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The New York Real Estate Mafia
May 6, 2015
Sometimes your conspiracy theory turns out to be absolutely true.
Over the past few years, primarily due to conversations I’ve had at my weekly Alt Banking meetings, I’ve become increasingly concerned about the crazy real estate industry in New York City and New York State. A few pertinent facts:
- There’s been a crazy luxury housing boom. Specifically, more luxury housing is being built than there are people who could reasonably afford them.
- Except perhaps the way to look at such apartments is that they are not apartments at all but financial instruments for rich people.
- Specifically, rich people who want to hide or launder their money. The disclosure laws are suspiciously lax.
- On the side of “affordable housing,” which the Alt Banking group wrote about here in our Huffington Post blog, there are ridiculous tax abatement laws that benefit builders. Specifically, the “421a” law, which Dean Skelos, Republican majority leader in the State Senate, is somehow involved with.
- Specifically, it seems that Skelos demanded money for his son in return for playing nice with developers.
- The ironic thing is how small the pay-offs are: on the level of $200K. Compare that to the $1.2 billion of taxes that have gone uncollected by the 421a law.
- In the meantime, the construction unions are being decimated by the real estate industry, even in this outrageously flush time. They are trying to organize around repealing the 421a law.
I am really hoping we can clear up this mess and end the corruption in the New York real estate market soon. Housing is a big deal.
Categories: Uncategorized
mathbabe 
You might want to consider the relation between real estate market values and perceived or reputed quality of education in a given locale. A factor that has become more prominent in recent years is the way that the former can be manipulated by manipulating the latter. Just taking the Broad View, if you cache my drift.
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“There is no public school system in this country. There is only a private school system and the real estate market.” – Suresh Naidu
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The “Skelos demanded money” link does not appear to be working.
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Thanks for pointing that out, I’ve fixed it.
Cathy
On Wed, May 6, 2015 at 11:17 AM, mathbabe wrote:
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When I was living in Honolulu we had “welfare condos”. What had happened was overdevelopment of condominiums, many of which were vacant, and therefore money losers. The gov’t stepped in and rented the condos for welfare housing. I don’t know how long that lasted.
Today, though, the practice of rich people buying up housing and leaving it vacant would probably prevent such a thing.
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I wonder how hard it would be to implement a law that would allow a city to condemn a property that stands empty more than, say, 50% of the time, and thus force the owner to put it to use. Even having the owner hire a manager to run the space through AirBnB would be better than just leaving it empty.
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Look – this is really easy. The UK does it properly and always has.
1) Trespassing is not a crime, and neither is breaking and entering into an uninhabited space.
2) If you start squatting in someone else’s property without permission, they can’t do anything other than kick you out, and they have to go to court to do that.
3) A squatter is not liable for any money unless he or she actually does damage to the property.
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My comment on a related story on Daniel Katz’s blog.
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“There’s been a crazy luxury housing boom. Specifically, more luxury housing is being built than there are people who could reasonably afford them.”
A significant portion of housing space (especially in Greenwich Village) is becoming occupied by long rows of racks of blades of servers that are dedicated to close-in high-frequency trading for legions of hedge-funders and banksters to rig markets on an industrial scale. Not easy for mere humans to compete with such intensive use of floor space.
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Since you find it remarkable that their is corruption around NYC real estate, I assume you are from out of town
Also,
First, with that cleaning up thing, why not wish for invisible pink unicorns as well ?
Second, you think you are the first person in the last 200 years to notice something fishy in the NYC real estate market ?
Third, you may not know this, but many others have remarked on how small bribes are; I think Galbraith pere talks about this and I’ll wage Machiavelli and Marcus Aurelius do so as well
Fourth…
I had a friend who got the equivalent of a faculty job at the Cold Spring Harbor Lab, one of our nations best biomedical research facilitys (he was and is a fabulous scientitst)
In biomed labs, their is usually a large plastic cooler filled with dry ice.
So, my friend asks around, and is told to call such and such a company to set up a standing order, so many pounds of dry ice a week
He does so, but finds the price outrageous.
He picks up the yellow pages (yes, that long ago) and pick out another local company, and calls them up, HI, I’m dr so and so, I want a standing order for 50 pounds of dry ice a week
no problem sir, what is the delivery site
CSH Labs
..long silence…uh, sir, we don’t service that area
no, says my friend, it is no problem, we are not that far away
no sir, *you* don’t understand, we don’t service *that* area (ie, for you out of towners, it was a mafia area; only a mafia company could deliver dry ice)
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Seems like almost everywhere has this real estate industry corruption problem. My research looks at this topic exactly in Australia, and looks at how to quantify the gains to being a connected insider. It might be of interest to you.
Click to access dp9028.pdf
Some media coverage
http://www.theguardian.com/australia-news/2015/may/27/developers-with-political-connections-19-more-likely-to-win-favourable-decisions
Ta
Cam
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