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| BIOGRAPHICAL NOTE | ||
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As the head of Muss Development Company, Joshua L. Muss represents the third generation in the family business since the arrival of his grandfather to Brooklyn in 1906. A graduate of Yeshiva College and Harvard Law School, Mr. Muss joined the business in 1965.
Specializing in the boroughs outside of Manhattan, Muss Development Company has recently completed two communities comprising 1,500 townhomes on Staten Island; retail centers in Forest Hills, Jackson Heights, and Staten island; and a 1.5 million-square-foot mixed-use hotel, office building, and garage in downtown Brooklyn. The company is about to begin work on a 15-acre residential, office, and retail center in Flushing and a 20-acre beachfront residential community on the South Shore of Staten Island. A 15-acre mid-rise oceanside residential community in Brighton Beach is under construction.
Aside from the daily, ongoing challenge of the development business, Mr. Muss has assumed an active role in addressing the inordinate difficulty of developing within the boroughs, where the risk/cost/reward ratio differs so radically from that within Manhattan. His advocacy focuses on Manhattan's critical dependence on its traditional but diminishing source of labor: middle income housing in the boroughs.
The following is a talk given by Joshua L. Muss at Baruch’s School of Public Affairs on March 9, 2000 to students in the undergraduate real estate and metropolitan development program.
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Middle-Income Market-Rate Housing in the Boroughs
Over the last 95 years, Muss Development Company has been developing Brooklyn, and Staten Island. That’s where 98 percent of our product is built. I’m going to explain some of the challenges of developing housing in these areas. These issues are complicated, but I will try to explain them as simply as I can. If I’m building a project in Queens, there are certain issues that I have to address. In Queens, which has been pretty well developed, to develop a large site you usually have to get approvals, such as changing the zoning that’s in place at the time. Major zoning changes can take anywhere from three to five years. Then, because you get caught up in economic cycles, or you get caught up in interest rate fluctuations, the evolution of the waiting period can be an extraordinary experience. The biggest problem in developing housing in the boroughs is that the costs of building there are the same as the costs of building in Manhattan. We have the same fees. We have the same interest rates, of course. And, more importantly, we have the same labor costs. Labor costs in New York City are negotiated by the construction managers based in Manhattan, where most of the construction is taking place. And in Manhattan, office buildings today rent for $40, $60, or $100 per square foot, and a two-bedroom apartment rents for $3,000 or $5,000 a month or is sold for $500, $800, or $1,000 per square foot. The owners are not going to tolerate a strike because too much is depending on completion. They can afford to be generous-- there’s a tremendous profit margin.
When building an apartment in the boroughs, where a two-bedroom apartment rents for somewhere between $1,200 and maybe $1,800 a month (very rarely does it go that high), I have to pay the same costs as I’m paying in Manhattan. Obviously there’s an affordability problem.
The other issue, even more difficult today, is simply getting the labor, which is in short supply when there’s so much construction going on. We have to compete for a contractor being paid premiums by a builder who is selling for $700, $800, or $1,000 per square foot. That builder can afford to pay the premium, and he’s going to pay fast because he wants to complete the building fast so he can collect his money fast. These are just some examples of issues that exist.
We started a dialogue on the issue of development of housing in the boroughs in about 1996 primarily because we were beginning to undertake mid-rise residential development. In scoping out the needs for the project, I realized something very strange was happening. Even though the market had basically started to recover in 1996 and 1997, there was no housing being built in the boroughs. None whatsoever, except for a certain amount of low-income housing generated by the New York City Partnership. We prepared a study in 1997 that addressed the issue and tried to quantify and define middle-income housing. "Middle-income" has generally been used lately to describe low- or low-middle-income housing. There’s a need for low-income housing, but I’m not addressing that issue at the moment.
Why is there no middle-income housing? Why should we worry, since Manhattan is doing so well? Why not just take pride in the fact that New York City as a whole is doing very well? What’s the big deal if the boroughs don’t produce housing? The fact is that when one analyzes it, the long-term ramifications of the problem are very troubling.
This issue has been addressed by the media recently. The most startling article that I’ve seen was in the New York Times concerning the salaried homeless of Silicon Valley. I could clip out a dozen articles from today’s newspaper that add anecdotal evidence to what we’re talking about. In the Sunday New York Times, I think on March 5, an article described a developer in Atlanta who was developing in the suburbs and now is returning to concentrate on urban development. I have another article from the September 12, 1999, Sunday Times: "When the greener grass is concrete, the suburbs are not the panacea." And this is a startling headline that was in the Daily News in 1999: "Jam City."
