be very much there. I think would become acute,

489
00:27:25,520 --> 00:27:29,480
Speaker 4: it become less acute, but would persist because a lot

490
00:27:29,520 --> 00:27:33,080
Speaker 4: of this is about these are long standing conflicts between

491
00:27:33,480 --> 00:27:37,840
Speaker 4: the realistic industry and you know, between landlords and tenants,

492
00:27:37,840 --> 00:27:41,280
Speaker 4: between you know what political faction runs New York, and

493
00:27:41,480 --> 00:27:44,680
Speaker 4: those cleavages. WOU would remain even if interest rates are lower.

494
00:27:44,680 --> 00:27:47,920
Speaker 4: I think interest rates would bail some people out and

495
00:27:48,320 --> 00:27:51,679
Speaker 4: increase transaction volume and delay the time at which someone

496
00:27:52,240 --> 00:27:55,480
Speaker 4: that's in trouble might go bankrupt, but the structural issues

497
00:27:55,520 --> 00:27:56,000
Speaker 4: would remain.

498
00:27:56,119 --> 00:27:59,639
Speaker 2: Can you real quickly just explain the roots of the

499
00:27:59,760 --> 00:28:03,959
Speaker 2: tax disparity or why say a unit in Brooklyn Heights

500
00:28:04,359 --> 00:28:07,520
Speaker 2: is relatively under text bomb Downey got into a little

501
00:28:07,520 --> 00:28:09,640
Speaker 2: bit of trouble because I think somewhere on his website

502
00:28:09,680 --> 00:28:12,359
Speaker 2: at one point it said something about historically white neighborhoods

503
00:28:12,400 --> 00:28:14,440
Speaker 2: and people like, oh, he wants to tax white people more.

504
00:28:14,760 --> 00:28:17,240
Speaker 2: It happens to be true, however, that a lot of

505
00:28:17,280 --> 00:28:21,520
Speaker 2: the neighborhoods that benefit from this structure do happen to

506
00:28:21,560 --> 00:28:23,560
Speaker 2: be more white. But what is the origin of why

507
00:28:23,640 --> 00:28:27,959
Speaker 2: certain neighborhoods are under tax given their sort of like

508
00:28:28,119 --> 00:28:29,280
Speaker 2: you know, their economic baise.

509
00:28:29,680 --> 00:28:34,359
Speaker 4: So I this the current property tax regime was crafted

510
00:28:34,600 --> 00:28:38,080
Speaker 4: in the early nineteen eighties as a result of court case,

511
00:28:38,680 --> 00:28:43,120
Speaker 4: and it instituted caps on the amount that assessments can increase.

512
00:28:43,480 --> 00:28:47,480
Speaker 2: Okay, and these places have seen their assessment surge.

513
00:28:47,240 --> 00:28:50,160
Speaker 4: As a result. Yeah. So like Canarsi in nineteen eighty

514
00:28:50,160 --> 00:28:54,520
Speaker 4: two was maybe a comparable income you know, middle income,

515
00:28:54,680 --> 00:28:57,320
Speaker 4: lower middle income area that as it is now, whereas

516
00:28:57,320 --> 00:29:01,040
Speaker 4: Park Slope was a much less swell off area that

517
00:29:01,200 --> 00:29:03,720
Speaker 4: is now. And if the property values in places like

518
00:29:03,720 --> 00:29:06,600
Speaker 4: Park Slope and Williamsburg and to some degree a place

519
00:29:06,680 --> 00:29:10,920
Speaker 4: like brook Brooklyn Heights have skyrocketed, but the tax burden

520
00:29:10,960 --> 00:29:12,520
Speaker 4: on those properties have not. That's gone up.

521
00:29:12,520 --> 00:29:16,120
Speaker 3: Commence certainly with your real estate hat on who's going

522
00:29:16,200 --> 00:29:16,600
Speaker 3: to win.

523
00:29:16,960 --> 00:29:19,760
Speaker 4: Mom, nanny? I think it's I think these these efforts

524
00:29:19,800 --> 00:29:24,120
Speaker 4: to draft another candidate or or you know, reboot the

525
00:29:24,520 --> 00:29:28,360
Speaker 4: Cuomo campaign are totally doomed. And the realist industry, I

526
00:29:28,400 --> 00:29:33,080
Speaker 4: think is is really internally is very split over.

527
00:29:32,960 --> 00:29:33,400
Speaker 3: What to do.

528
00:29:33,840 --> 00:29:36,120
Speaker 4: And you know, some are going to back mayor Adams,

529
00:29:36,360 --> 00:29:38,840
Speaker 4: some are going to back Cuomo, some are trying to

530
00:29:38,840 --> 00:29:40,800
Speaker 4: craft your peace with Mandannie, and some of them are

531
00:29:40,840 --> 00:29:41,840
Speaker 4: just going to stay out.

