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Brian Lehrer: Brian Lehrer on WNYC. Now, to the rest of the New York City housing crisis. We know there's not enough housing, and too little of what's available is affordable enough to match people's incomes. According to NYU Furman Center, you don't even really need to hear this again. You probably know more than half of the renters in New York City are rent burdened, which means they're spending more than 30% of their income on housing. More than a quarter of people are what's called severely burdened, spending more than half their income.

Despite wide agreement that we do in fact need more housing and more affordable housing, no one in government seems to be able to do anything about it right now. Remember, earlier this year, Governor Hochul couldn't get the legislature to pass a pretty big housing construction plan, mostly because of resistance from the suburbs who don't want more density and they don't want certain people moving in. Well, in a PC road in Crain's a few days ago, journalist Ross Barkan had a proposal for a political grand bargain that could get New York polls unstuck.

He's a columnist at Crain's, as I said, and a contributing writer at the New York Times Magazine, as well as writing in other places too. Ross, welcome back to WNYC. Can't wait to hear this.

Ross Barkan: Yes, thank you for having me, Brian. Always great to be here.

Brian Lehrer: Before we get to the grand bargain reveal, I want to just remind people about the year we've had when it comes to housing and real estate legislation or lack thereof. What happened in those failed negotiations in Albany?

Ross Barkan: Last year, Governor Hochul proposed a pretty far-reaching plan that would have forced upzoning in both New York City and the downstate county surrounding it, so the suburbs Westchester, Long Island. In short, the plan--

Brian Lehrer: Upzoning meaning allow more density or require more density.

Ross Barkan: Require more density, require more building if certain housing goals were not hit. Since suburbs have not been hitting really any construction goals for a very long time or don't really have them, this certainly was a new mandate that was not popular. Zoning in New York State is typically the prerogative of local governments and they cherish this, so there is a great amount of resistance to Hochul's plan. There is a lot of opposition from legislators in both the state senate and the state assembly.

Hochul herself didn't really marshal a big political coalition behind it, and the plan fizzled in the state legislature did not go anywhere. Nothing on the housing front has really changed since last year despite the crisis that you just mentioned.

Brian Lehrer: Right. We've done whole other conversations on the situation in some of the suburbs in particular. If you go through the files in Newsday, Long Island's newspaper you can find so many articles on how nobody can afford to live here anymore because housing prices are so high that the people who grew up in Long Island and are now young adults can't afford to live there, and yet there's resistance to creating more apartment buildings, which would mean more affordable housing on the island.

That's a dilemma that they face there. Here's another piece of it that I want to get through as background, because last June, I think it was the most recent iteration of the 421-a tax incentive program for real estate development that includes affordable housing ended without renewal. Remind people of this piece of it. Historically, there was a tax break for developers who billed certain kinds of affordable housing and that's gone away.

Ross Barkan: Yes. After the fiscal crisis in the 1970s, New York had a real problem with getting real estate developers and investors to really want to build here. Various tax incentive programs were created. One of them was 421-a. 421-a was always pretty controversial because it was a giveaway to pretty wealthy people, but the upside of it was, it genuinely did create a lot of housing. Now there are always debates over how much of it was truly affordable. Many progressives believed it was not affordable enough.

What you have seen with the expiration of 421-a last year, housing construction is slowing down and it'll probably continue to slow down. You have a lot of projects that were in the pipeline before last June that are getting built. The problem, though is next year, the following year, if you don't have replacement program, you are going to see less housing construction in New York City and that will affect affordability in the long term because you do have to create supply.

Brian Lehrer: That's frustrating, infuriating really, especially for a lot of progressives who think about this issue that the real estate development industry has the people over such a barrel. If you don't give them tax breaks, they're not going to create affordable housing that I think a lot of progressive economists would argue. You can build affordable housing without a tax break and make money on it. The developers apparently don't see enough of a profit in developing what we call affordable housing. They have enough political clout that they can demand a tax break.

Then the question is, are the people getting the bang for the tax break buck, or as the progressives said in objecting to the 421-a tax incentive program that expired they were getting too much of a tax break for not enough affordable housing and for housing that wasn't affordable enough, which is actually a different thing. Meaning for people with low enough incomes who really need additional supply the most. Okay. That's 421-a. We're going to do one other piece of background on this.