Here’s the point: New York City is basically focused around Manhattan. We all accept that. Manhattan is the center of commerce; 95 percent of the office space in New York City is in Manhattan. And Manhattan, of course, is fed by a rapid transit system that is unique in the world in terms of its ability to transport vast numbers of people in the City of New York. The number of people who come into Manhattan by rapid transit in one day exceeds the population of almost any other city in the country.
Traditionally, the boroughs have been the "bedroom boroughs." Traditionally, people have lived in the boroughs and have taken the subway into the Manhattan office buildings. Traditionally, in Manhattan itself, there has been a mix: there has been low income, there has been rent control, there’s been rent stabilization, and then there was always the upper income. That mix is rapidly disappearing. Manhattan is becoming almost exclusively upper income. Certainly any new housing is upper- to highest-upper-income, for the zillionaire type of person who can afford it.
What’s happening in the boroughs? Are they taking up the slack? Well, people who have lived in the boroughs for many years and have their houses or apartments and their route to get to work are doing fine. But if somebody is looking to move into New York City, if somebody has grown up in a house in the boroughs and wants to stay in their neighborhood, if an immigrant comes into New York City and is looking for middle-income housing or is aspiring to improve himself, where does he go? I can tell you unequivocally, there is very little choice in where to go. There is virtually no new housing at all in the boroughs. So big deal, some may say.
Well, for example, let’s say I live in the boroughs. I’m trying to upgrade myself. I got a salary increase, and now I’m making $50,000 or $80,000 a year or $100,000 a year or more, and I’m looking for a place to live. The single-family houses are now selling for $300,000 – $400,000— and up! I can’t afford that. So I’m looking for an apartment. There are no apartments. With rent control and rent stabilization, people stay in place, even though they may have raised three children in a large apartment and no longer need all that space, there is no financial disincentive, so they stay put; besides, they have no place to go. In fact, people living in a private house with three or four bedrooms, who raised a family, can sell the house today for $400,000, $500,000, $800,000, and more. But where are they going to move? There’s no place to go. So they stay put.
Five years ago, if they sold the house and they were 60 or 70 years old, they took a tax hit, so they might as well stay there until they die, and then their heirs would have a new appreciated basis. You learned that in tax class. But that law changed. Today you can sell a house and not report $500,000 of income. Why don’t people sell their houses? They don’t have to report the income as a gain. They could defer it. They could move into a nice apartment, where they don’t have to do the maintenance. They wouldn’t have to mow the grass. But there’s no place to move. So not only are those in rent-controlled and rent-stabilized apartments staying put, houses aren’t turning over either.
Since I can’t find a place t o live in the boroughs, I’m going to look elsewhere. Well, obviously Manhattan’s out of the question. I’ll look at Westchester. I’ll look at Nassau County. I’ll look at nearby New Jersey, Bergen County. Houses there are even more expensive than the boroughs — maybe not as expensive as Manhattan, but still out of reach. So I start looking in Suffolk County, Orange County. I’ll look in Middlesex County, and I’ll find a more modest house, maybe in the $200,000 – $300,000 range, maybe a little bit more; we’ll stretch. And then I try to commute back to my job. "Jam City." Can’t get back. You want t o know something? You can’t even find a parking spot by the railroad station because they’re all occupied. So even if you have a nice house in the suburbs, there’s no way to commute back into the city. And it’s going to take you an hour, or an hour and 20 minutes, when traffic is reasonable. You can’t drive in; that’s out of the question. And not only that, the commute is going to cost you a lot of money.
So guess what you’re going to do? You’re going to find a job out there in Orange County, or in Middlesex County, and you’ll take less pay. And the boss who has office space in Manhattan, who can’t find labor at any price, is going to move his offices out to Middlesex County, where he has less expensive labor, less expensive construction. And that’s where he lives anyway.
And then, what’s going to happen in Manhattan? Maybe the market will take a downturn, and you won’t have all your zillionaire dot-com, high-salary whiz kids to man these $40- or $80-per-square-foot office spaces. And all of a sudden, they’re not going to be able to fill these office spaces with middle-income office labor because it has disappeared from the City of New York. That’s what the article on Silicon Valley talks about. And it’s very scary, because it can happen in New York City. My paper was written in 1997, but nothing’s changed; nothing’s happened. There are a few more construction sites in the boroughs. There are some honest efforts; there are some programs. There is a little housing here, and a few buildings there, but basically nothing has happened. Well, why not?
