Category Archives: The Capital of Capital

Takeaway: The Capital of Capital

Announcements, The Capital of Capital

  • Angotti, T. (2008) “The Real Estate Capital of the World” from New York for Sale: Community Planning Confronts Global Real Estate, p. 37-79.

Our last reading/discussion was about the burning of the Bronx, which was part of a larger wave of abandonment of low-income neighborhoods of color in NYC during the years following the Civil Rights Movement and surrounding the 1975 fiscal crisis.  Since that time things have clearly changed.  The same neighborhoods that were burned and abandoned in the 1970s are now being targeted for reinvestment, and the communities who have held their ground all these years are being threatened by displacement.  In the chapter we read for today, Tom Angotti explains the nature of these changes through a brief history of urban planning in the context of NYC Real Estate development.  In short, he explains why the real estate industry is so powerful in NYC and how the “growth machine” works.  Overall, the outlook is pretty grim, as many of you noted in your reading responses.  The real estate industry, as a central aspect of our urban and global economy, is characterized by greed (Mohamed), deception (Minhal), institutional racism (Fanny, Brianna, Sam, Erica), and the exploitation of labor (Wilian), for the primary benefit of the wealthy (Edwin) and at the expense of everyone else, not to mention democracy.  Several of you drew connections between this reading and your group projects.  Patrick’s response is particularly illuminating:

Reading this article, I noticed many parallels between the real estate industry and the BQX, the proposed streetcar that is to connect Brooklyn and Queens. First off is the idea that real estate can bring money into neighborhoods. Developers felt that the building of large retail and grocery chains in poorer neighborhoods would provide the residents of said neighborhoods with jobs. These jobs, though, were often low paying and had high turnover rates. One of the advertised benefits of the BQX is that it provides a means for people in underserved neighborhoods to reach jobs that they wouldn’t be able to reach easily otherwise. What is not brought up, though, is that many of the available jobs in these neighborhoods around the proposed BQX route are specialized jobs, mostly in the tech industry. In both cases, money isn’t really being brought in; rather, opportunities are being opened for a select few….Another large parallel is seen when looking at what the Real Estate Board of New York and the BQX hope to bring to the Brooklyn Waterfront. REBNY hopes to rezone industrial sites for manufacturing from the waterfront so that residential and commercial buildings can be developed. The BQX is supposed to provide transportation for many of the residents living in the public housing units along the waterfront while also raising property values along its route. Both can be seen as the beginnings of gentrification along the waterfront, which may only serve to benefit wealthy residents or investors in the area…The final, and what I believe to be the most important parallel, is private funding and intervention in projects that are supposed to benefit the public…To compare this to the BQX, one only has to look at who is currently going to front much of the streetcar’s bill. Private investors who are the driving force behind the organizing and financing of the BQX have other business ventures in neighborhoods along the BQX route that can greatly benefit from a reliable transportation source. To me, this seems like a huge conflict of interest.  

Importantly, Angotti also illustrates how the power and CONTRADICTIONS of the city’s Real Estate market have (paradoxically) created cause and opportunities for community-driven change, as seen in the work of South Bronx Unite, Transportation Alternatives, Minkwon, and ACT UP.  They are organizing and mobilizing around these issues and often develop their strategies by doing historical and situational analyses similar to what Angotti proposes.  Along these lines, Angotti suggests exploring the following questions, which you should keep in mind as you continue planning your projects: 

  1. When/how should community organizers and planners oppose vs. ally with FIRE (finance, insurance, real estate) sector?
  2. How can contradictions within FIRE become strategic assets?
  3. How can we understand the current terrain of struggle as both local (concrete, particular, etc.) and global (abstract, general, huge!)?

