Gotham Gazette https://www.gothamgazette.com/component/tags/tag/163 Wed, 21 Aug 2019 03:03:21 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) Improving Opportunity Zones to Truly Benefit Needy Communities in New York City https://www.gothamgazette.com/130-opinion/8733-improving-opportunity-zones-to-truly-benefit-new-york-city https://www.gothamgazette.com/130-opinion/8733-improving-opportunity-zones-to-truly-benefit-new-york-city childrens museum cojo

Speaker Johnson, the author, at a construction site (photo: John McCarten/City Council)


Opportunity Zones, which were part of the 2017 federal tax package, have the potential to improve low-income communities. But the way they are currently structured, they will only benefit neighborhoods already in the midst of building booms and gentrification.

Here is how they are supposed to work: Investors get tax breaks if they invest in businesses and property development in low-income communities. In New York City, investors are eligible to save on state and local taxes in addition to their federal taxes.

Unfortunately, in a city like New York that already has substantial incentive programs across the city and has enjoyed relative economic success in recent years, these new incentives could end up mostly going to projects that would have happened anyway. 

Opportunity Zone neighborhoods like Long Island City, Downtown Brooklyn, and Gowanus are communities where private investment has already poured in, and seems poised to continue doing so even without the extra tax incentive - and as a result, they are expected to attract the majority of any Opportunity Zone investment that does happen. Our city does have neighborhoods that would benefit from the additional investment right now, but these aren’t them.

Displacement is a concern, too. 

The expected concentration of investment in a small handful of already-affluent (and often rapidly-changing) communities, and in high-end real estate, could accelerate many of the elements of gentrification that we are already struggling to keep up with. 

Fiscally, the program could be a huge loser for New Yorkers. 

With investors looking for the optimal combinations of high-profit and low-risk investments, and no requirements that investments deliver any public benefit, capital is likely to flow toward large, low-risk companies and high-end residential, commercial, or hotel development. In other words, not the intended targets, and not the people or businesses who could use help from the government. 

New York City taxpayers will bear a huge chunk of the cost. The city’s loss of tax revenue shares from Opportunity Zone tax breaks at the federal, state, and local levels could amount to $715 million just over the next five years – and much more over the following decades as investors continue to cash in on tax-free capital gains.

In New York, officials must make sure these Opportunity Zones help the right targets in the most vulnerable communities.

First, lawmakers in Albany must add localized criteria to the incentives. In order to be eligible for state- or city-level Opportunity Zone breaks, I am proposing that a project must be receiving substantial state or city government discretionary assistance, such as direct subsidy, land acquisition, or subsidized loans. This would help because local government agencies consider public benefit as a factor in dispensing discretionary assistance, so this change would enshrine a requirement of at least some benefit for local communities.

Second, we need to right-size other, complementary subsidies for projects. State and city agencies should consider Opportunity Zone equity sources as part of their due diligence process and allocation calculations when disbursing subsidy. This could prevent the unnecessary over-subsidizing of projects receiving both government assistance and Opportunity Zone tax breaks.

Third, we need robust monitoring at all levels. Federally, and at the state level, administrators must mandate transparency, monitor compliance, and evaluate results to ensure that Opportunity Zone incentives are used appropriately, fairly, and to the benefit of the public.

In cities like New York, this program could be a windfall for wealthy investors to little community benefit. But with action from state legislators, there is still a chance to salvage at least some benefit for New Yorkers who actually need it.

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Corey Johnson is the Speaker of the New York City Council. On Twitter @NYCSpeakerCoJo.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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Improving Opportunity Zones to Truly Benefit Needy Communities in New York City Tue, 13 Aug 2019 04:00:00 +0000
An Old, Unfair System: New York City's Property Tax Conundrum - Part III - The City's Bottom Line https://www.gothamgazette.com/state/8716-old-unfair-system-new-york-city-property-tax-conundrum-part-iii-revenue-city-budget https://www.gothamgazette.com/state/8716-old-unfair-system-new-york-city-property-tax-conundrum-part-iii-revenue-city-budget gov and may deb pro

Mayor de Blasio (photo: Rob Bennett/Mayor Bill de Blasio


This is the third and final part of a three-part series on New York City's antiquated and unfair property tax system, its complications and inequities, the underway task of reforming it, and prospects for the future.

Read part one - Taking on the Difficult Task - here.

Read part two - Deep and Complex Inequities - here.

**********

When Mayor Bill de Blasio and Council Speaker Corey Johnson announced the creation of an advisory commission to come up with reforms to the city’s antiquated property tax system (much of which is controlled by state law), they said their focus would be on fairness while maintaining the city’s largest revenue stream.

The revenue from New York City property taxes was a whopping $27.8 billion last year, roughly a third of the city budget, and it helps fund everything from basic government administration and social services to the mayor’s signature initiatives like universal pre-kindergarten, including the salaries and benefits of hundreds of thousands of municipal workers.

Property owners see their taxes rise every year, squeezing nearly everyone -- though not evenly or fairly. Elected officials across the board have expressed interest in changing the system. But to make a more rational property tax system and still fund extensive city services at or near their current levels, officials will have to navigate the murky waters between the public interest and that of each individual taxpayer.

How skillfully that is done will dictate the political consequences that follow, and whether promised soon-to-be-proposed reforms to the property tax system actually have a chance to pass through the New York City Council and State Legislature.

‘A Substantial Constraint’
“One of the hard things about the whole property tax system: changing things is always going to impact someone else. If you move things for one tax class -- because we’re trying to stay revenue neutral -- it inevitably means changes for a different tax class,” Marcy Miranda, a spokesperson for the mayor’s office, told Gotham Gazette.

Some experts have asked why, if the commission’s purpose is to create a more fair and equitable system, is it constrained by the mandate to leave the city’s revenue untouched?

“It is definitely a substantial constraint. And I think that is being driven more by city fiscal concerns than it is by questions of how to structure the tax and what is the best tax,” Ana Champeny of Citizens Budget Commission told Gotham Gazette.

Roughly two-thirds of the city’s revenue comes from taxes, a little under half of which is property taxes. During a panel discussion about economic growth in New York City in May, former Commissioner of City Planning Carl Weisbrod said the city’s vast provision of social services and recent changes in federal tax policy mean, “increasingly, we are dependent on our own ability to generate revenue.”

Mark Shaw, co-chair of the city’s property tax commission, the initial recommendations from which are expected soon, views the revenue mandate as a gesture to those anxious about the prospect of reforming a system so integral to private and public life in New York.

“The veil of revenue neutrality over the debates for the commission is actually a way of making it clear to any of the interested parties of the public that this is not a back door way of trying to increase property taxes,” Shaw told Gotham Gazette.

But the mayor’s executive order establishing the commission, which reflected an agreement with the City Council, does not mention revenue neutrality, exactly. It only says the commission’s recommendations “shall not result in a reduction of revenue.”

The Frozen Tax Rate
State law sets the property tax classes, along with the assessment standards and growth caps, but the city -- the City Council with the mayor’s approval -- controls the tax rate. Since fiscal year 2009, the mayor (Bloomberg, then de Blasio) and City Council have agreed to keep the overall tax rate frozen. Because of very strong growth in the city’s real estate market, however, property taxes have continued to rise and generate more and more revenue.

This has allowed the city budget to grow significantly over the past two decades. Spending under Mayor Michael Bloomberg reportedly rose 31.6 percent above inflation during his three terms in office. Since de Blasio took office, the city budget has grown by more than $20 billion overall, up to the $92.8 billion expense budget for the current fiscal year. 

“If the tax commission came up with reforms that adjusted the assessed values, the Council and the mayor could set a tax rate that didn’t have a revenue implication for the city, but it might raise the rate,” said Champeny of CBC.

Given how sensitive the subject of taxation is in New York City, raising the tax rate could come with political fallout. “Obviously that would be pretty unpopular if someone were to come in and make that change,” said Miranda from the mayor’s office.

The rates the city sets on the assessed value of the property in each class, known as the “class shares,” are supposed to adjust each year to reflect changes in the market but growth caps set by the state limit how much a class share can increase, according to Champeny. The city has the discretion to redistribute any increases above the cap to other tax classes.

In most years recently, the City Council has requested lawmakers in Albany lower the cap for homeowners, shifting increases onto commercial and utility properties. “The class shares protect [homeowners] slightly but also there’s been sort of this political choice by elected officials in the Council and the state Legislature -- and the mayor to some extent because they don’t oppose it -- to make sure that the levy growth does not fall too much on Class 1,” Champeny said, referring to one- to three-family homes.

“Each annual adjustment doesn’t necessarily shift a lot, but over ten, twenty years, it does accumulate,” she added.

Balancing the Equation
The purpose of the Advisory Commission on Property Tax Reform is to weigh all of these factors -- equity, rationality, what the state controls and what the city can do, the unintended consequences for owners and renters, transparency in the system -- and come up with recommendations for improvement. The result could be the kind of fundamental, planned restructuring of New York taxation that some had hoped would happen following the Hellerstein case in 1975; or piece-meal, band-aide solutions like the ones New York ended up with in the years after.

“We're going to...go at the heart of the property tax problem and have a commission, working closely with the Council, to try and reform fundamentally the property tax to be more fair for everyone,” Mayor de Blasio said in April 2018 when he released the executive budget that year. 

In 1975, Judge Solomon Wachtler, writing the majority opinion, was concerned with the “remarkable powers of endurance” of the practices that prompted the Hellerstein case. Their survival depended largely on the machinations of politicians and officials servicing particular constituencies, factors “none of which are particularly commendable,” he noted in his decision. Over the years, those factors have multiplied and become more interconnected. Any changes of substance now will implicate the entire system, and any balance struck toward making it “more fair for everyone,” as de Blasio said, may not be what everyone wants.

This is the third and final part of a three-part series on New York City's antiquated and unfair property tax system. Read part one - Taking on the Difficult Task - here. Read part two - Deep and Complex Inequities - here.

***
by Ethan Geringer-Sameth, reporter, Gotham Gazette      

Read more by this writer.

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An Old, Unfair System: New York City's Property Tax Conundrum - Part III - The City's Bottom Line Sun, 04 Aug 2019 04:00:00 +0000
An Old, Unfair System: New York City’s Property Tax Conundrum - Part II - Deep and Complex Inequities https://www.gothamgazette.com/state/8713-old-unfair-system-new-york-city-property-tax-conundrum-part-ii-classes https://www.gothamgazette.com/state/8713-old-unfair-system-new-york-city-property-tax-conundrum-part-ii-classes maybdb rem

(photo: Edwin J. Torres/ Mayor's Office)


This is part two of a three-part series. Read part one - Taking on the Difficult Task - here. (Skip to part three - The City's Bottom Line - here.)

Elected officials and their critics alike have decried the complexity and inequality of the state’s property tax system. They say it is layered and non-transparent, and produces disproportionate tax burdens for various populations because of technical factors that are difficult for taxpayers to understand. These can lead owners of similarly valued properties in different parts of the city to pay drastically different annual property taxes.

The rising value of a homeowner’s property can belie the struggle they may face to stay afloat and keep their homes when property tax payments also climb. For those who own rental property, when the tax burden goes up it is often passed on to renters in the form of higher rents and fees on apartments that are not rent-regulated.

The Advisory Commission on Property Tax Reform was emplaneled by Mayor Bill de Blasio and City Council Speaker Corey Johnson, both Democrats, in 2018 to examine these issues and develop recommendations to reform the system, which could implicate both city and state policy, without reducing the city’s largest revenue stream.

On the table are aspects like the way different properties are classified and assessed by the state, how statutory restrictions on tax rate growth interact with market forces, and how the city sets the tax rate. These factors have had consequences for communities of color, low-income New Yorkers, seniors, and residents in some, but not all, boroughs.

As it was in 1981, when the current system was wrought out of practices that extend to the early days of the American republic, the issue today is a political flashpoint. Property taxation affects every resident in the state, and members from nearly every interest group and political party have called for its overhaul. But some of the most outspoken critics of the system, especially certain homeowners who see their taxes go up every year, may end up responsible for an even greater share of the levy if changes are made.

