Every few years, someone pitches increasing property taxes for vacant or abandoned properties in New York.
When he was about to begin his first term as mayor, Bill de Blasio proposed raising taxes on vacant properties (most of which were zoned residential) as a way to motivate developers to build housing. It would also raise revenue, eventually bringing in an estimated $162 million annually, Crain’s reported at the time.
In 2017, the Independent Budget Office suggested a tax surcharge on vacant residential property, estimating it would raise $29 million in its first year. As a 2021 mayoral candidate, Andrew Yang proposed a 500 percent tax increase on vacant commercial land, which he projected would generate $900 million. That did not sit well with developers.
This year Manhattan Borough President Mark Levine revived attention in unrealized building opportunities, releasing a list of 171 development opportunities at vacant lots, gas stations and parking lots.
As of last year, more than 77,000 lots across the city were vacant or occupied by a building that was less than half the size that zoning allows, according to the Wall Street Journal. Low tax rates on such properties are at least partially to blame.
Other cities are further along in enacting a so-called land-value tax. Detroit is considering increasing taxes on abandoned buildings and lots, while lowering taxes on owner-occupied homes. The mayoral proposal requires sign-off by the state legislature, which just met for the final time this year without acting on a bill that would ultimately allow voters to decide on the policy.
Running parallel to the idea is the concept of a surcharge on second homes. The New York legislature has repeatedly floated a recurring pied-à-terre tax, which in 2019 lost out to a transfer tax increase.
Economists have been skeptical about such proposals. A 2021 report by Bloomberg found little evidence that vacancy taxes in Melbourne and Vancouver improved affordability in those cities. While such taxes raise revenue to some degree, they have not increased housing supply.
What we’re thinking about: The two pending rent law challenges before the U.S. Supreme Court were distributed for conference — again. When will the Supreme Court make a decision on these cases? Send a note to kathryn@therealdeal.com.
A thing we’ve learned: Strict disciples of the economic ideology known as Georgism believe that getting rid of all taxes in favor of a single land-value tax “would end poverty and recessions for good,” according to the New York Times.
Elsewhere in New York…
— The city is seeking proposals to upgrade the Downtown Manhattan Heliport to accommodate electric-powered aircraft. During a press conference Monday, Mayor Eric Adams announced the request for proposals, which is seeking a new operator for the city-owned helipad. Reporters, for some reason, wanted to ask him about the federal investigation into his campaign fundraising instead.
— The Adams administration is expanding the 30-day cap on shelter stays to single adult migrants staying in facilities run by the Department of Homeless Services, Gothamist reports. The limits previously only applied to those staying in shelters overseen by the Office of Emergency Management and Health and Hospitals system.
— City students may soon be able to opt out of Regents exams in favor of alternatives, such as capstone projects or presentations, the New York Times reports. A timeline for implementing these changes is expected to be in place by next fall.
Closing Time
Residential: The priciest residential closing Monday was $5.5 million for a condo at 35 Hudson Yards.
Commercial: The most expensive commercial closing of the day was $23 million for a development site at 12 Franklin Street in Greenpoint.
New to the Market: The priciest residence to hit the market Monday was a co-op unit at 860 Park Avenue in Lenox Hill asking $10 million. Nest Seekers has the listing.
Breaking Ground: The largest new building filing of the day was for a 50,000-square-foot, 17-story building at 10 West 17th Street in the Flatiron District. DXA Studio filed the permit application. — Jay Young