Real Estate Wealth Taxes as a Anti-Gentrification Tool

New Orleans   Recently I listened to an interview with a prominent local developer on WAMF in New Orleans as he was asked about gentrification.  He tried to walk the line between his self-interest and progressive values.  He was against displacement on one hand, but he opposed inclusionary zoning that would require developers to create affordable units in their properties.  He claimed it would sacrifice three units for every one that it created without mentioning that most of the three units built would be for high-end customers.  He opposed a tax on developments that would fund affordable housing or homeless programs.  He claimed the city and state had no money, so the real solution to gentrification had to be federal.

In some ways his argument was breathtaking in its chutzpah.  He was claiming to believe that gentrification was in some ways a pejorative term for a natural process, while opposing displacement, protecting his self-interest, and at the same time presenting himself as an advocate of a national remedy.  Unsaid was the fact that given our Developer-in-Chief president and the current situation in Congress and HUD, the chance of a federal remedy is much less than that odds Vegas would give a snowball in hell.

Chuck Collins, director of the Program on Inequality at the Institute for Policy Studies, in a commentary in YesMagazine made a much stronger, more realistic case for local action, saying:

Municipalities should move with due haste to enact high-end real estate transfer taxes, requirements for the disclosure of beneficial ownership, and regulations aimed at the disruptive impact absentee-owner-investors are having on our cities.

Collins doesn’t claim this will stop gentrification but makes the case that it will discourage “rapacious global capital” from exacerbating displacement and artificially increasing ownership and rental prices by discouraging the kind of offshore wealth capital “parking” that has been so destructive in Vancouver and London.  As an example, he cites the situation in San Francisco, another favor of “ultra-high net worth individuals” with over $30 million in assets, where voters passed a high-end real estate transfer tax on residential and commercial properties with $5 million price tags and higher.  According to Collins, the tax…

“…the tax expected to generate $44 million a year, which has been allocated to fund free tuition for residents at San Francisco Community College and help pay for the city’s tree maintenance program.”

That’s not the same as building affordable housing, but it’s moving in the right direction.  Furthermore, there’s no reason it could not leverage other funds to construct affordable housing or provide city-based rent subsidies.

We can’t wait for Washington.  We have to act now, and whether a real estate tax on $5 million or $1 million or whatever, if such a tax builds local equity by creating affordable housing or other programs that fight displacement, it’s worth a fight.

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Hope for Cities or Just Developers?

Looking northeast at soon to work LinkNYC station

soon to work LinkNYC station

New Orleans   It seems like cities are starting to get more attention, and if that’s true, that’s a good thing, but reading a recent special feature on cities, it’s not something without contradictions and concerns. This is true especially if you try to figure out where low-and-moderate income families and minorities fit into the coming profiles of the future. In some ways they just are not in the picture at least the one offered in the main from the New York Times, and this despite a recent feature in the same paper that talked flatly of the almost irreversible “whitening” of San Francisco where high housing costs and extreme inequality is leeching out the African-American community.

Part of the premise of some of the new hope for cities from the pundits and professors is the world seen dimly through the grim view from the suburbs. There is finally a consensus that cities are “safer,” which means they are ready to come back in again. Once again the question of “safer” for whom is unavoidable, but facts are facts, so we’ll ignore the bias for a moment. The same lens from the Trumpistas has all of us drowning in crime and gore in the urban space without being accompanied by the full disclosure that many of the zealots have done little more than drive quickly through cities for years, do their business, and leave before nightfall.

Unfortunately, reading the various pieces it was hard to feel comfortable about these new twists on urban revival. First of course there are huge, glaring omissions already mentioned, but followed quickly behind is the realization that the dominant perspective is not people-oriented really, but more developer promotions.

The examples of innovations are telling. There’s LinkNYC which would replace all remaining public telephone booths in New York City with wifi enabled terminals that can do tricks like recharge smartphones faster. Not surprisingly, this is paid for by tech companies and digital ads that will be on the booths, an expropriation of a public utility, and of course forget about lower income folks who still need those pay phones. There’s an apartment & condo complex in Austin and billionaire-driven building developments in Seattle that are at best ho-hum, but here are passed off as part of “remaking the modern cities.” There’s a story of Reno hoping to be Seattle and Kansas City about to have a “the largest co-working space in the world,” which is neoliberal, developer speak for building a monument to the gig economy and the decline of fulltime, firm-based employment.

The exceptions prove the rule in this parallax view of urban development and the modern dilemmas of the city. There is a piece on the rightly well-publicized and highly touted repurposing of a bank on Chicago’s South Side by Theaster Gates, Jr. in a celebration of black culture and an indictment of racism in the 97% African-American community there. There is also a discussion with an architect of the development of public space, which cannot paper over his conclusion that there is little and less being done.

The unaddressed problem is inescapable: where are the people – all the people – and what is being done to make a better place in the city for them and not just for young, white professionals and tech workers so many of these cities desire.

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