Key Terms and Main Ideas from this chapter:

  1. (NYC’s) Growth Machine: a block of economic and institutional interests that favor new construction and public works, led by the Real Estate Board of New York (REBNY) and the NYC Partnership, a group of corporate executives mostly from the financial sector founded by David Rockefeller.  According to Angotti it works like this:“Real Estate drives the growth machine [with the Real Estate Board of New York (REBNY) at the wheel], government oils and repairs it, the building trades make the parts, and global and local capital deliver the fuel. The machine works to create growth and sustain growth (i.e. through rising property values and keeping taxes low)…Growth is always presumed to be good, even in a Manhattan that is already densely packed with buildings and has little breathing room” (p. 39).  The whole thing depends on rising property values and the myth that growth is always good because it brings money to neighborhoods and always possible.  When in fact, it often extracts more than it invests (i.e. low paying/short-term jobs, lost jobs, gentrification, etc.) and space is quite limited.  This gives rise to.. Contradiction #1: Constant growth undermines quality of life which then suppresses growth.
  2. The 3 Rules of Real Estate: Dislocation, Dislocation, Dislocation: Location is important for land values but also implies dislocation of those who can’t afford the rising costs, aka gentrification: a product of the normal operation of the real estate market as it pushes out poor people and people of color and brings in people who can pay higher rents.  According to Angotti, “The more New York’s economy follows the dictates of real estate, the more it experiences the agonies of dislocation.  With the landing of the first Europeans in America, a perpetual cycle of displacement, settlement, and displacement began. This is a country of chronically displaced people- indigenous Indians, English pilgrims, African slaves, European immigrants, and now immigrants from every country in the world” (p. 43).
  3. Flexible Accumulation: nimble, adaptive, expansive process of capital accumulation that overcomes local constraints and regulations by taking advantage of mobile capital and labor (i.e. African slaves, northern investments in the south, etc.)  As such, another paradox emerged in re. to de-industrialization, globalization, etc.: NYC became “more like tornado than a mushroom, a whirlwind of explosive activity” (p. 41).  Yet at the same time, this chaos relies on central, concrete places, which reinforces the importance of cities like NYC (Contradiction #2), which suggest the 3 rules of Real Estate (see above) are likely to stay in effect. 
  4. Chasing Disasters (as a strategy for capital accumulation)- namely, the Great Depression, Post WWII federal urban renewal program, and vast neighborhood abandonment of the 60s and 70s (also post 9/11 redevelopment and securitization)
  5. Landscape of Inequality- NYC is one of the most segregated and unequal places in the world, thanks to Real Estate which divides the city in many ways: by concentrating wealth in elite enclaves (i.e Upper East Side); by perpetuating the myths that high end development will trickle down and create homes for lower income people, that the market’s invisible hand (supply and demand) will sort it out, and that rent regulations zoning restrictions etc. restrict the development of much needed housing; and through Institutional Racism in the form of:
    • Racial Steering: when real estate agents “turn people of color away from white neighborhoods, and white home seekers steer themselves away from historically integrated and black neighborhoods.”
    • Blockbusting: when “Realtors exploit racial stereotypes and spread the word that people of color are moving in, which will lead property values to go down. White homeowners sell at below-market rates and realtors turn around and sell to people of color at above-market rates.”
    • And as Jose pointed out: “Segregation and discrimination in housing are also consequences that have taken a strong foothold.”
  6. The Post-Industrial City: global trends of de-industrialization and flexible production accelerated during the decades post WWII and local real estate helped move manufacturing out (p. 50)- i.e. by pushing for the rezoning of industrial areas to residential/commercial, which would be more profitable to the real estate industry
  7. Globalizing Cultures and the Branding of New York:  “As capital’s system of industrial production becomes increasingly globalized, NYC, always a major center of culture and consumption, is now producing culture for export.  All services, art, music, culture, and ideas-indeed, everything both tangible and ethereal- are commodified and transformed into investment capital that can be traded in financial markets” (p. 51)
  8. REITS: Global Finance Unites with Local Real Estate: “REITs represent the global takeover of local real estate by publicly traded investment firms- a globally oriented finance capital” (p. 52).
  9. Low-Income Housing for Profit: “One of the more perverse contradictions in today’s real estate market is the use of public subsidies for low-income housing to back real estate speculation” (p. 53).  In short, profits from low-income housing provide a steady stream of cash for mega developers like Related (p. 54).
  10. The Diverse Ways of Globalized Real Estate: Companies like Related have figured out how to navigate NYC’s global/local dynamics better than Wal-Mart- the result is more or less the same (displacement).
  11. NY Real Estate’s Global Roots: i.e. Peter Stuyvesant, first political leader of the city, was director of the Dutch West India Co.
  12. The Global/New York Empire: “publicly financed fixed infrastructure helped to mobilize capital and in the long run was a boon to the most mobile of capital” (p. 61).
  13. Land Use Planning and Zoning for Real Estate Development: It started early!  With the 1811 Grid and 1916 Zoning Resolution. Later came the 1961 Zoning Resolution and the 1969 Master Plan, and led to Zoning Instead of Planning, what the “neoliberal” city does today.
  14. Urban Reforms Against the Working Class (and people of color) in “Central Cities”: Early 20th century- Post WWII, Robert Moses, “urban renewal,” etc. vs. the mass investment in suburban sprawl for (white) middle and upper classes.
  15. Corporate Vision of the Region: The Regional Plan Association: founded in 1920 and produced 3 plans for the metro region: 1929, 1968, 1996, which for the most part supported the status quo.
  16. The Permanent Fiscal Crisis and Deregulation: mass disinvestment/national conservative shift, “planned shrinkage” that started in 1975 and led to Capital and Communities on the Move/the Abandonment of Neighborhoods (in the 1970s), but has never really stopped.

