Tag Archives: landlords
When housing is a commodity instead of a human right
A basic problem of housing it this: Housing is a commodity instead of a human right. We’re not accustomed to seeing housing as a basic right for everybody, but why isn’t it? Other than food and water, what is more basic a need than shelter?
It is here that questions about why the cost of housing is so out of control should begin. Because real estate is a massively profitable commodity — a locus of speculation — your rent is too damn high. So is your mortgage. And not disconnected from that is the scourge of gentrification, which continues to decimate urban communities around the world.
The specifics can change from one city to another, but ultimately massive accumulations of capital are at work. In New York City, where the form of government is a de facto dictatorship of the real estate and financial industries, the hands behind sharply rising rents are in the open. In San Francisco, where gentrification is fueled by cascades of money flowing into the technology industry, or Vancouver, where foreign speculators are seeking profitable outlets for the massive amounts of capital at their disposal, the proximate causes are somewhat different. But the underlying causes in these and other cities are ultimately “market forces.”
“Example of Bruxellisation” (photo by “Uppploader”)
Market forces are nothing more than the aggregate interests of the largest industrialists and financiers. Markets do not sit high in the clouds, dispassionately sorting out worthy winners and losers in some benign process of divine justice, as ideologues would have us believe. There is no magic at work here.
Neither housing, nor education, nor a clean environment are considered rights in capitalist formal democracies, and if you live in the United States, health care is not a right, either. Democracy is defined as the right to freely vote in political elections that determine little (although even this right is increasingly abrogated in the U.S.) and to choose whatever consumer product you wish to buy. A quite crabbed view of democracy or “freedom” if we stop to think about it.
That is because “freedom” is equated with individualism, a specific form of individualism that is shorn of responsibility. Those who have the most — obtained at the expense of those with far less — have no responsibility to the society that enabled them to amass such wealth. Imposing harsher working conditions is another aspect of this individualistic “freedom,” but freedom for who? “Freedom” for industrialists and financiers is freedom to rule over, control and exploit others; “justice” is the unfettered ability to enjoy this freedom, a justice reflected in legal structures. Working people are “free” to compete in a race to the bottom set up by capitalists.
Housing costs in U.S., Canada far outstrip inflation
Let’s run some numbers and examine just how this “freedom” works for working people. By no means are the massive increases in the cost of housing limited to a handful of popular cities. Nor is this merely a new or recent phenomenon.
Since 1975, the average prices of houses in the United States have risen by more than 60 percent faster than inflation. In Canada, real estate prices have increased 46 percent faster than inflation since 2000. Those are countrywide numbers, not specific to particular cities.
That inflation-adjusted cost of U.S. housing was calculated by comparing the statistics for the period January 1975 to February 2017, as reported by the S&P/Case-Shiller U.S. National Home Price Index, with the rate of inflation for that period as calculated by the U.S. Bureau of Labor Statistics’ inflation calculator. The increase in Canadian national housing prices from January 2000 to February 2017 was then compared with the rate of inflation as determined by the Bank of Canada’s inflation calculator.
San Francisco’s Haight-Ashbury district (photo by “Urban”)
If the prices of buildings are increasingly inflated above inflation, then as sure as the Sun rises in the east rents will rise, too. Often faster, as holders of real estate try to squeeze every possible dollar out of beleaguered renters. The U.S. government’s Department of Housing and Urban Development, in a report that the Trump administration has not yet gotten around to removing, says:
“Shelter costs have been increasing faster than the costs of other items. According to the Bureau of Labor Statistics’ Consumer Price Index (CPI), the costs of equivalent levels of shelter increased by 104 percent from 1985 to 2005 compared to a 74-percent increase in the cost of all other items.”
The department reports that for home owners, the cost of principal and interest on mortgages increased nearly 18 percent, adjusted for inflation, from 1985 to 2005. The cost of rent, over the same period also increased nearly 18 percent over the same period, again adjusted for inflation. As a result, the percentage of income paid toward either a mortgage or rent increased over these two decades. These trends have only accelerated since.
Incomes fall but rents keep rising
Those are national averages. In many cities, of course, rent increases have been much faster. Examining the trends in rents going back to 1960, Andrew Woo of Apartment List wrote:
“[I]nflation-adjusted rents have risen by 64%, but real household incomes only increased by 18%. The situation was particularly challenging from 2000 – 2010: household incomes actually fell by 7%, while rents rose by 12%. As a result, the share of cost-burdened renters nationwide more than doubled, from 24% in 1960 to 49% in 2014. … Rents have risen rapidly in many cities across the US, but looking at things over more than fifty years helps us understand the impact of these trends. If rents had only risen at the rate of inflation, the average renter would be paying $366 less in rent each month.”
Mr. Woo reported that although incomes in expensive areas like Washington, Boston and San Francisco have risen rapidly, rents have increased roughly twice as fast. In Houston, Detroit and Indianapolis, incomes have actually fallen in real terms, while rents have risen 15 to 25 percent. He found that the only U.S. urban areas where incomes kept pace with rising rents were Austin, Las Vegas and Phoenix.
For those workers struggling to survive on the lowest wages, the cost of living is a nearly impossible burden to bear. There is not one state in the U.S. in which a minimum-wage worker can afford the cost of the average one-bedroom apartment by working a full-time 40 hours. It would take 49 hours per week to afford the average one-bedroom apartment in West Virginia (the lowest figure) and 124 hours in Hawaii. In 14 states and the District of Columbia, you’d have to work at least 80 hours per week at minimum wage to afford the average one-bedroom apartment.
