WHATEVER THE PROBLEM, THE SOLUTION IS LUXURY DEVELOPMENT: NEW YORK CITY'S 21ST CENTURY PLANNING PARADIGM

May 28, 2019

Photo by Field Condition


New York boosters sometimes call their city “the real estate capital of the world.”  By 2016 its buildings and land were worth over $1 trillion, representing a hike of more than 10 percent over the previous year. The real estate sector is the largest contributor to the New York metropolitan gross domestic product, one of the city’s major employers and by far the largest donor to political campaigns. Between 2000 and 2016, real estate interests gave over $83 million to the state politicians who control New York City’s rent and tax laws. The city’s campaign finance laws are stricter, but still contain loopholes that allow real estate fronts like “Jobs for New York” in 2013 and “Progress Now New York” in 2017 to donate millions. Both Republican and Democratic politicians depend on the real estate industry to maintain their governing and electoral coalitions, even if large segments of their constituencies suffer at its expense.

 

In the twenty-first century, New York has been led by two mayors who, in many ways, could not be more different. Michael Bloomberg was famous for being rich; he espoused classic neoliberal policies, with an emphasis on trickle-down economics and streamlined governance. Bill de Blasio, on the other hand, seeks to be known as the country’s most progressive mayor; he presents every policy as a tool to reduce economic inequality and challenge long-standing inequities.

 

Bloomberg was elected as a Republican before becoming an independent, and managed to govern the city from 2002 through 2013 thanks to a successful bid to allow himself a third term. As Julian Brash discusses in his book, Bloomberg’s New York, Bloomberg’s rise was propelled by the growth of the city’s “transnational capitalist” and “professional managerial” classes, and he spoke in their voice as an advocate for streamlined governance. Under his watch the city was managed as a “luxury product” to be sold, triggering an explosion of mega-developments and public-private partnerships.

 

Democrat Bill de Blasio, who took office in 2014 and was reelected in 2017, presents himself as Bloomberg’s opposite: a progressive populist who fights inequality and stands up for working class people of color. While he has pursued many policies that would have been anathema to Bloomberg, like paid sick leave and a higher minimum wage, he has also continued Bloomberg’s push to stimulate real estate development and raise land and property values through rezonings.

The story of New York in the early twenty-first century is one of continuity despite change. Conservative Michael Bloomberg and liberal Bill de Blasio are very different mayors, with divergent styles, priorities and coalitions. But no matter how different they may be, and no matter how divergent their paths to city hall and the visions they have charted, a few constants remain. Most importantly, they both subscribed to the same neoliberal, market-driven planning paradigm: whatever the problem, the solution is luxury development.

 

Housing is too expensive? Both Bloomberg and de Blasio claimed that their massive upzonings would provide affordable housing to New Yorkers and solve the perpetual housing crisis. The only catch was that all the new affordable apartments would be accompanied by dramatic increases in luxury apartments. As those skyscrapers rose, rents rose alongside them. Tellingly, so did vacancies: between 2014 and 2017, 69,000 new units of housing were built in New York City; during the same period, 63,000 additional apartments went vacant. Almost all of the growth in housing was eaten by emptiness—either incidentally, as in the rare cases of apartments that simply will not rent or sell, or intentionally, as in the far more common cases of Airbnbs, pied-à-terres and pure investment vehicles.

 

Worried about jobs?  A great many New Yorkers’ jobs are closely connected with the ebb and flow of real estate investment, whether they are employed in construction, renovation, demolition, maintenance, security, cleaning, hospitality, sales or finance. This means that mayors sell every development as a jobs program. Bloomberg and de Blasio successfully recruited strong backing from organized labor, which publicly celebrated their plans in return for promises of contracts and jobs. This support came less from building trades unions—classic members of the “urban growth machine”—than the more politically savvy service and municipal unions (such as the Service Employees International Union, the Hotel Trades Council, and the American Federation of State, County and Municipal Employees).

