No more bailouts without including affordable units

The definition of speculative investment is buying something based not on what

you think you can do with it now, but what you hope you can do with it in the

future. Crain’s New York  describes a developer who’s done just that:

The real estate investment firm, Savanna, can build up to 120,000 square feet of residential space on the site, according to Vincent Battista, president and chairman of the board for the Institute of Design and Construction. But, by securing a special permit from the city, up to double that amount of space can rise on the site. Mr. Battista said it was likely that Savanna could secure such a waiver, since the City Point development was zoned for high-rise development.

“Much of the surrounding area allows for large towers to be constructed,” Mr. Battista said. “We expect that it is a reasonable request to change the zoning here so that this site too can benefit from higher density.”

Too often, government has bailed out these speculative real estate investments – investors buy not intending to build under current laws, but anticipating an action by the city.  This is emblematic of the old way of thinking – that a developer is entitled to the city doubling what they can build, with no obligation to give anything back to the community.

This is an opportunity for our new administration to step up and show the real estate industry that things are different now. Instead of simply bailing the purchaser out with a rezoning or special permit, there needs to be a serious negotiation over how much of that new high rise is going to be truly affordable to people in the neighborhood.

Blogger: Moses Gates