Four decades ago, in Hellerstein v. Assessor, Islip, the courts found New York’s property value assessment methods, which had been in practice for roughly 200 years, to be in violation of state law. Homes were being assessed with great variability on a fraction of their sales price, while business owners were footing a much larger bill for their commercial properties. Rather than adjusting practices to assess the full value of homes, lawmakers in Albany changed the rules to allow government assessors to continue favoring certain types of property over others.

Reflecting the old order, the current system divides properties into four classes, each to be assessed and taxed differently. Statutory caps are in place to ensure property taxes payments remain stable even if market values jump. To help account for variables like income, location, and the condition of housing, tax abatements and rebates are available. As a result of the classification regime’s disparate assessment methods, discrepancies exist among residential properties, with cooperatives and condominiums greatly undervalued for tax purposes compared to other homes despite at times being worth far more.

One- to three-family homes are in Class 1 and are assessed based on comparable sales prices; in Class 2, apartment buildings, as well as co-ops and condos, are taxed based on a market value derived from the annual income earned in rent by similar, nearby units, which is usually lower than the market value based on sales price, according to property tax experts. Even within the classes, statutory caps on assessed value growth have led, more recently, to uneven tax burdens across the five boroughs because of the way the housing market has exploded in some neighborhoods more than others.

An Unfair System
Attempts have been made to address property tax inequities in New York City since the current system was adopted nearly 40 years ago, but they have failed to produce transformative results. The most notable review was led by Mayor David Dinkins in 1993.

Dinkins, a Democrat, empaneled a commission to study the issue, which released a report just days before his term ended. Its most salient recommendation was to bring the treatment of co-ops and condos closer to Class 1 properties, but years of negotiations under his Republican successor, Rudy Giuliani, led only to a temporary tax abatement for apartment owners, according to an Independent Budget Office report. (A piece in the New York Times from 1994 provides an alternative account in which the Dinkins commission made no recommendations because it could not come to a “consensus on objectives,” using the words of one of the commissioners.)

The issue has become a recurring political motif. De Blasio discussed it during his first campaign for mayor and a year later, in 2014, his Commissioner of Finance, Jacques Jiha, said he would undertake a comprehensive analysis before making recommendations to the state for change. Yet it appears the Advisory Commission empaneled in 2018 is conducting the first such review of the mayor’s tenure.

“Fairness” is at the core of the commission’s mission, largely a response to a number of related policy consequences that have become apparent over the years.

>>Property Tax Classes
Legislators in 1981 created a system that would benefit small home owners by placing them in Class 1, maintaining the relatively low assessment rates they had enjoyed for so long, while leaving commercial properties, including apartment buildings, in Class 2 with a larger share of the levy.

At the time, co-op conversions, which started in New York City in the 1920s, had begun to take place at a very rapid rate; between 1978 and 1988, roughly 242,000 rental apartments in more than 3,000 buildings had been turned into tenant-owned cooperatives, according to a New York Times report published in 1988. In order to prevent assessors from considering the value of apartments if they were to be converted, lawmakers placed co-ops and condos into Class 2 and inserted language into the state law requiring they be assessed on the net income they would earn as rentals, as opposed to their sales value.

More recently, however, in an era of acute gentrification and concentrated market value growth, the low rates on co-ops and condos has become a new variation on the unequal assessment theme that sparked the Hellerstein case. As the price of homes in booming neighborhoods has skyrocketed, taxes assessed on co-ops and condos have become an increasingly smaller proportion of their sales value.

Tax Equity Now New York, a coalition of homeowners, renters, and business groups, led by former city Department of Finance Commissioner Martha Stark, filed a lawsuit in 2017 challenging the state laws that lead to disproportionate rent burden. The group claims the neighborhoods with the greatest burdens are less affluent and more likely to be the home of large populations of people of color.

By state law, taxes for homes in Class 1 are assessed on 6 percent of what assessors believe to be their market value, while co-ops and condos in Class 2 are assessed at a rate of 45 percent of potential rental income. But the way the city Department of Finance (which is responsible for calculating market value based on formulas set by the state) arrives at that value for the two property types is not consistent.

For Class 2, city finance officials compare co-op values to the income of nearby rental properties, vastly undervaluing what the property would be worth if sold. Because of the age and location of many co-ops, their taxes are often assessed based on comparisons to rent-regulated buildings, exacerbating the value discrepancy. 

Ana Champeny of Citizens Budget Commission (CBC), the fiscal watchdog, gave an example: “You look at the value that [Department of Finance] determined based on state law and it’ll be something like...$600,000, but when you look at how much the person paid when they bought that unit, they would have paid something like $3 million.”

To help address this inequity, CBC argued when it testified before the Advisory Commission in November, simply put condos and co-ops in Class 1 where they belong, and assess them based on sales prices. This would also help New Yorkers understand the system’s complex arithmetic and the outcomes it produces. Because now-distant beginnings created the fractional assessment practices established by the property classification system, the particular tax-related burdens New Yorkers face often feel arbitrary.

“I think that creates a lot more mistrust, too, in the system. Which is why we said you really should put all these homes into one class and you should value them based on sales,” Champeny told Gotham Gazette.

There were a number of bills in the Legislature related to condos and co-ops that lawmakers were apprehensive about taking up because of uncertainty about changes to the classification system, according to Assemblymember Galef.

“We want to see where the commission comes out on that one so those bills won’t be addressed this year,” Galef told Gotham Gazette in May before the legislative session ended. (The Legislature passed, and the governor has yet to sign, a two-year extension of a property tax abatement program for co-ops and condos, but nothing to address the structure of the real property class system.)

When everyone is a stakeholder, though, upsetting the long held fractional assessments would mean some people will have to pay more, and that is likely to include the high value co-ops and condos now enjoying low rates. As in the past, this will inevitably be a difficult pill to swallow.  In a letter to the Advisory Commission in May, City Council Members Steven Matteo, Joe Borelli, and Justin Brannan -- who represent parts of southern Brooklyn and Staten Island -- urged, “First, do no harm to Class 1 and 2 homeowners.”

Responding to a co-op owner who worries about rising taxes year after year, Mayor de Blasio said, “I want to be...really honest with everyone that we cannot end up with a system that reduces our revenue substantially, unless people want to see a change in the services provided by city.”

>>Renters
For residents, the weight of New York’s property classification system is harder to bear the further you are away from the mitigating effects of ownership, which can put serious pressure on renters who can’t cash in or pass on tax burdens to tenants. In a class-action lawsuit filed in 2014 on behalf of African-American and Hispanic renters, the real estate law firm Newman Ferrara claimed that the way the state classifies different types of property has resulted in a disproportionate tax burden being passed on to renters in large residential buildings.

According to a CBC analysis, as of December 2016 one- to three-family homes made up roughly 48 percent of the total market value of New York City property, but were taxed only about 15 percent of the total levy. By contrast, Class 2 properties -- apartment buildings, co-ops, and condos -- made up approximately 25 percent of the market, but were taxed significantly more: nearly 38 percent of the total.

Most of that burden falls on apartment buildings because owners of co-ops and condos often pay such a small percentage of their property value in taxes. To maintain their profit margin, landlords often redistribute the tax burden to tenants (the same is true for commercial tenants, which can put a strain on small business). The 2014 suit alleged, since large apartment buildings are predominantly occupied by African-American and Hispanic tenants, the uneven tax burden they experience is a violation of the Fair Housing Act.

The property tax burden on one- to three-family home owners can be mitigated by the lower share they pay on the property’s value; the tax burden on co-ops and condos is not great because they are assessed on a fraction of their sales price; and much of the tax burden of big landlords can be passed on to tenants. But renters, who make up two-thirds of all occupied units, according to 2017 U.S. Census data, have no outlet to spread their burden.

(Homeowners who pay a significant portion of their income in property taxes and cannot immediately benefit from the rising value of their homes without selling them, are also put in a precarious situation as taxes rise annually and the costs of maintaining aging housing stack up. The city’s Third Party Transfer program, which seizes buildings from landlords who are behind on taxes and other fees, has recently come under fire for taking the homes of lower-income, minority property owners.)

The 2014 Newman Ferrara suit was dismissed by a state Supreme Court, which rejected the notion that property taxes could be shared more equitably among the classes as “speculative.”

Short of revamping the city’s entire property tax system, the push to improve conditions for many tenants was a major point of contention in Albany this year, as state rent regulations affecting the city and surrounding suburbs approached their expiration date in June. A concerted push under the new Democratic governing reality resulted in a landmark package of tenant reforms aimed at strengthening protections and closing loopholes in rent regulations like reforming the major capital improvement program, ending vacancy decontrol, and eliminating the vacancy bonus, among others. These regulations affect roughly 2 million tenants in 1 million apartments.

“We made a commitment that the new Senate Democratic Majority would help pass the strongest tenant protections in history,” said Senate Majority Leader Andrea Stewart-Cousins in a statement after the package passed both houses of the Legislature. “The legislation we passed today achieves that commitment and will help millions of New Yorkers throughout our state.”

>>Income
While statutory caps were put in place to keep homeowners’ property taxes from rising too quickly, they have still tended to outpace the growth in household incomes, creating a disparity in tax burden across income levels. A report by the city Comptroller’s Office from September found that between 2005 and 2016 annual property tax revenue grew an average of 6.4 percent a year, while the household incomes of small home, co-op and condo owners rose only 2 percent per year. As a result, the share of income that goes to pay property taxes on those types of homes has risen significantly and is most pronounced among the lowest earners.

The comptroller’s report shows that households making less than $50,000 -- largely retirees whose incomes had been higher when the homes were purchased -- had property tax payments increase from 6.6 percent of household income in 2005 to nearly 13 percent in 2016 (the study does not take into account social security earnings and other non-taxable income for seniors, meaning its findings for this group may be higher than seniors’ true property tax burdens).

“For households at this income level, where there is little or no discretionary income, these increases impose significant constraints and sacrifices on household budgets,” the report reads. By contrast, homeowners with income between $250,000 and $500,000 paid only 2.9 percent of their income in property taxes.

Some advocates have proposed what are known as “circuit breakers” to deal with property tax burdens on lower-income New Yorkers.

A circuit breaker essentially provides a tax rebate for lower-income property owners by reducing state income taxes if property taxes exceed a certain proportion of income, or simply by capping property taxes as a percentage of income. Hellerstein was a proponent of implementing circuit breakers, as was Governor Carey, who included them in his own 1981 proposal, which failed. In November, the CBC testified about the benefits of circuit breakers before the city’s Advisory Commission.

But mechanisms like circuit breakers, which create indirect relief through income tax reductions -- as well as various other kinds of exemptions, abatements, and rate limitations -- when piled on to triage the discrete consequences of New York’s property tax system (exacerbated by the city’s complex housing portfolio), also contribute to the opacity of the system -- one of the main problems the Commission aims to address.

“Homestead exemptions, or elderly or disabled or veterans exemptions...tax abatements and rate limitations and assessment limitations and assessment increase limitations -- it becomes a very complex system and ultimately non-transparent,” John Anderson of the Lincoln Institute for Land Policy noted before the Advisory Commission in February.

But exemptions and other forms of relief are popular among property owners in distress and are something that can be enacted by the city, making them attractive to local politicians trying to court voters. (Borelli introduced a bill to the City Council in 2018 that would give a tax exemption to veterans of Cold War conflicts.)

Disparities exist despite tax credits and other programs intended to ease the burden on lower-income New Yorkers, and they are likely to get worse.

The increase in tax burden identified in the Comptroller’s report was tempered by the rising value of property assets and declining interest rates over the past 20 years, which kept mortgage payments low, according to its authors. But the report notes interest and mortgage payments have begun to rise while property value growth has subsided in many neighborhoods, and phase-ins on co-ops and condos (like statutory caps on small homes) mean that property taxes can continue to rise even after the market stabilizes.

Changes in state and local tax deductions from Washington, D.C. last year mean taxpayers who itemize their deductions may no longer be able to deduct the amount of their property taxes from their federal taxes.

>>Geography
Last September, Citizens Budget Commission released an analysis showing that homeowners on Staten Island and in the Bronx have a higher effective tax rate than the rest of the city, meaning they pay a higher percentage of their property’s market value in taxes despite owning homes that are worth less.