My father used to talk to me about the Depression. Now I understand it, because I’ve been through it. In the period between 1988 and 1995 there was a depression in the City of New York. If you built houses--and we had houses built in Staten Island--in October 1987, sales stopped. They stopped completely, like the economy just fell off the side of a cliff. In the subsequent six years, 90 percent of the developers in New York City went broke, and the banks that lent to them lost their money and have not yet recovered psychologically. So the traditional way of financing housing is not there.
In Manhattan, you can show extraordinary projections and take mortgages at 50 percent of value. It’s sexy to develop in Manhattan, and there are people and institutions that have a lot of money who can and want to take risks. Therefore, there is comparatively a lot of development. In the boroughs, where you do not have that kind of margin, and where nobody with any sense would put any cash because they could put it in Manhattan, you don’t have financing for housing.
The alternative has been the investor, the equity market. A lot of the developers you see building major projects have 5 percent of the action, and the investors have 95 percent. The investors do not know where the boroughs are!
The major issue is the cost of housing. Keep in mind that the boroughs of the City of New York comprise about seven-eighths of the population, probably more if you count the uncounted. And the boroughs are entities in and of themselves. But the boroughs lie in the shadow of Manhattan, so that everything is gauged by what happens in Manhattan. If Queens or Brooklyn were part of Duluth, Minnesota, labor wouldn’t be getting $75 to $100 an hour. When I hire a union contractor, the cost of labor is somewhere between $75 and $100 an hour. If I go to Duluth, Minnesota, to build, and I ask, "What’s the cost of labor?" and they say "$75 to $100 per man hour," I’d move elsewhere because you can’t make it work. That’s why they don’t get $75 to $100 an hour in Duluth. The rate there is probably about one half or one third, because whatever people can afford, they pay, and labor understands that. In Manhattan, you can afford to pay $75 to $100 an hour, but you can’t afford that in the boroughs. In the boroughs, the cost of labor is the same as in Manhattan. The fact that you can’t afford these costs is irrelevant. That’s the shadow problem of the boroughs.
Here’s another example of the cost impact: an issue in Manhattan is reported in the newspaper, and the politicians react. If Donald Trump builds a building that’s 90 stories high and upsets the community, the politicians react. In this case, they reacted very quickly. There was a determination to change the zoning to reduce bulk. Developers were taking air rights for development from one site, moving them next door, and before you knew it, you could build a very tall building. So the reaction was, "Let’s control it by changing the zoning." Guess what? The zoning has been in place for 50 years. There are problems with it, but you can’t change it in six months. But it’s being done. And the zoning changes affected because of this particular location in Manhattan, and another location in Brooklyn Heights, are all of a sudden being translated into all of the square miles of all the boroughs. It doesn’t work, because it creates another adverse impact on the ability to build economically in the boroughs.
A similar situation happened with waterfront zoning. A similar situation happened with sprinklers. If there’s a fire and somebody dies, let’s correct the situation that caused the fire, and appropriately so. So there was a fire about a year ago, and within a month the politicians were competing with each other as to how quickly a sprinkler law could be passed. To my knowledge, each year in high-rise or mid-rise fires, the total number of deaths is in the single digits. More people die every year crossing Queens Boulevard, but there has been no rush to legislate safety there! And the fact is that if a new law has a severe impact on the cost of housing, and you consider that impact on people who need a place to live, you have to act slowly, quietly, and contemplatively. It goes on.
You’ll find that in Staten Island, for example, communities have single-handedly downzoned their areas to stop the proliferation of housing. This is very nice when you live there, but it’s making it more difficult and more expensive for people to get appropriate housing. And the fact is that Staten Is land has been about the only place for unsubsidized, affordable new housing (if affordable is defined as what the middle class can afford). A person making $50,000 has been able to afford a new home on Staten Island. But those days are gone, because all of a sudden you can’t build attached houses. There is reason, in New York City, to build attached houses. There are far more attached than detached homes throughout the city. In the meantime, families are leaving New York City by the millions--literally. In the last decade, almost a million people have left New York City. The city has maintained its population because there’s been a huge influx of immigrants, but it’s losing its middle class.