As this is a product of capitalism, not national peculiarities, we can see the same trends around the world. Average real estate prices in Toronto, adjusted for inflation, are seven times higher in 2016 than they were in 1953! Thus it comes as no surprise to learn the average rent of a one-bedroom apartment in Toronto is nearly double that of someone earning Ontario’s minimum wage. And not only does the supply of affordable housing not keep up, it is actually shrinking: In Calgary, for example, 3,000 rental units were converted into condominiums from 2006 to 2008 alone at the same time that the number of people in unaffordable housing steadily increases, while in Edmonton the wait-list for social housing in 2015 tripled.
A BBC report found that the average rent on a one-bedroom flat in London is £920, which would consume more than 90 percent of the after-tax income of someone working 39 hours per week at the minimum wage. Although not as expensive elsewhere, the rent for a one-bedroom would consume more than half of that minimum wage in Wales, West Midlands, and the southeast and east of England. A separate report by the Resolution Foundation found the household income of British renters increased two percent from 2002 to 2015, while their housing costs increased 16 percent.
And on it goes, from Paris to Berlin to Istanbul to Sydney to Melbourne.
Limited local efforts to counteract global forces
Some local governments in the cities subjected to the most extreme rent crises are taking measures to ameliorate market conditions, including those with a measure of effectiveness, such as Vancouver, which has instituted targeted taxes, and those with no effectiveness, such as New York, where the mayor continues his predecessors’ policies that accelerate gentrification.
Homelessness in Vancouver has reached record heights at the same time as the city has become one of the world’s least affordable, along with Hong Kong, Sydney, Melbourne, Auckland, and the California city of San Jose.
The city council of Vancouver in November 2016 instituted a tax on unoccupied homes that are not principal residences and are unoccupied for at least six months of the year. The city government estimates that more than 20,000 homes are empty or left vacant for most of the year. Earlier in the year, the British Columbia provincial government imposed a 15 percent tax on foreign buyers, who have been rapidly buying up real estate. “We need to find a balance between welcoming investment and ensuring it doesn’t skew the housing options for people who live here,” Vancouver Mayor Gregor Robertson told The Guardian, while lamenting the actions already taken as “too late.”
Vancouver as seen from Lookout Tower
Home prices were reported to have declined since the 15 percent tax on foreign buyers was imposed, but whether that decline will be sustained, or translate into reduced rents, remains to be seen.
Doomed to certain ineffectiveness, by contrast, is the housing plan of New York City Mayor Bill de Blasio. Rents there have escalated well beyond inflation for many years, with landlord profits increasing yearly. Gentrification was encouraged by the city’s mayor during the late 1970s and 1980s, Ed Koch, who infamously declared, “If you can’t afford New York, move!” The pace quickened under Rudy Giuliani and Michael Bloomberg, with the latter forcing through massive re-zonings of neighborhoods against the wills of residents.
The Bloomberg plan was to allow developers to run wild, and give gigantic subsidies to them in exchange for a few units to be set aside for affordable housing. Although he won election as a supposed progressive reformer, Mayor de Blasio has kept the Bloomberg plan firmly in place, and thus continues to drive gentrification, rising rents and the ongoing removal of residents forced out by unaffordable rents.
Gentrification is a deliberate process
Gentrification is not some natural phenomenon like the tides of the ocean, as ideologues are fond of asserting, but rather is a deliberate process. Gentrification frequently means the replacement of a people, particularly the poor members of a people, with others of a lighter skin complexion. A corporatized, sanitized and usurped version of the culture of the replaced people is left behind as a draw for the “adventurous” who move in and as a product to be exploited by chain-store mangers who wish to cater to the newcomers.
Gentrification is part of the process whereby people are expected, and socialized, to become passive consumers. Instead of community spaces, indoors and outdoors, where we can explore our own creativity, breath new life into traditional cultural forms, create new cultural traditions and build social scenes unmediated by money and commercial interests, a mass culture is substituted, a corporate-created and -controlled commercial product spoon-fed to consumers carefully designed to avoid challenging the dominant ideas imposed by corporate elites.
Bill de Blasio tries to assert that gentrification is some natural, uncontrollable process beyond human control as fervently as his billionaire predecessor, Michael Bloomberg. In sum, Mayor de Blasio believes that the only way to get affordable housing built is to allow billionaire developers to do whatever they want, grant exceptions to already pro-developer zoning regulations, and accept a few crumbs in return. As a result, rents have increased more than twice as fast as wages since 2012, and a minimum-wage worker would have to work 139 hours per week to afford the average New York apartment.
The new look of Williamsburg (Photo by Alex Proimos)
Rezoning is the linchpin of Mayor de Blasio’s housing plan — specifically, what is called “inclusionary zoning,” whereby developers are allowed to exceed height limits and are given huge tax credits in return for a few extra apartments below market rates and targeted for specific income levels. This simply does not work, instead funneling still more money into developers’ bulging pockets and further fueling higher profits for existing landlords because the new high-rent housing puts upward pressure on the rents of older apartments. The affordable units created by Bloomberg’s inclusionary zoning account for just 1.7 percent of housing growth between 2005 and 2013, according to Samuel Stein, writing in Jacobin.
That is below the level of the city’s population increase for the period. Coupled with de-regulation laws with large loopholes, an estimated 300,000 to 400,000 rent-regulated apartments have been lost since the 1990s, a city housing activist and reporter, Steve Wishnia, reported in Truthout. At the same time, other subsidies are thrown at developers to build luxury housing unaffordable by almost all city residents — a Midtown Manhattan tower in which apartments cost tens of millions of dollars and which is largely empty because the units are mostly bought by capitalists from outside the country as pied-à-terre received $35 million in tax breaks!
