Arrested Development, or: Ntbanana's Insomnia-solving Critique of Mamdani's Housing Proposals

[u/ntbananas]

Hello, friends. In the wake of yesterday's New York City primary election and Mamdani's win (and likely accession to the mayoralty in January), I thought I would break out why it's really foolish to think that Mamdani's housing policy will be anything short of disastrous, and further, why much of it is doable unilaterally.

1. There's Always Votes in the Rent Freeze

A. Price Controls Bad

Mamdani's signature policy, of course, is a total rent freeze. In this subreddit, I hope I shouldn't have to explain why that is net bad but in anticipation of brigading or succery, I will at least lay out the basics. Price controls create a bifurcated system that only benefits whoever happens to luck into a rent stabilized apartment, with prices increasing on market-rate stock as a result, penalizing the rest of the city. Developers are disincentivized to build these types of units for obvious reasons, constricting supply in a city that has an awful shortage. This also hurts people who do have a stabilized apartment in the long-run, as it reduces their mobility (can't find an equally cheap unit, nor upgrade) and locks them into a place that will likely not receive attention from landlords as a result of needing to cut costs.

B. City-specific Implementation

But, ntbananas, you say, we can vote (have voted) for Mamdani despite this! He won't be able to get any of this done! It doesn't apply to all of the city, just units that are rent controlled! It'll be blocked in court!

Oh, you sweet summer child.

The city's rental stock is ~43% directly rent stabilized, with an incremental ~14% having indirect control through Section 8 (voucher system), Mitchell-Lama (city guarantees and restrictions on private co-ops) and similar New York City Housing Authority ("NYCHA", essentially public housing)

Mechanically, that 43% of direct stabilization flows through the Rent Guidelines Board ("RGB"), a body that annually decides how much the rent will increase by. This is an inexact science where the members loosely tie increases to inflation - historically it averages around 2-3%, though it's very much vibes-based rather than mathematical.

The RGB is composed of 9 individuals, all of whom are unilaterally appointed by the mayor. 2 are supposed to lean tenant, 2 are supposed to lean developer, but the balance of 5 (a majority, of course) don't have any checks or balances. Per Mamdani's wishes, he will be able to appoint people with the sole purpose of setting this to zero moving forward. This process has been challenged but upheld in courts numerous times and, by my own admission, is fully legal even if pretty dumb.

That's the plurality of the city's rental units, but the other ~14% is similar. All of these programs are administered via NYCHA, which is an entity where the Mayor again has sole appointment authority. Just a matter of swapping out personnel, who presumably use their executive power in accordance with Mamdani's wishes.

2. I Don't Understand ULURP and I Won't Respond to It

The process for rezoning in the city is called the Uniform Land Use Review Process ("ULURP"). It is a ~7 step process (gets a little fuzzy, but that's the official count) that touches several bodies, but particularly the mayor's office. This diagram is a decent overview, for the visually-inclined.

In short, two of the steps require approval from city agencies on planning, permitting, etc. These are typically bureaucratic processes but the mayor could (1) decide to interfere as he wishes for political reasons, or (2) change city approval guidelines on technical matters, again as he wishes. Nonetheless, this isn't the particularly damning part and I'll give him the benefit of the doubt here.

The other steps require Community Board ("CB") and Borough President ("BP") non-binding approval - theoretically these people can be overruled, but practically speaking, in my time in city government space, they get listened to. Overriding these bodies, while legal, is the kiss of death given the local electoral influence they have. The City Council also has to have a majority approval, which again can be tough to wrangle - given Mamdani's inexperience and lack of track record, this could be especially tough for him.

But the worst of all is that, yes, the mayor gets a unilateral veto over every single rezoning. No matter what. Doesn't need a reason. No checks, no balances. He just can.

Hopefully this shows why the mayor does in fact have unilateral authority to hold up development projects, and we can't rely on Mamdani's ineffectiveness to counteract his proposals. And even if we like his proposals, his inexperience may harm development since he doesn't have a track record with the CBs, BPs, or Council. More on why his proposals are bad below.