Well, what can be done? I’m just going to throw out a few examples, and there are many more. We created an achievable five-point program:
1. Reform real estate taxes in New York City. The way the tax code is written, there are two classes of taxes. A house is taxed differently than an apartment. A house that would cost, say, $300,000 (I’m sorry to throw out numbers like $300,000 dollars but that’s about the lowest level sold today) will have a real estate tax of approximately $3,000 per year. And there are significant abatements available for as many as 21 years. If you sell an apartment for $300,000, the tax is going to be double, about $6,000 a year, and the abatement is for half the time. Is there a reason for this? No, that is just what the law says. The only opportunity to create a meaningful quantity of housing within New York City is by building apartments. In New York City, because empty land is so expensive, the all-American dream of owning a house is more likely to be an apartment because, except for the wealthiest neighborhoods, the only way to develop successfully is to build more than one unit on an available site that you buy.
Another problem with the tax statute is that t he real estate tax is not based upon the price of the unit you sell, it’s based upon the cost of the construction. So, you remember I’ve said it’s almost as expensive to build in t he boroughs as it is in Manhattan. Sometimes it’s more expensive because you often have to put in the infrastructure. You have to create a site. In Manhattan, you just put a building into the foundation and hook up the water and hook up the electricity. It is interesting, and very discouraging, to report that a comparably sized apartment in Trump International Tower is taxed almost the same as an apartment in Brighton Beach, Brooklyn. The selling price isn’t the same, but the cost of construction is almost the same. It is very discouraging when you think about the impact prospective taxes have on the sale of apartments .
Another disparity in taxes is in a program in New York City called 421A. This provides for a reduction in taxes for new construction. New apartment buildings in the boroughs usually qualify for a 12-year abatement. In Manhattan, there’s a program called the "80/20" program. The 80/20 program offers substantial incentives if you build 80 percent market-rate and 20 percent below-market-rate units. The concept assumes the 80 percent subsidizes the 20 percent. In fact, the Governor recently wanted to cut a ribbon at an 80/20 building, but he was waved off because one of the apartments on the top floor was renting for well over $10,000 a month. This, in a "subsidized" building! And the subsidy included a tax abatement for 23 years. That’s inexplicable. (The program doesn’t work in the boroughs because the 80 percent needs subsidy.)
2. Reform fee structures. To build a building in Queens, on Roosevelt Avenue in Flushing, on Springfield Boulevard, or on Hylan Boulevard in Staten Island, you pay the same fee per square foot to the city to get a permit as if you’re building on Madison Avenue and 59th Street. To pay for the Uniform Land Use Review Process (ULURP), a zoning change procedure, you pay the same--up to $250,000--for a process in the Bronx as on Park Avenue. This makes no sense. There’s no reason for not having a distinct ion. That’s one of the inequities that should be corrected.
3. Re-establish labor cost differentials. Formerly, in the City of New York, there were differentials in labor costs between Brooklyn and Manhattan, or Staten Island and Manhattan. The plumbers had different rates; the electricians had different rates. However, an interesting thing happened in the early nineties when there was no work for anybody: they eliminated a lot of these differentials. Not that they were significant, but they were something. Nobody was working, nobody really cared, nobody was paying attention. Now these differentials are gone. And now it is virtually impossible to have construction in any quantity in the boroughs. I’m not talking just about residential but about office space as well. You don’t see any office space being built in the boroughs. There must be a distinction between labor costs in Manhattan and the boroughs.
4. Establish and/or adjust existing federal, state, and city financing programs. There are federal, state, and municipal financing programs (I won’t go into detail) that do not relate to the world as it exists today and must be brought into conformity with existing legislation and reality to make housing possible.
5. Apply Industrial Development Authority (IDA) type abatements for housing in the boroughs. There’s an IDA program that helps build industrial buildings, factories, and other manufacturing facilities. It allows certain incentives: it abates sales tax for materials, and it eliminates mortgage recording taxes (a 2.75 percent imposition). Transfer fees imposed when you buy a house or apartment should also be abated. These and similar taxes and fees could be eliminated or abated because if there is no construction, the money is not coming in anyway! This would translate into savings of $5 to $10 per square foot. When you’re selling an apartment for $500 - $1,000 per square foot, it’s hardly worth the effort. But when you’re selling an apartment for $200 - $300 per square foot (or the equivalent rent), it can be the difference between making a profit and not. That’s what it’s about. I know it’s hard to believe, but, without the potential of profit, a developer is not interested in undertaking the difficulty and risk of developing in the boroughs.
