Land is the issue all over the world; One57 sets another sales record & underpays property taxes
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Scott Baker
Jan 16, 2015, 12:38:56 PM1/16/15
to Scott Baker, Edward Dodson, Andy Mazzone, Billy Fitzgerald, Alanna Hartzok, Joshua Vincent
Hello Common Groundlings (and friends)!
I've written about One57 before, and its 94% tax break. The building has just 94 units, despite being nearly the height of the Empire State Building. The reason for this is that many of the apartments span entire floors, including this one on the 84th floor (#84) that just sold for $52,952,500, the record-holder for that week:
A Full Floor at One57 for $52.9 Million (http://www.nytimes.com/2015/01/04/realestate/a-full-floor-at-one57-for-529-million.html)
As an earlier related article on a similar apartment (At One57, $55.4 Million and Ready for Entertaining: http://www.nytimes.com/2014/12/14/realestate/at-one57-554-million-and-ready-for-entertaining.html) says:
The monthly carrying costs for the 6,240-square-foot apartment, No. 81, are a relatively non-astronomical $12,132, owing to a tax abatement negotiated by the sponsor.
And in general (http://www.nytimes.com/2015/01/06/nyregion/real-estate-in-manhattan-set-sales-records-in-2014.html):
Manhattan’s superluxury market flourished in 2014, ending the year with nearly triple the number of closings with prices at $10 million or more in the fourth quarter compared with the same quarter a year ago, according to Urban Compass. Extell’s One57, a new tower on West 57th Street that overlooks Central Park, made up the top five sales for the quarter, ranging from $8,819,873, or $4,390 a square foot, for Unit 55B, to $56,079,298, or $8,987 a square foot, for Unit 82.
Yet, Governor Cuomo wants to make property taxes even lower than the current 2% tax increase cap allows. He is proposing a property tax cut: Cuomo unveils tax credit for 209K city residents. This is exactly the sort of thing that will encourage higher prices and more hoarding, while delivering even less real estate revenue to the city.
Mike Durant, New York director for the National Federation of Independent Business, quickly slammed the initiative as unhelpful to small businesses.“The governor’s proposal is anything but a tax cut,” Mr. Durant said via email. “It simply is a gimmicky idea that has long been kicking around Albany which shifts the property tax burden while avoiding addressing the cost drivers. It also does nothing to provide relief for small businesses as it does not address the sky-high property taxes on commercial property. For us, this proposal is a nonstarter."
Mr. Durant may not understand Land Value Taxation either, but he is right to say the proposal of the Governor - whose biggest campaign donors are the Real Estate lobby - will do nothing to bring down costs on commercial property, and in fact, the refund will only be factored into the price, which will then go up accordingly.
And many of these priciest addresses aren't even occupied. Up to a quarter of all NYC apartments are non-primary residences, says this article in the NY Times: New York City’s Emptiest Co-ops and Condos and this does not even include the 421a residences, which are among the most likely to be used as investment properties. Is this location privatization fair?
As regular readers know, Common Ground-NYC has been opposed to these huge tax giveaways to the already wealthy for some time. We've supported Assembly Member Dan Quart's bill to Assess NYC buildings using comparative properties and written a memorandum of support, signed by both members and prominent Georgist non-members. Of course, this would never happen in a Georgist world where the full rental value of the land was collected. This needle tower, as big as it is, is actually a waste of space, because its enormous apartments, which aren't even occupied for much of the year by many of its foreign owners, could house 2-3 times as many people, mostly New Yorkers, if the Land was properly assessed and taxed. Instead, the rent is privatized first to the developers, and later to the owners, when they sell. Very little of that will "trickle down" to New York City; it will instead be invested in other assets, including other Land.
This wealth is definitely NOT trickling down to the poorest population, including the now-record "average nightly population of more than
50,000 people. That number was up 19% from 2012, and up 61% since (former Mayor) Bloomberg
took office." (http://www.opednews.com/articles/A-Dickensian-nightmare-Ne-by-Danny-Weil-Banksters_Bloomberg_Capitalism_Children-150105-980.html).