This, the report notes, is the result of statutory caps set in state law on the rate by which assessed values can grow. There are different caps for different categories of property; for small homes the cap is set at 6 percent annually, or 20 percent over five years.

The growth rate cap, intended to insulate homeowners experiencing rapid market growth from dramatic property tax increases, has the effect of shifting the tax burden from booming neighborhoods to ones with more stable housing markets, regardless of the overall value of the homes. The CBC analysis finds only 5 percent of the city’s single-family homes are assessed at the 6 percent target ratio because the caps keep most assessments lower. But Staten Island and Bronx homeowners do not seem to be the beneficiaries of this dynamic.

Council Members Borelli and Matteo, who represent districts on Staten Island, in a 2016 press release said, “Staten Islander’s [sic] on average pay [property taxes on] 98.5% of their actual market values, while average Brooklyn and Manhattan class-1 homeowners pay 88.5% and 87.2% respectively.”

Politicians from Staten Island have been among the most vocal proponents of property tax reform. The borough has a large aging population on fixed income and roughly 70 percent of residents own their homes, according to Census data.

In 2016 Borelli and Matteo, both Republicans, called for a bipartisan commission to look at the economic burdens on one- and two-family homes, including the caps issue. They also called for the Department of Finance to use actual assessors, not statistical models, in order to account for a property’s actual condition (on Staten Island only a tenth of homes were built in the last 20 years). Assembly Member Nicole Malliotakis, also a Republican, joined Borelli in calling for a property tax commission when she ran for mayor against de Blasio in 2017. (Property tax reform and relief was also a central pillar of Republican gubernatorial candidate and Dutchess County Executive Marc Molinaro’s 2018 campaign against Gov. Andrew Cuomo, who this year pushed through a permanent 2 percent cap on annual property tax growth, which applies everywhere outside New York City.)

To address the tax burden inequities, Borelli has called for the Legislature to at least change the law so that caps reset when a house changes hands. Borelli was the prime sponsor of a resolution, co-sponsored by 13 others in the 51-seat Council, calling for the change in January 2018, but it has not been adopted.

He repeated the proposal to the Advisory Commission in September, saying, “The cap is attached to the property, not the owner, and the result creates vast disparities between the city’s wealthy and middle-class homeowners, and among wealthy homeowners themselves depending on when their homes were built and the characteristics of the market.”

>>Race
Tax Equity Now New York, the coalition led by former city finance commissioner Martha Stark, has highlighted some of these inequities in its lawsuit filed against the city and state in 2017. The lawsuit, filed after long-running frustration with elected officials’ apparent unwillingness to act on property tax reform, alleges New York’s property tax system has a disproportionate negative impact on homeowners and renters in less affluent neighborhoods with large populations of people of color.

In a study conducted by the group, higher tax burdens, especially those identified in the Citizens Budget Commission analysis, were shown to have a disproportionate impact on neighborhoods where racial minorities make up a majority of the population.

At the crux of the issue is the claim that property tax assessments have not reflected true market values, resulting in neighborhoods predominantly of color being assessed 19 percent more than predominantly white ones, the group alleges. Tax Equity Now is seeking changes to the law, not compensation, but has not specified what those changes should be. The suit survived the city’s motion to dismiss in September but is now stayed, pending appeal.

This is part two of a three-part series. Read part three - The City's Bottom Line - here. (Find part one - Taking on the Difficult Task - here.)

***
by Ethan Geringer-Sameth, reporter, Gotham Gazette      

Read more by this writer.

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An Old, Unfair System: New York City’s Property Tax Conundrum - Part II - Deep and Complex Inequities Thu, 01 Aug 2019 04:00:00 +0000
Johnson Unveils Plan to Address Hunger and Food Inequity https://www.gothamgazette.com/city/8715-johnson-unveils-plan-to-address-hunger-and-food-inequity https://www.gothamgazette.com/city/8715-johnson-unveils-plan-to-address-hunger-and-food-inequity 48433082297 f0af3fb88d z

Speaker Corey Johnson (photo: John McCarten/City Council)


City Council Speaker Corey Johnson on Thursday announced a plan to address hunger and the lack of equitable access to fresh food in New York City, laying out a package of legislative proposals that the Council will consider over the next year.

Food insecurity — the absence of or insufficient access to affordable, nutritious food  — affected nearly 1 million New Yorkers as of 2017, according to a new City Council report that Johnson released at Cypress Elementary School in East New York. The school is the first in Brooklyn that has a greenhouse and incorporates nutrition education into the curriculum.

The Council’s report, titled “Growing Food Equity in New York City,” found that food insecurity particularly affects individuals living in poverty, seniors, and people of color, and it pervades higher education — 48% of students at City University of New York said they had experienced food insecurity in the last month.

Johnson, a Democrat who is exploring a run for mayor in 2021, outlined measures that would address neighborhood inequities in access to healthy food through improvements in food governance, reducing food waste, promoting healthy school lunches and nutritional education, and expanding urban agriculture.  

The proposals include the creation of a citywide food plan, a push to help seniors receive Supplemental Nutrition Assistance Program (SNAP) benefits (also known as food stamps), and increased city funding for coupons called Health Bucks, which are provided to low-income New Yorkers to buy fresh food at any city farmers market.

“Adequate access to nutritious food is a human right,” Johnson said. “This principle isn’t just for developing countries. It’s something we must follow right here in New York City, one of the richest cities in the world.”

The food equity plan is the latest big policy announcement that Johnson has made since becoming speaker. In March, Johnson proposed a plan for municipal control of the city’s subways and buses, followed in May by a sweeping criminal justice reform agenda. 

As part of the food equity plan, the Council will work to expand existing programs that have already been successful such as Health Bucks, nutrition programs in schools, and lunches cooked from scratch at public schools. One bill would require that schools send information about summer meals programs to families, and another would create an Office of Urban Agriculture that would focus on incorporating city farming and gardening into city planning.

The Council and the Department of City Planning will also work to expand the number of neighborhoods eligible to receive the Food Retail Expansion to Support Health (FRESH) zoning bonus. FRESH offers financial assistance and zoning incentives to grocery stores that provide affordable and fresh food in communities that lack access to nutritional food.

Johnson said the City Council will also advocate at the state and federal level to protect and expand access to SNAP benefits. In June, the Trump administration announced plans to change SNAP eligibility requirements. The U.S. Department of Agriculture estimates that nearly 3 million people would lose their food assistance as a result. Johnson said the Trump administration’s “relentless attacks” on SNAP are an enormous threat to the city as food stamps generate up to $5.3 billion in economic activity and the president’s “fear-mongering” has discouraged some who worry they would lose their immigration status.

“Shame on the federal government for using food as a weapon to disenfranchise vulnerable communities,” Johnson said. “Shame on the Trump administration for denying the rights of food to families and seniors while heavily subsidizing corporate interest.”

The speaker was joined on stage by Council Member Rafael Espinal, a Democrat who represents East New York. Espinal noted that 16% of New Yorkers go to bed hungry every night, and 20% of those city residents live in Brooklyn. The Council member has helped pass legislation that set up the city’s first website dedicated to urban agriculture and authored a bill with Brooklyn Borough President Eric Adams to create a comprehensive urban agriculture plan.

Espinal spoke of his own experiences with food insecurity growing up in East New York. He said healthy food was hard to come by, but his father’s garden helped reduce the number of times his family had to drive for miles to buy fruits and vegetables.

“I grew up learning about soil, harvesting and maintaining produce, eating healthy food, and how to become a healthy adult,” he said. “The majority of kids across New York do not have the same opportunity, and to this day most communities are deprived of this kind of experience.”

Another piece of legislation the council will consider would improve and codify the Office of Food Policy, which the speaker said has been under-resourced. Getting New Yorkers more accessible, healthy food options should be one of the city’s top priorities, Johnson said.

“What I really want to see, and what’s at the heart of the food justice movement, is for all of our communities to have greater control over their food options,” Johnson said. “Food is power. We feel it when we eat it. We feel it when we feed our children. We want that power in the hands of our communities.”

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bySamantha Handler, Gotham Gazette
     

Read more by this writer.

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Johnson Unveils Plan to Address Hunger and Food Inequity Thu, 01 Aug 2019 04:00:00 +0000
An Old, Unfair System: New York City’s Property Tax Conundrum - Part I - Taking on the Difficult Task https://www.gothamgazette.com/state/8712-an-old-unfair-system-new-york-city-s-property-tax-conundrum-part-i https://www.gothamgazette.com/state/8712-an-old-unfair-system-new-york-city-s-property-tax-conundrum-part-i mayor deblasio clears

Mayor de Blasio shovels snow outside one of his two Brooklyn houses (photo: Rob Bennett/Mayor's Office)


This is part one of a three-part series. Skip to part two - Deep and Complex Inequities - here.

In May 2018, after years of criticism that New York City’s property tax system lacks equity, Mayor Bill de Blasio and City Council Speaker Corey Johnson announced they would empanel a commission of “blue chip” experts to explore the issue. Its tasks are to examine everything from the way different property values are assessed to relief for vulnerable homeowners, solicit input from the public and specialists, and make recommendations for reform.

Because of the laws and practices governing New York property taxes, the recommendations will inevitably include some changes that can be enacted by the city and others that would require action in Albany, both of which would upset a longstanding and largely unchallenged system. Even coming up with recommendations has proven fraught.

The commission was tasked with an important constraint: make recommendations to overhaul a complicated, decades-old tax system without changing the city’s bottom line -- in other words, to make sure that a new property tax system would continue to provide city government with its single largest revenue stream, good for roughly $27.8 billion last fiscal year.

More than a year later, with the 2019 legislative session in Albany well over, the panel has conducted ten public hearings and meetings but has produced no report nor indicated what consensus is emerging on a path forward. Asked about it repeatedly, de Blasio, who was criticized for punting on the issue until his second and final term, has said he expects recommendations by the end of this year.

The property tax system impacts homeowners and renters, landlords and developers -- virtually every one of the city’s 8.5 million residents. Problems with the system are myriad in New York, where real estate dominates and nearly a third of the city’s annual revenue comes from real property levies.

Critics have contended that the property tax system is overly complex and opaque, that property assessments are not reflective of true market values, and that classifications and caps aimed at mitigating rapid property tax increases contribute to disproportionate tax burdens across many populations.

Twelve months before the commission was announced, a coalition led by a former city finance commissioner filed a lawsuit alleging the Byzantine tax structure creates vast inequities and that those disparities are felt most severely by low-income New Yorkers and people of color.

One of the central problems is the vast under-assessment of many owner-occupied cooperatives and condominiums, which have experienced sweeping growth in property values over the past two decades, but are taxed instead based not on their sales value but on the much lower income they would likely make if they were rentals. Homeowners, in general, pay a lower effective tax rate (taxes as a percent of sales prices) than commercial and residential rental property owners, according to the Citizens Budget Commission, a fiscal watchdog.

Another problem is the labyrinth of abatements, rebates, caps, and phase-ins that obscure the causes of rising property taxes, making them hard for residents to trace and understand.

As property values ratchet up in gentrifying neighborhoods, so do the taxes assessed on them, which can put a strain on lower-, middle-, and fixed-income homeowners struggling to keep up with bills and maintenance fees. At the same time, homeowners in places with slower real estate market growth, like Staten Island and the Bronx, see their taxes rise higher relative to home sales prices because of caps that keep tax hikes low when the housing market unexpectedly leaps.

The symptoms of unequal assessment and taxation land harder on different populations of New Yorkers. The coalition behind the lawsuit says these factors lead to higher tax assessments in communities of color than in majority-white neighborhoods. Others over the years have asserted that when landlords’ tax burdens increase, they may be passed on to tenants in the form of higher rent, especially in large apartment buildings with sizable black and Latino populations, critics say.

The most expensive home sold in United States history is a Midtown Manhattan condo that went for $238 million earlier this year to Ken Griffin, the hedge fund manager ranked the 45th richest American by Forbes. Griffin pays taxes on a property valuation of just $9.4 million, or .22 percent of the sales price, according to the Wall Street Journal. By contrast, the owner of a two-family home in the northeast Bronx that sold for $439,000 in the most recent fiscal year pays 1.16 percent of the price tag in property taxes, according to an Independent Budget Office analysis provided to Gotham Gazette.

