Perhaps no mayor in recent history has taken such delight in shaping New York as Michael Bloomberg. Indeed, he rezoned over a third of the city, while developers added a staggering 40,000 new buildings since he took office, according to an analysis of census data by the New York Times. But whether developers — and the real estate industry as a whole — can count on having an ally in City Hall once Bloomberg’s 12-year reign ends in January remains to be seen.
As the race to replace him moves into the homestretch — this month voters will go to the polls to cast ballots in the long-anticipated Democratic and Republican mayoral primaries — The Real Deal talked to some of the leading candidates on both sides of the political aisle. (Bill Thompson is the only major candidate who did not participate).
Below is a side-by-side look at where the candidates stand on key real estate issues, including rezonings, air rights and tax breaks.
Mayor Bloomberg often gets criticized by community activists for being too pro-development. Do you think that’s a fair characterization? And what type of relationship would you like to have with the real estate and development community?
Bill de Blasio
Democrat: (Public Advocate)
I fundamentally believe that the relationship between the city and its developer community needs a reset. Towering, glitzy buildings marketed to the global elite is not the type of development New Yorkers are looking for. I look forward to working with the real estate community to spur the development, in all five boroughs, of real affordable housing, mixed-income neighborhoods, sustainable and vibrant density, and new spaces for small and new businesses to grow and thrive.
Republican: (Former Chairman of Metropolitan Transportation Authority, Deputy Mayor in Giuliani Administration)
I think it’s unfair to criticize Mayor Bloomberg, who has been concerned with how to deal with the growth of New York City. His critics don’t take into account that the city is dynamic, not static. We need to change to meet this growth. We are expecting an influx of another million New Yorkers and we must prepare our infrastructure and housing to accommodate that growth.
Democrat: (City Comptroller)
NYC was started on a real estate transaction. We need the real estate industry to build the city; we might get a million more people in 20 years! But we also want responsible development. I think the vast majority of developers are responsible, but they have been given a free ride by the current administration. The role of government is to ensure that capitalism doesn’t get out of control, especially when abetted by changes in government policy.
Democrat: (City Council Speaker)
The mayor has done a good job encouraging development, but I believe we can do more to create jobs and encourage locally beneficial development. As Speaker I have fought for living wages and benefits for workers in rezoning projects and other places where companies receive a public benefit. I would direct my Economic Development Corporation to make living wages a priority in every possible project. I believe that it’s appropriate to enforce these standards when public resources are being utilized, since tax dollars should not be used to subsidize low-wage salaries that perpetuate the growing income inequality.
Republican: (CEO of Gristedes Foods and Red Apple Group, developer)
I am pro-development. I believe we should create the incentives to have people invest in New York City. But look what’s going on with our corporate community. The Fortune 200 has $2.5 trillion invested offshore. They’re creating more jobs overseas than in the U.S. That is wrong. I can’t solve the world’s problems, but I can solve New York’s.
Democrat: (Former Congressman)
I’m pro-development, but I would be more creative in leveraging middle-class housing. I would also not fall in love with misguided ‘glamour’ developments like football stadiums on the West Side.
During his three terms, Mayor Bloomberg took on major rezonings throughout the city. If elected, would you do the same? If so, what areas would you like to see rezoned next?
Quinn: The next mayor is also going to have to create new zoning regulations to respond to the realities of climate change. The Administration is working on climate-resilient zoning tools now, and the regulations will have to evolve as we learn more. [Also], the No. 1 reform to the zoning process should be adding certainty to the ULURP [Uniform Land Use Review Procedure] certification process. The pre-certification process can be frustrating to many applicants. There is no clock governing any of the actions that need to be taken. By including a neutral step in the process that would include a certain level of review of the submitted application and a written response, the applicant could have greater assurance that the project could move forward.