Jamming more money into developer pockets
Inclusionary zoning is a “fatally flawed program,” concludes Mr. Stein:
“It’s not just that it doesn’t produce enough units, or that the apartments it creates aren’t affordable, though both observations are undeniably true. The real problem with inclusionary zoning is that it marshals a multitude of rich people into places that are already experiencing gentrification. The result is a few new cheap apartments in neighborhoods that are suddenly and completely transformed.
De Blasio wants to use inclusionary zoning to create sixteen thousand apartments for families making $42,000. That’s just 3 percent of the need for such apartments in the city today, according to the plan’s own figures. At the same time, the mayor’s policies would build one hundred thousand more market-rate apartments in the same neighborhoods. What will happen when these rich people arrive? Rents in the surrounding area will rise; neighborhood stores will close; more working-class people will be displaced by gentrification than will be housed in the new inclusionary complexes. …
Rather than curbing speculation or aggressively taxing landlords, inclusionary zoning keeps the urban growth machine primed and ready to build. … What this and other public-private partnerships will not do is fix the city’s perpetual housing crisis.”
The only alternative is to fight back. Fran Luck, a housing activist who has fought the gentrification of the Lower East Side of Manhattan, notes:
“Progressive movements from the 1920s through the 1960s fought for and won some housing relief for low-income people — including rent controls, public housing and Section 8 subsidies. But during the ‘Reagan [counter-]revolution’ of the 1980s, federal housing monies were slashed and by the late ’80s, mass homelessness, such as had not been seen since the Great Depression, had made a comeback, accompanied by accelerating gentrification.
“Today, with little housing money from the Feds, mayors such as New York’s Bill de Blasio, even with the best of intentions, simply have no source for ‘affordable housing’ funds other than the crumbs thrown out by large developers. While the housing movement in New York City is not dead — as shown by the annual struggle between tenants and landlords over rent regulation — it has been on the defensive for some time due to a real estate climate heavily skewed toward developer profits, not people’s housing needs.”
Such a climate enables judges judges to overturn even tepid attempts at stabilizing rents, such as in San Francisco, where a federal judge in 2014 declared that rents rise without human invention and thus a ruled against a city law that would have forced landlords who kick tenants out of rent-controlled apartments to pay them the difference between the rent they had been paying and the fair market rate for a similar unit for a period of two years.
Landlords are innocent victims of rising rents, the judge declared, and have no responsibility for San Francisco’s housing crisis. Bizarre, yes, but the logical conclusion of rampant ideology that declares the workings of capitalism operate on their own, as a natural process outside of human control. Public-private partnerships, whether designed to create housing or public infrastructure, are thinly disguised schemes to turn over public property to private capital, so the latter can cash in at the public’s expense.
As long as housing is treated as a commodity to be bought and sold by the highest bidder, housing costs will increase and we’ll remain at the mercy of landlords, who, under gentrification, decide who is allowed to stay and who will be pushed out of their homes. Housing should be a human right!
7 Comments Posted in Gentrification Tagged housing, landlords, markets, New York, rents, Vancouver
Do rents really rise without human intervention?
It takes a lot of money to get people to vote against their own interests, and the real estate industry has plenty of money. Ideological obfuscation plays its part, too, and both contributed to a recent pair of defeats in San Francisco’s uphill fight against gentrification.
I happened to be in San Francisco in the days leading up to Election Day, and there seemed to be quite a lot of excitement over Proposition G, a modest proposal that would have instituted a tax on speculators buying and quickly selling tenant-occupied housing. “Yes on G” signs abounded and most, although not all, advocates I met believed it would pass. Why not? What renter could be against a law that might slow down, a little, skyrocketing rents? Nonetheless, the real estate industry poured $2 million into opposing Proposition G, outspending proponents 12-to-1, and it was defeated.
Only two weeks earlier, a federal judge overturned a law passed by the city government that would have forced landlords who kick tenants out of rent-controlled apartments to pay them the difference between the rent they had been paying and the fair market rate for a similar unit for a period of two years. An attempt to combat a steady upsurge in evictions, the judge nonetheless declared that skyrocketing rents aren’t the fault of landlords.
The rents go up all by themselves? Landlords by some lucky coincidence just happen to be the beneficiaries of some mysterious process outside of human control?
Ah, yes, the magic of the market at work again. The federal judge who handed down the ruling, Charles Breyer, has a reputation as a liberal. Yet he had no hesitation in grounding his ruling in orthodox economic ideology, largely echoing the arguments of the hard right, libertarian Pacific Legal Foundation, which represented the landlords. Judge Breyer went so far as to call the requirement a confiscation and “an impermissible monetary exaction.” But the law would not have stopped landlords from throwing tenants into the street so they could bring in new tenants who would pay more, merely ameliorate the cost to the evicted tenant.
Lawyers for the city of San Francisco argued that the two-year rent-differential payment would be “roughly proportional to the harm they impose on their tenants by evicting them from a rent-regulated unit and forcing them to seek new housing at market rates.” That is a real consequence, as the average San Francisco rent of a one-bedroom apartment is $3,100. It would require the combined salaries of 4.6 full-time jobs at San Francisco’s minimum wage to afford the average two-bedroom apartment there, according to the National Low Income Housing Coalition.
