An Unconvincing Defense of the Poor Door

Given the, shall we say, “unfavorable optics” of the poor door scandal, I wasn’t exactly expecting to see a defense of the policy, let alone from the putative center-left. But Matt Yglesias has made an attempt at one, so let’s have a look:

the idea of a single building with two different doors — one for the super-rich and one for the normals — works as a potent metaphor. But the building is not a metaphor. It is, in fact, a building. A building in which people live. A building whose construction employs people, and whose existence expands the New York City tax base. Even better, it’s a building that created subsidized dwellings in a desirable location for 55 lucky families. The serious problems with housing policy in America have nothing to do with poor doors and everything to do with the literally millions of people in the New York area who aren’t lucky enough to get a subsidized unit on the Upper West Side.

After all, Yglesias notes, if the developer had built two buildings, one for the rich and one for the poor (editor’s filibuster: one of the weird things about this story is that we’re not even talking about class segregation against the poor – the subsidized dwellings are going for $908 a month for a one-bedroom, which means by HUD guidelines you’d need to be making at least $36k/year to afford this affordable housing – but rather against the working class, which is an unsettling increase in classist prejudice), no one would be talking about discrimination, and the real issue is that there’s not enough affordable housing in New York.

However, if you dig into Yglesias’ argument, not only do you find some major holes, but there’s some nasty stuff inside the holes.

Yglesias’ real target here is inclusionary zoning, which he argues “blend together two policy ideas [redistribution and increasing the housing supply and do neither of them very well.” In the former, “the buyers of the market rate condos are being taxed to finance a subsidy to the renters of the affordable apartments. Soak the rich to subsidize the poor. It’s a reasonable idea. But the only rich people being taxed are the tiny minority of rich people who happen to be buying into a brand-new luxury tower. Rich brownstone owners in Brooklyn are unscathed.” In the latter, it would be better to “change the zoning code to allow for the construction of more and denser buildings” because “ultimately, the number of people who can afford to live in New York City is a function of the number of housing units that exist in the city.”

Yglesias’ preferred policy? Drop inclusionary zoning, deregulate zoning density, and “then if you feel low-income people still need more help, you can tax all rich people and subsidize all poor people.” (Note the way in which working class people just got turned into poor people; hint to Yglesias – inequality is a problem all the way up and all the way down the income scale. There’s a reason people are talking about the 99%)

The first flaw in this argument is the elision Yglesias makes when he says that “the buyers of the market rate condos are being taxed to finance a subsidy to the renters of the affordable apartments.” What he’s actually talking about is that the developers of One Riverside Park got two different forms of public subsidies – a “density bonus” worth between $2-26 million and a “421a” tax exemption for builders of affordable housing that’s worth $21.8 million annually. What he’s not saying is that it’s all New York City taxpayers who are footing the bill for this – which includes lots of people making $36,000 a year. Those people shouldn’t have to walk into a publicly-subsidized building, a building that was subsidized with their own tax dollars no less, through a door whose very existence threatens stigma and discrimination. That’s a massive civil rights violation, not a metaphor.

The second flaw in this argument is that Yglesias’ solution is a terrible one – and its flaws point to the precise reasons why inclusionary zoning is absolutely necessary. Yglesias argues that we should opt for deregulation over inclusionary zoning because we need more density, and because “even new luxury units in Manhattan do something to increase affordability, and reversing Bloomberg-era policies in the Outer Boroughs could unleash substantial new accessible development all around the city.” Now, I have no problem with increasing density, but I do have a problem with the idea that new luxury units add to affordability. Yglesias argues that deregulation adds to affordability because “there are only so many millionaires in the country. As the number of projects increases, developers need to reach further down the market to reach a larger base of customers.” The problem with this is that this is New York City we’re talking about, a place where the supply of millionaires is not limited by the country but rather by the world – hence the current situation of a vacancy rate of 1.64% in Manhattan and “30 percent of apartments between 49th Street to 70th Street between Fifth Avenue and Park Avenue, are not occupied for at least 10 months out of the year” because they’ve been bought up by international speculators looking to park their money. Given this sky-high demand from the absolute top of the market, without inclusionary zoning to require some units for the rest of us, it would be entirely possible that luxury housing would dominate the market, squeezing everyone else out.

Moreover, even if we deregulated housing density in New York, there’s no reason why we shouldn’t also use the public’s resources to make that added density more affordable. The land, air rights, loans, loan guarantees, density allowances, and tax benefits that new development depends on are all resources that go to someone in the end  – ending inclusionary zoning only means that the wealthy get the entirety of the benefit right up front, and then the city has to chase them down to recapture part of it in taxes. Why not, while the city has the upper hand when all of these resources are still under the public’s control, make the wealthy hand over a share of the benefits right up front?

And then we can tax the wealthy and redistribute to everyone else. New York City is perfectly capable of doing two things at once.