De Blasio: I have called for rezoning — and an increase in the number of places to live — in areas of the city well served by transit, and where residential demand is highest. It’s an economic and environmental imperative. But in exchange for this new zoning capacity, developers should be required to build affordable units for middle- and low-income New Yorkers to expand the city’s affordable housing stock and cultivate mixed-income neighborhoods. I will also propose rezonings and changes to land-use rules in industrial zones to protect proper industrial uses, rather than allow those spaces to be used for storage areas, gas stations, or hotels, while loosening some restrictions to meet the demand for live/work spaces and mixed-use neighborhoods.
Lhota: I will continue rezoning, but we’ve saturated the market. We should naturally slow it down until we start seeing results from the rezonings we’ve recently accomplished.
Liu: Large parts of the city could be up-zoned for greater development. This includes significant areas outside Manhattan, beginning with my hometown of Flushing. But I would apply mandatory inclusionary zoning, so that we can fund affordable housing. Mayor Bloomberg has barely used inclusionary housing. I’m very much in favor of people making a handsome profit, but they shouldn’t get to keep all the gains.
Catsimatidis: I believe in creating incentives for developers to create jobs and to create new residences. I believe in transit-oriented development, which means taller buildings around our subway stations. I believe in giving developers zoning for taller buildings, so we can make it economical for them to build middle- and low-income housing. I’d look at areas in Brooklyn and Queens … to see where development is needed.
Weiner: Neighborhood-by-neighborhood zonings have neglected the citywide need for opportunities for light manufacturing, affordable office space and middle-class housing. I’d expand the use of M1-6D [the categories of zoning for manufacturing and commercial use in high-density districts].
What do you think is the best way to address New York City’s affordable housing shortage?
Liu: There’s only so much money the city has in terms of capital. There’s not really any way to use city dollars to fund new affordable housing projects, only to rehabilitate and preserve what housing we do have. I’d use mandatory inclusionary zoning to help fund new affordable projects.
Lhota: We need to create an incentive program using our tax structure that requires developers to create 20-30 percent of their units as low-and moderate-income housing. One of the things I will do as mayor is seek out surplus property from the state and the MTA, as well as abandoned post offices to give to the city for the purpose of affordable housing. This way, the city won’t lose any revenue.
De Blasio: In order to make New York City accessible for more people, I have called for increased as-of-right residential development with mandatory inclusionary zoning for middle- and low-income New Yorkers. We need to change the tax treatment of vacant land, expand the use of tradable development rights, and allow for the legalization of accessory dwelling units and ‘granny’ flats — housing additions for the elderly. I have also called for investing a small portion of city pension dollars — $125 million annually — to support the development and preservation of affordable units.
Quinn: As mayor, I will use a combination of new financing and savings within the city’s capital budget to build 40,000 new middle-income units in addition to 40,000 currently planned new low-income housing units over the next decade. This is quadruple the current rate of construction, and by far the largest middle-class housing program since Mitchell-Lama. I will also work to get Albany to pass a Permanent Affordability Act, giving us a new financing tool that will allow us to keep units affordable indefinitely, and will get legislation passed that will allow the city to incentivize building owners to convert existing units into affordable housing.
Weiner: Finding an affordable place to live has become a major roadblock to building a life in New York City. I have a plan to introduce ‘Mitchell-Lama for the 21st Century,’ which will offer developers incentives to develop middle-class rental housing by providing modest but long-term profits. Additionally, we need to replace the tax-supported “80/20” system with a “60/20/20” formula, which would reserve 20 percent of new construction for low-income residents and 20 percent for middle-income residents. [The remaining 60 percent would be for market-rate units.]
Catsimatidis: There’s a lot of discretionary funding in the budget. I will use it to address the housing needs of our people.
In January, the state legislature passed a housing bill that included a tax abatement for ultra-luxury buildings such as Gary Barnett’s One57 and Larry Silverstein’s 30 Park Place. What are your thoughts on this? What changes would you like to see to the 421a program?
Catsimatidis: I believe there’s a current investigation in Albany about the matter. I believe in incentives, but they should be more widespread to attract more investors. The outer boroughs should get more money than Manhattan, because Manhattan is a natural sell to foreign buyers. I’m the only candidate that has common sense. If the mayor stomps his feet down, shit happens.