Yet the owners of both these types of homes -- owned by some of the wealthiest New Yorkers, as well as lower- and middle-income residents -- often say they feel pressure from rising property taxes year after year and are seeking relief. One of the barriers to property tax reform is that virtually all homeowners, whether they are likely under-assessed or not, believe they are getting squeezed by property taxes, which for small homes rose an average of 7.7 percent annually between 2001 and 2017, according to a Citizens Budget Commission analysis. (New York City has been repeatedly exempted from a state cap of 2 percent on annual property tax growth that applies everywhere else.)

There is broad agreement that the New York City property tax system produces inequality, that it hurts a wide range of communities from senior homeowners to renters of color to (some) outer-borough residents. Democrats, Republicans, and others across the political spectrum have called for change. But while the debate over the city’s property taxes crosses partisan lines, efforts to make an unequal system more equal means upsetting some stakeholders.

The complexities in the system have cut out a difficult task for members of the commission launched by de Blasio and Johnson, commissioners who were originally given only a year to produce results. But, as with other attempts to rethink the city’s relationship to its most essential resources, the task of unpacking the property tax system reveals a tangle of practical and political factors that have led to the status quo and make change so challenging.

Hope quickly faded that the commission would put forth recommendations to be taken up before the June end of this year’s state legislative session. During a May interview, Marc V. Shaw, one of two commission co-chairs, told Gotham Gazette that for lawmakers to deal with complicated concepts at the end of the legislative session, “there just would not be time...even if we were prepared. But we haven’t reached the point of making even the recommendations. We’re still sort of in an analysis phase.”

A Difficult Task
“I think all of us that have been working on the commission, knew from the beginning that that was a time schedule that was going to be pretty...difficult to attain...so from our perspective we’re looking at trying to put together a series of recommendations to be available for discussion and debate in the next legislative session,” Shaw said in May. Legislators will return to Albany in January, but the mayor and City Council can evaluate the commission’s work throughout the rest of this year, pending a report.

Shaw, a former first deputy mayor under Michael Bloomberg, is the interim chief operating officer for CUNY. He has been the Advisory Commission’s single (co-)chair since its other, Vicki Been, stepped down when she was appointed Deputy Mayor for Housing and Economic Development in April. The body is made up of fiscal policy experts, business leaders, and city planning specialists, almost all of whom have served in city government in the past.

Spokespeople for both the mayor and City Council told Gotham Gazette the Advisory Commission is now planning to release a preliminary report in the coming months and hold another round of public hearings in the fall to solicit feedback. In a July 19 WNYC radio interview, Mayor de Blasio said the commission would produce a final report by the end of the calendar year, in time to be taken up in the next state legislative session.

City Council Member Keith Powers, a Democrat who represents a Manhattan district with a mix of property, is concerned the timeline doesn’t allow for much flexibility to work in Albany’s tight calendar. The timeline “puts you rolling right into January’s legislative session,” and just before state budget negotiations begin, he told Gotham Gazette. “You just may lose a little steam if you don’t have a bill early next year, and you know agencies miss deadlines all the time.”

In the meantime, the Legislature is waiting to hear from the commission. “It just kept coming up where we may be modifying some bills, or not doing some bills, because of the commission and not knowing what their positions are going to be,” Sandy Galef, chair of the Assembly’s real property tax committee, told Gotham Gazette at the end of May. “So yes, I would say it’s holding back some ideas.”

It appears important that the city has its ducks in a row before the January to June state session begins, giving a report and decisions by the mayor and Council enough time to work their way through Albany’s political corridors. Complicating matters further is the fact that 2020 is an election year for the entire state Legislature. Albany lawmakers sometimes try to get around dealing with especially thorny issues in conspicuous ways by packing them into state budget bills, which are due by the April 1 start of the new fiscal year.

Many of the reforms will focus on the state Real Property Tax Law, which sets standards for property tax assessment, among other things, and will require the state Legislature and governor to act. Once the commission produces its final report and city leaders make their opinions known, proposals will have to be negotiated in Albany, which in the past has proven fatal to serious property tax reform.

“We’re involved but at this point I view it as local home rule,” Galef said in May before the legislative session ended. Much if not all of what the city will ask of the state will come through the City Council, even if some of it is through non-binding measures.

Some tax programs were set to expire this year, like tax relief for property owners who install green roofs, which the Legislature extended and the governor signed notwithstanding the city property tax commission’s progress. “Even if the commission does the report at the end of the year, by the time they get authority from the state, there may be a lot of time in between,” Galef said.

That prospect does not sit well with Powers. “I think that any commission or body that’s working on this needs to understand that there are real people who are waiting for this relief,” he said, noting he has heard from constituents who are anticipating the commission’s recommendations.

The Status Quo
The complexities the commission is now grappling with are the result of a system with antique origins, one which has not been comprehensively updated and seldom reviewed over the past four decades. New York State’s current property tax apparatus is the outcome of a judicial ruling that shook up the prior system in the mid-1970s, and subsequent legislative action that mostly put it back into place in the early ‘80s.

In 1975, the Court of Appeals, the state’s highest tribunal, sided in favor of Jerome Hellerstein, an Upper West Side lawyer representing his wife, Pauline, who had sued the Town of Islip for assessing the property value of the family’s Fire Island vacation home -- and every other property on its roll -- at only a fraction of its market value, in violation of state statute (and, apparently, in their own interests). The law, at the time section 306 of the Real Property Tax Law, stated, “All real property in each assessing unit shall be assessed at the full value thereof.”

hellerstein fire island houseThe Hellerstein Fire Island home (image courtesy of Walter Hellerstein)

For nearly 200 years prior, however, property taxes for homeowners in New York State were assessed on only a fraction of the “full value,” based on what assessors “deemed proper,” “not ‘according to their best information and belief, of its value,’ ‘but according to the usual way of assessing,’” an 1852 Court of Appeals decision reads. The decision, in 1852, noted, “the usual method is to estimate property at less than half its value.”

The discretion given to assessors meant commercial and apartment building owners in 1975 paid taxes on a much larger fraction of the market value of their property than homeowners. According to an account published by the city’s Independent Budget Office, reports at the time of the Hellerstein court decision found even the tax burden from similar homes in different neighborhoods could vary, with homeowners in New York City’s lower-income communities paying more than homeowners in more affluent ones.

The Hellerstein decision upended centuries of property tax assessment practices and sent New York’s political world into a spin. For six years, officials in Albany battled over the implications of the decision with some, like Democratic Assembly Speaker Stanley Fink, arguing for the fractional assessment practice to be codified into law, fearing the effects homeowners would feel if their property taxes were to rise rapidly.

There was panic that “fiscal chaos” would ensue if wholesale changes were made to the way the properties of people and businesses were assessed across the board, according to Judge Solomon Wachtler who wrote the majority opinion in the Hellerstein case. A report from the New York Times during that period quotes Edwin Margolis, counsel to the Assembly majority, saying, “The goal is not to shift the burden from residential to industrial or commercial, but simply to keep the status quo.”

The Legislature achieved that goal in 1981 after overriding a veto by Governor Hugh Carey, a Democrat. Instead of meaningfully changing assessment practices, the new legislation removed the “full value” language from the law and established a system in New York City that separated properties into four different categories, each to be taxed on a different portion of the full market value, mirroring the de facto practices assessors had been using all along.

The system placed one- to three-family homes into Class 1; apartment buildings, co-ops, and condos into Class 2; utilities into Class 3; and commercial properties into Class 4.

“The law was set up in such a way that each class of property would continue to pay roughly the same share of the levy” as they did at the time the law was passed, according to Ana Champeny, a property tax expert at the Citizens Budget Commission.

This “is the property tax system that we essentially currently operate under,” said Shaw, the commission chair. “That just gives you a sense that it’s always been a complicated system from the beginning.”

Before the 1981 law codified the current system, a number of other proposals had been floated and a bipartisan commission was even set up, the Temporary State Commission on the Real Property Tax, to review the state’s practices. That commission suggested that as an alternative to moving toward assessment by class, the state could mitigate the shift in tax burden from businesses to homeowners by implementing homeowner assistance programs.

But the political might of homeowners won out over the interests of commercial property owners, as well as over the will of the governor and a sizable minority in the Assembly. As part of the 1981 legislation, lawmakers enacted caps on the amount assessments could increase annually and over a five-year period, further protecting homeowners against rapid rises in property taxes in the event they be more accurately assessed going forward.

The resulting system, in a nutshell, is one where one- to three-family homes, which are more often occupied by their owner, are assessed based on the comparable sales prices of the property, while commercial and rental properties are assessed based on the income those businesses could generate.

One catch to this, which has been a recurring sticking point in perennial calls for property tax equity, is that co-ops and condos like Griffin’s are assessed on the income that would be made if they were rental apartments, rather than the sales prices of owner-occupied homes most observers say they more closely resemble. Another has been the caps on how much the assessed value of a home can increase, which more recently has led to owners of homes in booming neighborhoods paying relatively low property taxes compared to other homeowners in more economically stagnant parts of the city.

“What we’re facing is looking at how to do a reset of the property tax, given all of those problems, to make it a fairer system now,” said Shaw.

This is part one of a three-part series on the property tax system in New York City and potential for changes to it that may be on the horizon. Read part two - Deep and Complex Inequities - here.

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by Ethan Geringer-Sameth, reporter, Gotham Gazette      

Read more by this writer.

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An Old, Unfair System: New York City’s Property Tax Conundrum - Part I - Taking on the Difficult Task Wed, 31 Jul 2019 04:00:00 +0000
On Presidential Campaign Trail, De Blasio Promises Paid Vacation Law ‘This Year,’ But City Council Has No Timeline https://www.gothamgazette.com/city/8707-presidential-campaign-trail-de-blasio-promises-paid-vacation-city-council-no-timeline https://www.gothamgazette.com/city/8707-presidential-campaign-trail-de-blasio-promises-paid-vacation-city-council-no-timeline proposes mybdbd become

(photo: Ed Reed/Mayoral Photography Office)


As he campaigns for president, Mayor Bill de Blasio has repeatedly said that “this year” the city will pass a mandate that most businesses provide employees with two weeks of paid personal time each year, but the City Council, which would have to pass such legislation, has not committed to the timeline the mayor is touting.

De Blasio first announced his support for paid personal leave and said it would get done “this year” in his January State of the City, and he’s doubled down on that timeframe a number of times since, including during remarks at a U.S. Conference of Mayors session in late January, despite the fact that he has no public commitment of that sort from the city’s legislative body.

In May, the mayor led a rally for paid personal time legislation just ahead of the City Council’s initial hearing on the bill, which was first introduced in 2014 by then-City Council Member Jumaane Williams, who is now the public advocate. De Blasio did not back the bill, which would expand the city’s paid sick leave law and is facing opposition from business owners, until five years later.

At the rally, both de Blasio and Williams said it would be passed this year.

The push has become a major talking point for de Blasio on the presidential campaign trail -- “we’re going to pass a law in New York this year, two weeks paid vacation for every working person,” he said this past Sunday on ABC’s This Week with George Stephanopoulos -- and he included the idea in his recently-unveiled “21st century workers’ bill of rights” campaign agenda.

But there has been no apparent movement on the bill since the May hearing, and it has just eight sponsors in the 51-seat City Council (including Williams, who as public advocate is a non-voting member of the Council but can sponsor bills).

Asked how the mayor could be so certain about it passing this year, a City Hall spokesperson for de Blasio, Laura Feyer, said in a statement, “Since the start of the year, we have been pushing hard and working nonstop with stakeholders and elected officials to get Paid Personal Time legislation passed this year. We look forward achieving this massive win so that New Yorkers get the time off they are owed.”

A spokesperson for City Council Speaker Corey Johnson told Gotham Gazette that the speaker continues to be supportive of the aims of the bill but has concerns about potential unintended consequences impacting small businesses. Unlike de Blasio, the Council has no set timetable in mind, the spokesperson said.

“The paid leave proposal is going through the legislative process,” a Council spokesperson wrote by email.

