Not that America has become a divided, classist society or anything. Oh wait, it has.
New York City approved plans for a new 33-story luxury high-rise at 40 Riverside Drive on the Upper West Side of Manhattan that will include a separate entrance for tenants in “affordable” housing, what some have called the “poor door.” The high-rise has both super-luxe units worth millions, and some affordable housing units. Rich residents come in the front door. Poor residents enter through the side door. The expensive units overlook the Hudson River waterfront. The affordable units are in a “building segment” that faces the street. “Affordable” folks cannot enter the rich side of the building and are prohibited from using any of the building’s amenities. The way the architecture was specifically designed, the two groups will never mingle.
Affordable Housing in a Luxury Building?
Why does such a luxury building have affordable housing units in the first place? Well, so the rich can manipulate New York’s housing laws for their own benefit.
Including some affordable housing units in your new construction buys you two distinct advantages in New York. The first is that the developer is allowed to build a much taller building (and thus having more apartments to sell), skirting zoning laws and claiming valuable “air rights” for the benefit of the poor, of course. The air rights the developer will claim are worth millions in crowded Manhattan. The benefits even apply if you build your luxury tower in one part of Manhattan and your affordable units “off site,” maybe in a nasty part of town.
A developer can also qualify for the program by building condos on “areas of Manhattan of underutilized or unused land,” wherever those may be on some of the most densely populated land in the world.
The biggest advantage of including the affordable units in a luxury building is the massive tax breaks all residents share. New York waives or significantly lowers property taxes, meaning the rich, who need never see or interact with their poor neighbors, make money off their presence. It’s all called the “Inclusionary Housing Program,” or officially, the 421a program.
Here’s an example of how significant these tax breaks can be drawn from another super-luxury building in midtown Manhattan that included some affordable housing units. On an apartment purchased in 2007 for $1.5 million, the owner paid just $35 a month in property taxes. That creeped up to only $374 a month in 2011. When the exemption expires in 2018, the actual monthly tax bill will be an estimated $1,629. Note also any that real estate taxes paid are tax-deductible from one’s income.
Developers Getting Rich off the Poor
Another New York developer, who has built “poor door” buildings, summed things up quite succinctly:
No one ever said that the goal was full integration of these populations. So now you have politicians talking about that, saying how horrible those back doors are. I think it’s unfair to expect very high-income homeowners who paid a fortune to live in their building to have to be in the same boat as low-income renters, who are very fortunate to live in a new building in a great neighborhood.
The developers of the poor door building under discussion have done well with tax breaks. Five of the luxury firm’s other apartment towers cost the city $21.8 million in tax revenue in their first year alone. Overall, as of 2012, property tax abatements in New York City totaled $2.9 billion, about 20 percent of actual property tax collections in the city.
So what’s the problem, some say, with poor folks gettin’ some uptown housing from the swells? History: Separate but equal favors the separate but never the equal part. It did not work as a solution for racial inequality and it won’t work as a solution for economic inequality. Indeed, one wonders if the building caught fire which door the fire department would go through first?
And there you have it, another tidy example of how taxes and laws are rigged to favor the people who already have the most money. Go ahead, work as hard as you like; this game, friends, has already been decided.
Photo by Jeffrey Zeldman under Creative Commons license