As some readers will remember, in my presentation on Case Studies in New York City Property Development, given 3 times over the past year and a quarter, I cited a Picture the Homeless study that showed there are 3X the number of vacant apartments needed to house all the sheltered homeless. Of course, some of these are in the process of being bought and sold, but many more are simply warehoused, in some cases in need of fixing up (which could provide jobs for some of the poor too). Our long-standing support to Tax Vacant & Unused Land to Return its value to the Community is one of the best ways to address this inequity.
Our Subways are in need of more and better funding too, as new MTA Chairman Tom Prendergast recognized in a recent presentation to the NY Law School: NY Law School Commentary on Talk by Tom Prendergast, Chair of NY MTA (emphasis added)
“I do believe it’s important that we get a menu of different
funding sources up there that are sustainable. Sustainable in terms of
the revenue they bring, and sustainable in terms of their long-term. In
the sine-wave cycle that some of these revenue sources have, you
hopefully have ones that are in a peak while others are in a valley.
Value capture on real estate, there’s different elements of it,
different cuts of it, but the idea of Seven West funding, where New York
City is giving us [money] to fund the 7 Line is an example of that.
There are cases, you can read Crain’s, as recently as 6 months ago,
where someone bought a piece of property directly adjacent to the
current phase one of the Second Avenue Subway, and they’re selling that
property at increased value because of the investment that the MTA and
the region is putting into the construction of the second avenue subway.
It’s reasonable to expect that some of those profits should be shared
by the people who actually made the improvements to the infrastructure
and replow those revenues to further increases in the infrastructure
network. The other one is cap and trade.”
Value capture on real estate should be pursued and institutionalized. It's not just in NYC, and it's not just in America.
All over the world, people are fighting for their just entitlement to the fruits of their land.
Nicaragua is ground zero for controversy over the upcoming Chinese-backed canal. The controversial company behind this gets all the gains, and the Nicaraguan people get all the pain:
“All use rights of the land, air, water, maritime spaces and natural resources,” Baltodano adds, “have been handed over, without valuing the importance of environmental integrity to guaranteeing the life of Nicaraguans”.And Nicaragua gets very little in exchange for handing so much to HKND, Baltodano claims.The canal and related infrastructure will be 99% owned by HKND from year one, with ownership transferring to Nicaragua at a glacial rate of 10% every decade.That means the cash-starved state, whose poverty is surpassed only by Haiti in the Western Hemisphere, can look forward to getting full canal revenues only after a century.In the meantime, HKND will pay the government just $10m per year.
Read the rest here: GCR - - What’s really going on with the Nicaragua Canal?
And also this article that expresses concern by the U.S. Embassy over lack of transparency: GCR - News - US breaks silence, expresses concern over Nicaragua Canal
It's hard to imagine a bigger issue for that country right now.
Until next time, Happy Landings....
Scott Baker - President: Common Ground - NYC; NY State Coordinator, Public Banking Institute; Opednews Blogger/Managing Editor; Huffington Post Blogger; Author
Video Appearances & Slideshows here:
http://newthinking.blogspot.com/
Petitions:
-- Commemorate President Lincoln's Assassination with 1 Billion Debt-Free Lincoln $5 Bills
-- Replace Property Tax with Ground Rent in New York State
-- Assess NYC buildings using comparative properties
-- California Dreaming: Set up a State Bank with abundant CAFR funds
-- Complete the East Side Manhattan Greenway from 38-61 Streets and save bikers, help the environment, and clear up traffic
-- Tax Vacant & Unused Land to Return its value to the Community
-- Close New York State's budget Gap with money from its own agencies by setting up a State Bank
-- Defend the Clean Air Act
-- Produce debt-free United States Notes
-- Reclassify the FED's account, from private to public
Video Appearances & Slideshows here:
http://newthinking.blogspot.com/
Petitions:
-- Commemorate President Lincoln's Assassination with 1 Billion Debt-Free Lincoln $5 Bills
-- Replace Property Tax with Ground Rent in New York State
-- Assess NYC buildings using comparative properties
-- California Dreaming: Set up a State Bank with abundant CAFR funds
-- Complete the East Side Manhattan Greenway from 38-61 Streets and save bikers, help the environment, and clear up traffic
-- Tax Vacant & Unused Land to Return its value to the Community
-- Close New York State's budget Gap with money from its own agencies by setting up a State Bank
-- Defend the Clean Air Act
-- Produce debt-free United States Notes
-- Reclassify the FED's account, from private to public
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