More than 10,000 San Franciscans have been evicted under a state law, the Ellis Act, that enables landlords to “exit” the landlord business (although in many cases, they “re-enter” the business after the previous tenants are evicted). The Tenants Together study that reported that total notes that it actually accounts for a small percentage of Ellis Act-related evictions as many others are forced out by the threat of an Ellis Act eviction and do not count toward the official statistic.
Court says landlords who evict are bystanders
Judge Breyer, nonetheless, blamed “market forces” and that favorite right-wing bogey, rent control, for runaway rents. Landlords, therefore, are innocent victims. In his decision, the judge wrote:
“[The law] seeks to force the property owner to pay for a broad public problem not of the owner’s making. A property owner did not cause the high market rent to which a tenant who chooses to stay in San Francisco might be exposed, nor cause the lower rent-controlled rate the tenant previously enjoyed.”
There you have it: If you are in the way of a speculator or a developer wanting to maximize their profits, get lost. That is simply a more polite way to say what former New York City Mayor Ed Koch said as gentrification got underway there in the 1980s: “If you can’t afford New York, move!”
Lost in these legal and ideological thickets are that landlords are cashing in on the sweat of others, including those they force out. Gentrification is a deliberate process. Organic cultures originating in the imagination, sweat and intellectual ferment of a people living in a particular time and place who are symbolically or actually distinct from a dominant moneyed mono-culture are steadily removed and replaced by corporate money and power, which impose a colorless chain-store conformity.
Those organic cultures then became selling points to promote the targeted neighborhood, cashed in not by those who created it but by real estate interests. Local governments facilitate this process on behalf of developers, tempered by the ability of movements from below to slow the process.
The fallback position of the Pacific Legal Foundation, also adopted by the judge, was that the two-year rent-differential payment would be unfair anyway, because there was no requirement that the payment be used toward rent. The San Francisco city attorney pointed out that the recipient of such a payment would have no choice but to spend it on new housing. But the Pacific Legal Foundation attorney admitted that were such a requirement in place, it would have opposed the law just the same.
The city of San Francisco has announced it will appeal Judge Breyer’s ruling to the U.S. Court of Appeals for the Ninth Circuit. “There should be no doubt that when a landlord evicts a rent-controlled tenant, the immense rent increase the tenant faces is the direct result of the landlord’s decision to evict,” the city attorney, Dennis Herrera, said. A decision acknowledging that would be one grounded in the real world, rather than the phantasmagoria of orthodox economics and its insistence that “markets” are based in the clouds, beyond human touch. In the real world, the landlords, developers and bankers who profit are the real estate market.
A flood of real estate money
Two weeks later, Proposition G failed, with 54 percent against and 46 percent voting in favor. Prop G proposed a “speculation tax” whereby a buyer of a multi-unit property would have to pay a tax surcharge if the building were sold in less than five years; the charge would range from 24 percent in the first year to 14 percent between four and five years. After five years, there would be no such tax surcharge. Because it was designed to be applied only to speculators, the proposed tax had several exemptions, including all single-family buildings and any building sold at a loss.
A heavy barrage of landlord mailings, including false claims that all properties would be covered, was too much for housing activists to overcome. Nonetheless, in a survey of activist responses after the vote published on the 48 Hills blog, there seemed to be a consensus that the effort to talk to people in the streets changed many minds, came close to overcoming the real estate industry’s 12-to-1 spending advantage and set the stage for further efforts that could succeed. The author of this article, Gen Fujioka, policy director for the Chinatown Community Development Center, quoted Causa Justa/Just Cause organizer Maria Zamudio:
“In this election we made major gains in organizing working class immigrants, seniors, low-wage workers, parents, and tenants, firing people up around the demand that they, too, deserve to live in San Francisco. … While it did not win this year, Prop G was part of a larger [local] progressive narrative that did win [including a minimum-wage measure that passed]. That narrative, along with the tools developed and relationships built in this campaign, will be the foundation on which we can continue to grow.”
Another activist, Randy Shaw of the Tenderloin Housing Clinic, believes that a greater emphasis on community organizing would make a difference. Proposition G had been placed on the ballot by four members of the city Board of Supervisors (San Francisco’s city council), rather than by activists collecting signatures, a strategy he believes should be reconsidered. He writes:
“Had the anti-speculation tax gone the signature route, activists would have recognized when the Title and Summary for the initiative petitions was prepared that the very popular idea of ‘stopping the flip’ did not translate well into a ballot measure. At that point a decision could have been made to alter it in some way as to either guarantee that the words ‘eviction’ or ‘speculator’ were included in the ballot question, or to seek to broaden the support base before going forward. … [T]he months spent talking to voters during the petition gathering process would have educated thousands about the issue. It would have insulated these voters from the big money attacks that created, and sought to provoke, confusion about what Prop G meant.”
The influx of technology-company employees may have also tipped the balance. It is difficult to speculate as I have no seen no surveys or breakdowns of the Proposition G vote, but it is possible that techies, many of whom absorb their corporate leaders’ libertarian political tendencies, voted in large numbers against. The group Techies Who Vote called on the technology industry to “exercise its electoral muscle” and vote against Prop G and progressive candidates who supported the measure.