532
00:29:42,160 --> 00:29:44,160
Speaker 2: Ben type and thank you so much for coming back

533
00:29:44,200 --> 00:29:48,080
Speaker 2: on odd lots. Always love getting your your level headed

534
00:29:48,120 --> 00:29:50,400
Speaker 2: perspective on what's happening in rcity.

535
00:29:51,000 --> 00:29:52,440
Speaker 3: Thank you so much, Ben, my pleasure.

536
00:30:07,040 --> 00:30:09,200
Speaker 2: I always really liked talking to Ben. I had not

537
00:30:09,440 --> 00:30:11,840
Speaker 2: realized this sort of I mean, there was a lot

538
00:30:11,880 --> 00:30:15,360
Speaker 2: there that was interesting. That's sort of that source of

539
00:30:15,400 --> 00:30:18,560
Speaker 2: the disparity in property taxes. It makes a lot of

540
00:30:18,600 --> 00:30:21,440
Speaker 2: sense that if you just can't raise property taxes at

541
00:30:21,440 --> 00:30:26,000
Speaker 2: a certain clip, how you know, relatively undertext, any sort

542
00:30:26,040 --> 00:30:30,520
Speaker 2: of booming neighborhood such as Williamsburg will inevitably end up.

543
00:30:30,400 --> 00:30:32,840
Speaker 3: Being Yeah, that seems like a problem, given that like

544
00:30:33,080 --> 00:30:35,680
Speaker 3: a big chunk of the recent story of New York

545
00:30:35,720 --> 00:30:40,480
Speaker 3: City is gentrification, and all these neighborhoods where like a

546
00:30:40,520 --> 00:30:42,960
Speaker 3: warehouse that used to cost I don't know, one hundred

547
00:30:43,040 --> 00:30:46,240
Speaker 3: thousand in the eighties now costs like ten millions, yeah

548
00:30:46,280 --> 00:30:49,320
Speaker 3: or whatever. The other thing I thought was really interesting.

549
00:30:50,080 --> 00:30:53,360
Speaker 3: It's sort of hammered home that point that we discussed previously.

550
00:30:53,440 --> 00:30:56,920
Speaker 3: But the idea of the competitive advantage for large tandlords

551
00:30:57,040 --> 00:31:00,360
Speaker 3: basically being they can network in city hall, they can

552
00:31:00,680 --> 00:31:03,320
Speaker 3: presumably do the paperwork and all of that stuff, and

553
00:31:03,400 --> 00:31:08,920
Speaker 3: so if an administration comes in that jeopardizes that particular advantage,

554
00:31:09,200 --> 00:31:10,760
Speaker 3: then they're not going to like it.

555
00:31:10,960 --> 00:31:15,960
Speaker 2: Right, Like, maybe the rules for development will be more stringent, Yeah,

556
00:31:16,000 --> 00:31:18,240
Speaker 2: but if they're just sort of uniform where it's like okay,

557
00:31:18,440 --> 00:31:19,920
Speaker 2: and I don't know how it could ever be in

558
00:31:19,920 --> 00:31:21,360
Speaker 2: real estate, but let's just say, you know, in the

559
00:31:21,440 --> 00:31:24,800
Speaker 2: sort of abstracts and you check these four boxes and

560
00:31:24,880 --> 00:31:30,160
Speaker 2: you are approved to build a new development. Then intuitively, yeah,

561
00:31:30,440 --> 00:31:35,000
Speaker 2: that would sort of undermine the relative advantage enjoyed by

562
00:31:35,360 --> 00:31:38,760
Speaker 2: a big, powerful entity that sort of knows the system,

563
00:31:38,840 --> 00:31:39,400
Speaker 2: so to speak.

564
00:31:39,480 --> 00:31:41,760
Speaker 3: On the other hand, of course, maybe there are smaller

565
00:31:41,840 --> 00:31:45,240
Speaker 3: property developers who really like the idea of a streamlined

566
00:31:45,360 --> 00:31:49,760
Speaker 3: process doing away with things like the parking requirement, yeah,

567
00:31:49,760 --> 00:31:52,360
Speaker 3: and stuff like that. Dual staircases versus single I.

568
00:31:52,320 --> 00:31:55,760
Speaker 2: Don't know, and I do think like you can't, you know,

569
00:31:56,040 --> 00:32:00,840
Speaker 2: if you're anxious about what Mamdani administration is going to

570
00:32:00,920 --> 00:32:06,480
Speaker 2: bring you, you can't really simultaneously argue that it's going

571
00:32:06,520 --> 00:32:10,480
Speaker 2: to stifle development and rents. Right If development gets stifled,

572
00:32:10,480 --> 00:32:13,920
Speaker 2: then the market rents go up. Yeah, and if you know,

573
00:32:14,000 --> 00:32:16,440
Speaker 2: and so there will be this balancing effect, you know.