As it happens, many of these themes appeared in a NY Times article the same day as our discussion: De Blasio’s New York Feels Effects of Recovery to Relief of Business Leaders (March 7, 2016).

Real Estate Won’t Give People of Color a Break

The Capital of Capital

In the readings we always see that ethnic groups get the short end of the stick. In the second chapter of Tom Angotti’s book, we continue to see that ethnic groups get the stick in real estate. Tom Angotti writes, “Central locations are generally highest in land value, and as land values in central areas go up, rents go up…this creates a ripple effect that forces people out and creates opportunities for redevelopment. This is the central dynamic underlying what is now called gentrification, a product of the normal operation of the real estate market as it pushes out poor people and people of color and brings in people who can pay higher rents” (43). Since immigrants are a large part of the labor force, it’s impossible for them to afford the high rents in upscale neighborhoods with their low wages.

On pages 47 and 48 are two maps of the city showing the percentage of poverty and the percentage of non-Hispanic Blacks. The maps match up with the high percentages of poverty and high percentages of immigration being in the same area and vice versa. These maps further show how segregated the city can be. Even if people of color have the money to live in the upscale neighborhoods, “the sale and rental of property is color-coded” (49). Racism, discrimination, and “racial steering” prevent immigrants from moving into white neighborhoods.

There is also “blockbusting,” which exploits ethnic groups to satisfy the real estate greed. Rumors are spread that people of color are moving in to lower home values, which would allow realtors to buy homes for low prices and then sell the homes at high prices to people of color. They are being used to change neighborhood values, like that example of a Puerto Rican restaurant being a “blight” and that its presence would lower a neighborhood’s value.

People of color are constantly being pushed around and exploited. They live in their own neighborhoods separate from white neighborhoods. For a city that is known to be multicultural, this doesn’t look like it.

Discussion Question: Can New York City really be called a melting pot despite being heavily segregated?