Listeners, I think we're doing this clearly and not getting into the wonky weeds too much. One of the things that failed in Albany this year was a push for what's called A Good Cause Eviction Law. Ross, that would be like rent stabilization for every apartment in the state, right?

Ross Barkan: Yes, in essence. I've lived in rent-stabilized apartments. I'm sure a lot of your listeners do as well. They're fairly common. There's over a million rent-stabilized tenants in New York City, I believe. In essence, when you're in a rent-stabilized apartment, you have a right to a lease renewal and your rent increases are governed by the rent guideline board. Your rent can only go up so much. You can still be evicted from a rent-stabilized unit, but there has to be that good cause. You have to violate the lease.

You have to be not paying your rent or doing something that really is in violation of that contract you signed. You can't be wantonly evicted. The idea of good cause is it would expand these protections to tenants everywhere across New York State. Localities beyond New York City have tried to implement good cause, judges shot them down, said it had to be done statewide. State legislatures have been trying to get it through. Governor Hochul is against good cause, though she hasn't stated it openly, but behind the scenes, she's not in support.

The real estate industry reviles good cause because they see it as a cap on profits, and they believe it could slow housing construction, and they view it as a form of socialism for housing. It's been very bitterly contested in Albany. There's also a contingent of Democrats, particularly in the state assembly, who don't like good cause because they have a lot of small homeowners, small landlords in their district, and landlords also don't like the idea that you can only raise your rent by X percentage every year. They don't want that regulation in place.

Brian Lehrer: Right. I always ask people can't there be a distinction between small homeowners who have an apartment or two to let, or maybe a small building or two, and the big corporate landlords who have so much supply and take so much advantage of tenants that we could protect the small homeowner or the small investor in real estate and still have a lot of good cause eviction. The small guys seem very willing to hitch their wagon to the big ones, anytime I ask that question.

Ross Barkan: Yes, very much so. The real estate lobby is very organized against good cause. A few years ago, there were a lot of tenant protections passed in Albany. I would say the progressive pro-tenant movement had a lot of momentum. That has definitely stalled out. As you've seen the Real Estate Board of New York, which is the major real estate lobby partner with a lot of these smaller landlords to really block good cause.

I argued in my column that you could reach a compromise where you revive 421-a, you build more housing in the suburbs, and you do good cause, which would make money for developers because they would get new building opportunities in New York City and beyond. Also, tenants would be protected. It should be noted, too, good cause is not going to lower anyone's rent. It is not a law that says rent can only be $1,000 a month. As much as tenants would love that, simply it limits how much your rent can rise.

For many tenants out there who go up for renewal and find their landlord wants to raise their rent by 50% or 100% that could not happen under good cause.

Brian Lehrer: Right now with journalist Ross Barkan who has proposed a grand bargain for getting unstuck on affordable housing development in New York state, which we're now going to get to now that we've spent the last 10 minutes just doing background on where we are. Hopefully, this has been a lot of educational stuff for a lot of you listening right now who don't know a lot of these details but are interested in it.

By the way, I see almost all our lines are full already with people wanting to call in on this so to make sure that not only those with us on speed dial have the number 212-433-WNYC. Listeners chime in, 212-433-9692. Text or call that number or tweet @BrianLehrer. All right, Ross, drum roll. Tell us your grand bargain.

Ross Barkan: In essence, it would be you can pass good cause, you can agree to the Hochul housing compact and force and upzoning in the suburbs and you could revive 421-a or create a new program perhaps that would incentivize more affordable housing. That would have to be worked out. You could do all of these things that would help tenants in the long run. It would make developers money. Now the politics behind it are very challenging, and I don't want to sugarcoat that. There's a lot of legislators in Albany who don't want to do any of these things.

They don't want to build more, particularly if they're in the suburbs or in their low-rise areas of New York City. They don't particularly like good cause because they have a lot of homeowners or small landlords in their district. They're skeptical 421-a and you then have the real estate industry which hates good cause. You have to get a lot of different interests on board with this compromise, so to speak. The politics of it are very thorny as of right now.

