The discreet charm of the bourgeois school
[Previous posts on local taxation include Assessment of affordable housing, Local taxation: cui bono?, Real estate taxes: basic budget algebra, The states of play, Who pays property taxes? – Ed.]
From the Unintentional Humor Department of the New York Times comes this What-are-we-going-to-DO-about-this? story about new parents who are shocked, shocked to discover that where they live isn’t where they want to send their children to school:
Any good private schools around here?
For some young families who bought during the housing boom, having it all meant an affordable brood-sized apartment in possession of a good public school zone.
That’s always been the American dream; what makes this lede so funny is the presumption that only boom-buying households would have had school systems on their mind.
But other parents in pursuit of real estate never even thought about schools. They assumed they would send their children to private school, often because they too had followed that route.
Born with a silver spoon? Now that we’ve unwittingly established our focus characters’ Marie Antoinette credentials of oblivion, let’s press on.
Can you believe we’re going to have to move to get away from all yucky guillotining going on in
That was before the economic crisis. Now, as many would-be private school parents scramble for a good public school, there is a despairing recognition that in this respect, geography is destiny: With odds of being accepted into a popular school in another zone slimmer than ever, they either live in a neighborhood with a decent elementary or they don’t.
Suddenly these property owners care about neighborhood. That should be a good thing.
Paying your property taxes? It’s a good thing
As I’ve posted before, I’m convinced that a signal strength of the
Renters and first-time buyers are in the best position to light out for better school zones with their young offspring.
Another benefit of a permanent professional rental sector – households with economic and demography mobility also need tenure and consumption mobility.
Meanwhile, landlocked owners — unable or unwilling to sell in a down market or to spend around $33,000 a year to send their child to private school — are panicking.
Thirty-three kay a year?
How much extra is a place in the right
Using $33,000 annually as the cost of sending a child to private school, let’s assume that the home or condo owners are in the 25% effective tax bracket, so that $44,000 in pre-tax mortgage interest costs them the same as $33,000 after tax. (Actual New Yorkers are almost certainly in higher tax brackets than that, particularly when state and local taxes are factored in to the Federal rates.) Now, at an 8.0% cap rate/ Weighted Average Cost of Capital (which is higher than typical cap rates, but probably realistic in today’s credit-constrained environment), that means as much as $550,000 in house price differential per school-age child.
[Technically minded readers may object that the child will not be school age indefinitely, and therefore that a discounted present value would be better.
I recommend discounted present value
Those readers are technically right --- that's what technical means – but the loss is not as great as one might think. To begin with, even if I want to move out because my family no longer has school-age children, whomever I sell to may have the kids, so the benefit could be evergreen. – Ed.]
What can you do if you bought in what is now the ‘wrong place’?
That’s called ‘being in the wrong place’
Trapped by their real estate, these parents are swallowing a bitter pill –
You mean I could have made more money?
– had they sold their apartments a year ago, their profits might have financed an entire private school education.
Life is full of regrets.
Some parents are considering renting an apartment in a desirable zone — at least for the time it takes to prove residency.
Another example of how homeownership, beneficial though it may be, by reducing mobility can lead to over-consumption of housing by multi-housing families.
And some otherwise law-abiding parents plan to flout the system by establishing a fake residency in their school zone of choice.
Fake residency is just polysyllabic for fraud.
Just a few clicks
“I can tell you I hear it all the time on the playground — whether you’re moving or ‘moving,’ ” said Claudia Knafo, 47, a concert pianist and music professor who lives with her husband, Alexander Yagupsky, 44, and 4-year-old son, Joshua, on West 110th Street and Riverside Drive.
THINK AGAIN Claudia Knafo and her husband, Alexander Yagupsky, hope to send Joshua, 4, to public school, a change in plans dictated by the economy. To get Joshua into the right school, they may move.
She says her family’s situation is common in her neighborhood.
“We bought our apartment in 2004,” she said, “and like most new parents we never even thought about the public school zoning issues.”
Like ‘most new parents’? All the ones I know and knew were consumed with choosing residence based in large part on the school system.
“We just assumed our son would go to private school.”
And didn’t put aside any money for it …
But when it came time to apply last fall, she and her husband, a music teacher, felt they could no longer commit to the expense because of the change in the economic climate. They applied to three private schools asking for financial aid, even though they were advised by other parents that this would undermine their son’s chances.
