Public Policy In Action In Progressive New York

Feb 23, 2019 by

You may think that California —solidly in the grip of progressive deep thinkers — has to be the craziest state out there. I mean, what could be more loony than thinking you can “save the planet” from carbon emissions by building a high-speed rail project from San Francisco to LA, spending $5.4 billion on the project, and then canceling it?

Well, here in New York we think we can give those West Coast nutcases a good run for their money. I’ll give you a few data points, and then let you decide.

First up, we have the doings in the state legislature. As you may know, in the recent elections the Democrats finally got full control of the State Senate (after some decades during which Republicans had held onto a tenuous one or two seat grip on power through a variety of stratagems and machinations). Now the progressives can finally do the things they have been blocked from doing for all those long years in the wilderness. That is, unless reality gets in the way of their progressive fantasies.

So what do they have in mind? A Wall Street Journal article on February 19 (probably behind pay wall) gives the top priorities: “rais[ing] taxes and increas[ing] spending on education . . . .” But unfortunately, at least on the tax side, the recent imposition by the feds of limitations on deductibility of state and local income taxes is causing some severe constraints:

[Governor Andrew] Cuomo, a Democrat, announced this month that the state’s estimated income tax payments around the turn of the calendar year were $2.3 billion behind projections—a result of poor performance in the stock market and, the governor said, the migration of wealthy New Yorkers in response to the 2017 federal tax law. [The $2.3 billion projected shortfall has since increased to $2.6 billion.]. The higher [$2.6 billion] figure includes an additional shortfall in tax withholdings.

Cuomo actually is resisting calls for raising income taxes on high earners, on the ground that the state has already reached about the practical limit. And how about the plan to raise spending on K-12 education? Education advocates have been putting on a big push for more spending. No surprise there. But has anybody looked over at our peer state of Florida, which has recently surpassed us in population to become the third most populous state? Their state budget is about half ours, and they have no income tax. On the K-12 education front, they spend about $9000 per student per year (2016 figures) compared to over $22,000 in New York. Surely for all that money, New York must dramatically outperform? Actually, on the most recent NAEP (2017 data) Florida students got an average score of 246, compared to an average score of 236 in New York. (The national average was 239, with all states clustering between 230 and 250.)

How about on the energy front? Cuomo has spent his first two terms burnishing his green credentials. Aside from declaring that we’ll go “all renewable” at some fairy tale time in the future (not happening), he has also banned fracking in the portion of the Marcellus shale that is in New York (even as Pennsylvanians get rich just on the other side of the border), and has used supposed “water quality” concerns to block pipelines that would take the Pennsylvania gas across the Hudson River to population centers like Westchester County. Then, earlier this month, Con Edison (local utility) announced that it could no longer take new gas customers in Westchester due to inadequate supplies. Oops! Newly-elected Democrat County Executive George Latimer is not amused, but he hasn’t yet figured out what to do. From Patch, February 4:

County Executive George Latimer call[ed] the moratorium [on new natural gas hookups] “a serious move that will impact development in the county, particularly in our major cities where development has been very much part of their economic revival efforts.” He said the goal is to bring all local governments together and plan how to respond to the move.

How about pushing to get the pipelines built, George?

And finally, one of my favorite examples of the tooth fairy economics that permeates New York progressivism is the still-ongoing saga of P.S. 64 in the East Village neighborhood of Manhattan. This one is a local story, rather than one of state government. Our local newspaper The Villager has a big write-up in its February 8 edition.

Here’s the background: During the bad times of the 1970s through early 90s, the easternmost part of Manhattan south of 14th Street, sometimes called “Alphabet City” (because its Avenues have letters — A, B, C, and D — instead of numbers), suffered substantial loss of population and abandonment of buildings. Several schools were largely unused. One of those was P.S. 64 (on 9th Street between Avenues B and C). Some of the P.S. 64 building had been turned over to a “community and arts facility” known as CHARAS/El Bohio, and the rest was largely vacant. In 1998, the City administration, then under Mayor Rudy Giuliani, decided to auction off the building to the highest bidder. The CHARAS/El Bohio people, and other supporters in the “community,” protested vociferously, but to no avail. The auction went forward, and the winning bidder was a guy named Gregg Singer. He paid about $3 million.

Singer has spent the past 20 years trying to develop the site. His opponents have used every device at their disposal to stymie him. This being New York City, there is an endless list of such devices — zoning issues, environmental issues, landmarking schemes, claims of “nuisance,” you name it. Twenty years later, the opponents have succeeded in totally preventing anything from getting built. The building has sat there deteriorating for the whole 20 years. Today, it is not just an eyesore, but according to claims of neighborhood activists, it is actually dangerous. The Villager quotes the local City Councilmember, Carlina Rivera:

“This is a blight on the city and the Lower East Side,” declared East Village Councilmember Carlina Rivera at a rally Thursday outside the crumbling, turn-of-the century landmark. The building has stood empty and in disrepair for the last 20 years due to the city’s protracted stalemate with the owner, Gregg Singer, who has been seeking to convert it to a multi-school dormitory. . . . “At this point, it’s not just an eyesore, it’s a danger to our community,” said Rivera, pointing to the more than 30 open violations for everything from unsafe scaffolding to cracks in the facade and masonry.

So what now? Rivera and her supporters have just the answer: the City should take back the building using eminent domain, and the give it back to the CHARAS/El Bohio people (assuming they are still around after all these years):

Rivera and the area’s other elected officials are now using the building’s deteriorating conditions as leverage to pressure de Blasio to restore it as a community and arts facility along the lines of CHARAS/El Bohio, the Puerto Rican-run center that occupied the building before former Mayor Rudy Giuliani sold it to Singer at auction in 1998.

But here’s the problem: In the intervening 20 years, the East Village reversed its decline, and became a desirable neighborhood again. How much would this building be worth today? It’s about 152,000 square feet. According to the Villager, Singer asserts it is worth around $250 million. That may be somewhat high, but the truth is that you can’t buy anything in Manhattan today for less than $1000 per square foot. So the value is probably somewhere in the range of $150 – 250 million. So yes, the idea is that the City should spend somewhere around $200 million to acquire this building, and then undoubtedly many tens of millions more to rehabilitate it, to then turn it over to a “community and arts” group that probably has never had more than a few hundred thousand dollars of revenue in its best year.

As an alternative, the City could just overrule the activists and let the building go to its highest and best use, which would probably be new condos. A new building on the site would easily generate several million dollars per year of real estate tax revenue for the City. Any other city in the country would be thrilled with its good fortune if someone were willing to build such a valuable tax-paying building in a part of their town that was only recently considered a bad area. But hey, this is New York, where we stand united against “corporate greed, worker exploitation, and the power of the rich.”

Source: Public Policy In Action In Progressive New York — Manhattan Contrarian

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