Brian Lehrer: The basic concept is you say to developers, okay, we're going to give you a new good tax incentive to build more housing and make money on it to replace the 421-a tax incentive that expired if you agree to good cause eviction limiting how much rents go up and how easily people can be evicted. My first pushback question to that is it sounds in theory like maybe it's in everybody's interest, but what about the suburbs because if we're going to really solve the housing problem for New York City, it's got to be a regional approach as Governor Hochul was trying to propose earlier this year, but the suburbs are still going to resist density.

How does the grand bargain as you are proposing it, get through suburban opposition?

Ross Barkan: It's very challenging. Yes, part of this grand bargain would absolutely be upzoning, building more density. You could focus on areas around train stations. We actually have a pretty good commuter rail network through Long Island and Westchester. You can build a lot more over parking lots there where you're not interfering, so to speak with single-family homes and their vistas but it's hard. That's where the governor comes in. That's where Hochul has to use the power of her office. She has to pressure legislators.

Democrats have to accept there's going to be opposition, there's going to be a lot of fury around it but with a lot of difficult legislation going back to the 1960s and the civil rights movement, which a lot of Democrats accepted would cost them votes in the South, you often have to do what's right over what's politically expedient. That being said, there's no magic answer other than you have to win votes in the suburbs. You have to win votes in bucolic parts of New York City as well because there's a lot of opposition to building in New York City, outside of Manhattan, and even within Manhattan you'd be surprised.

It's very challenging, but I do think it's going to have to start with the governor using the power of her office. She has a lot of sway over the budget. She has a bully pulpit. It really begins with her.

Brian Lehrer: Does she read Crain's? Has she responded to your article? Ha ha.

Ross Barkan: I can't comment on off-the-record discussions, but I will say they acknowledge the challenge and it's on her, but it's also on the legislature as well to be able to recognize that you're going to have to build in places that don't want building, and you're going to have to deal with the likelihood of a contested election after that. Many in the state legislature do not want that at all. I will add you have congressional races coming up next year. The New York suburbs may determine the outcome of the house majority.

There's a lot of suburban democrats running for Congress who do not want to touch upzoning in the suburb. That complicates things even further.

Brian Lehrer: Derek in Manhattan, you're on WNYC. Hi, Derek.

Derek: Hi. To be quick, the 421-a program was not renewed because the real estate people, landlords were scamming the system that they were taking the tax abatement or reduction and then not yielding the proper rent stabilization clauses and they were jacking up people's rent above rent stabilization. That's why they had not gotten renewed so why bring it back? Point two, the SRO hotels were designed, I think back in the pre-depression through the depression era to house people inexpensively. We've been scammed out of those over decades.

New York Public Library had a document I found in their archives that said, this was back in 2004, that we had lost 50,000 SRO units in the previous 10 years. If anybody bothers to look, you'll find that those hotels, SRO hotels had forged their-- What do you call it? Certificate of occupancy. They had changed the certificate from a class B Bravo hotel to class A alpha hotel, the alpha being permanent residence versus the B being transient. For example, what the mayor's looking for is basically if he can get it hotel spaces with kitchens they were pretty much like apartment but they're in hotel spaces.

Brian Lehrer: Right. That's more for the asylum seekers who are arriving. Does this address the permanent housing crisis which we've transitioned to now? Ross go ahead, do you want to jump in?

Ross Barkan: Yes, I'll jump in on that, on the SRO front. I've written about this before. New York really should revive the SROs. People don't know single-room occupancy units. They were very common in New York City throughout the 20th century. They had a lot of issues as well. Drug use, fell into disrepair, communities organized against them, mayors including Koch turned their backs on them. Many were destroyed or turned into luxury housing, hotels, and they're pretty much gone now.

If you had functioning nice SROs, you could really make a big dent in the homelessness issue and also house a lot of young people coming to the city for the first time. They wouldn't be taking up larger apartments. A good SRO program could solve a lot of our problems. It's been disappointing that politicians have not looked more hard at really pushing a strong revival of them.