Well, yes. Private schools are a business. They have a student revenue mix.
Please sir, my parents need me to win a scholarship
Financial aid is simply a device to disguise wealth and income surcharges imposed on their more affluent parents.
He was turned down by one and put on the waiting list at the others.
“At that point,” Ms. Knafo said, “we decided with the economy being what it is, we had to adjust our heads and think about public school.”
Which, say I the public school grad, is probably better for their child and for their community. Now, all of a sudden, they care about municipal services.
Start practicing …
“We’ve noticed significant spikes in traffic to our reviews of good schools since Jan. 1,” said Pamela Wheaton, the director of Insideschools.org, a nonprofit Web site that provides information about the city’s public schools. For example, page views of information about P.S. 6 on the
After research that included speaking with parents from her neighborhood school, Ms. Knafo set her sights on two highly regarded schools in her district — P.S. 199 and P.S. 87 — and listed them at the top of the lottery form that parents of entering kindergartners were asked to submit by early March.
Results are due by early April, but Ms. Knafo doesn’t expect Joshua to get in because priority goes to children in each school’s own zone, and P.S. 87 already has at least 25 more applications from zoned children than it does seats, according to the Department of Education. As of early March, P.S. 199 had 189 applications from zoned students for 177 seats.
In other words, if you want the benefit of a good school, you should live in its vicinity.
Would you send your child here? PS 11
Their anxiety mounting, Ms. Knafo and her husband are considering selling their two-bedroom co-op and moving into a zone with a more desirable school.
“We actually had a Realtor come to our home, because I was completely hysterical about what to do with this smart kid I can’t seem to find the right school for,” Ms. Knafo said. “We bought it for $570,000 in 2004 and she said we’re back at 2004 prices, so we might not necessarily lose money on it.”
More likely, as with parents since the dawn of urban time, they will sell their condo, buy a smaller one in a neighborhood with better schools, and move there for the sake of their child.
Plan B, she said, is to sublet the apartment and rent elsewhere.
Not overconsumption, but an example of how rent stabilization leads to market distortions; without rent stabilization, apartments would be plentiful, and people like Ms. Knafo would have the intra-city mobility they need.
A schools consultant, Robin Aronow of School Search NYC, advised her that by historical standards her son’s chances of being admitted to P.S. 87 were good if the family established residency in the zone by June 1.
Tells you something about
But Ms. Knafo worries that the rent from their apartment won’t cover the cost of a new one. The median asking price for a two-bedroom rental in the P.S. 87 zone is $4,200 a month; in P.S. 199’s zone, it’s $5,450, according to Streeteasy.com.
Okay, this is now a no-brainer. You can spend $1,250 per month, $15,000 a year, more in increased occupancy costs, or you can spend $33,000 a year in increased school costs, or you can stay where you are and send your child to the local school.
“Basically,” Ms. Knafo said, “it’s like playing Russian roulette — are we going to have to pay for two apartments to get our child into the correct zone?”
Russian roulette is a game of odds; this is a simple toll. You will pay or not as you choose.
You want our public schools?
“There are lots of people who are borrowing addresses or moving in with family. I personally am not comfortable with that.”
Honesty! How refreshing! Good for you!
A man who lives in the same school zone as Ms. Knafo says he is prepared to do whatever it takes to get his son into a preferred kindergarten.
When he and his wife bought their $1.6 million six-room apartment a year and a half ago, they had envisioned his alma mater, a prestigious private school, as the place to send their son.
“I think it’s all part of the end of the wishful-thinking era, where you just think you’re going to grow into your expenses,” he said. “We’ve had successively bigger mortgages and we say: ‘It’s always a stretch. That’s all right; in a couple of years we’ll have more money.’ But now we’ve had to get a little more real.”
Evidently ‘getting a little more real’ doesn’t mean depriving themselves of their luxuries:
He and his wife both still have jobs and could probably scrape together the tuition. But their financial optimism has dimmed.
So ‘getting a little more real’ means gaming the system:
How dare you call it cheating!
“I will certainly consider some alternative way to game the system by gaining a different address,” said the man, who asked to remain anonymous for obvious reasons. “This is my child, who is a really smart kid, and he’s not going to my crummy zoned school. That’s just not going to happen.”
Love your civic concern, fellow.
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