Williams remains optimistic, but he appears to have backed off any timeline. “As the bill goes through the legislative process, our office looks forward to continuing to work with the Council and Administration so that Paid Personal Time is no longer a privilege, but a right for all New Yorkers,” Williams said in a statement to Gotham Gazette. Despite being asked, Williams did not comment on the timeframe for passage of the bill.

At the May rally, Williams said, “In a couple weeks or a couple months we are going to have paid personal time.”

At a January press conference not long after de Blasio announced his support for paid personal time, Johnson said he was supportive of the bill conceptually, but “it will go through the legislative process.”

“We want to hear from all the stakeholders. We want to hear from workers and small business owners,” he said. The Council created that opportunity in May. Before the hearing, de Blasio and Williams led their rally in support of the bill, while business owners and other critics led a rally in opposition. Proponents and opponents of the bill then testified before the Council’s Civil Service and Labor Committee, chair by Council Member I. Daneek Miller. 

Miller’s office did not respond to a request for comment on the legislation’s status and potential timeline for passage.

The legislation would require private employers with five or more employees to offer 10 days of paid personal leave annually, accrued based on employee service hours. For every 30 hours worked, an employee would earn one hour of paid personal time, with a maximum of 80 hours earned per year, according to the bill. De Blasio and other supporters of the legislation have pointed to similar programs in other countries, and lamented the United States as the only “industrialized” nation that does not mandate any paid personal leave.

New York City mandates paid sick leave for employers of the same size that would be affected by the proposed legislation, a law that was passed in late 2013 and then expanded multiple times by de Blasio and the City Council, beginning during the mayor’s first year in office in 2014.

“Working people have been working longer and harder with very little to show for it,” de Blasio said at the May rally. “Too many people in this city aren’t guaranteed any time off – not a single day. That’s not what New York City is about,” he said.

During Sunday’s interview on ABC, de Blasio said, “We need to do things like ensure a $15 minimum wage and paid vacation days....every country on Earth, every major country on Earth provides paid vacation days as a matter of law. Doesn’t happen in this country, we’re going to pass a law in New York this year, two weeks paid vacation for every working person.”

Later in the interview he said it again: “Look, in New York City, we've done pre-k for every child for free. We have done $15 minimum wage. We've done paid sick days. We're giving those two weeks paid vacation to every working person. We're literally guaranteeing health care for anyone who does not have health insurance. These things are happening in the nation's largest city.”

Small business owners and advocates have made their opposition to the paid personal time bill known over the last few months, saying that while they want to be able to give paid personal leave, they cannot afford to do so and would be on board if the city funded it. Up to 80 percent of small business owners are concerned that mandated paid personal leave would require “significant operational changes,” which could include letting workers go, according to a June survey of 1,471 small business owners.

Supporters for paid personal leave have found a rallying cry in 2014’s Earned Safe and Sick Time Law, citing similar pushback from small business owners at the time.

“Yeah, we heard that when we all did paid sick leave together, we heard that when we did the fair work week together, every time we heard the same refrain, it would hurt our economy and we would lose jobs. Well, guess what? We have more jobs in New York City than we've ever had in our history,” de Blasio said of opposition at the May rally.

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by Noah Berman, Gotham Gazette

Read more by this writer.

Ben Max contributed to this story.

Note: this story has been updated with comment from the mayor's office.

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On Presidential Campaign Trail, De Blasio Promises Paid Vacation Law ‘This Year,’ But City Council Has No Timeline Tue, 30 Jul 2019 04:00:00 +0000
‘Nobody Should Enter the Criminal Justice System for Something Related to Mental Illness’ https://www.gothamgazette.com/state/8705-new-york-criminal-justice-system-mental-illness-thrive-nyc https://www.gothamgazette.com/state/8705-new-york-criminal-justice-system-mental-illness-thrive-nyc first lady chirl mcc first

Chirlane McCray on Rikers Island (photo: Michael Appleton/Mayor's Office)


A rising number of 911 calls to report emotionally disturbed persons, several fatal encounters between police officers and people with serious mental illness, and an increasing percentage of seriously mentally ill people among those detained in city jails have all raised questions about how New York City and State provide care for those suffering from the most serious mental illnesses.

These questions and concerns don’t have easy answers. The city’s public hospital system, NYC Health + Hospitals; the mayor’s mental health care roadmap, ThriveNYC; services from the city’s Department of Health and Mental Hygiene; treatment within the city Department of Correction; private clinics; mental health shelters; and more combine to create a complex and stratified framework for treating those with a serious mental illness (SMI).

For some, much of what is at times called a crisis of treatment for those with serious mental illnesses like schizophrenia can be traced to the trend whereby the state closed down psychiatric hospitals with many thousands of inpatient beds while requisite treatment systems were not put into place to help people who would no longer be institutionalized, many of them cycling through the criminal justice system and inappropriately receiving their best mental health care while in jail.

There is insufficient use of mandatory outpatient treatment, some critics of the city and state say, with significant recent criticism also aimed at Mayor Bill de Blasio and First Lady Chirlane McCray over how resources have been allocated in their signature ThriveNYC program. Meanwhile, others have focused on questioning that police officers with guns are often first responders to people experiencing a serious mental health crisis, and those critics have been successful to some extent in getting protocols changed, though they say there is clearly more to do.

Dr. Mitchell Katz, president and CEO of NYC Health + Hospitals, says he’s troubled by the gaps in treatment and looking for new answers that would require the city and state to work together.

“The problem with the current mental health system, from my point of view, is for people with serious mental illness, the people we most worry about, the people we sometimes see on the subway or sitting on the bench, that right now there is nothing in between acute hospitalization and traditional outpatient care,” he said in April during an appearance hosted by the Citizens Budget Commission (CBC), a nonprofit think tank.

During an interview after the CBC event on the What’s The [Data] Point? podcast from CBC and Gotham Gazette, Katz was asked for more on his view about how to fill that gap.

He said H+H is working with the state on fixing a system that “drops off too precipitously.” Katz said he was in discussions to create programming to increase services for those who don’t qualify or don’t want to be admitted for inpatient care at a hospital but don’t receive enough treatment or care in the current outpatient system.

“We know in New York City there is a group of people with very serious mental health and addiction problems who rotate between the acute hospital, the shelter, and the jail,” he said on the podcast. “They don’t need to be locked up but let’s provide them a positive residential program that they want to stay at because it’s better than shelter and it’s better than the jail when we know that there are people who get arrested in order to be taken care of in jail.”

Over the course of months since Katz’s April comments, Gotham Gazette reached out multiple times to New York City Health + Hospitals and the Mayor’s Office but didn’t receive any further details on Katz’s vision for the program or whether there are ongoing discussions to make it a reality. State law and the state Office of Mental Health (OMH) have near full authority over the types of mental health treatment options allowed throughout the state, and are essential to the discussion, as Katz indicated.

In a statement to Gotham Gazette, a spokesperson for the New York State Office of Mental Health said, “as New York State continues to transform its mental health system to serve more individuals in the least-restrictive setting possible, we are expanding our reach through community-based services. These treatment models allow people to stay in the communities where they are best supported.”

Serious mental illnesses are not the types of mental illnesses and mental health issues that plague a little under 50 million Americans; according to the National Institute of Mental Health, about 4.5% of American adults have a serious mental illness -- meaning roughly 239,000 New Yorkers based on population statistics.

The three most common SMIs are schizophrenia, bipolar disorder, and major depression – less severe depression and anxiety are not categorized as serious mental illnesses although both the National Institute of Mental Health and the Substance Abuse and Mental Health Services Administration (SAMHSA) agree there is some ambiguity in the cut-off line for what’s considered a “serious” mental illness. It’s also important to note that there are complications with the term “serious mental illness”; it is not a diagnosis itself, but a level of disability or a threshold for having a particularly significant and debilitating mental illness.

In asking how New York treats those estimated 239,000 New Yorkers, there are the unavoidable questions of where they can and should be treated, as Katz indicated. Back in the early 20th century, many people with SMIs were admitted into state psychiatric centers, more commonly known as “insane asylums”; however, over the past 80 years there has been a major shift in placing those with serious mentally illness into inpatient treatment.

In the 1950s, New York began deinstitutionalization – a shift from inpatient care (a patient admitted into a hospital full-time) to community-based outpatient care. According to a 2018 report by Manhattan Institute senior fellow Stephen Eide, the process of deinstitutionalization continues to this day but may have gone too far. According to the report, the city’s public hospital and health care system, NYC Health + Hospitals, is the leading provider of inpatient psychiatric care in the city with only 1,218 beds dedicated to adult inpatient psychiatric care, representing 48% of adult inpatient beds in the city. State psychiatric centers in the city account for 1,058 adult inpatient beds.

ThriveNYC, led by McCray, has come under fire on multiple fronts, including general money mismanagement and lack of clear outcome-tracking, but also for how it helps -- or doesn’t help -- those with serious mental illnesses. During a City Council budget and oversight hearing on March 26, McCray was pressed on the issue several times, including pointed questions about how much of the ThriveNYC budget is dedicated toward treatment for those with SMIs.

At one point she said, “All of Thrive is really focused on the seriously mentally ill,” but she and others who testified about the program eventually offered more clarity.

Thrive, which is called a “roadmap” and spends around $200 million per year on programming and coordination, does include services solely focused on those with serious mental illness, but its main objective is to plug gaps of already existing services run by H+H and the city Department of Health and Mental Hygiene (DOHMH), while reorienting health care to always include mental health care and extend awareness and treatment into all of the city’s communities.

“Thrive is dedicated to prevention when possible, early prevention, treating people in crisis, and making sure people are stabilized when they do reach a crisis point,” McCray said. In arguing that all of Thrive is aimed at serious mental illness, she argued that untreated lower-level mental health issues can spiral.

Thrive, in the context of treating those with SMIs, is criticized for focusing more on mental health rather than mental illness; most of its 54 initiatives are focused on combating stigma, the negative factors that can lead to mental illness, and encouraging people to spot mental health issues in others and themselves, and to seek help.

In a May op-ed in the New York Post, DJ Jaffe, the executive director of Mental Illness Policy Org, and Eide of the Manhattan Institute called for the reallocation of ThriveNYC’s entire budget to focus on those with serious mental illness. They offered specific ways in which to redirect funding into different programs, such as enhancing existing crisis intervention teams, creating an office to exclusively manage the use of Kendra’s Law in New York CIty, and promoting supportive housing for homeless people with serious mental illnesses.

“The most serious cases are the ones most likely to become homeless, arrested, incarcerated, hospitalized and violent if they go untreated,” they wrote. “Yet Thrive virtually ignores this group in favor of people with less severe illnesses.”

Susan Herman, the recently-appointed executive director of ThriveNYC, said during the March testimony, “we are filling strategic gaps and piloting innovative programs for the seriously mentally ill to be able to work with people so they can stay in community by connecting them to services, by helping them connect or reconnect to treatment. We’re helping people both before crisis and after crisis.”

For example, McCray said in an op-ed in New York Daily News that Thrive adds $30 million of funding (about 15% of its budget) to the $300 million the Department of Health and Mental Hygiene already spends directly to help people with SMIs.

“Thrive-supported programs are designed to enhance and complement these existing services, not compete with or replace them,” she wrote.

For someone who voluntarily requests care, they can go to a public hospital for informal short-term hospital care as well as traditional outpatient care. The average stay for someone hospitalized for mental illness is 11 days, according to the New York City Department of Health and Mental Hygiene.

Outpatient care -- preferred by many for its community-based nature -- consists of things like meeting with a therapist or a psychiatrist and getting medication prescribed. Influential 1999 Supreme Court case Olmstead v. L.C. ruled public entities must provide community-based services to those with mental illness whenever possible.

“Lots of people have schizophrenia,” says Dr. Gary Belkin, Executive Deputy Commissioner for Health and Mental Hygiene in the city's Health Department and Chief of Policy and Strategy of ThriveNYC, in a phone interview. “The vast majority don’t end up on the street untreated and that’s because there are things that happen earlier, things that Thrive is working on – getting better care connections, having many points of contact, opportunities for family/friends to bring them mobile help."