The Real Estate Industry and Capitalism

The Capital of Capital

The real estate industry is the epitome of Capitalism. In the beginning of chapter 2 of Tom Angotti’s book New York for Sale: Community Planning Confronts Global Real Estate, Angotti quotes Lao Tzo: “There is no greater disaster than greed.” The ultimate goal of many large industries such as real estate is essentially ‘gain more money’. Many of the times large industries and corporations will do anything in order to gain more money. This may include the destruction of communities, neighborhoods, and even lives. As long as the stock prices keep going up these industries will continue to justify their actions. Not to sound pessimistic, there are also benefits that come from capitalism. Truly the economic freedom of capitalism also provides for political freedom. Capitalism also offers efficiency as well as economic growth for those that are willing to work hard. However, overall what we notice in the real estate industry  is that the quality of life of the residents is undermined so that a select few can gain more.

The reading by Tom Angotti displays exactly what the real estate industry is all about. The real estate industry claim to bring money into neighborhoods by building businesses in poorer neighborhoods and therefore provide jobs. Unfortunately though these jobs are low paying and most run out of business. The previous post “The BQX and the Real Estate Industry” by Patrick Blake puts it well, truly “money is not really being brought in; rather, opportunities are being opened for a select few”. Furthermore, many of the real estate companies are private. We notice how they utilize this power in order to keep gentrifying New York City and keep it segregated. They pressure certain groups to remain at certain locations all in order to keep property values from dropping. They ultimately refuse to take into consideration the communities they harm by doing so.

The real estate industry is led by greed.

Discussion Questions: How can greed in such an important and detrimental position shape the future of a city? Can it be dangerous? Why? Why not?

The Deception of Real Estate

The Capital of Capital

As a whole, Tom Angotti’s novel examines community planning responses to several injustices within communities, including urban renewal, large-scale planning, gentrification, and now, real estate. The issue of land ownership started in the 60s and 70s when vacant lots and abandoned buildings were handed to the highest bidders. This kinda makes sense, except for the fact that all this land would have provided a powerful foundation to build a better future, such as allowing communities to use their own ideas to plan and develop the land in their own neighborhood. Instead, the government’s distribution of land left neighborhoods at the mercy of real estate companies.

Neoliberalism, which calls for deregulation of the government, privatization, and market-driven development, has led to the replacement of a strong public sector by privatization. As a result, communities confront local governments that are “less aggressive in leading land development and more dependent on hegemonic real estate interests.” The policy of the government has facilitated the rise of the powerful real estate market that we’ve come to know today.

Not only does the market systematically segregate communities by wealth in its quest for additional profit, but also by race. “The sale and rental of property are color-coded,” meaning that certain races are encouraged not to buy property in certain neighborhoods. The city’s racial apartheid has led to racial steering, but also the benefit of blockbusting. It’s surprising how much of an impact the real estate company has on the economy of NYC. It has its downsides and its benefits, even unintentionally. But as a whole, real estate basically transformed the central NY district into a globalized cultural one, full of competition between real estate companies, elected officials, and community residents.

Even in its efforts to provide affordable housing for the low-income classes, the benefits of real estate outweigh the benefits to low-income tenants. Private developers that finance low-income housing have an incentive- tax deductions. It allows the private developers to accumulate money and initiate programs that depend on market-rate housing for low-income residents. These programs pave the way for gentrification and displacement due to the increase in construction that eventually drives up property values and rent. New buildings and property attracts people with more money in their pockets and eventually displaces the poor and affordable housing.

As Angotti suggests, we need the city to allow local neighborhoods to grow “independently” and “organically,” in a process not driven by real estate developers and without depending on financing from global investors. We need communities to take control of their own land because with real estate, “property is theft.”

The Real Estate Industry and the Wealthy

The Capital of Capital

The relationship between capital and labor has influenced the development of New York City. With wealth came better living conditions, and greater influence in the development of the city. Real estate development, or lack of development, has been a result of shifts in capital. The city has always tried to accommodate the wealthy to stay in the city because they are a major source of the city’s income. That has at the cost of the low-income workers in the city. Labor laws and unions, which protect the workers, have been torn down to keep the wealthy in the city. The real estate industry even used dirty tricks to influence people to leave their homes in order to sell it at a higher price. Public space, such as Central Park, was planned for the wealthy people in the area.

