By: David A. Smith
In yesterday’s Part 2, I laid out the arguments made, chiefly by keyboard crusaders masquerading as reporters, that ‘poor doors’ (separate entrances in a mixed-income building for affordable housing renters) are demeaning, discriminatory, and in general un-American.
We’re from Christendom and we’re here to help you
Sources used in this post
The Guardian (July 25, 2014; black font)
New York Times (Ginia Bellafante; July 25, 2014; blue font)
Slate (July 29, 2014; slate-gray font)
New York Post (July 28, 2014; green font)
Which immediately raises the question: if they’re so inherently offensive, why are they designed and built?
C. Who’s responsible for these ‘poor doors’, anyway?
Whether they are harmless or dignity-crushing, separate entrances don’t happen by accident – somebody built the property, somebody designed it, and somebody approved its design. Whose fault is it?
Now we’ve unmasked the real villain!
C1. “Developers are responsible because they’re greedy”
When writing a GAIA story, always start with the easiest to demonize, and who more so than the developers:
Some are coy about the subject. Native Land, which is currently building Cheyne Terrace just off Kings Road in Chelsea, complete with a swimming pool and gym, refused to comment when asked if its 13 affordable housing units would be accessed via a separate door.
However, the website of John Robertson Architects, which has designed the building, makes it clear this is the case.
You have been found out!
Evidently John Robertson Architects didn’t get the message that poor doors are inherently offensive, but as they are architects, not developers, they were given a journalistic free pass.
In a bid to ease the housing crisis, developers are obliged to provide a set proportion of affordable homes when they draw up a new project, but they are often able to negotiate this figure down with local planners.
As I’ve previously posted, inclusionary zoning that is zero-sum (such as the UK’s Section 106) create a nasty bilateral negotiation that often stalls properties indefinitely, because every pound surrendered (in the form of additional affordability) is just economic deadweight; there’s no compensating benefit. That’s why London’s rate of new inclusionary-zoning affordable-housing development is so slow, and also why the capital has such a housing shortage.
We have no idea why we’re not building what we need
But we do know that prices are rising faster than is good for us
When the inclusionary-zoning has a compensatory benefit (or even, occasionally, is positive-sum), the dynamics are quite different:
Extell is including the rental units:
1. To get a tax abatement [Section 421a – Ed.], and also
(In fact, Extell opted not to apply the floor-space bonus at 40 Riverside, but instead to it hold it in reserve for possible sale to another nearby site — as is perfectly legal.)
Portaging the density bonus from the subject site to a future site implies two revealing economic things:
1. Extell believed that the bonus density would be more valuable elsewhere and by further inference concluded that more apartments on the Riverside site would overbuild the submarket.
2. Extell didn’t need the extra height/ apartments on the Riverside site to make the numbers work there.
For a developer, everything is about the arithmetic, in particular the market price:
A developer erecting a structure with $3 million apartments is going to worry, not irrationally, that those apartments will be less marketable if they are next door to those renting for $1,000 a month.
C2. “Rich people are responsible because they’re snobs”
It’s hell being rich
Because a developer’s profits (and indeed, its ongoing viability) depend on judging what the market will market, they become sensitive to market perceptions:
As the London housing market has boomed the expectations of some of the capital’s wealthiest homebuyers have grown and many properties now have communal areas akin to those in some of the world’s best hotels.
Indeed, developers – especially those with a single focus of profit – may become hypersensitive to those market perception, and pre-emptively eliminating anything that might be even a momentary distraction to the high-end proposition:
“When Ken Livingstone left office he was keen that all developments should have their social housing ‘pepper-potted’ – mixed in with all the other more upmarket accommodation,” said Ed Mead, a director at estate agent Douglas & Gordon which sells upmarket properties in central London. “This didn’t go down well with developers with the result that most developments now have a separate entrance and a different look.”
Saint Peter with the kingdom of London?
That has to be principally because some people will choose to spend their money elsewhere than will other people.