Brian Lehrer: Derek, thank you for putting that back on the table. Is it like dorms? Do people want to live in dorms?

Ross Barkan: Young people in college pay a lot of money to live in dormitory. In their 23, 24 I think they would. Also, people who are homeless right now, if they have a nice functioning unit with a lock, with a key, with a refrigerator, maybe with their own bathroom, ideally they'd all have their own bathrooms that would really be the goal. The SROs worked. You didn't have a street homelessness problem in New York City really until the 1980s, until the destruction of the SROs.

If you remember the fiscal crisis era, New York had many, many problems. You did not have anything like the street homelessness you have now. That is because we have the lack of very cheap housing that used to take a lot of people off the streets who had nowhere else to go, didn't have good credit, just needed a place to stay.

Brian Lehrer: Chris, in Woodside, you're on WNYC. Hi, Chris.

Chris: Oh, hi Brian. Thank you for taking my call. The reason why I was calling was because I find it difficult to not blame the rent stabilization that we have as also a cause to the affordability crisis. The reason why I say that is if you look over the span of, say, over about the past 22 years, you can do that on the Rent Guidelines board website. You can go into their research tab and it shows what they determine as what the change of costs for a building did over the course of a year. If you compare that with what the rent guidelines board decided to actually give as one-year lease renewal, you'll see that over the past seven years in a row, they've allowed lease renewal rates to be lower, sometimes far lower. This year, for instance, they are giving a 3% increase when it was determined that it was over 8%, I think it was 8.8% or 8.2% on the average increase in costs on buildings, for instance. The past seven years in a row, lease renewals have been less, and over the past 25 years, it seems like 22 years out of 25 years, the same thing has occurred where lease renewals are less.

What does this do? It makes vacant apartments, in order to subsidize the existing units, it makes the vacant apartments much higher. When we're talking about an affordability crisis, we also have to figure out what is it that we're looking at. Are we trying to figure out how do we want to keep new vacant rentals lower, or are we talking about just protecting the existing tenants?

Brian Lehrer: Chris, thank you. Ross, we've got about two minutes in the segment, but that is an argument that you hear from some mostly conservative-leaning economists. Rent stabilization on a mass basis actually contributes to rents going up for everybody else who's not in a stabilized apartment.

Ross Barkan: I don't buy that. For more than 20 years, we had vacancy decontrol in New York City, which meant that when the rent reached a certain threshold for rent in stabilized apartment, it could leave the system altogether and go market rate. That existed from the 1990s until 2019, and rents did not go down in New York City. They accelerated and hundreds of thousands of rent-stabilized units disappeared altogether, never to return, even with the passage of tougher tenant laws in 2019.

I understand that argument, but the reality is if you wiped away rent stabilization tomorrow and everything became market rate, rents would rise. If a landlord is not limited by a rent guidelines board, they will say, "Yes, maybe our costs went up, your rent's going up 20% now. Oh, I can evict you now. I can find a wealthier tenant." I'll go and do that because there's always going to be affluent people looking for decent housing. I understand the theory behind it but in reality, if these protections vanished, rents would rise.

There wouldn't be this magic market that would then lower rents suddenly, rents would go up.

Brian Lehrer: We didn't solve New York's housing shortage in this conversation, but at least we put some ideas on the table and kept talking about it. Journalist Ross Barkan's idea for a grand bargain between progressives and the real estate industry for a new generation of tax incentives, for construction in exchange for a new generation of so-called good cause eviction laws, mass rent stabilization out there on the table. It focuses on Governor Hochul. We'll see if she runs with it in any way.

I do want to just mention because Ross has a new piece out. The one we've been talking about is in Crain's. He's got a new one just out today in The New Republic that talks about the history of socialism in America and the limits of it in our current political climate. Ross, maybe we'll have you back to talk about that one day but I just want to acknowledge, because you were good enough to come on today about your Crain's article that you've got this major piece out in The New Republic on American socialism.

Ross Barkan: Yes. Thank you for plugging it. It's going to be out in print as well. Definitely, you should check it out. It's a good one and always happy to be on WNYC with you, Brian.

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