My group is working on the rezoning of Flushing West and one of the concerns that we saw was the development of the land along the Flushing Creek. That land is currently undeveloped and it is of high value. The Flushing-Willets Point-Corona Local Development Corporation is in charge of planning the development of that land. From this reading I can understand why the community would be worried about what the LDC will do with the land. It can be a very attractive location for business, but it wouldn’t help the Flushing West community if the businesses that moved there were global companies that only gave low wages. There would be no point in spending tax money on cleaning the Creek if the businesses that moved in created dead-end jobs.

 

Discussion Questions: How can we promote quality of life changes rather than changes for growth?

The BQX and the Real Estate Industry

The Capital of Capital

Reading this article, I noticed many parallels between the real estate industry and the BQX, the proposed streetcar that is to connect Brooklyn and Queens. First off is the idea that real estate can bring money into neighborhoods. Developers felt that the building of large retail and grocery chains in poorer neighborhoods would provide the residents of said neighborhoods with jobs. These jobs, though, were often low paying and had high turnover rates. One of the advertised benefits of the BQX is that it provides a means for people in underserved neighborhoods to reach jobs that they wouldn’t be able to reach easily otherwise. What is not brought up, though, is that many of the available jobs in these neighborhoods around the proposed BQX route are specialized jobs, mostly in the tech industry. In both cases, money isn’t really being brought in; rather, opportunities are being opened for a select few.

Another large parallel is seen when looking at what the Real Estate Board of New York and the BQX hope to bring to the Brooklyn Waterfront. REBNY hopes to rezone industrial sites for manufacturing from the waterfront so that residential and commercial buildings can be developed. The BQX is supposed to provide transportation for many of the residents living in the public housing units along the waterfront while also raising property values along its route. Both can be seen as the beginnings of gentrification along the waterfront, which may only serve to benefit wealthy residents or investors in the area. Though they were probably developed with pure intentions, both ideas don’t necessarily take into consideration future outcomes and repercussions felt by those living in the area.

The final, and what I believe to be the most important parallel, is private funding and intervention in projects that are supposed to benefit the public. Most, if not all, real estate companies are private and are supposed to have their clients’ best interests in mind. Yet, a lot of the time, the real estate industry has other priorities and can serve as another artificial means of segregation in New York City. Many agents often discourage people of color from renting or buying in certain, white neighborhoods. In an effort to keep property values where they are, racial steering keeps people of color in historically black neighborhoods and whites in historically white neighborhoods. Another example on the real estate front is the subsidizing of low-income housing for private investors. Though intentions are well, what these companies often do is use their profits from subsidized housing and invest them in high-risk, commercial ventures. Basically, the rich exploit the city to get richer. To compare this to the BQX, one only has to look at who is currently going to front much of the streetcar’s bill. Private investors who are the driving force behind the organizing and financing of the BQX have other business ventures in neighborhoods along the BQX route that can greatly benefit from a reliable transportation source. To me, this seems like a huge conflict of interest.

Social Injustice in the New York City Real Estate Market

The Capital of Capital

Perhaps one of the most shocking aspects of the history of New York City urban planning is the institutionalized segregation that has been the driving force of community development. New York City is known as one of the most ethnically diverse cities in the world, often being described as a melting pot of residents of numerous nationalities and socioeconomic classes. However, Angotti stresses the fact that real estate in New York City is something of a “racial apartheid” that perpetuates economic and racial inequality (Angotti, 50).

Historically, New York City real estate has been guided by a questionable moral compass. Ethical issues pertaining to real estate have not simply been by chance, but have been the result of deeply engrained values that promote monetary gain while disregarding the concerns of those affected. Angotti discusses the history of displacement in New York, comparing it to displacement of the Native Americans during the conquest of the New World. In both of these cases, the conquerors (in this case, those in high positions in the real estate market) have promised benefits, but have only caused the hardship of dislocation. Through the process of gentrification, many have lost their homes because of the market’s desire to change the value of the land for monetary gain.