De Blasio: I have called for a fundamental reform of our city’s economic development tax abatements, including the 421a program. We need to restrict the granting of tax incentives to only those projects which would not have happened absent a tax break — or which, because of the tax break, provide important public benefits, such as real affordable housing. I do not believe the tax benefits for One57 or 30 Park Place meet these criteria.
Quinn: 421a has historically been used to encourage housing development in neighborhoods less likely to see new construction. These buildings are clearly not in such neighborhoods, and their inclusion is frankly outrageous. They should be removed immediately. As mayor, I’ll make removal of these properties from 421a part of my housing agenda, along with clear and unyielding requirements that all subsidized units must be treated the same as all other units. One major problem with the current system is Albany making decisions that really should be done in the city. It is time for Albany to delegate more of its authority to the city on tax expenditure. 421a already includes caps on benefits for high-value units that limit benefits to buildings such as those in the omnibus tax bill, but these caps appear way too high. Developers are not charities, and therefore should not have been profiting from their lobbying activities.
Lhota: I will advocate for the extension of 421a benefits, [but] we should be using our taxing powers to focus solely on creating low- and moderate-income housing.
Weiner: I would restore flexibility to the use of affordability certificates and permit them to be used offsite in exchange for a higher number of affordable units.
Liu: That is outrageous. We have so many needs for affordable housing, and they are going to the people who need it the least. I’d put together a panel right away to discuss 421a and see if [these abuses] could be resolved; otherwise I’d scrap it altogether.
What’s your position on Bloomberg’s plan to lease NYCHA land to private developers for market-rate and luxury housing?
De Blasio: NYCHA land is not for luxury condos. As mayor, I would not support any plan on NYCHA land that doesn’t also include substantial amounts of affordable housing. Money generated should be directed back towards the development to support repairs and maintenance.
Quinn: I don’t believe we should use limited, publicly owned land to create market-rate housing. I will instead work with NYCHA residents to make sure they have a real voice in decisions about this property, and ultimately look for opportunities to build new, permanently affordable housing.
Catsimatidis: I believe in using excess land to build. We could use the first floors of the NYCHA housing projects to create commercial rental positions — such as supermarkets, drugstores, and shoe repair shops — to provide essential services for NYCHA residents.
Liu: I think the numbers don’t work. They’re essentially selling all that land, in some of the most prime areas, to simply generate a revenue stream of $30 million to $50 million? Who are they kidding? It just sounds like another break for luxury developers. There’s a credibility gap here. For 12 years the Bloomberg administration did nothing for NYCHA residents. Why are they suddenly proposing this?
Lhota: I agree with the concept of this plan, but it needs to be true surplus property. I do not support taking land that may be used for other uses, such as a playground, for this purpose.
Weiner: I oppose it. I would be open to commercial options that provide better services and jobs to residents, or the use of NYCHA land for Section 202 housing for seniors.
What are your thoughts on Bloomberg’s proposal to rezone Midtown East? As mayor, would you champion it?
Lhota: I support the proposal and will champion it as the next mayor.
Catsimatidis: Some of those buildings deserve landmarking, such as Grand Central, and they should get it. Other than that, if we can take older buildings and build more energy-efficient ones, that’s a good thing. I will do it selectively, negotiating in good faith with the community. But maybe I won’t do as many buildings. The air rights should be sold at market value — whatever that is.
De Blasio: It would help meet a pent-up demand for high-quality Class A office space around Grand Central Terminal and, hopefully, have a catalyzing effect on the diversification of New York’s economy by expanding the stock of available office space for a wider array of firms. However … the current plan does not adequately address the infrastructure necessary to accommodate the additional office density. … There must be a clear plan for infrastructure improvements and a rational plan to pay for it … before we proceed.
Quinn: As Speaker, I have a policy of not commenting on land-use proposals before the local Council Member has taken a stand on the issue. That said, I support making Midtown business-friendly and believe we can do so without endangering the historic buildings in the area.