 

Insufficient transportation? Since the Rapid Transit Act of 1894, the city’s pursuit of better transit has always triggered speculation. In recent years, however, the linkage has become more explicit. In the city’s first subway extension in twenty-six years, Bloomberg convinced the Metropolitan Transit Authority to extend the 7 line to his Hudson Yards development, and to pay for it floated bonds based on the increased tax revenue from rising nearby property values. One of De Blasio’s main transportation initiatives, a streetcar that would snake along the Brooklyn-Queens waterfront, uses the same funding trick. The plan only works if the already transformed waterfront undergoes an even more severe gentrification.

 

Need new parks? Many of the city’s newest parks are closely tied to real estate schemes. Brooklyn Bridge Park is financed through the conversion of nearby piers and warehouses into luxury housing. The celebrated High Line is funded by a private conservancy, which in turn is funded by donations from developers and property owners along the route. This is not a totally new phenomenon; Central Park was also financed through a tax on increased property values along its borders. But the model is back with a vengeance, and new park spaces are increasingly treated as amenities for luxury development.

 

The land is polluted? When and how the city’s toxic sites are remediated has everything to do with real estate values. Under Bloomberg and de Blasio, New York City’s municipal brownfield program allocates its funds like a capitalist firm: based on the expectation of a return on investment. Remediation thus occurs as a first step toward luxury development. In places like Staten Island’s North Shore, for example, local residents are caught in a quandary: their land is polluted and it’s hurting them every day; the only plan on offer, however, links cleanup to large-scale luxury development, which threatens to displace them.

 

Schools are struggling? New York City public schools are a mixed bag: some offer challenging curricula and encourage intellectual independence, while others subordinate learning to militaristic discipline. Both Bloomberg and de Blasio made education reform a priority, and both linked public school success to the problem of racial and economic segregation. Their gentrification plans became means to diversify public schools and maximize “neighborhood effects”: new luxury development in poor neighborhoods are supposed to bring about “equity and opportunity” for all students. This does not always work out, since there are numerous ways for wealthier parents in gentrifying neighborhoods to steer their children out of their traditional neighborhood school: charters, magnets, private schools and even fraud are all common tactics. Working class kids are then stuck in segregated schools while their parents’ rents rise.

 

Neighborhoods are segregated? A cursory look at the data on racial change in New York City shows that during the Bloomberg era, upzoned neighborhoods became more racially diverse. De Blasio amplified Bloomberg’s zoning policies, so the same results should be expected. The key to understanding this data, however, is that most of this change was accomplished by building expensive housing in historically Black, Latino and Asian neighborhoods. While these administrations argued that they were undoing redlining and ghettoization, it was a one-way integration process, and it went the wrong way: displacing people of color from areas where they had built power, rather than integrating segregated White neighborhoods.

 

Want to preserve African burial grounds? In perhaps the most absurd variation on this theme, New York City is proposing mixed-use development as a way to protect desecrated African burial grounds. In East Harlem, a seventeenth-century Dutch cemetery for free and enslaved Africans was covered over and developed, eventually becoming a bus depot. After a groundswell of protest, the city’s Economic Development Corporation and the local councilmember proposed that a memorial be built, and funded by an adjacent development that would include hundreds of apartments, a parking lot and an office building. In order to redress the harm caused by developing over an African burial ground, the city is now planning to develop over that same African burial ground.

 

Conclusion

 

No matter the question, the answer is the same. The pattern holds under a liberal and a conservative administration, suggesting something much bigger than the figure at the top of the political pyramid. The problem is not just a matter of personnel or personality, but rather the structure of contemporary urban political economy. Real estate now forms the largest concentration of global capital, and decades of neoliberalism have conditioned planners into endorsing public actions based on their ability to stimulate private accumulation. Politicians come and go; coalitions join together and fall apart; but throughout it all, this strategy—planning through real estate—remains.

 

Planners rely on real estate for two reasons. First, because real estate is by far the most powerful player in the market. As in many other cities, landlords and developers control New York City and state politicians, they fund the local media and they dominate the Planning Commission. Second, in this private land market, real estate capitalists absorb any land improvements that planners design. If they are going to benefit anyway, they become “stakeholders” who must be involved in any planning decision. The fastest way to get their buy-in is to give them an opportunity to build.