The [market homeowner] lobby is out of bounds to some of those who live in the building. The brochure doesn’t mention a second door, with a considerably less glamorous lobby, tucked away in an alley to the side of the building, alongside the trade entrance for Pret-a-Manger. This is the entrance for One Commercial Street’s affordable housing tenants.
Yet that is basic logic; between glamour and cost, a rich person may choose the glamour; a middle-income person will save the cost.
As nearly the entire Upper East Side from Lexington Avenue to Fifth can lay testament, rich people like to live among rich people.
Because like likes living with like, top-end homeowners want assurance of security:
The Riverside development is unusual, and even vaguely radical, in the sense that its luxury units are condominiums rather than rental apartments.
Typically, buildings like it, which combine market-rate and affordable units, offer none of them for sale.
Combinations of owned condos and rented affordable apartments are more common in London than in New York.
What I think of poor people
It isn’t simply that rich people find poorer people yucky, though in some cases that will certainly be true, but that owners typically prefer living among other owners, out of the belief that this arrangement best protects the value of their asset. Renting has the taint of transience, diminished stability and so on.
We’ve seen that homeownership changes behavior, usually for the better; that people in living clubs (like co-operatives) become quite familiar with each other (perhaps too familiar, to judge by the income-certification police).
There is also a socioeconomic gulf:
In this case, a building in which apartments are trading at $2,000 a square foot will also contain 55 apartments for households earning $35,280 to $50,340 a year. (At the top range the household must contain at least four people.)
In fact, let’s put those figures in context. Assuming a 1,250 square foot condominium flat, with 20% down and a 30-year mortgage loan at 5.0%, the debt service alone will be $10,750 a month; add to that condo fees (including reserves) and real estate property taxes, and the net payment is $12,000 a month or more; meanwhile, if we use 30% of income for rent, the affordable households will pay between $880 and $1,260 a month, or an average of roughly $1,070. That is, the market tenants – condo buyers – will pay roughly 11x as much as the affordable residents, and even if we assume that the affordable residents remain houselocked as long as possible – knowing a fantastic deal when they see it – they’re unlikely ever to blend economically.
In north-west London the developers behind Queen’s Park Place are more upfront about how its 28 affordable and 116 market-rate homes [20% affordable, 80% market – Ed.] will co-exist – its marketing website says the external appearance will be uniform across all properties – or “tenure blind”.
Everything looks the same to me
I suspect some of this is legally-required disclosure in the UK (which is a good thing; it is always better to be clear).
Inside the building the two types of resident will be treated very differently: “Affordable tenants will not have use of the main private residential entrance, private courtyard gardens or basement car and cycle parking. Services including postal delivery and refuse storage are also divided.”
Why then do the poorer people put up with it?
C3. “Poor people are responsible because they’re choosing what they wish to pay for”
Peter Allen, sales and marketing director for Londonewcastle which is behind the Queens Park Place development in north London said housing associations were sometimes unable to pay for all of the facilities covered by service charges. “The simplest way from a design perspective is to have things separate.”
Allen likes keeping things simple from a profit perspective
“Affordable accommodation is managed separately by Network Housing who have full control of the services and facilities provided to its tenants, said James Moody of Redrow London –
This too is common in the UK: the market portion is managed by a conventional rental agent/ manager; the affordable piece by an affordable-housing manager.
“– and have a set cap for service charges.”
Unless there’s a government subsidy [Fat chance – Ed.], the ongoing service charges – that is, charges for non-residential amenities – have to be paid for by the residents themselves.
Service charges to maintain these are high, and a separate entrance means housing associations and their tenants do not face these extra costs. However, as in New York, there are concerns that it is leading to increasingly divided communities.
Double your whammy?
Note the double-whammy of journalistic equivalence, where via an immediate ‘however’ an economic reality is negated by a social possibility in an anonymous passive-aggressive voice (‘there are concerns’).
Notice too how an inclusionary measure – one that successfully brings affordable housing into a neighborhood where the Law of Economic Pressure would otherwise be completely priced out of that rapidly gentrifying location – is presented as implicitly exclusionary (‘increasingly divided communities’) because of a feature not of the apartments themselves, but of their manner of entry.
[Continued tomorrow in Part 4.]