Liu: I think it’s problematic. Significant amounts of rezoning are being granted with no assurance of public investment. I’m happy to see this District Improvement Bonus [a public works funding mechanism for transit and infrastructure improvements] where they are allowing developers to essentially purchase FAR [floor-area ratio]. Problem is, the $250 per-square-foot price [for air rights] is only going to be applied for rights in excess of those allowed by the rezoning. I think the contribution to the infrastructure fund should be required for all air rights that stem from the rezoning.
Weiner: I have an open mind, but want it to be a deliberate process.
The mayor’s third term has been marked by major public-private partnerships, such as the Cornell University Roosevelt Island campus and the Related/Oxford Hudson Yards project with the MTA. What is your stance on public-private partnerships?
De Blasio: I support the tech campus projects on Roosevelt Island, and the others in Downtown Brooklyn and in Morningside Heights. We should explore opportunities for additional higher-education partnerships in other areas across the five boroughs. Such partnerships work well when they create public goods like parks, new affordable housing, schools and training programs. But too often these partnerships are just an excuse to turn over public assets to private ownership, or funnel public dollars towards projects that would happen anyway. That can’t happen anymore.
Liu: I support partnerships, but what has manifested in recent years is that the public gives and the private gets. It’s a one-way street. Look at what happened with Atlantic Yards. Hundreds of families relocated with the promise of huge amounts of affordable housing and local jobs. A decade later, we have a beautiful stadium and some popcorn-vending jobs. Where are the apartments? Where are the local jobs? We need a much more stringent system of accountability, starting with the Economic Development Corp.
Lhota: There is no doubt that the city government needs to partner with the private sector [for both] development and redevelopment [projects]. The process needs to be transparent and open.
Catsimatidis: I like partnerships, especially if the developer delivers a free school to the city. As for transparency, I am not taking any money from anybody. [Catsimatidis is self-financing his campaign.]
Quinn: They can be extremely beneficial for the city, but we must make sure that we engage the local communities and collect input before making any permanent decisions.
Weiner: I support them but would expand the city’s partners to include more minority- and women-owned business enterprise opportunities.
What changes, if any, do you think need to be made to the property taxes paid by homeowners, developers and landlords in New York City?
Catsimatidis: On Jan. 3, I will freeze all property taxes [the only tax the mayor has direct control over], whether it’s by assessment, or by rate, until we take control of what’s going on. The budget has swollen 50 percent over inflation. I think it’s time to say, ‘stop.’
Lhota: We need an evaluation of our entire real property tax system and a resulting overhaul.
De Blasio: I have called for a change to the tax treatment for vacant land — from the lower residential rate to the higher rate for commercial property — to discourage long-term speculation that leaves lots vacant in our neighborhoods, and to encourage the construction of more affordable places to live.
Quinn: The question of whether we have the right taxes is really a question of what New Yorkers want from their city government. I have long called for a more progressive tax structure that should be balanced with pro-growth tax policies. … I have proposals to build new housing, increase access to healthcare, and improve schools, that I have carefully balanced by identifying cost savings in areas like Medicaid claims, overpayments for contracting … and a host of other savings expected to total more than $700 million. My administration would continue many of the city’s existing high-quality services, particularly in the areas of workforce development, reform agencies like NYCHA that are grossly ineffective, and identify other places that we can be more efficient.
Liu: We should take a look at some equity issues across property classes.
Weiner: Nobody is happy with the byzantine New York City real estate tax formula. Residents of one- to three-family homes have seen their taxes rise by 169 percent despite seeing their real incomes barely budge. Co-op owners on Park Avenue pay less in real estate taxes than renters in Washington Heights. And office space owners spend millions in legal costs trying to figure out their opaque tax assessment. All of this is the result of a long-unexamined hodgepodge of legal precedents, state laws and institutional inertia. New York needs a property tax commission that ensures we have a system that is clear, fair and transparent.
Answers have been edited and condensed for clarity.