Thrive has Assertive Community Treatment (ACT) teams dispatched around the city, often in mental health shelters, to treat people with serious mental illness. There are at least 50 ACT teams in New York with the capacity to serve 3,500 people at any time, according to Herman’s March 26 testimony. Thrive also created intensive mobile treatment teams that mostly go to shelters and provide treatment for homeless people. These outreach efforts mostly help people with outpatient care, but can lead to more intensive intervention, though it is very rare for judges to order people into inpatient hospitalization in New York.

Some of these efforts will now be part of ThriveNYC’s recently-announced outcome-tracking procedures, announced in late June.

The key questions, it seems, are whether Thrive’s efforts and the increased emphasis on outpatient programs on the state level -- perhaps including what Katz of H+H said he’d like to see -- can successfully fill gaps left by deinstitutionalization, while creating a more humane care system, and reduce threats posed by those with serious mental illness to themselves and others.

Deinstitutionalization in New York has been drastic. According to Eide’s report, as of November 2018, the average daily number of people in New York state adult psychiatric centers was 2,267. In 1955, there were over 93,000. Even in just the last four years, the number of state inpatient psychiatric beds -- in other words, the capacity for inpatient care -- has dropped by 19% statewide, from 2,866 in 2014 to 2,335 in 2018.

The drop in average daily patients and inpatient beds has coincided with an increase in the number of seriously mentally ill homeless people in New York and the proportion of inmates with a serious mental illness diagnosis in city jails.

According to Eide’s findings, there are more psychiatric beds in New York City mental health shelters than the number of psychiatric beds in state psychiatric centers and Health + Hospitals facilities combined.

Supportive housing, which provides housing and social services for those with serious mental illness, is also seen as a key tool. There are currently 52,000 units of supportive housing statewide, half of which are funded by the state Office of Mental Health (the other half don’t necessarily serve those with mental illness). Supportive housing, which is built and funded by both the city and state, sometimes in conjunction, is typically run by nonprofit providers who provide onsite mental health care, medication delivery systems, and more.

According to testimony given in a May City Council hearing by the Supportive Housing Network of New York, there are around 33,000 units of supportive housing in New York City. Amid calls for more units, both Mayor de Blasio and Governor Andrew Cuomo have made pledges to develop more supportive housing.

In his NYC 15/15 Supportive Housing Initiative announced in November 2015, de Blasio said the city would develop 15,000 additional units of supportive housing over 15 years. Two months later, Governor Cuomo announced his plan to build 20,000 units over the same 15-year timespan. These announcements came after the two were unable to come to an agreement on what have been known for decades as “New York-New York” supportive housing deals whereby the city and state work together to develop thousands of units.

The New York State Senate and Assembly Democratic majorities see a need for more programming aimed at mental health care and housing, too. Earlier this year, the two bodies unanimously passed a bill creating a temporary commission to study what is seen as chronic underfunding for these housing programs. The commission would “provide policy guidance and recommendations relating to the adequacy of funding levels and need for sufficient staffing in all supportive housing under the auspices of the Office of Mental Health.”

According to a June 25 press release from supportive housing provider Bring It Home, “[t]he bill would prompt a study of current funding and staffing levels across the state and investigate ways the state can begin to remedy its years-long failure to adequately fund mental health housing programs.” Advocates are urging Cuomo to sign the bill so the commission can issue its report in time for the next state budget season.

Another discussion that has played out over many years, at the state level especially, is over how to treat individuals who are too sick to seek help.

Per New York State Law, the criteria to involuntarily admit someone due to mental health is fairly strict – the person can’t understand the need for care or presents a substantial harm to self and/or others, among other standards.

According to a 2015 New York City Department of Health and Mental Hygiene report, 40% of adult New Yorkers with serious mental illness didn’t receive medical treatment in the prior year.

Courts can and do order people to outpatient care: assisted outpatient treatment (AOT) is also known in New York as Kendra’s Law. Originally passed in 1999 in New York State (the first law of its kind and emulated in many other states since), Kendra’s Law allows select people close to a mentally ill person to petition the court to mandate a treatment plan for that person. According to OMH’s website, as of Monday (July 29) there were 3,109 people under active court order via Kendra’s Law, 1,377 of them in New York City.

Jaffe of Mental Health Policy Org, a staunch supporter of Kendra’s Law, estimates around 4,000 people should be in mandated treatment under the law. Critics of Kendra’s Law typically accept the principle but say it’s overly strict, such as the need to show an instance of seriously violent behavior in the last four years. Once a petition to mandate care is successfully filed, the chances of the courts granting the petition are extremely high: 90% of Kendra’s Law petitions were granted statewide from July 29, 2018 through Sunday (July 28, 2019), according to OMH’s website.

Kendra’s Law affects a very small population but has shown signs of working: the state Office of Mental Health says for someone who went through an assisted outpatient treatment program, psychiatric hospitalization was reduced by 64% after AOT, incarceration by 72%, and homelessness was reduced by 61%. Jaffe and Eide in their op-ed call for the creation (and funding) of a Kendra’s Law Office to deal solely with helping the city expand its efforts to get more people into Kendra’s Law.

Meanwhile, ThriveNYC offers NYC Well, a mental health helpline that has the ability to dispatch mobile crisis intervention teams to someone experiencing a mental health crisis. The phone line is something that de Blasio and McCray often cite in their public remarks about Thrive and the city’s efforts to improve mental health care.

Another big piece of the current picture of care for those with serious mental illnesses is correctional health services, which have been needed more and more. Although the daily inmate and detainee population in city jails is decreasing, the percentage of those diagnosed with a serious mental illness has gone from 10.2% in city fiscal year 2014 to 14.3% in fiscal year 2018, according to the Mayor’s Management Report.

Dr. Katz  said on What’s the [DATA] Point? that “In the case of correctional health…we know in New York City there is a group of people with very serious mental health and addiction problems who rotate between the acute hospital, the shelter, and the jail.”

One goal of ThriveNYC is to limit the number of people going to jail due to serious mental illness. The city will open two health diversion centers later this year. Announced in late 2018, the diversion centers will provide somewhere for police officers to take someone who has committed a low-level, non-violent crime but they believe is exhibiting behavioral problems due to mental health. The centers will offer mental health treatment and have overnight beds but stays will be capped at five days.

Skeptics of the idea point out that there will only be two diversion centers, one in the Bronx and one in East Harlem, and each center will only serve its specific community. Plus, the centers will have a “no-refusal” policy that could edge out those with serious mental illness if the centers are at capacity. According to Herman at the March City Council hearing, Thrive plans to evaluate the success of the two programs and possibly create more centers next year.

“We want to catch [people] before entry into the criminal justice system,” said Dr. Belkin. “Nobody should enter the criminal justice system for something related to mental illness. We should be able to reach those people so that doesn’t happen, where they can be treated and managed in a health context before they get ensnared in the criminal justice system. I think everyone wants to avoid that path."

Critics argue, as alluded to by Katz and recently brought up during a Council hearing on recidivism of those with mental illness, that mental health services outside of the criminal justice system are less robust than those offered in city jails. According to Katz, “the fact that we make it necessary for some people to commit shoplifting in order to ensure they’re in a safe place, get their meds, get their food, get their house, when we could do that so much less expensively elsewhere is really a condemnation on us.”

Another option, proposed by Jaffe and Eide, is the expansion of mental health courts, which allows judges to divert those with serious mental illness and charged with crimes to treatment instead of jail. They say current mental health courts cannot offer housing to these people, which weakens its effectiveness.

City Council Speaker Corey Johnson is attempting to prevent those with mental illness from going to jail and to ensure they get better treatment instead. In a speech on criminal justice reform on May 16 at John Jay College, he announced the Council will create a program to house 100 people with SMI caught in the criminal justice system and emphasized the 100 beds are a start, but the program will need further investment and focus to add more beds.

Johnson also pointed out how targeting the legal system can keep people with SMI out of jail; he announced the Council will fund a program to connect social workers with defense attorneys to find alternatives to prison. He also previewed the Get Well & Get Out Act, which would require correctional services staff to keep attorneys informed of their clients’ mental health.

The bill was introduced on June 13 by Council Member Margaret Chin of Manhattan and six other Council sponsors, including Speaker Johnson. The Council quickly held a hearing on the bill that was combined with an oversight hearing on recidivism rates for those with mental illness. The bill has not yet received a committee vote.

How the city handles crisis situations including people with serious mental illness has come under increased scrutiny over the last few years. According to the NYPD and an investigation from THE CITY, calls to 911 involving EDP’s, or emotionally disturbed persons, have risen from around 97,000 in 2009 to 180,000 last year. Fourteen people who appeared to be suffering from acute mental illness have been killed by police officers in the past three years.

The extent to which the city’s roughly 37,000-member police force has been trained in crisis prevention is an ongoing issue. THE CITY estimated that only about 11,970 uniformed officers had undergone crisis prevention training at the time of its March reporting.

In April 2018, de Blasio and McCray launched the NYC Crisis Prevention and Response Task Force to create a strategy to better deal with mental health crises in the city. That report was due in January and has not been publicly released. The Task Force consists of leaders from the Department of Health and Mental Hygiene, ThriveNYC, and the NYPD, among others.

McCray in her Daily News op-ed said serious mental illness and EDP calls aren’t as related as they appear.

“Unfortunately, too many people think of serious mental illness as ‘crazy people in the subway,’ or 911 calls involving emotionally disturbed persons. But not everyone sleeping in the subway or on the streets has an illness,” she wrote. “And emotional disturbance describes erratic behavior at a given time — not a chronic disease.”

In an attempt to treat EDPs, Thrive created what it calls co-response teams that proactively send a police officer with a clinician to people who have shown violent tendencies or behavioral problems in the past. The forensic ACT teams, the mobile intervention teams, and the co-response teams are all a part of Thrive’s NYC Safe program.

It’s possible that the program Dr. Katz spoke about in April -- creating a residential program for the seriously mentally ill to fill in the gaps of treatment between outpatient care, inpatient care, and prison -- is what’s called “Intensive Outpatient Treatment,” or IOT, which offers a much higher intensity of services but still in the patient’s community. Patients under IOT would visit a psychiatrist more often and for longer than traditional outpatient programs.

Already existing outpatient programs must apply for a waiver to the state Office of Mental Health for permission to offer an intensive outpatient treatment program. OMH has approved waivers for 35 clinics beginning in August 2017, according to OMH’s website (they are required by state law to publicly release waiver requests and decisions).

Otherwise, the most intensive treatment with the most consistent care can be found in hospitals, prisons, or homeless shelters.

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by Truman Stephens, Gotham Gazette

Read more by this writer.

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‘Nobody Should Enter the Criminal Justice System for Something Related to Mental Illness’ Mon, 29 Jul 2019 04:00:00 +0000
City Officials Debate What To Do About Taxi Medallion Debt Crisis https://www.gothamgazette.com/city/8695-city-officials-debate-what-to-do-about-taxi-medallion-debt-crisis https://www.gothamgazette.com/city/8695-city-officials-debate-what-to-do-about-taxi-medallion-debt-crisis taxi medallion drivers rally city hall

Council Members Levine & Rivera & drivers rally at City Hall (photo: Jeff Reed)


City Council Speaker Corey Johnson asked what sounded like a simple question: should the Taxi & Limousine Commission apologize for its role in the taxi medallion debt crisis, in which thousands of taxi owner-drivers have been trapped in predatory loans unchecked by city and state watchdogs?

Jeffrey Roth, nominated by Mayor Bill de Blasio to lead the TLC, failed to give a direct “yes” or “no.” Johnson asked again, to which Roth said, “whether or not the TLC leadership there should apologize, I don’t know.” Visibly frustrated, Johnson moved on to a new question.

The exchange took place at a July 18 hearing to discuss Roth’s nomination for TLC Commissioner – a nomination that has since been temporarily withdrawn in part due to Roth’s performance at the hearing.