 

Some planners play this game earnestly and believe that encouraging luxury development will generate more tax revenue for the public good (despite the tax breaks they use to incentivize development), or that increased supply will cause overall prices to drop (even though this kind of sorting rarely takes place in the real world). Others do so cynically, knowing planning through real estate will not work but will please their bosses and their bosses’ patrons. Still others do not like it at all, but see no other alternative on the horizon and are commanded by policy elites to push for perpetual construction. Given cities’ dependency on landowners, these civil servants—who tend to remain in place even as administrations change—are tasked with anchoring municipal governments to the interests of developers and landlords.

 

In this capitalist democracy, planners make the real estate market, but they cannot control it. Because they have encouraged such an oversupply, the luxury real estate market may be beginning to dip. In New York and elsewhere, high-end condominium sales have slowed, and prices have begun to drop at the very top. New capital controls imposed in China could limit the amount of foreign luxury purchases, and uncertainty caused by the erratic Trump administration may make otherwise interested investors balk. More existentially, climate change threatens to make the whole stretches of urban coastline uninhabitable and valueless.

 

Even as the market shows signs of stress, the push for development has not diminished. In fact, if the market tumbles, planners and politicians will likely respond by providing even more generous subsidies to luxury developers, since most of their planning strategies rely on a booming real estate market. They also know that under the right conditions, declining investment in property can become the precondition for future reinvestment and therefore gentrification. Such cycles cannot last forever, but for the last several decades, New York’s planners and investors have managed to turn each near bust into another boom.

 

Planners are in a tough spot: while many seek to create more beautiful, efficient and equitable cities, their day-to-day work involves creating massive investment opportunities for real estate capital. Planners can, instead, work to cool overheated property markets, preserve public land, foster community control and reduce speculator’s capacity to wreak havoc on land markets. There are countless political programs, policy pamphlets and model tools developed to address the radical inequalities that characterize contemporary urban life. Naming alternatives, however, is much easier than enacting them, as the political conditions in New York and elsewhere make such actions difficult, at best.

 

For radical planners in public office, the leading task is to get organized: find each other, meet outside of work, share information, introduce each other to new ideas and keep each other honest. Organizing can help combat the groupthink and bureaucratic fatalism that often takes hold within city agencies, and remind radical planners that while they may be alone in their workplace, they are not alone in their workforce.

 

There are a number of past examples of such organizing. From 1967 to 1974, members of Movement for a Democratic Society formed the Urban Underground, which organized planners—primarily in New York’s Department of City Planning—to study radical texts, demonstrate, testify and publish critiques of city plans. From 1964 to 1972, Planners for Equal Opportunity brought together planners whose work supported the civil rights and Black Power movements, and aimed to act as a national counterweight to the mainstream American Institute of Planners (now the American Planning Association). During those same years, Student Nonviolent Coordinating Committee members formed the Architects’ Renewal Committee of Harlem, which brought planners, architects and designers together with neighborhood residents to plot the spatial specifics of Black self-determination. From 1975 to the present, Planners Network has connected radical planners and urban organizers through its meetings, newsletters, publications and conferences.

 

Since most big city planning departments are part of larger municipal labor organizations, the union might be a secure home for such activity, as long as local leadership can be either grasped or evaded. This would not only bring people together, but also provide some job protections for those engaged in riskier political activity. In order to stave off isolation and foster creative action, radical planners need to build an active organizing culture that can both incubate new ideas and expand their ranks.

 

All of this presumes a major break with politics as usual. After all, most cities are quickly moving in diametrically opposed directions. Turning radical ideas into reality will require robust and organized movements. Constrained by the perverse incentives of the capitalist state, as well as their limited power, planners alone lack the means to enact this program without higher state authority, and real estate-aligned politicians will not be inclined to try these actions without forceful protest and challenges from the public. We can and should be mad at planners, but ultimately they cannot undo real estate’s grasp over the city until people wrest back power from those who profit off land.

 

Samuel Stein is a geography PhD candidate at the CUNY Graduate Center. His work focuses on the politics of urban planning, with an emphasis on housing, real estate, labor, and gentrification in New York City. This article is a modified excerpt from his first book, Capital City: Gentrification and the Real Estate State.

 

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