January 29, 2005

‘Where Crack Once Ruled, Construction Now Booms’

"From central Brooklyn to the South Bronx to the farthest corners of Staten Island, new homes in the city are being built in numbers not seen in a generation," the New York Times reports today.

New York City approved construction of more than 25,000 housing units last year -- the highest since 1972. And many of those new homes are being built "in neighborhoods best known 10 years ago for their brisk crack trade and overwhelming economic misery."

Why? The article gives some credit to city policies encouraging this, as well as "a confluence of factors, including the city's rising population - fueled in large part by immigrants who are willing to take a chance on underdeveloped areas that are no longer riddled with crime - as well as the city's continual housing shortage and protracted low mortgage rates."

So let's recap here. A community with a housing shortage and lots of immigrants -- sound familiar, anyone? -- is able to generate an environment for new housing for middle-class residents.

In 2002, the Times explains, NYC Mayor Bloomberg announced a $3 billion plan to create new housing via repairing existing units and building new ones. The money would be spent in part by New York's Housing Development Corp. borrowing, and also loan programs "in cooperation with four commercial banks to develop thousands more abandoned or decaying properties in the city." This hasn't given government the responsibility of redevelop all these areas; intead, the government investment sparks additional private development.

"There has been a concerted effort on government's part to help finance housing," Jason Bram, a regional economist with the Federal Reserve Bank of New York, told the Times. "This is mostly true in poor neighborhoods, where they go in and other developers say, 'Aha, now there is an anchor!' and now the whole neighborhood improves."

Contrast this with, say, the Massachusetts "smart-growth" initiative to offer one-time credits of a couple of thousand dollars per unit for cities and towns that build high-density housing near transit stations, and it's almost embarrassing.

Please note that New York's government didn't just whine about affordability and decide that "affordable" actually means "no new taxes" for those lucky enough to have already purchased a home (hint: If you can't afford the pricetag of a home, it doesn't matter how low taxes are). When properly spent, a sizeable amount government seed money pays back that investment for decades in more taxpaying properties owned by working-class and middle-class residents.

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