The “City of Yes” debate continues. New York’s City Council amended and approved the first two sections of Mayor Adams’ (and Big Real Estate’s) three-part City of Yes planning and zoning overhaul (COY). Public review of the final section, “The City of Yes for Housing Opportunity” (COYHO), is under way. It’s the most controversial—and consequential—part of the proposal. 

The 1,386 pages of changes proposed for COYHO include many points, good and bad. New York’s Planning Commission and Big Real Estate say COYHO will create more housing for all. However, many of the revisions make it easier for developers to build highly profitable luxury apartment towers. If the City Council approves all the changes, many neighborhoods will become more expensive. For Manhattan in particular, COYHO is a neoliberal vision in which the rich get richer and the poor get evicted.

The Rise of the Real Estate State

The three most important factors for evaluating real estate are, famously, location, location, and location. Market determinants in Manhattan, Kansas, are significantly different than on Manhattan Island. The most profitable buildings in the history of New York are the super-luxury, supertall apartment towers marketed to the global rich as a new asset investment class. Saying yes to more of these “safe-deposit vaults in the sky” is one of the driving forces behind the City of Yes.

Industry used to be an important source of wages and taxes in New York. Manufacturers wanted inexpensive land for factories and low-cost housing for their workers. Since the decline of industry and the near bankruptcy of the city half a century ago, however, New York has increasingly looked to property taxes to fund the annual budget. In 2019, property taxes supplied 49% of the city’s tax revenues, more than twice as much of the total as the second-largest source, income taxes. That gives immense power and influence to Big Real Estate.

Big Real Estate roughly comprises the 10 to 15 companies and families that own and build New York’s biggest buildings and developments. You might call them the “Anti-Industrial Real Estate Complex,” because they don’t want low-cost land for housing and manufacturing. They want to buy low and sell high, converting the factory and shipping sites on the harbor into prime waterfront sites for high-end housing. The profits have contributed to making them the most powerful group of political donors in what planner Sam Stein calls “the Real Estate State.” You can see what they build on Billionaires’ Row, at Hudson Yards, and in the new supertall towers around Grand Central Terminal. Those unpopular buildings and places are the poster children for COY.

A New New York?

COY began in 2022 as a set of proposals for a “New New York” written by a public-private partnership led by a Who’s Who of the city’s power players in business, finance, real estate, and politics. At the top was one of the most important figures in creating Hudson Yards and Billionaires’ Row, Dan Doctoroff. One of the supertall residential towers on Billionaires’ Row was the most profitable building in the history of New York. Making it easier to build more super-luxury supertalls was one of the panel’s top goals.

In the 1990s, Mayor Rudolph Giuliani’s planning commissioner, Joseph Rose, proposed a thorough zoning revision that would have prevented supertall residential towers. Rose is a third-generation member of one of New York’s successful development families, and he spent years trying to sell the plan to his friends and colleagues in Big Real Estate. In his telling, when he finally put the plan on Giuliani’s desk, a phone call from some of the biggest developers killed the plan within half an hour.

When Mayor Michael Bloomberg came into office, some thought the influence of Big Real Estate might decrease. Mayor Mike was one of the richest people in New York, able to self-fund his political campaigns. He didn’t need donations from Big Real Estate, but his post-Reagan, neoliberal politics meant he supported public-private partnerships between the city and the largest, richest businesses. Bloomberg commissioned a study by McKinsey & Company that recommended that New York become an expensive luxury brand.

Bloomberg’s second-in-command, Deputy Mayor Doctoroff, reorganized all the city departments involved in planning, housing, development, and economic development into a group that worked together, all reporting to him. The old economic development emphasis on building low-income housing and working in poor neighborhoods changed to supporting and subsidizing large-scale expensive projects by the richest developers. That was how Atlantic Yards, Hudson Yards, Billionaires’ Row, and all the new high-end towers next to the Highline and new riverfront parks came to be. Doctoroff was later the co-chair of the New New York panel.

Mayor Bill de Blasio had high hopes for creating new affordable housing. Soon after taking office, however, he had a lunch with the Real Estate Board of New York (aka REBNY, Big Real Estate’s mouthpiece), at which he announced a deal that the city and Big Real Estate would work together, building apartment towers as tall as necessary to get more housing.