No lobbying group represents developers in the boroughs because there aren’t very many developers around. There are issues begging for definition and resolution, begging for somebody to take the lead. There are issues in the City of New York that have to be addressed. I don’t know what you students are planning to do when you graduate. If you look for a job with a developer, in Manhattan it’s much easier to get things done. On the other hand, in Manhattan there’s a lot of competition: there’s a building across the street, there’s a building down the block, there’s a building two blocks over. All of a sudden, if there’s a break in the economy and competition for price, as fast as it went up, it can go down. In the boroughs there isn’t that much competition, so that you have some protection against the variables of the marketplace.
These are some of my thoughts. I welcome comments, questions, friendly advice.
| QUESTIONS AND ANSWERS | ||
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Question: As a developer, isn’t it advantageous to invest in multi-family as opposed to single- and two-family homes? You mentioned earlier that you get tax benefits because of the high expense and high value of the land. Why then do we not see a lot of multi-family construction going on? Instead, you’re seeing the opposite : a lot of single- and two-family homes being constructed, especially in the boroughs.
Joshua L. Muss: Zoning has a lot to do with it. If you have a lot in the middle of a residential neighborhood, you’re limited to single-family homes. Also, in the market for single-family houses, there are more affluent people who can afford and are willing to pay for a single-family house than there are people who can afford what it would cost to buy an apartment. In the boroughs, the higher income element of the marketplace is looking for single-family houses. The biggest problem is that there aren’t that many sites that are zoned to build an apartment building in a good location. They’ve already been built. To make zoning changes or to take a site that’s not yet been developed, you have a long pipeline until you get approvals to build. It could take several years. To go into a zoning change is a mandated seven-month process. And before you get there, you have to spend a year or two satisfying the City Planning Commission. Then you have to get financing. And you hope it’s at a time when the economic rates are favorable. Consequently, there aren’t that many people who are out there starting developments in the pipeline. And any project under way today would have had to been started three or four years ago, and nobody was doing anything four years ago.
Question: How do you decide where you’re going to develop? Would you start a new development, or would you build near a Queens West? Would you consider development in Long Island City because something’s already started and values have gone up 11 percent, and you can plan on the area being up and coming? Or would you create a new development in an area that’s off the beaten track right now, in the hopes that in the future it’s going to rise?
JLM: I have a lot of opinions about Queens West . When a development has taken place, and there’s a sense of growth in the neighborhood, it’s going to stimulate the neighborhood. I would like to think that it shouldn’t have taken any stimulation in the last five y ears for prices and values to go up. The sad part about it is when you say house values have risen 11 percent (while in Manhattan values have gone up 100 percent or 500 percent), it shows that maybe Queens West didn’t do what it was supposed to do. Queens West is probably the most heavily subsidized development ever created in the City of New York, and yet there’s only one building up. That says something. They have the same problems that I previously described. It costs the same to build as in Manhattan. While the views are wonderful, half the views don’t look out on the water. And the fact is that it’s a tough neighborhood; it is still not there. It’s going to take a long time for it to be developed. To my knowledge, two other buildings are going up. When the first building was finished, the city went out, issued a Request for Proposals (RFP) for the other sites and said, "Now that we’ve paid for all that has happened, we want you to pay us (the city) for the privilege of developing here." That RFP was eventually taken off the table because there were no takers. That’s a problem. You would think that in the year 2000, when we’re at the zenith, the height of the most exciting market boom in the City of New York, something could be built on the water, facing Manhattan, not far from a subway, even with the community incomplete, without having to have the city stimulate, stimulate, and stimulate. It should happen on its own.
Question: People living on the south shore of Staten Island a e saying that they want to stop development because there are too many houses being built and there are not enough schools. Do you think they should stop building houses down in the southern part of Staten Island, or should it be developed more?