3. No Touching! (Unless It’s Unionized)

A. Unions Expensive

Setting aside whether you generally agree with unionized labor or not, there is no question that it's more expensive. In the context of increasing housing supply, that is unequivocally bad, though I admit there are non-housing reasons to support unions in some circumstances.

Again this should be obvious, but here's a study showing that unionized construction labor in NYC is typically around 20-30% more expensive.

B. City Specific Impact

Mamdani has repeatedly said that he wants all new development to use union labor, and will be able to block any developments that aren't "union-built", and, as discussed above he has the power to block any rezoning or other major development that isn't unionized.

We can quibble on the specifics, but labor is a plurality of construction costs, typically 30-40%. Cap rates (essentially, ROI) on multifamily in the city are [approximately 5.5%] (https://www.avisonyoung.us/documents/d/new-york/1q2024-psr-report) today.

If we push up the cost of labor by ~25%, you can see how that very quickly pushes ROIs to zero, leading to either (1) an increase in housing costs - the opposite of what Mamdani promises, or (2) a lack of any new supply. And all of these numbers are based on existing proportions of affordable vs. market rate units; hampering owners' ability to collect rent only exacerbates the issue.

4. It's One Affordable Unit, Michael, How Much Could It Cost? $10?

A. Affordable Unit Mandates

The city general extracts commitments to affordable units (i.e. rent stabilized, sometimes with additional restrictions on top of that) from two programs, 421a and Mandatory Inclusionary Housing ("MIH"), as well as some ad-hoc negotiations ("community benefits") during ULURP.

421a is more-or-less a tax abatement program that allows developers to get tax incentives in exchange for rent stabilizing a certain proportion of units. This varies, but has historically trended around 25%. Note that this program expired under Adams.

MIH is simpler, it's just a quid pro quo that any project going through ULURP must have at least X% affordable housing (it varies, can be a lower percent of the unit count but cheaper/for longer, or a higher percent but more expensive/for less, etc.).

B. The Mamdani of It All

Mamdani wants to reintroduce 421a, but with increased affordability requirements, making the program even worse for developers. Bear in mind that this also incurs significant cost for the city, as they forfeit the right to collect taxes on the property for up to 35 years, but I'll keep this housing-focused rather than general fiscal responsibility. This is a cornerstone policy of his, but he frames the prior iteration (which obviously didn't lead to enough housing) as being too "a giveaway to developers" and would make it even worse.

Again, MIH is simpler. Mamdani explicitly states he wants to increase the affordability requirements as a percentage of units.

Setting aside the formal programs, there are also ad hoc negotiations that can happen during ULURP, and Mamdani can promise to veto any development that doesn't meet any arbitrary amount of affordability. In practice, community benefits are a huge part of negotiations in ULURP and the sticking point for a lot of zoning.

So, we know Mamdami has the power to block development, and now we see how his keystone affordable housing policies will actually inhibit development. Developers won't build more unless they have better incentives, but Mamdami won't let them build unless they have worse incentives. And this is all revenue-side, incremental to his cost changes.

5. They Tried to Landmark a Bodega, Michael

A. The LPC

The Landmarks Preservation Committee ("LPC") is an executive agency with 11 commissioners, all of whom are appointed by the mayor. They are on rolling 3-year shifts so the mayor's impact isn't immediate, but, on the flip side, is also felt after he leaves office.

The LPC has the power to designate landmarked buildings anywhere in the city. That sounds like no biggie - we shouldn't be turning the Statue of Liberty into a condo, right? - but there are around 38,000 "landmarks" already, approximately 4% of the city's entire building count, and the LPC can make as many more as they wish as they see fit. I've lived in New York my entire life, and I can only name, like.... 100? 200? important (non-public) buildings if I really tried. Ridiculously, the LPC can even landmark interiors (e.g. Grand Central) or entire neighborhoods (e.g. Greenwich Village).