Roth’s evasiveness on the apology questions and others, and Johnson’s resulting exasperation highlighted a growing debate over the culpability of city government in facilitating the medallion crisis. As a New York Times two-part investigation published in May revealed, the TLC ignored warning signs of a highly inflated medallion market (the city sells taxi medallions and sets baseline prices for auction) and risky lending practices, leaving many medallion owner stranded in colossal debt when the market collapsed. A wave of suicides among driver-owners, along with the Times' series, has elevated the discussion to emergency status.

But, as policymakers, drivers, and others have been asking, should the city itself be responsible for forgiving the debt? What is the best path for helping driver-owners get out from under their loans?

For the Taxi Workers Alliance, the most prominent organization representing for-hire vehicle drivers, the answer is a resounding yes: New York City government should prepare a bailout. But Mayor de Blasio has repeatedly said a bailout would be both out of the city's purview and too costly to the city's budget. On the other hand, several City Council Members, including Speaker Johnson, have expressed some initial support for the idea of a partial bailout of driver-owners.

Bhairavi Desai, the head of the union since its inception in 1998, has called for a city-run program to determine the current market value of medallions, then buying out and forgiving loans down to that value. At the height of the market in 2014, medallions were going for more than $1 million, compared to a $200,000 price tag a decade earlier.

The TWA has calculated that, based on a current medallion market value of $150,000 and an average owner-driver debt of $600,000, the program would cost between $1.6 and $2.4 billion – an increase from the $1 billion the TWA estimates that the city made from inflated prices at medallion auctions.

City Council Member Mark Levine, who represents Upper Manhattan and has long been one of the TWA’s strongest allies in government, claimed at a July 11 rally outside City Hall that a clear precedent for a city-run bailout exists.

“During the housing mortgage bubble, an entity here called the Center for New York City Neighborhoods did exactly that for New Yorkers with underwater housing mortgages,” he said alongside Desai and dozens of assembled owner-drivers. “The fact is, there is a myriad of precedents for this here in New York City, and it’s simply inexcusable to say this isn’t possible when we have done projects like this in the past.”

Levine is not alone in his support for the TWA’s proposal. Council Member Carlina Rivera of Lower Manhattan appeared at the same rally to call for loan forgiveness; City Comptroller Scott Stringer and Council Member Ritchie Torres, among others, have also expressed some measure of support for city-financed debt relief. Because bailout legislation has yet to be introduced to the City Council, it is difficult to gauge how broad the proposal’s support is.

Desai and the TWA have also called for a cap on medallion mortgage payments at $900 per month (compared to an average of $3,000 a month currently) and the creation of a retirement fund for drivers, among other things. But with chants of “Loan forgiveness now!” and pre-printed signs calling for “Debt Forgiveness NOW!” at the July 11 rally, owner-drivers have made their first priority clear.

On the other hand, de Blasio, as well as officials in the TLC, have expressed skepticism about, even dismissal of such an idea. Their preferred plan of action is for the city to instead pressure the private banking lenders to downsize loans, without the city itself directly buying or bailing out anything.

De Blasio, in a June interview on WNYC’s The Brian Lehrer Show, said that he would “absolutely pressure banks and lenders to be fair to these drivers, we’ll do that.” But he rejected the possibility of a city bailout, saying the city “doesn’t directly fund the drivers…There’s some things the City of New York simply has limits on.” He has indicated on multiple occasions that the city simply doesn’t have the billions of dollars that would be needed for a bailout, that it would be too costly of a one-time expense.

Meera Joshi, formerly the commissioner of the TLC, listed in an email to Gotham Gazette several proposals to address the crisis, all of which involve the city leaning on banks to modify loans so that they match drivers’ income. “State and city officials should publicly name those that refuse to work with borrowers,” she suggested, “much like the 100 worst landlords list. Publicity about their inflexibility will go a long way in making a change, and will achieve change quickly.”

Two other possibilities Joshi mentioned involve conditioning medallion ownership on viable financing, thus causing “banks that do not modify loans within a prescribed period [to] lose the medallion as an asset,” and “chang[ing] state tax law to ensure that forgiven loans are not considered taxable income for individuals below a certain income level.”

When asked directly about the possibility of direct loan forgiveness by the city, Joshi stated that she supports “all real assistance, but prioritizes what can realistically happen, affects the largest group, and most of all happens quickly, which is pressuring banks to restructure loans.”

Current Acting TLC Commissioner Bill Heinzen, during a June 24 City Council oversight hearing on the crisis, expanded on this assessment, saying that “the people who have the power and money here are the banks and the credit unions that hold those loans, and they should be the ones who should be forced to write down those loans to something that is human and possible to pay.”

And Roth, responding to pointed questioning from Johnson, said that he thinks “there are measures short of financial bailout...that might be sufficient and not excessive.”

Writing in a City & State op-ed column the day after the July 11 rally, Nicole Gelinas argued that the roughly $2 billion required for a bailout of many owner-drivers would make a significant, arguably unfair dent in the city’s budget. “The city must follow only public need,” she wrote, “not the extraordinary circumstances of one industry.” Others, including Roth, have pointed out that a city-financed bailout might inadvertently reward lenders for their predatory behavior.

While she echoed some of the other ideas that have been offered for alleviating the crisis, another of Gelinas’ proposed fixes involves city- and state-level regulation, without either funding a bailout. “The city,” she wrote, “should make it much clearer whether it is giving up on the medallion system or not, guiding both lenders and borrowers on underlying value, and allowing lenders to keep an interest in the future, possibly higher value of a medallion in exchange for debt relief.”

For their part, the TWA and its Council allies have also called on the city to lean on lenders to forgive debt and ease burdens on owner-drivers. Levine noted that, if the city can successfully push lenders to downsize loans, then the pricetag the city pays for a bailout decreases and becomes more politically feasible.

But some who support a city forgiveness program worry that the focus on outside forces like credit unions makes concrete solutions harder. Council Member Brad Lander, at the June 24 oversight hearing, said he worries “that if we only focus on accountability, we will fail to come up with a real approach to relief...We must find a way to do both.”

A spokesperson for the City Council said in a brief Thursday statement to Gotham Gazette that “Speaker Johnson and the council are committed to helping drivers, and the newly appointed task force is exploring a variety of ways to help including various forms of a bailout.”

Appearing on Thursday evening’s Inside City Hall on NY1, Johnson was asked by host Errol Louis about what he thinks should be done for the medallion owners. “I think the mayor is right in one aspect,” Johnson said after disagreeing with the mayor’s claim that if a cap on new for-hire vehicle licenses had been instituted in 2015 much would have been different, while also reiterating his regret for not supporting the cap back then, “which is $17 billion for a full bailout is not realistic, and it would be inappropriate and disingenuous for me to say that’s what we can do. But there has been a proposal -- Council Members Levin and Levine and Lander have been talking about doing a partial bailout for some of the medallion owners who are under water, maybe at $100,000 or $200,000, to get them out of debt in a way where they’re not as under water. It’s something we need to look at.”

Underlying the debate over debt forgiveness is a deeper question over who, exactly, bears the blame for the crisis to begin with. Mayor de Blasio has called the crisis a “private market reality,” and the TLC released an investigation it conducted laying the responsibility on lenders and the National Credit Union Association while insisting that “TLC and the City have no regulatory oversight or control over lending practices.”

Additionally, Roth, Heinzen, and Joshi – the prospective, current, and former TLC commissioners, respectively – all pointed to the specific ways in which the TLC worked to mitigate the crisis, including loosening restrictions and reducing taxes on drivers. The cap on vehicle hailing apps such as Uber and Lyft has also been highlighted as a measure that the city took to help owner-drivers (de Blasio has repeatedly said he wishes the City Council had gone along with his 2015 push for a FHV cap, rather than stalling for several more years until its passage in 2018). 

For many, however, these measures were too little and too late. Though the city was not directly responsible for reckless lending practices that may have helped thrust owner-drivers into severe debt, Levine and others claim it still has a “moral debt” to pay for its lack of oversight. Levine charged that “the city itself was asleep as thousands of drivers entered into a world of financial hell.” 

Council Member Torres, who co-chaired the oversight hearing with Council Member Ydanis Rodriguez, said that the TLC “is inclined to scapegoat everyone except itself.”

The TLC, as many debt-relief proponents have pointed out, was not just a regulator asleep at the wheel. Faced with a $3.8 billion budget deficit early in his administration, Mayor Michael Bloomberg and his TLC commissioner, Matthew Daus, advertised the medallion market as a stable, “once-in-a-lifetime” opportunity in order to increase city revenue. In 2011, Andrew Murstein, the former president of a prominent medallion lender, called the city his “partner,” because “they want to see prices go as high as possible.”

Debt relief, either from the city or from lenders, is not the only measure being discussed to address the medallion crisis. At the June 24 oversight hearing, four bills were proposed that would increase accountability at the TLC, with the goal of preventing future crises.

Additionally, Council Member Rodriguez, who chairs the Transportation Committee, has proposed a bill that would exempt taxi drivers from congestion pricing. The TWA held a rally on July 18 demanding that the cap on for-hire vehicles be extended, which would continue to restrain competition to the taxi industry. And, as Roth mentioned in the July 18 committee hearing, the TLC plans to set up a driver assistance unit to provide drivers with financial and mental health services.

But, as these legislative proposals’ backers have attested to, such fixes are not enough to help those already in massive debt. Regardless of who bears the blame for the crisis and who needs to pay for it, thousands of drivers remain in dire straits. “This may have taken years in the making; it cannot take years more in the fixing,” said Desai at the July 11 rally.

“Otherwise," she said, "thousands of families are going to simply break.”

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by Joey Fox, Gotham Gazette

Read more by this writer.

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City Officials Debate What To Do About Taxi Medallion Debt Crisis Thu, 25 Jul 2019 04:00:00 +0000
Corey Johnson's Big Small-Dollar Bet https://www.gothamgazette.com/city/8685-corey-johnson-s-big-small-dollar-bet https://www.gothamgazette.com/city/8685-corey-johnson-s-big-small-dollar-bet Corey Johnson

Council Speaker Corey Johnson (photo: Emil Cohen/City Council)


City Council Speaker Corey Johnson’s expected mayoral campaign is based in part on a big small-dollar gamble.

When Johnson announced in January that he was exploring a bid for mayor – he hasn’t made it official yet – he set a $250 limit on all campaign contributions, far below the maximum possible limit of $5,100. And though the latest campaign finance disclosures show him outpacing his three likely Democratic primary opponents in the number of donations he received, he is well behind the pack in total funds and will have to work overtime to fill the gap.

Along with the low self-imposed donation limit ($250 is also the ceiling for how much of each donation can be matched eight-to-one in the city’s public campaign finance system), Johnson has also pledged not to take any campaign money from real estate developers, lobbyists, or corporate political action committees.

By constraining himself in these ways, he’s making a calculated bet: that New Yorkers will be impressed enough by his voluntary limitations that so many will donate, albeit in small amounts, to still get him the war chest he needs to spend as much as his competitors given the cap on expenditures that comes with the city’s matching system. And, that he’ll hit those maximums while earning a larger, more enthusiastic grassroots base of supporters than his opponents.

He’ll be living out the values that many Democrats espouse, and he’ll have a very effective talking point as he seeks to separate himself from the pack, expected to also include City Comptroller Scott Stringer, Bronx Borough President Ruben Diaz, Jr., and Brooklyn Borough President Eric Adams.

“I’m focused on these small-dollar contributions because there’s a double benefit,” Johnson said in a Wednesday interview. “Of course there’s the money you raise, but also you get to meet a lot more people around the city and spread your message to New Yorkers.”

“I’m doing this in a way that no one’s ever done before,” he added, “and I was a little concerned when I made the pledge, wondering if I’d be able to raise the amount of money to be able to compete. But after these last five months, I feel good about where I am and I feel like it’s totally doable.”

The latest filings with the New York City Campaign Finance Board show that Johnson has raised a total of $379,728 from 3,029 contributions. The money came from 2,612 individual donors, with many of them giving more than once. He also transferred $88,780 from his City Council campaign account, spent only about $32,800 and has just under $432,000 in cash on hand.

“I think it shows the grassroots nature of the campaign and I did it all without raising money from real estate developers or people who work at lobbying firms and with a self-imposed cap of $250,” Johnson said Wednesday. “So I feel excited. I worked really hard. I went around the city and met with voters in their neighborhoods, in their living rooms and talked about the issues that matter to New Yorkers.”