Gentrification is not the only way in which the real estate market has perpetuated social inequality. Contrary to popular belief, Angotti states that “This is one of the most segregated and unequal metropolises in the world, the fact related to its role as a global city.” (Angotti, 48). The common trend of segregation of ethnic groups by neighborhood is not only attributed to residents’ personal preference, but also to real estate practices such as “blockbusting” and “racial steering”. I am personally shocked that these practices are widely used, especially in a city like New York that is known as progressive and culturally diverse. However, the fact that real estate developers are driven by monetary gain rather than social justice is- although appalling- not very surprising when thinking about the importance of financial success in a city like New York.

 

 

Personal wealth in development

The Capital of Capital

Its interesting to see how the current situation of real estate came to be for New York City. The high demand for space has always been a problem for the city. The pace of growth hasn’t slowed down neither. At the beginning, the city was only limited to the Manhattan. As demand for valuable land space for industrial purposes increased, the city expanded to the five boroughs. With industry and businesses came residents, and the outer boroughs became populated. The personal gains of wealthy individuals were also huge factors for the expansion of the city outwards. These individuals supported plans that would cause land value to soar.  For example, the development of early subway lines not only facilitated the outward expansion of the city, but also caused properties along the subway line to develop. People who owned these lands prior to the construction of the subway benefited greatly.

Soon, the city ran out of empty space. New development can only come at the expense of displacing others, and this often targeted colored people and the poor. What were once unwanted industrial areas are now cheap, but valuable space for development. The Brooklyn waterfront is an example of this. Once the city rezoned the area and made parts of it ready for development, large apartment buildings were built. The neighborhood was greatly improved with businesses moving in. Parks were also built in some cases. However, as the areas along the Brooklyn waterfront was being developed and gentrified, the need for transportation arose. My group is the Future of Transportation and we are focusing on the city’s proposed streetcar line that will run along the Brooklyn waterfront. Unlike history, where subway lines led to development and expansion, the opposite is happening for the Brooklyn waterfront. The area is quickly developing even without transportation services. Instead, the transportation and services is following the development. The Brooklyn-Queens Connector would provide transportation along the Brooklyn waterfront. It is also worth mentioning that the addition of the streetcar line would also increase the property value of the surrounding areas as well. This would benefit the few companies who have businesses in those areas and who are also coincidentally supporting the creation of the streetcar line. It seems like the personal wealth of individuals and companies still play a huge role in the development and shaping of New York City.

Discussion question: Should the wealth/gains of individuals or institutions be involved in city planning? Is it justified when thousands of people are being displaced? But if they don’t develop the city, will the city ever move forward?

Racial Tensions Impacting Real Estate

The Capital of Capital

Tension between different races and social classes seem to drive the real estate market. Racial steering and blockbusting are both methods that instill negative racial stereotypes for monetary gain. The negative perception of colored people in real estate is still apparent today.

For example, in Elmhurst it was decided that the Pan American Hotel be used as a homeless shelter. However, there was much backlash from the community, which has a majority of Asians living there.  A few arguments made by Elmhurst residents were that the presence of the homeless shelter would drive property values down and that the city government decided this without consulting them. Elmhurst residents felt like the government just “dumped” this homeless shelter into the community. Many of the Elmhurst residents who organized and protested against the establishment of the homeless shelter were Asian. When Elmhurst residents held a protest outside of the hotel, racial slurs were exchanged between the homeless families, who were mainly Hispanic and black, and the protesters.

Reflecting back to our previous readings, it is evident that there is a housing crisis on our hands because of the rising property values and high rent. Usually people want the government to step in and help the poor. However, because of racial tensions and the stigma against homeless people, the opportunity of lowering property values for more affordable housing in Elmhurst was squandered.

Discussion Question: Can more affordable housing be developed with the approval of various communities if racism still exists?