Don’t mourn, organize
Organization is the only recourse against further gentrification, in San Francisco and elsewhere. But reversing the powerful moneyed interests that profit from it is no small task. A local organizer, Mike Miller, writing in CounterPunch, laments the fading of coalitions such as the Mission Coalition Organization that won many battles on behalf of tenants but was unable to coalesce into a force strong enough to reach neighborhood-wide agreements with landlord representatives. He writes:
“Regulation replaced organizing as the strategy to protect tenant interests—a voter-passed initiative created a rent control law, and a Rent Control Board to administer it. Electoral politics rather than mass, disruptive, nonviolent action became the means to enforce the strategy. Each, alone, is insufficient. ‘The market’ overwhelms them: too much demand for too little supply.
Unfortunately, there is no capacity now to negotiate with landlords, developers, lenders and others who profit from this run-amuck market. There is no longer a mass organization that might hurt profits and politicians’ careers by its capacity for boycotts, disruption, lobbying and electoral action.”
The inability to stop gentrification then has ramifications for surrounding areas. Across the bay, Oakland rents have risen 15 percent this year after rising 12 percent in 2013. Housing developments, with little affordable set-asides, are mushrooming in Oakland and evictions are increasing.
That, of course, is not merely a local phenomenon. The average net income from building ownership in New York City has increased 31.5 percent since 1990 — rents collected have risen faster than expenses. Nationally, real estate prices have been increasing faster than inflation since the 1960s. Thus it is no surprise the share prices of real estate investment trusts have more than quadrupled since early 2009.
This is the result of allowing “market forces” to control housing. The way out is for housing to be recognized as a human right, instead of a capitalist commodity to be bought and sold by the highest bidder. That, however, will require a different, better world.
9 Comments Posted in Gentrification Tagged activism, California, economics, evictions, housing, landlords, markets, rents, San Francisco
Mayor de Blasio is the Obama of New York City
He’s only been in office six months and I know we should be leery of making comparisons that risk becoming glib, but the consistencies are already too apparent to be ignored: Bill de Blasio is the Barack Obama of New York City.
Both took office with expectations higher than were reasonable but have fallen short of what someone with sober expectations might have expected. High expectations without mobilizing a movement to realize those expectations is part of the problem, true. That is, and is not, a mitigating factor. That too many hopes were poured into individual office-holders, and too little effort into holding them accountable, is beyond reasonable dispute. But that does not ameliorate the necessity of judging them by what they do rather than what they say.
And who they appoint. Among President Obama’s first significant appointments was Lawrence Summers to be his lead financial adviser. All was lost right there; an unmistakable neoliberal signal. Among Mayor de Blasio’s first significant appointments was William Bratton as police commissioner. Commissioner Bratton held that office under Rudy Giuliani, a time when the New York Police Department often acted like an occupying army, with relations between the police and, in particular, Black and Hispanic communities, abysmal.
He followed his Giuliani-time stint with a lucrative deal with Kroll Inc., a security firm that describes itself as “Wall Street’s eyes.” He also greatly increased the use of “stop and frisk” tactics when he was Los Angeles commissioner despite his new boss’ promise to curtail usage, and the Los Angeles Police Department’s use of force increased under his leadership.
Should we judge Mayor de Blasio by his words or by his actions? He certainly said words welcomed by most New Yorkers in the days leading up to the June 23 vote by the city’s Rent Guidelines Board in which it voted for an increase in rents for rent-stabilized apartments, as it has in each of its 45 years of existence. Consistent with the position he took during last year’s mayoral campaign, he publicly called for a rent freeze. He went so far as to say, hours before the vote, that:
“We need a course correction, a one-time action to clearly rectify the mistakes of the past, and a course correction that will actually provide fairness to tenants who have been charged more than they should’ve.”
But he also said the decision should be based on “the actual facts, the actual numbers.” That was a signal to not expect a rent freeze.
The Rent Guidelines Board is independent, but the mayor appoints all nine members; Mayor de Blasio has had time to appoint or re-appoint six of them. So although the mayor can’t dictate what the board members will do, he can select people who will follow his alleged philosophy. Previous mayors such as Michael Bloomberg, Rudy Giuliani and Ed Koch, each unreserved servants of New York’s two dominant industries — real estate and Wall Street — had no difficulty packing the board with appointees who routinely gave landlords significant rent increases.
Two board members represent tenants and two represent landlords, so the five “public” members are decisive. And it was one of Mayor de Blasio’s picks, an executive with M & T Bank, who put forth the proposal for a one percent raise despite widespread hope that this year would see the first-ever freeze. According to a report in The Wall Street Journal, the bank executive, Steven Flax, cut a deal with landlord interests on the board because the latter realized they would not be able to get the much bigger increase they sought.
Landlord profits rise with rents
According to a report prepared by the board — which presumably relies on landlord reporting and thus likely somewhat understates their income — apartments in rent-stabilized buildings generated an average net income of $436 per month in 2012. The average building surveyed has 45.3 units — thus, the average building yields $237,000 in profits for one year! It is true that many buildings are much smaller, but it is also true that many landlords own multiple properties.
Moreover, that average net income has increased 31.5 percent since 1990, with much of that coming since 2005. Landlord profits have increased all but one year since — that is, the rents collected have risen faster than expenses.
Mayor de Blasio has kept former Mayor Bloomberg’s real estate policies intact. During the billionaire ex-mayor’s reign, zoning laws were changed over wide swathes of land to allow luxury high-rises where either smaller residential buildings or commercial operations had been, accelerating gentrification. The zoning could have been reversed; 40-story towers are out of place in neighborhoods where buildings had been on a human scale. But just last month, Mayor de Blasio allowed the notorious developer Two Trees (which has already rapidly gentrified another Brooklyn neighborhood down the East River) to build towers up to 55 stories in Williamsburg, on the site of a shuttered sugar factory.