JLM: We own a piece of property in southern Staten Island. I am subjective on this issue. I think it’s incredible that the one area in New York City that has more available school seats than any other location can cry shortages and stop housing. What the community is saying is, "I know you’re building new schools, and I know you’re planning those schools, but you shouldn’t build a house until the school seats are exactly there." It is a manifestation of the zoning that took place about 20 years ago, called the South Richmond Zoning of Staten Island, which mandated school seats. It’s the only location in the entire City of New York where this is required. In Flushing, Queens, or other areas of New York City that have really serious crowding in the schools, the community can’t stop new homes. It’s very hard to feel sympathetic to people who want two empty seats for every child so that there won’t be any crowding. Staten Island is where "Not In My Backyard" (NIMBY) was founded. Since 37 years ago, when the bridge was built, each person who came to Staten Island wanted to be the last one in. But the bridge is built and Staten Island still has a lot of developable property. They want to think that they’re not a part of New York City, but they are! And there should be housing in Staten Island like everywhere else.
Question: You mentioned that it sometimes takes between three and ten years for a project to take hold. Does it matter if it’s a very big project or a very small project?
JLM: No. We recently completed a project of 270 houses. It’s a big project, but it ’s not the biggest project. My father bought the land in 1961, I believe. The last house was delivered in 1998. I have a history of this site that you wouldn’t want to hear. It’s filled with tearstains. By the way, is there anybody here who is interested in being a developer? Where do you think you’re going to get started? Where would you look for your first job? And what kind of job do you think it would be in order to get into the development business?
Question: (Student): I’m trying to get into property management
JLM: Absolutely, that is one way of doing it. You get to understand the mechanics and the working of the actual building itself and understand what makes it tick.
Question: (Student): I have already started. I own up to six properties in Livingsport, Bushwick, and Jamaica. I’m building multi-family housing. I’m gut-renovating and renting out in Brooklyn.
JLM: There are three ways to become a developer. Number one is to start off just exactly as you’re doing. You work for a realty business; you work as a contractor; you work as a real estate broker. You start to understand what it is. That’ll take a few years. Then you try to get into a position where maybe you can manage a building, you understand enough to put together some equity to buy, renovate, build, or lease. You’re in a position to understand a terrific bargain when you see it. Somebody is out there selling a building or building lot with a $30 per-square-foot lease from Genovese Drug Store, and you’ll grab it. You don’t sell it to somebody else. See a terrific building and buy it for yourself.
Question: (Student): Last time I went to a bank and applied for a loan they said," That’s it. You’re maxed out."
JLM: Did you finish the first project?
Question: (Student): Yes. I finished the first six properties. I went to the bank to refinance to buy the second. And I did that for the third. After my sixth, I’m stuck because no bank wants to fund me. "You have too much riding on you," they say.
JLM: So wait a year or two and solidify your position. Get more equity into what it is that you have now and then move on to the next one. The banks may know more than you do about your vulnerability. It doesn’t pay to expand too quickly, because that’s t he way you may fail quickly. They may be telling you something that you should listen to. I can think of about 90 percent of the developers in New York City who until 1992 or 1993 thought that they could parlay the bet and keep it going. And today, it’s not so easy to do it quickly. In and of itself, real estate is a very slow process. When I get to the third reason, you’ll understand. The second way to become a developer is to have so much money that it doesn’t matter how much you lose. And there are people who are doing that. The third way is to have a father in the business. My grandfather originally came from Russia to this country in 1906 and started building houses in Brooklyn. Then he ran into the Depression. My father started building after that and he had his own Depression, which was the Korean War, when he was starting to build. All of a sudden there was no housing, no materials; I remember those days. You can’t do everything in one generation--it’s very difficult. I know guys who tried it to do it all in one generation but then they lost everything. It’s not worth it. I happen to be lucky. I have two sons in the business. I have two daughters also. One is in the business. One is figuring it out. And it takes time. This project that I talked about (in South Richmond with 270 houses) took over 30 years to complete.
Question: Do you find it easier to concentrate on one single area, as opposed to the city as a whole?
JLM: I consider our area of concentration to be the boroughs of the City of New York. Somebody else might concentrate only on stores, somebody else might concentrate only on Tenafly, New Jersey. Somebody might concentrate on building only housing. It certainly is hard enough to understand any one discipline. You shouldn’t go running around doing a lot of different things until you know that you’ve mastered one discipline. And when you think you’ve mastered it, you’ve already made a mistake because there’s always something else to learn.
Question: Do you know why some developers advocate for the Second Avenue subway line? At the beginning of your speech, you mentioned that Manhattan is connected and affected by the subway system. We have many buildings on the East Side, but there’s only one subway line.
