In 1955 the state signed into law the Mitchell Lama program, a limited profit program for real estate developers. This was at a time when government had to encourage development, and real estate in the city was not the treasure trove it is today.
The program allowed owners to rent units for slightly above fair market rates to people within a certain income bracket. If a family’s income went up, they could stay in the program and pay an added fee. It worked, and it was the biggest supportive housing program in the country, encompassing 269 developments.
After a period of years, the contracts ran out and the owners could do as they wished with the properties. As New York rebounded, there was not an incentive to stay with a program that limits profits when units and buildings can be sold for so much money.
Academics have sought ideas as to how to introduce a similar program, given that so many people are in low-income brackets. Some want an aggressive program that simply limits or caps rent. Some groups are more pragmatic, however, and realize that some profit is necessary in order for developers to even consider it.
There might be a way to encourage developers to sign on to a 10 or 20-year contract that keeps rents at realistic levels if government wants to get creative. What developers want more than anything is to sell buildings and units at the best price possible. Solutions that incorporate the free market are usually the best.
If developers were given a locked-in, guaranteed, low capital gains tax when they sold their property after signing on to limited profit housing, it might be enough to encourage them to participate. This way, they would make up for a lot of revenue they did not get when they agreed to keep rents limited.
It would be a way to lower taxes through incentives. And most of all, it could open up the possibility of middle to low-middle income people renting in the city and not being overburdened. Too many New Yorkers already pay at least one-third of their income in rent, which means they have less to spend in other segments of the economy.
This may require cooperation from federal and state government, but it would make sense for government to be open to the possibilities. All real estate developers have to do is bet that their property value will go up in New York City, and that is a pretty good bet.
Good For The Rams
It’s easy to write about what a feel-good story the St. Louis Rams drafting openly gay defensive end Michael Sam has become.
Strictly by the numbers, Sam is something of a risky pick in the first few rounds. While he was defensive player of the year in the SEC, which is a very tough conference, he is still somewhat small and his stats in the combine were not stellar.
But he was not a risky pick at the latter end of the draft, and the Rams were smart to pick him. It means that he gets to stay in Missouri, where he can hold on to his “favorite son” status. He also joins an already tough defense.
The concerns about an openly gay player in a locker room will quickly melt away. The Rams also get a player that has something to prove, because being picked that late in the draft will energize Sam. On all facets of social media, the Rams fanbase is happy with the team’s ownership, which is not always easy to achieve.
Just ask the Wilpons.