574
00:32:16,480 --> 00:32:19,440
Speaker 2: Obviously there are the landlords who are deeply exposed to

575
00:32:19,480 --> 00:32:23,240
Speaker 2: the rent stabilized market. We've talked about them before, but

576
00:32:23,280 --> 00:32:25,840
Speaker 2: they're hurting right now as it is. I also do

577
00:32:25,960 --> 00:32:28,200
Speaker 2: think at some point maybe we should talk about the

578
00:32:28,240 --> 00:32:31,160
Speaker 2: prospect of a Supreme Court case in the next couple

579
00:32:31,160 --> 00:32:36,240
Speaker 2: of years that eliminates rent stabilization or rent regulation period possibly.

580
00:32:36,240 --> 00:32:38,640
Speaker 2: You know, I mentioned the sort of cynical possibility of

581
00:32:38,720 --> 00:32:41,680
Speaker 2: Mamdani being an accelerant that gets that case in front

582
00:32:41,680 --> 00:32:44,000
Speaker 2: of the Supreme Court at some point could have big implications.

583
00:32:44,360 --> 00:32:47,080
Speaker 3: This entire conversation has reminded me that I need to

584
00:32:47,440 --> 00:32:50,200
Speaker 3: call my super and get something fixed in my apartment.

585
00:32:50,320 --> 00:32:51,200
Speaker 4: So this was useful.

586
00:32:51,280 --> 00:32:53,440
Speaker 2: This is what I miss about Vina Renter is I

587
00:32:53,440 --> 00:32:55,920
Speaker 2: don't have someone that I could call as easily. There

588
00:32:55,960 --> 00:32:58,800
Speaker 2: are some entergy, there are some advantages to being a renter,

589
00:32:58,880 --> 00:33:01,280
Speaker 2: you know. All right, leave it there, Let's leave it there.

590
00:33:01,480 --> 00:33:03,800
Speaker 3: This has been another episode of the aud Lots podcast.

591
00:33:03,920 --> 00:33:06,800
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.

592
00:33:06,960 --> 00:33:08,360
Speaker 2: Actually I do have a super. I just have to

593
00:33:08,360 --> 00:33:10,400
Speaker 2: pay him now for it where it used to be

594
00:33:10,520 --> 00:33:13,640
Speaker 2: all these various repairs and stuff. The burden fell on

595
00:33:14,080 --> 00:33:15,240
Speaker 2: my landlord before.

596
00:33:15,320 --> 00:33:18,280
Speaker 3: Now the burden that's not too bad because like the

597
00:33:18,600 --> 00:33:22,200
Speaker 3: big problem with supers, I feel is just availability or Yeah,

598
00:33:22,200 --> 00:33:24,960
Speaker 3: the problem with getting something fixed is finding someone and

599
00:33:25,000 --> 00:33:25,800
Speaker 3: getting them in.

600
00:33:26,160 --> 00:33:28,520
Speaker 2: Anyway, every time something breaks, I have to pay for

601
00:33:28,560 --> 00:33:30,320
Speaker 2: it now. They don't tell you that when you become

602
00:33:30,360 --> 00:33:30,840
Speaker 2: a howner.

603
00:33:31,280 --> 00:33:32,400
Speaker 3: Pretty sure they do.

604
00:33:32,760 --> 00:33:35,560
Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart.

605
00:33:35,760 --> 00:33:38,959
Speaker 2: Follow our guest Ben Carlos Tipan, He's at soa Bendito.

606
00:33:39,200 --> 00:33:42,320
Speaker 2: Follow our producers Carmen Rodriguez at Carman Erman dash O

607
00:33:42,360 --> 00:33:45,719
Speaker 2: Bennett at Dashbot and kel Brooks at Kelbrooks. For more

608
00:33:45,760 --> 00:33:48,600
Speaker 2: odd Laws content, go to Bloomberg dot com slash odd Lots.

609
00:33:48,640 --> 00:33:51,000
Speaker 2: We have the daily newsletter and all of our episodes,

610
00:33:51,200 --> 00:33:53,160
Speaker 2: and you can chet about these topics twenty four seven

611
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Speaker 2: in our discord discord dot gg slash outlines.

612
00:33:56,800 --> 00:33:59,120
Speaker 3: And if you enjoy Odd Lots, if you like it

613
00:33:59,160 --> 00:34:01,719
Speaker 3: when we talk about New York City housing policy, then

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00:34:01,800 --> 00:34:05,160
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615
00:34:05,480 --> 00:34:08,359
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