Unaffordable Housing

REBNY and other advocates for COY frequently argue that more housing of any kind will “trickle down” into more affordable housing for all, but that has not been true in New York. Predictions by the New York City Planning Commission and the City’s Economic Development Corporation about the benefits of their upzonings are notoriously unreliable. A massive rezoning along the river in Long Island City created over 30,000 expensive new apartments. New apartments are good, and needed. However, the new units displaced residents in low-rent apartments: despite inclusionary housing regulations, the average two-bedroom rent in the neighborhood went from $3,400 a month to $5,300. Median household income almost doubled, going from $52,000 to $97,000. Not surprisingly, diversity in Long Island City decreased. A large upzoning in SoHo and NoHo that benefits a few deep-pocket developers who have warehoused sites will have a similar effect on SoHo, NoHo, and Chinatown. 

The more than 20-year history of Atlantic Yards (now called Pacific Park) in Brooklyn has been a story of broken promises made to the public by the developers and New York State’s economic development office, Empire State Development. The original developer, Forest City Ratner, agreed to give local residents in the surrounding neighborhoods preference for the affordable apartments in the 22-acre development, but only a little more than half of the affordable units have been built, and most of those are the more expensive ones. Three-quarters of the units built are for the upper-income tenants in the program, which is based on New York’s high Area Median Income (AMI). Only 3% of the apartments built at Atlantic Yards have gone to lower earning tenants.  

The rest of the affordable apartments were supposed to go on top of an expensive deck over the railyards. There are no plans to build that deck, however. An out-of-court settlement with the group BrooklynSpeaks extended the completion date for the deck and the apartments by 15 years, until 2025, but the first two developers moved on without starting construction or leaving any funds for the deck’s construction. Although the settlement set financial penalties for failure to meet obligations for affordable housing, it appears that the Empire State Development will not apply them. 

To further complicate matters, Forest City Ratner no longer exists, and the second developer—the American arm of a Chinese development company partly owned by the Shanghai government—is largely gone, too. This summer the parent company defaulted on a $432 million bond; significant parts of the development are facing foreclosure. In the meantime, the percentage of African Americans living in the districts that have preferred rights for the affordable units is approximately half what it was when the Atlantic Yards began construction.

Over the years, following Big Real Estate’s plans resulted in a net loss of hundreds of thousands of rent-regulated apartments. The hugely-profitable 932-foot supertall on Billionaires’ Row replaced a 20-story rental building with roughly the same number of apartments, a third of which were rent-stabilized. One apartment in the new building sold for $238 million as a pied-a-terre for a Chicago billionaire. How’s that supposed to “trickle down” to affordable housing? Thinking it will is like believing that quadrupling the supply of Lamborghinis while simultaneously decreasing the number of inexpensive used cars will somehow lower car prices for all. Reaganomics promised trickle-down income, but in fact it shrank the middle class and transferred $50 trillion up to the 1%, contributing to the ever-growing income inequality in America and New York City.

We Deserve Better

We have a housing crisis across the country and the continent. Every city that has a strong market for expensive houses has a shortage of low-cost housing and an epidemic of homelessness. Cities like New York and Vancouver that attract buyers and investors from around the globe are especially unaffordable. “Buy land, they’re not making it anymore,” Mark Twain once said. That is not true in Dallas or Phoenix, cities that sprawl out into new single-family subdivisions on cheap sites in the desert. But the global rich want to be in Manhattan.

Big Real Estate’s response is to build higher and higher in the most expensive neighborhoods. That is good for selling apartments to Russian oligarchs, but it causes problems for the rest of us. The taller a tower is, for example, the more it costs to build per square foot. The towers make the land expensive, too. That’s doubly bad if the goal is to lower housing costs. 

The City of Yes says “yes” to luxury buildings. As currently written, COYHO will produce bigger, taller, more-expensive towers in Manhattan’s most-expensive neighborhoods. Developers will build those when they think the market is right. Many of the changes proposed for low-cost housing will never materialize, on the other hand, because those buildings won’t be profitable (or profitable enough). 

New Yorkers deserve better. We have the right to ask for a better, more livable city, affordable for all. In the second part of this essay, “I’m a New Yorker, Not a NIMBY,” we’ll look at what that means for the city and its residents, as well as discuss solutions not considered in changes proposed for the City of Yes.

Featured image of Hudson Yards via Wikimedia Commons.