Johnson will be bolstered by the city’s voluntary public matching funds program, which incentivizes small donations by matching them with public funds and has recently been enhanced by the City Council through legislation, a portion of which stirred controversy given its apparent benefit to Johnson and detriment to his rivals.

A ballot referendum approved last year gave candidates the ability to choose one of two versions of the city’s public funds program, run by the Campaign Finance Board. For candidates for citywide positions, they can now opt for a new $2,000 contribution limit and receive an 8-to-1 match for the first $250 of an eligible contribution, or they could stick with the older $5,100 limit and receive a 6-to-1 match for the first $175 of an eligible contribution.

The City Council then bolstered the new system further by enhancing the extent of the public match candidates can receive as it relates to the spending cap in their race, and made the new system retroactive to the beginning of the four-year cycle, meaning the start of 2018, which rankled Johnson’s rivals, especially Stringer, who would have to return a significant amount of money in order to opt into the new system.

Stringer accused Johnson of playing political games with his government position, while Johnson noted he was acting on a recommendation from the Campaign Finance Board, looking to help take big money out of politics, and that Stringer could stick with the higher donation limits if he’d like (though Stringer had already chosen the new system, not thinking he would have to make refunds from 2018 fundraising). The changes also impact Adams -- who also has criticized Johnson over the move -- and Diaz, Jr., though they have not made clear which system they plan to choose. After this election cycle, the new system will be the only choice.

Johnson chose the new system and of his total fundraising, $315,421 qualifies for public matching funds, meaning he could receive eight times that amount in public funds. When the Council increased the cap on the amount of public funds a candidate can receive – from 75% to 88.8% of the spending limit for a campaign – it meant Johnson will be able to stick to his self-imposed limit and spend as much as his three rivals, who are all expected to participate in the matching funds program and therefore abide by spending limits. It’s unclear if any other Democrats will jump into the race, or what the general election field may look like.

It's likely that Johnson, Adams, Diaz Jr., and Stringer are all able to raise as much as they need to, in combination with matching funds, and spend the allowable amount -- $7.3 million for the primary. But Johnson appears to think his pledge will significantly impact how voters and donors see him, and his competitors, which can potentially help him secure more support in the ascendent left wing of the Democratic Party.

Johnson sees significant momentum in his first filing period, noting that he currently has the largest amount of funds that can be matched, compared to the other candidates who had been raising funds for well over a year before he began.

There are also pitfalls to Johnson’s approach. He said he can’t afford full-time campaign staff and admits that it’s “been a challenge” to vet the thousands of contributions he’s receiving with a mostly volunteer crew. He’s had to return about $4,100 to people who have gone over his campaign limit. It also takes major time and effort to raise so many smaller contributions and not buttress them with larger ones.

“Oh my god, it’s very tough. It’s grueling. And sort of nonstop, and it’s house party by house party, 20-25, 30-35 people at a time,” said Johnson, who has been appearing at a variety of small campaign gatherings.

Compared to Adams, Diaz Jr., and Stringer, the Council speaker is currently far behind in money in the bank. Along with taking the larger donations, the other three have been raising funds far longer and have deeper coffers from their own earlier races. No one has received any public matching funds yet, and won’t anytime soon -- the Democratic mayoral primary will be in June, 2021. (If Mayor Bill de Blasio, who is running for president, doesn’t finish his term for one reason or another, things could speed up a bit.)

Stringer leads the pack with nearly $2.6 million in cash on hand. He raised $336,700 in the last six months from 1,447 individual contributors after having raised at a faster rate previously, when he was toying with a challenge to de Blasio head of the mayor’s 2017 reelection. Stringer was able to transfer $1.4 million to his campaign from a previous citywide campaign account and has been prolific in his fundraising. Of his total, he has about $254,554 in funds that qualify for a public match.

Opting in to the newer of the two campaign finance systems, Stringer now has to return many thousands of dollars that represent the retroactive lowering of the individual contribution limit. Stringer called the new regulations a “power grab” by Johnson, critiquing him for changing the rules midway through the race (a criticism that Adams echoed).

"Time and again, Scott Stringer has stood up for bold progressive solutions to our toughest challenges, and this latest filing shows the growing energy behind our people-powered campaign,” said Emily Bernstein, finance director for Stringer’s campaign, in a statement. “At grassroots events across the city, we’ve talked with New Yorkers about real ideas to make our city more affordable for working families, build a better future for our children, and deliver true progressive change. We’re incredibly humbled by the support we’ve received, and we’re excited to build on our momentum.”

After Stringer, Adams has the most funds, with nearly $2.3 million in cash on hand. He raised $583,627 in the last six months from 1,234 donors. He also made an earlier transfer of $332,594 from his borough president campaign account. A total of $273,385 from his fundraising would be matchable by the CFB, though Adams has not yet declared if he is participating in the public matching funds program, much less which of the two versions, and has been accepting donations of the maximum amount allowed, $5,100. “New Yorkers believe in Eric and trust that he shares their vision for our city--that's why so many of them from such diverse backgrounds are supporting his campaign to lead the five boroughs. And he's just getting started,” said Evan Thies, a campaign spokesperson, in an email.

In comparison, Diaz Jr. has about $931,228 in the bank. He raised $232,334 in this latest filing period, from 385 donors, and he transferred $219,395 to his campaign for this race. He also hasn’t declared whether he will participate in the public funds program but most of his money came from large donations. He has about $57,476 that would qualify for matching funds.

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

Ben Max contributed to this story.

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Corey Johnson's Big Small-Dollar Bet Thu, 18 Jul 2019 04:00:00 +0000
Campaigning for Congress, Torres Touts City Funding Secured for Development Outside Council District https://www.gothamgazette.com/state/8672-campaigning-for-congress-torres-touts-city-funding-secured-for-development-outside-council-district https://www.gothamgazette.com/state/8672-campaigning-for-congress-torres-touts-city-funding-secured-for-development-outside-council-district 1 cm r torres lib

Council Member Ritchie Torres (photo: Jeff Reed/City Council)


Bronx City Council Member Ritchie Torres is touting $3 million in city funding he secured for a residential complex that falls outside the Council district he represents, but within the Congressional district where he’s seeking votes.

The money will go to Concourse Village, Inc., a nearly 1,900-unit housing cooperative located in the south Bronx, over a mile away from the border of Torres’ district. The second-term Democratic Council member is running for Congress in the primary that will be held in June of next year.

Torres sent a campaign text message announcing the “great news,” using the funding allocation he secured as a member of the City Council to advance his congressional campaign, apparently targeting voters in Concourse Village.

"This is Council Member Ritchie Torres, running to be your next Congressman,” read a text message shared with Gotham Gazette. “GREAT NEWS: In the latest NYC budget, I secured $3 MILLION for Concourse Village.” The message went on to tell the recipient not to hesitate to reach out to Torres, providing a phone number, and concluded, “You can always count on me to fight for the Bronx. - Ritchie".

The youngest member of the City Council and the first openly gay elected official from the Bronx, Torres officially announced his candidacy for Congress on Monday, though he has been exploring a run for months. He joins several other Democrats vying for the seat opened by incumbent Representative José E. Serrano, who announced in March he would not seek reelection because of health concerns related to Parkinson’s disease. Representing the district in Congress since 1990, Serrano’s current term will end at the end of next year. Torres, who has been representing the 15th Council District since 2014, is not eligible to run for reelection in 2021 because of two-term limits. (Serrano’s Congressional district also happens to be the 15th.)

Others in the race include City Council Member Ruben Diaz, Sr. and Assemblymember Michael Blake.

Taking advantage of the authority and influence of elected office to secure popular measures that can later be used as campaign fodder is commonplace in New York, where local politics is often a stepping stone to higher office. But the grey area around promoting public interest and political aspirations becomes less ambiguous when the sway of an elected office goes to benefit another district entirely, with electoral goals at play.

"How do you rationalize using campaign funds to communicate with people outside your district to tell them that you got them money blatantly for the purpose of trying to curry political favor?" said Blake, whose district includes Concourse Village.

Torres says the budget allocation for what he calls the largest concentration of cooperative housing in the South Bronx is consistent with his focus on affordable housing, especially for African-Americans. So is the political campaigning that followed.

“I have been an advocate for affordable housing not only in my district but throughout the city,” Torres told Gotham Gazette. Concourse Village “has an outsized presence in the housing stock of the South Bronx, which is keeping with my record and reputation for advocating for affordable housing.”

“I think of cooperative housing like Concourse Village as the bedrock of the African-American middle class, you know, whether it’s Co-op City in the East Bronx or Concourse Village in the South Bronx,” Torres, who is black and Latino, said. Black voters in the 15th Congressional District are expected to be an important part of the primary vote. Blake is African-American and Torres is African-American and Latino.

Concourse Village, Inc. is subsidized under the Mitchell-Lama housing program, which offers income-restricted rentals and below-market value buy-in for co-ops, a boon for affordable housing.

The neighborhoods comprising the South Bronx are home to some of the worst poverty in the country and also have some of the highest rates of rent burden in the city. In the community district that includes Concourse Village, more than half of households are rent burdened, meaning they spend more than 35 percent of income on rent, according to the Department of City Planning.

Torres, who grew up in NYCHA public housing and chaired the Committee on Public Housing during his first term, has made the living conditions of the city’s most underserved residents a signature priority.

He notes the $3 million allocation did not come from the capital funding dedicated to his Council district, but from the city-wide pool controlled by Speaker Corey Johnson. Torres told Gotham Gazette, “if it had come from the Council District 15 pot then there is cause for controversy, but there is nothing unusual about funding for Concourse Village from a city-wide pot.”

“And since I had a role in securing the funds, it’s natural for me to take credit,” he added.

Each fiscal year the City Council is given a capital budget from which Council members may apply to allocate funds, according to Jonathan Rosenberg of the Independent Budget Office. Individual members can apply for district-specific projects, and borough delegations can sponsor projects that span multiple districts. The Council speaker ultimately decides how that money is disbursed and can also allocate it to city-wide projects.

In recent years, speakers have designated an equal amount of capital funding, $5 million, to each of the 51 Council members with the remainder of the now $655 million capital budget going to a city fund. City-wide allocations are controlled by the speaker and might go toward large or expansive projects like street reconstruction, according to Rosenberg, and members are able to put in requests.

“This money was funded by the City Council Speaker at the request of Council Member Torres,” said a Council spokesperson. The spokesperson said it’s not unprecedented for members to seek funding for a project outside their district, adding that the money is from the city capital funding, not the money set aside for Torres’ Council District 15.

Torres has also secured funding for cooperative housing in his district using the money designated specifically for that purpose by the Council leadership. This year, he put roughly $1 million of the $5 million towards renovationing a Mitchell-Lama co-op, known as Dennis Lane Apartments, in the heart of District 15.

Concourse Village is located south of Torres’ district off of Morris Ave. within the borders of Council District 16, represented by Vanessa Gibson. Gibson, a Democrat, is not listed among the sponsors of the $3 million Concourse Village, Inc. allocation, despite the project falling into her district. “I actually was not even made aware of this allocation until the day of adoption,” she said in a phone interview.

“I did not have the opportunity to work with the speaker nor Ritchie on this. It was something that Ritchie had done on his own, but I am grateful for the attention Concourse Village is getting in the budget,” she said.

“I get the strategic way that Ritchie is obviously looking at the future. This was a development that came up among the priorities within the district, and I truly believe that that was the logic behind it,” she added.

But Blake called foul on that strategic approach. “It is difficult to say that you want to be a fresh voice in Congress when you are directly trying to communicate to people that you want to pay for their vote," he said.

“I’m proud of the role that I played in securing the funds. Concourse Village is one of the most important housing developments in the Bronx and in the city,” Torres said. “And it’s been a stabilizing force for communities of color, for middle-class communities of color. That’s why I felt so strongly about it.”

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by Ethan Geringer-Sameth, reporter, Gotham Gazette      

Read more by this writer.

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Campaigning for Congress, Torres Touts City Funding Secured for Development Outside Council District Mon, 15 Jul 2019 04:00:00 +0000