In response to Mayor Adams’ sweeping City of Yes plan, housing policy advocates have started countering with their own well-intentioned proposals. The City for All plan, recently released by City Council Speaker Adrienne Adams and Housing and Buildings Committee Chair Pierina Sanchez, is one example. It’s full of good suggestions for increasing the housing supply and deepening affordability. But when you read through it, there’s a litany of familiar refrains, all of which come with the same dubious caveat: 

• “Significantly Increase Funding in HPD 5-Year Capital Plan”

• “Increase Funding and Support to Strengthen CLTs”

• “Double Funding for HPD HomeFirst Down Payment Assistance Program”

• “Expand Funding for HPD HomeFix”

• “Increase Affordable Homeownership Production”

• “Commit Significant Capital Funding for DEP Infrastructure, Open Space and

Street Upgrades”

• “Significantly Increase Capital Funding for NYCHA Section 9 Units”

• “Increase Funding for HPD Preservation”

• “Significantly Increase Funding for Mitchell-Lamas Preservation”

The proposal has a number of excellent ideas that most progressive housing advocates will embrace. But we all know that the “significantly increased funding” it relies on is not going to materialize. 

In the end, housing is a capital funding problem. We can either pay everyone enough money to compete in the private market, or we can subsidize housing for those who cannot pay private market prices. Since we don’t do either, we should not be surprised that we have a housing crisis. 

One consequence of the Trump election is that most of the socially responsible policies that progressives value will no longer be supported by the federal government and may even be undone, either by malice or neglect. It will fall to states and cities where there are progressive administrations to defend these policies. Not least of these is the struggle to provide affordable housing for the working population. In this respect, we may not notice much change since the federal government has consistently neglected this issue since the demise of the public housing program in the 1960s. The limited support for housing that we currently have, like the Low Income Housing Tax Credit, may well continue since it has the backing of capitalist interests who reap the tax benefit. 

But for housing policy advocates who have seen how these policies are inadequate to generate the housing production that we need, the prospect is bleak. Any hope that the federal government might re-enter the battle to increase housing supply by actually funding production is probably dashed by the election.

So, if it all falls on states and cities, what can they do?

One idea whose hour may have come is the New York State Stock Transfer Tax (STT). This is not a new tax, but an excise imposed on sales of stock that was passed by the State Legislature in 1905. Stock sales pay a 0.5 cent tax per dollar to the state. Every stock sale at more than $20 per share pays 5 cents to the state. This would, if imposed today, generate something like $14 billion per year in additional revenue. The problem is that, in 1981, the state initiated a process of collecting the tax but then rebating it back to the Wall Street firms that paid it! I am at a loss to explain this incomprehensible and irresponsible action by the state. One can only imagine the lobbying and influence-peddling that went into it.

The State Assembly must be well aware that the trend we can expect in the Trump administration is reduced funding for New York… So perhaps the time is ripe to revisit the Stock Transfer Tax. 

 

But hope is on the horizon, in the form of a group of experts put together by New York State Assemblymember Phil Steck (District 110) that concluded that the state should reverse its 1981 decision and resume collection of the STT. Steck and State Senator James Sanders, Jr. have introduced legislation to require the state to keep the proceeds from this tax (A3353/S1406). It has stalled so far because of a lack of support by Assembly Speaker Heastie. It might be time to get it back on the legislative agenda. The State Assembly must be well aware that the trend we can expect in the Trump administration is reduced funding for New York (especially if we continue to be a “sanctuary” city and provide access to abortion). And that corporate profits will continue to rise due to generous tax cuts. So perhaps the time is ripe to revisit the STT. 

What could we do with $14-billion a year? Wow.

Hard construction costs for residential construction in New York run between $400/SF and $1,000/SF (the latter for “luxury” high-rise residential). Apartment sizes average around 1,000 SF: a one-bedroom might be around 550 SF; a two-bedroom, 750 SF; and a three-bedroom, 1,200 SF. So assuming a mix of one-, two-, and three-bedroom units, plus an allowance for common spaces like lobbies, I am using an average of 1,000 SF.

So, at an average of 1,000 SF at $500/SF, each new apartment will cost, on average, $500,000 to build. This is probably a reasonable number if housing is done in volume, in which case prices would be lower. My go-to house developer, Les Bluestone of Blue Sea Development LLC, who has built thousands of affordable apartments in New York City, tells me that my number is low and should be closer to $600,000. But maybe outside NYC, the costs could be lower. But I use $500,000 for simplicity.

If all of the $14 billion were allocated to house production, we could fund the construction of 28,000 new apartments per year! But this is unrealistic. Even during its peak production years, the NYCHA did not achieve this volume of production—and that was when open land was available for construction. And it’s unlikely that the entire $14 billion would be allocated to housing, given the many other demands on the budget. Phil Steck’s bill allocates the STT money across a variety of public programs, with only 10% going to housing. Just half of the annual STT revenue would build 14,000 units per year. And this assumes covering the entire construction cost; if the STT revenue were spread across many projects as a subsidy in mixed-income projects to create affordability, many more affordable apartments could be created. If that 10% of STT was applied to subsidize apartments to bring the cost within the range of families earning 50% of Area Median Income, it could generate many more affordable apartments.

A major obstacle to reinstating the STT is that other, no doubt well-meaning, legislators are backing a plan by a lobbyist organization, Invest in Our New York (IONY), which proposes five bills that “tax the rich” in a variety of ways, none of which seem to be gaining traction in the legislature. The IONY proposals are drawing attention away from the STT bill. There is also the old worry that Wall Street will leave New York if the STT is reinstated—an argument that goes back to 1905, when the tax was first introduced, but has never happened. It’s hard to imagine Wall Street moving because of a half-penny tax per dollar capped at $300 for large transactions. Wall Street does not pay the tax. Investors do, and most investors do not even live in New York.

So, the time has come to reinstate the STT tax. Collect it and keep it; don’t give it back to the traders who pay it. That way, we might have a chance to house the working families that we need to keep our city and state running, at a time when the federal government is not coming to help.

Featured image via the Community Service Society of New York.