JLM: Most of the advocates are people who have property interests on the East Side and feel that the subway would be advantageous. The truth is that if the proposed Second Avenue subway is built to its whole potential, as it probably should be, it will help transport people from the Bronx right through and back from Brooklyn. That’s what it’s meant to be. Unfortunately, the way I believe it’s being proposed is that it will run from 125th Street through midtown Manhattan, and that’s it. That’s stupid. It would alleviate some of the crowding on the Lexington Avenue line, but that’s hardly a reason to spend 20 billion dollars. Another observation is, "Why do you care? It ain’t going to happen while you’re alive." It’s going to take a long time. We should care, because that’s planning for the future. It should be planned based upon its overall value, not upon the politics of the moment. Assemblyman and Speaker of the House Sheldon Silver wants it to go from uptown down to the Lower East Side (his district). That’s shortsighted. It doesn’t go far enough.
Question: How would you describe the loss of low-income housing as it relates to the next "best place" phenomenon? Right now, it’s the Lower East Side people are moving back to, and it’s not your grandparents’ old Lower East Side. People and businesses who have had a place there for 100 years are now moving out be cause they can no longer afford the real estate prices. They can’t afford their apartments as their rents are going up, slowly. It’s like the original urban renewal plans. They did one floor of a building, renovated it, and kicked the tenants out.
JLM: You’re talking to a capitalist, so keep that in mind. The free enterprise system is going to have casualties. The question is, is this going to be a city of only the rich? That’s a problem, and that’s where the boroughs should be the safety valve. If New York City is New York City, you’re talking about Brooklyn, Queens, Staten Island, and the Bronx, not just Manhattan. If this is New York City and there’s displacement on the East Side (which is nothing that people thought would happen), these people could move to Queens or Staten Island. But G-d forbid they should move out of Manhattan. You see, that’s the issue. This is one city, and it should be treated alike. But also, there should be a realization of the inequalities that have to be attended to, like the cost of labor or the same taxes. But I don’t know that anybody has the G-d-given right to live in Manhattan.
Question: The MTA is now discussing having sliding scales for subway fares. At peak times you would pay a vastly different amount than if you wait until six o’clock. So if some one happens to live in the outer areas of Queens and takes a bus and a subway and needs to be at his job at 7:30, that means that he will pay twice the amount that he is already paying to commute. If he’s living on the Lower East Side, he cannot afford to move out to the boroughs, because now his commute will cost him twice the amount. I think that pricing these people out is really the is sue. It seems like it’s a Catch 22--you move these minimum wage people out to the other boroughs and then you make the commute more expensive.
JLM: Well, I don’t know if it’s more expensive, but I’m sure, as I said, that you can’t think everything out. That’s why there shouldn’t be one pat answer. You don’t go out and zone an entire city because there’s a problem in Manhattan. By the same token, you don’t go out and create different fare levels without analyzing the impacts. I’m not an expert on mass transit, so I can’t answer that. Guess what? New York City buses and subway are a lot better than taking the Short Line bus from Orange County. In other words, there is a transportation system in place that works. The question is, do you take advantage of it, and how do you take advantage of it when nothing’s happening, in terms of development, outside of Manhattan?
Question: Do you recommend that developers concentrate their efforts in communities planned for revitalization?
JLM: Sure, because there’s a force in place that is nourishing the area. Hopefully, there is a momentum going on. And you could become part of the critical mass. You have support, people who are working for the same purpose. That’s where you want to get involved.
Question: How do you know when a community is about to go through that stage of revitalization?
JLM: You know it if you see it. You get a sense of the civic commitment. You get a sense of it just by walking the streets and seeing that things are happening. You’ll read about it in the local newspapers. Almost every community in New York City has local papers that feature any-thing positive that’s happening. So you’ll know if a community is undergoing revitalization.
Question: Speaking along the lines of the community, does it help to go to the community board first and see what they would like, since they’re pretty much going to be your main opposition from day one?
JLM: You’re jumping to a conclusion that community boards oppose. If there’s something that needs an approval, go to the community board and give them a presentation of what it is you plan to do. Do not necessarily ask for their approval. You could ask for input, but you should take a very positive stance, saying, "This is what we plan to do. Here’s how we feel it will be an advantage. I need this authorization." It ’s good to give them an early notice because they usually are quick to oppose anything that they didn’t know about. Work with the communities and the politicians. If your idea is good and you develop trust, you’ll be surprised at the encouragement you may get.
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