The developer that previously owned the property wanted to build an out-of-scale luxury housing complex that is certain to put still more upward pressure on local rents — this is a historically working class area — consistent with the new zoning. Having instead flipped the property to Two Trees, the “progressive” mayor decided to capitulate to the new developers’ demand to allow even bigger buildings in exchange for a token increase in the number of affordable units.
But perhaps we should not hold our breath waiting for the lower-priced apartments to be built — another developer, Forest City Ratner, has pushed the date for the promised affordable housing associated with the massive luxury-housing project at Barclays Center far into the future. That despite hundreds of millions of dollars in government subsidies and buying rights to what had been public land for below market value.
Mayor de Blasio has made no move to reverse any of the Bloomberg-era rezoning — heavily opposed by neighborhood residents who rightly saw them as being implemented to benefit developers at their expense. He is eyeing similar rezonings (in other words, keeping the wave of gentrification moving) for another 15 neighborhoods. The mayor is already on the record as saying he will continue the Bloomberg administration’s policy of higher-density building. That’s music to the ears of the city’s billionaire developers. Not so much to neighborhoods lacking the infrastructure to handle such influxes.
Folding on charter schools
Then there is the matter of charter schools — funded through city taxes but privately run and given public-school space for free at the expense of the public-school students. Charter schools are the leading edge of efforts to privatize school systems and put them under corporate control while busting teachers’ unions so as to bring on younger teachers with less pay and less job security. And they achieve similar or worse results than traditional public schools, despite the hype that surrounds them.
In contrast to his campaign promises to reign in charter schools and make them pay for the space they use, Mayor de Blasio’s first move was to approve 39 of 49 charter-school applications that had been rubber-stamped late in 2013 in the waning days of the Bloomberg administration. Hedge funders and other corporate interests, backed by “Governor 1%,” Andrew Cuomo, swiftly reacted with a counter-offensive against that tepid opening. Governor Cuomo rammed through a provision in the state Legislature that requires the city to hand over space for free to charter schools.
Mayoral control of schools was fine when a billionaire mayor wanted to corporatize them but not when there is a theoretical possibility of a mayor allowing public input in education policy.
Mayor de Blasio’s reaction? Not so much as a whimper as his charter-school promises were eviscerated as if they had never existed, and then he played a critical role in defeating an electoral challenge to the governor when the latter was challenged for the nomination of the Working Families Party, a small party that seeks to provide progressive cover to Democrats by cross-endorsing them.
The mayor has yet to challenge the governor on any issue, despite the latter’s corporate agenda, backed heavily by the financial industry. The New York City government is hamstrung in advancing tenants’ interests because of the state law known as the Urstadt Law, which forbids local governments from enacting rent laws better than the limited protections allowed under state law. The mayor could push for the repeal of Urstadt, a long-time demand of housing activists, but has remained silent. The one thing he could have delivered, a rent freeze, he did not do.
Although it may seem that a one percent increase — the smallest ever granted — is not much different than zero percent, a first-ever freeze would have set an important precedent and created the conditions for future rent freezes — or rollbacks. In 2011, about 55 percent of New York City’s households lived in apartments with rents that exceeded 30 percent of household income, defined as the maximum affordable rent, up from about 45 percent ten years earlier.
Just as President Obama made a couple of symbolic gestures that were easy to do — successfully pushing for the Lilly Ledbetter equal-pay act and withdrawing the Bush II/Cheney administration’s legal memos “legalizing” torture — Mayor de Blasio has overseen a reduction in “stop and frisk” police tactics and pushed for an expansion of pre-kindergarten school programs. Those are widely popular and represent a minimal “promise kept.” But, so far, overall, an Obama-esque drifting and surrender to corporate ideology. Both have effectively turned Right-wing offensives in bipartisan collaborations.
Trend is larger than any one personality
One person, one office-holder, can only do so much; all the more so is that the case when there is no sustained grassroots mobilization that can hold them to account. Nor should we overemphasize personalities when the structure that maintains corporate domination is as strong as ever. This is hardly a new phenomenon — North American liberals and European social democrats have been capitulating to corporate interests and adopting right-wing positions steadily through the three decades of the neoliberal era. The tenures of Bill Clinton, Jean Chrétien, Tony Blair, Gerhard Schröder, François Hollande, to name only a few at the national level, tell us there is something much larger than individual personalities at work here.
There is a breakdown of coherence beyond dependence on corporate money, corruption, domination of the mass media by the Right, philosophical and economic myopia, and cowardliness. It’s that North American liberalism and European social democracy no longer stand for anything. They, and their leaders, believe as fervently in capitalism and its limitations as strongly as any conservative. But although acknowledging problems and advocating reforms, they are trapped by their belief that capitalism will solve its own problems and nothing more than tinkering is necessary, or imaginable.
Beyond the exhaustion of liberalism and social democracy, and their submission to corporate perspectives, is the lack of mass movements. At the start of his first term, President Obama told his supporters to “make me” do what they wanted him to do by applying pressure. They didn’t, and haven’t. Mayor de Blasio did not go so far as to say that to his supporters, but the same principal applies. There is no serious movement pressuring him to not only fulfill his campaign promises, but, more importantly, to move the political agenda well beyond.
For example, why shouldn’t housing be a human right instead of a commodity for private profit?
In the absence of popular pressure, corporate money speaks all the louder. Ringing your hands in frustration gets you nothing. Organizing a movement, filling the streets, refusing to cooperate with business as usual changes societies. Until that happens, corporate power and money will continue to call the tune, no matter who is in office.
