Q&A: Joe Lhota, Bill de Blasio talk real estate

Last night, Joe Lhota won the Republican primary for mayor, while Bill de Blasio led the field of Democrats (though it remains to be seen whether he’ll face a runoff with rival Bill Thompson). This month, The Real Deal spoke to the candidates to get their views on rezoning, affordable housing, property taxes and other issues of interest to the real estate community. (Thompson declined to participate.)

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.

Joe Lhota
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.

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?

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.

What do you think is the best way to address New York City’s affordable housing shortage?

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.

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?

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.

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.

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.

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.

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.

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.

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.

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.

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?

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.

This is an excerpt from “Mayoral candidates get candid,” which appears in the September issue of The Real Deal. To read more, click here.