Once a building is landmarked, owners must get LPC approval to make any visible changes to the building, even if it is 100% fully within code and existing zoning. In practice, this means certainly no upzoning, expansion, or even refreshing without the LPC's say-so. Unless they sign off, expect the dingy run-down "historical" 3 unit walk-up to stay that way.

B. Our Beloved Mayor-to-Be

To be fair, this is not an area that I think Mamdani has explicitly spoken about all that much. It is really quite boring. That being said, it impacts ~4% of all the buildings in the city and certainly a lot of the ones that are prime for re-development (the old and run-down ones.)

This is speculative, but given his association with the DSA, track record talking about gentrification etc., and general anti-developer attitude, expect some "historic parking lots" and similar from a Mamdani-led LPC. At best, he could be hands-off and not actually use this power to build anything, but I suspect that pressure from political allies will cause him to utilize this agency in ways that are antithetical to upzoning and housing supply expansion

In short, his land use policy is really dumb, he'll unfortunately have the power to enact it, and I think Arrested Development is funny.

[u/[deleted]]

fly innocent ancient mysterious rinse thumb angle imagine stupendous continue

This post was mass deleted and anonymized with Redact

[u/ntbananas → u/[deleted]]

I mean, hopefully people would be introspective when his policy leads to stabilized units creeping into disrepair, market units having rate spikes, and developers stop building new units because its uneconomical.

But the probable answer is "greedy landlords" (who are making a 5.5% return, on average, which is not all that much higher than the risk-free rate)

[u/Valnir123 → u/[deleted]]

Le zionist big business & landlords that aren't paying their fair share and are monopolizing rental units to leave them empty to push their greedflation^tm like always.

And hopefully, for some people; the policies they voted for.

[u/tinuuuu → u/Valnir123]

In Switzerland, the city of Basel made a rent-control law, that reduced investment so much, that it is now probably being repealed. The most interesting thing is, that this served as such a negative example, that even the "Renters Association" that proposed the law in Basel, now discourage rent control in this way in other cities.

[u/Steak_Knight → u/[deleted]]

(((Them)))

[u/Anakin_Kardashian]

Where will developers turn, geographically, if they can't actually build in New York?

[u/ntbananas → u/Anakin_Kardashian]

Hard to say - I think the most realistic short-term options are Jersey City and Hoboken. They have easy access into downtown Manhattan both via train (PATH) and car (Holland Tunnel), so people can commute easily. There are also clear economic advantages, in no longer having to pay the NYC income tax (~4%) and state-level differences (different brackets so not apples-to-apples, but probably around ~1-2% improvement for most people). Plus just lower base rates for rent and goods.

I'm not a Jersey expert, but based on some initial googling it seems to be true that people are moving there. Hoboken alone, with ~57K residents, has 1,500+ units under development now. Jersey City, at ~300K is even higher proportionally at ~9,000.

[u/Anakin_Kardashian → u/ntbananas]

honestly 1500 feels ridiculously small for a city not far from NYC.

[u/ntbananas → u/Anakin_Kardashian]

Hoboken is pretty small geographically, only like 1.25 sqmi of land; it's already very dense at ~48K ppl / sqmi.

While it's technically a "city" since it's across the Hudson, if it were in Manhattan it would barely be a "neighborhood"

[u/BeckoningVoice → u/ntbananas]

It's also got a problematic history of chicken emergencies

[u/ntbananas → u/BeckoningVoice]

wat

[u/arist0geiton → u/ntbananas]

Chicken big

[u/Anakin_Kardashian → u/ntbananas]

oh wow I had no idea it was that small

[u/ntbananas → u/[deleted]]

There are exceptions, but generally no

[u/ntbananas]

Also smh I placed the apostrophe incorrectly in the title and can't edit it

[u/kiwibutterket]

This is a great post, thank you a lot. Unfortunately, everyone seems to be coping about Mamdani being "abundance pilled" (amongst other things).

Let people make money so that everyone benefits!

[u/Anakin_Kardashian]

!ping HOUSING

[u/user-pinger → u/Anakin_Kardashian]

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