13 Comments Posted in Gentrification Tagged capitalism, Democrats, economics, housing, landlords, New York, politics, rents
Gentrification is an ongoing process, of which we’ve had two reminders in the past month in New York City. The recent closing of the Bowery Poetry Club is a sad reminder of the dwindling number of community spaces — and one need only look across the street to see a high-end corporate clothing boutique occupying the space where CBGB showcased musical acts for more than three decades.
Even last weekend’s annual commemoration of the Tompkins Square Park police riot of 1988 was, in its own way, an echo of gentrification as the event served mostly as an act of nostalgia for the past of Manhattan’s Lower East Side that remains only in pockets. No New York City neighborhood put up more of a fight for its survival as an alternative haven for non-conformists in cultural, political and social milieus. That any of its tradition as a place of resistance to the overwhelming power of money survives in the now legalized squats, smattering of community spaces, and the out-numbered activists, artists and non-conformists who are able to remain by virtue of rent regulations is because of collective action.
Just to be clear about what is meant by the term gentrification, a working definition of it is: A process whereby an organic culture originating in the imagination, sweat and intellectual ferment of a people living in a particular time and place who are symbolically or actually distinct from a dominant moneyed mono-culture is steadily removed and replaced by corporate money and power, which impose a colorless chain-store conformity. The process of gentrification is assisted by a local government under the sway of local corporate elites, and is centered on dramatic increases in commercial and residential rents such that the people and culture who are being removed find it increasingly difficult to remain.
New York’s Lower East Side (photo by Postdlf)
This process is concurrent in many cities and countries. A special twist in New York City is that artists are used as a “bait” to put formerly industrial areas on the map as destinations, until the artists are no longer needed and are forced out by the sharply rising rents that sweep over the area once gentrification takes hold. This process can happen gradually, as it was in Brooklyn’s Williamsburg neighborhood, or it can happen swiftly, as it was further down Brooklyn’s East River waterfront in the “Dumbo” enclave.
These processes are never organic, but become orchestrated once a neighborhood attracts a reputation as “hip” or “interesting.” In this variant, the artists arrive in places either emptied by de-industrialization, subject to high crime rates under the impact of neglect, or a combination of the two. In the case of Williamsburg, the process greatly accelerated following a massive rezoning that allowed 40-story luxury condominium buildings along the East River where only industrial uses has previously been allowed. (That more than 95 percent of local speakers at an hours-long hearing were in opposition and that local activists spent years developing an alternative plan in line with the neighborhood’s character was of no consequence.)
So now we have the “irony” of aggressively marketed buildings branded as “The Edge” located where an open-air waste-transfer station operated only a few years earlier: Bags of garbage used to molder there until a barge could arrive to remove them.
One strongly suspects the developers responsible for the complex do not inform the newcomers of the recent past.
The pace of corporatization accelerates
The neighborhood that became know as Dumbo (the name is an acronym for “Down Under the Manhattan Bridge Overpass”) underwent the process much quicker. Artists had settled there, too, as space became available. One real estate company essentially bought the neighborhood and openly used the artists as bait to make the neighborhood a desirable destination, going so far as to give street-level space for them to use as galleries or performance stages for a couple of years until the developers would be ready to reclaim the building to convert into condominiums and/or rental space for high-end corporate retail businesses.
The process extended to the corporatization of the annual Dumbo Arts Festival. I appeared as a poet in the 1999 pre-gentrification edition of the festival, simply because I happened to meet the friendly organizers of the spoken-word event, which was held on a loading dock. Artists would open their studios to the public, and those participating in the festival were primarily artists who lived there. A decade later, the neighborhood had been transformed into an expensive shopping mall, and the festival now boasts a string of corporate sponsors. Few artists remain in a neighborhood now dominated by million-dollar condominiums, the owners of whom undoubtedly fancy themselves as trend setters by virtue of living there.
The idea of corporatization has so taken hold that Dumbo’s open space, the Brooklyn Bridge Park, is expected to generate a profit. That sounds crazy, but it is really true: Some of the land set aside for the park is being sold to developers to build high-end hotels or other commercial enterprises to offset the costs of the park.
But the draw of artists is not necessary. Gentrification moves in waves and is ongoing; in New York City, developers are greedily preparing to devour Harlem — its historical cachet reduced to an advertising campaign — and have begun to eye outlying neighborhoods such as Bushwick. Gentrification frequently means the replacement of a people, particularly the poor members of a people, with others of a lighter skin complexion. A corporatized, sanitized and usurped version of the culture of the replaced people is left behind as a draw for the “adventurous” who move in and as a product to be exploited by chain-store mangers who wish to cater to the newcomers.
Neglect, then profit
The city’s oldest gentrification project is that of the Lower East Side. Here the concept of “spatial de-concentration” was put into practice. “Spatial de-concentration” is a deliberate strategy of reducing the available housing stock to disperse a population. The Lower East Side in the 1970s suffered from a wave of landlord abandonments, arsons and city neglect, such as reduced firefighting services; eventually a shortage of housing triggered rising rents and stimulated real estate speculation.
A neighborhood that was an escape from the pervasiveness of corporate mass culture — its unique ambience created by a mix of Puerto Ricans, Ukrainians, Poles, artists, squatters, community gardeners, anarchists, communists and beatniks — and anchored by community spaces and local mom-and-pop businesses has been transformed into an alcohol-fueled playground for the privileged overrun by “trendy” bars and chain stores. Deep-pocketed chain stores and boutiques owned by holders of trust funds are becoming the only entities that can afford the commercial rents as the very concept of commercial rent control is never raised by any political leader.
