Tag: City Hall

Mayor Bloomberg has proposed a simple formula that allocates funds to schools based on the number of students and their needs, replacing a complex formula that often provides higher funding to less needy students. I’ve been left with a double shock. First, I’m shocked that the city itself has a formula that does exactly what the state formula, the subject of a decade-plus long lawsuit, does: uses complexity to allocate school funding based on political pull and the number and pay level of employees in the place they choose to work, regardless of the number of needs of the children. Why did the Mayor wait five years to point this out? Second, I’m somewhat shocked, and certainly disappointed, that groups which purport to be concerned with the needs of the children, and in particular disadvantaged children, and the quality of education object to changing this. I’m more disappointed than shocked by the opposition of the Teacher’s Union. I’m surprised that an organization called the Educational Priorities Panel objects. But I can’t help but feel total incomprehension at the objections of Michael Rebell, the co-counsel for the Campaign for Fiscal Equity in its lawsuit against New York State.

In a prior post, I showed how far New York City lagged beyond the rest of New York State in public school spending in FY 2005, with a conservative cost of living adjustment applied to Downstate expenditures. Using data from the U.S. Census Bureau for Fiscal Years (FY) 1997 and 2004, however, we find that inflation-adjusted per-student current expenditures for the city’s schools increased 46.7% from the former year to the latter. And whereas the city’s per child current spending was 2.3% below the national average in FY1997, it was 19.2% above average in FY2004. The spreadsheet is attached, and I'd rather have you download that than read the rest of this post. Once you have, to compare your explanations to mine, my overview of the breakdown by type of spending follows.

The newspapers are reporting that the Mayor will join the City Council in calling for big tax increases during a recession, when people can least afford it. What? Didn't they in fact call for tax breaks, likely to be temporary, when the economy is strong and unemployment is low? Yes, but the first follows from the second, time after time. And the state is doing the same thing with transit fares, holding out for a big increase at the worst possible time rather than lifting the fares year by year as labor costs rise. So when property taxes are once again jacked up when you can afford it least, and elected officials say they have no choice, remember that they did have a choice. They are making that choice right now.

In my current employment as a surveyor and describer of all things real estate across the country, I happened upon a news item which has induced me to renew my complaints against “affordable housing.” As long time readers here may recall, I believe that the government should provide services and benefits for everyone, or at least for the less well off, while “affordable housing” is necessarily made available to the fortunate few, often those with connections. There are urban legends, for example, that those in certain unions and political clubs were tipped off in advance when the lists of subsidized Mitchell-Lama apartments came open, showed up at the right time, and snatched up all the units. Those rental apartments are now the subject of political controversy, as buildings constructed in the late 1970s gain the right to exit the program – and rent stabilization – as their subsidies expire. But there was another aspect of Mitchell Lama, limited equity coops, under which apartment buyers agree to resell at lower prices in exchange for tax breaks. These coops are also gaining the right to exit the program, and sell for more, but the windfall in this case would accrue to individual apartment owners, not landlords. Let the morality tale begin!

Last week, there was a news splash about the city's population projection, with an overall gain but a decline in school-aged children. I read the fine print, and it appears that my former mates at City Planning did what I consider the right thing, and constrained the population forecast by land use. That is, since NYC is already developed at a high density, there are only so many housing units that can be added, and demographic trends are driven here (unlike in Texas) more by the occupancy of existing housing than by the amount of new housing. And here DCP used migration by type of person from 1980 to 2000 to see who would flee and who would move in. Therefore, the city's official population projection assumes that parents of school age children with the means to leave will continue to be driven out of NYC by bad schools and small housing units, as they were in my generation.

These organizations have long maintained that housing is expensive in New York City because New York City's development regulations are extremely difficult and restrictive. It is a mantra repeated over and over. Well some bad news — a developer who builds all over the United States has moved into town, and when asked about development restrictions in an interview with the Wall Street Journal, he gave the "wrong" answer.

WSJ:   Is it easier to build in the suburbs versus the city?

Mr. Toll:   It's easier in the city. The approval process is more professional in the city. The experts that you deal with are pretty much doing the assigned job, as opposed to the secret unassigned job to stop the growth, stop sprawl [in the suburbs].

So the Independent Budget Office has found that New York City’s property tax system is unfair. This is not a surprise. In a fundamental sense, property taxes are a tax on property wealth, and “fairness” requires that the tax be charged equally to all residential and commercial property owners based on the value of that wealth. This, however, has run into another definition of “fairness,” one based on income, with concern that people with high property wealth relative to income (such as senior citizens and, in rural areas, farmers) could be taxed out of their homes. This post will propose a different way to balance "wealth" fairness and "income" fairness.

The Daily News recently ran a series of articles outing “no-bid” contracts at New York City’s Department of Education. As someone who spent nearly 20 years as a “provisional” public employee, I’m not surprised.

Whether the government is hiring public employees or companies, it faces what I call the “dilemma of discretion.” Allow public sector managers to hire and fire who they please, and the government runs the risk of having their brother-in-law – or the brother-in-law of a politico who is in a position to threaten them – hired. But bind that manager with all kinds of rules, such as a requirement to accept the lowest “responsible” bidder, to hire those who score highest on a civil service test, and to only fire an employee or contractor after a complicated series of steps, and you create a legalistic playground for those who seek to get paid to do a job without actually doing it. Thus the tendency of those trying to improve public services, as well as those trying to steal, to hire provisionals or “consultants,” which New York’s public agencies are stuffed with, and to enter into no-bid contracts.

As I mentioned here, the fact that there are many poor people in New York City is, in some ways, a phony issue.  According to 2005 data from the Census Bureau, the New York Metropolitan Area as a whole had a poverty rate of 12.6%, below the national average of 13.3%.  Poverty is high in New York City because it is the part of the metropolitan area where the poor are permitted to live; taking regional and national economic trends as a given, the more places for the poor to live a municipality provides, the more poverty it will have.  A better focus for public policy is how well the poor live in New York City, and to what extent the city provides an environment their families to advance out of poverty, if not in this generation than in the next.   In my view, the city is a worse place to be poor today than it was 50 years ago.  That is the real issue.

The big story in New York real estate in recent weeks has been the potential sale, for a purported asking price of $5 billion, of Stuyvesant Town and Peter Cooper Village, two huge “middle class” housing developments on Manhattan’s East Side, by the Metropolitan Life Insurance Company, their developer and long time owner.  Metlife had previously sold its other large New York City housing projects, such as Parkchester in the Bronx.  Immediately, politicos have rallied to the side of the potentially embattled tenants of these developments, most of whom benefit from rent stabilization.  The local council member has proposed a tenant buyout, which he says will be possible with union pension fund money, “socially conscious” investors, and city subsidies.  If the existing tenants want to make a bid for the place, more power to them, although I advise that we are in a real estate bubble and any buyer will likely pay too much – one reason Metlife is selling.  But if they want to put city pension fund money at risk, given that the city would be required to raise taxes and cut services to make up any losses, and to receive tax breaks, I say forget it.  Since Stuytown and Peter Cooper village are large enough to be their own census tracts, we can use 2000 census data to find out some characteristics of those who live there.  And like Waterside Plaza, another development that was granted a city tax subsidy in exchange for a continued great rent deal for the tenants, residents of these developments are MUCH better off than most of the rest of us.