The average neighborhood residential monthly rent is now $2,400 — this in a neighborhood where, 40 years ago, people paid less than $100 for an apartment. Commercial space has increased in price still more steeply; local businesses that give back to the community are steadily forced to close their doors. As the former population becomes a smaller minority within in its neighborhood, the ability to fight back in an organized way dwindles, until a critical point is reached where real estate interests become essentially dictatorial and the process accelerates.
The Whole Earth Bakery, a victim of gentrification (Credit: VegGuide.org)
At some point, history becomes nostalgia. And 24 years later, the Tompkins Square Park police riot — when police hiding their badges went on a rampage against anybody luckless enough to be near the park sparked an intense period of struggle that lasted for several years — was unmistakably an object of nostalgia in this year’s commemoration. And even that had its corporate echo, as one person seized control of the annual event after chasing out others who previously helped organize it, and announced that he owns the marbles and will take them home if others don’t do as he says. A most capitalist attitude.
A community needs community institutions. Several years ago, I published a book of poetry by a friend who had recently died. The poet was well-liked and very modest; his friends felt it important that his work be kept alive. After I had completed the book, I walked one Friday afternoon to the Bowery Poetry Club, saw the owner, Bob Holman, there and began to ask him if I could schedule the book-release party there. Before I could get the first sentence out of my mouth, he enthusiastically said yes, giving me a two-hour Sunday slot without charge. I don’t think Starbucks would have done that.
I don’t pretend to know the club’s financial specifics, but I don’t think it takes a stretch of imagination to imagine that Mr. Holman had a large mortgage or rent to cover each month. And his club, home to artists and performers in a variety of disciplines, was a haven for community do-it-yourself arts and culture. I mention this not because its closing is a loss to a specific community (which it is) but because it is an example of what is happening on a mass scale through the corporate homogenization that arrives in the wake of gentrification.
Passive consumers instead of creators of culture
Gentrification is part of the process whereby the “commons” are taken away and replaced by privately owned space. When there are no longer places where the community can gather — whether for their own cultural events, to discuss community issues or as gathering places for demonstrations and protests — the ability to maintain alternatives to the pervasive corporate culture and to continue to retain the ability to cohesively resist corporatization or to defend themselves against a city government determined to push them out is greatly diminished.
The Lower East Side will provide an example here. During the 1990s, a former school building was used to build a community space called Charas/El Bohio; benefit concerts, dance parties, space for a variety of local cultural groups and performers, and meeting places for organizers were among its uses. In a rapidly gentrifying neighborhood in which real estate developers saw dollar signs in front of their eyes and in which a large body of neighborhood activists resisted gentrification, Charas was seen not as the busy community resource it was, but as a threat that had to be eliminated.
In one of former Mayor Rudy Giuliani’s last acts, he saw to it that is was eliminated. Partly because of his hatred of community organizers or any opposition, partly because of his embrace of corporate ideology that insists private profit is the only legitimate usage of any property, and partly in support of a corrupt local council member in bed with developers who literally saw himself in a war against the neighborhood but who supported Giuliani, Charas was taken away and sold at far below market rate to a connected developer. Because of ongoing pressure that has blocked a necessary zoning change (the corrupt council member who did not try to hide the hatred he felt for his own constituents is long out of office), the developer has not been able to realize his plans. But 13 years later, Charas sits empty behind sealed walls and has so deteriorated that it is now uninhabitable.
That’s capitalism in action: A community resource created and run by the community is taken away so one person can make a profit, and the resource is allowed to rot unused if that one person doesn’t realize the profit.
Taking away public spaces is nothing new
The path of gentrification mirrors that of culture. The corporatized art world now mimics finance capital. In the financial world, a tiny number of people succeed in positioning their company for an initial public offering and the fantastic riches that flow upward from it while so many others labor for little; in the art world, a small number of artists catch the eye of a wealthy investor, generating multimillion-dollar sales while legions of other artists starve.
None of these patterns are new. The taking away of the commons is as old as capitalism; in fact capitalism was built on the privatization of commons. As a market arose for commodity agricultural products, feudal lords wanted to clear space for sheep meadows. Peasants were forced off the land they had farmed and barred from the “commons” (cleared land on which they grazed cattle and forests in which they foraged), forcing them to become beggars, risking draconian punishment for doing so, or laborers in the new factories to endure pitifully low wages and inhuman working hours.
As the Industrial Revolution gathered steam, a “moral” crusade promoted by owners of factories and agricultural estates in which the tiny fraction of commons that had survived were taken away; the measure of independence that rights to the use of commons provided wage laborers was denounced for fostering “laziness” and “indolence” — defects that could be cured only by forcing them to be fully dependent on wage work.
Legal codes make such work more civilized these days, but the principal remains. An independent community is a community that can’t be pacified or narcotized by consumerism; common or collective property available for community use presents a counter-example to privatization of all spaces; and the use of resources for community benefit instead of for private profit represents an especially dangerous counter-example. Such concepts must be systematically stamped out, and for resisters, a militarized police force is used to enforce the rule of wealthy elites instead of the army as in past times.
If democracy is the goal, then community self-management must be a part of it — decision-making that requires a radically different way of organizing the community. A system in which the community exists to be plundered for the private profit of local elites is incompatible with democracy.
18 Comments Posted in Gentrification Tagged capitalism, economics, history, landlords, New York, politics, spatial de-concentration