[NYtenants-online] NY Tenants Online 4/28/04

[Tenant]

NYtenants Online/TenantNet                                5/14/04
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IN THIS ISSUE ...

1. Ninth Avenue Food Fair
2. March for Lower Rents ... May22
3. Board Proposes Rent Increases of Up to 7.5% for Two Years (NYT)
4. The Convention Center Shell Game (City Journal)

Note: although the press and politicians focus almost exclusively on the 
proposed West Side stadium, even more destructive would be the Hudson Yards 
project combined with a doubling of size of the Jacob Javits Convention 
Center, turning Manhattan's West Side -- 60 blocks -- into a Central 
Business District and blocking off the waterfront for many more blocks.

Unfortunately the West Side elected officials (led by Christine Quinn -- 
who is trying to curry favor with developers for her candidacy for Council 
Speaker in 2006) are supporting the worst part of Bloomberg's plans. They 
created a fake grass-roots "astroturf" group called Hell's Kitchen/Hudson 
Yards Alliance, which is financed by Deutsche Bank (and which has a deal 
with the Bloomberg administration to finance much of the bad development). 
The Hudson Yards Alliance has made considerable effort to deceive the 
public, claiming they are against the stadium, but not telling people they 
actually support all the bad development. When put on the spot, they deny 
they are supporting the Doctoroff CBD plan, but their "plan" that calls for 
approximately 28 skyscrapers is right on their website. These are the same 
people who embraced many other bad skyscrapers on the West Side.

Mayor Bloomberg claims the Javits must be expanded for the jobs, but the 
city's studies have been kept under wraps and other studies have the 
opposite conclusions ... that the trend to expand convention centers at 
taxpayers' expense makes no sense. Bloomberg is justifying the Jets/Olympic 
stadium with the Javits, and that would bring widespread displacement. See 
the last article, the 'Convention Center Shell Game.'

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NINTH AVENUE FOOD FAIR

This weekend is the Ninth Avenue Food Fair in Manhattan from 37th to 57th 
Streets
Sat. & Sunday May 15th/16th
Stop by our booth between 45th and 46th Streets (west side of the avenue)
(the CSDC booth has the 'Stop the Stadium' banner)

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MARCH FOR LOWER RENT, HIGHER WAGES, & MORE EDUCATION $$$!

· 1 out of 3 Bronx & East Harlem residents spend more than 50% of their 
salaries on rent
· Try doing that on $5.15 an hour (current minimum wage)
· Try earning more $$ without a quality education

Date:  Saturday, May 22nd

March: Begins at 11:00am
Meet at 135th St & Willis Ave (Bronx)
#6 to 138th & 3rd Ave

Rally: Begins at 1:00pm
116th St & Lexington, across the street from La Marketa (East Harlem)
#6 to 116th St

For More Information Contact Peter Santiago 212-292-0070 ext 202 
nyacornman@acorn.org

Attention New York Politicians:
· Last year you declared war on tenants by gutting our rent laws
· This year you are blocking raising the minimum wage
· And stalling giving us the money we need for our schools

Now we are holding you responsible for not representing us!

Sponsored by: ACORN, City Wide Tenants, Belnord Tenants Assoc, Center for 
the Independence of the Disabled, NY, Centro Hispanico Cuzcatlan, Chelsea 
Housing Group, Committee to Protect Rent Controlled Tenants, Lower Wash. 
Heights Neighborhood Assoc., QLOUT, RENA, Skyview Tenants Assoc., Alliance 
for Quality Education, New York Jobs with Justice, New York Unemployment 
Project, Latina PAC, Working Families Party

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May 11, 2004
NY Times
BOARD PROPOSES RENT INCREASES OF UP TO 7.5% FOR TWO YEARS
By DAVID W. CHEN

In a sharp departure from tradition, which befuddled landlords and tenants 
alike, the New York City Rent Guidelines Board last night opted not to 
recommend a specific set of rent increases for one- and two-year leases on 
the city's one million rent stabilized apartments.

Instead, the board offered a tentative range of increases that will be made 
final on June 17 - anywhere from 3 to 5.5 percent for one-year leases, and 
5.5 to 7.5 percent for two year leases.

Ordinarily, the board makes a firm set of recommendations that does not 
change between an initial vote and the final one. But last night, Marvin 
Markus, the board's chairman, unveiled the concept of a range of increases 
before a confused audience at Cooper Union, saying that he wanted more debate.

"I believe this board is not ready to make a final decision, '' Mr. Markus 
said. Indeed, in a sign of how divided the board was in the 5-to-4 vote, 
its two landlord representatives took opposite positions.

Whatever the final numbers - and Mr. Markus said in an interview that the 
board would be within its purview to go beyond the suggested ranges - the 
vote clears the way for a second straight year of what tenant groups 
contend are unconscionable rent increases, but what landlord groups say are 
justifiable adjustments to compensate them for rising costs.

Last year, the board raised rents by the biggest amounts since 1989 - 4.5 
percent for one-year leases and 7.5 percent for two-year leases.

Last night began in typical fashion for the annual meeting. Outside, 
tenants denounced any increases and criticized Mayor Michael R. Bloomberg, 
who appointed a majority of the board's members; inside, tenants and 
landlords wore competing baseball caps and traded verbal jabs. But Mr. 
Markus's proposal seemed to catch everyone off guard.

Michael McKee, associate director of Tenants and Neighbors, a statewide 
advocacy group, said, "I thought I'd seen every manipulation that Marvin 
Markus could come up with, but this is a doozy.'' He said that the board 
perhaps was trying to deflect criticism by avoiding specifics until the 
last minute.

And Jack Freund, executive vice president of the Rent Stabilization 
Association, an owners' group, said: "I don't think it's a good precedent. 
I think there's more uncertainty.''

Of the city's three million dwelling units, about two million are occupied 
by renters. The national rate is one-third renters. Of those two million 
rental apartments, about one million are stabilized and subject to the 
rates set by the board.

Since it was established in 1968 to review rent rates for the city's 
stabilized units, the board has never authorized a rent decrease or freeze. 
During the high-inflation era of the late 1970's and early 80's, the board 
sometimes ratified increases of up to 14 percent for two-year leases. But 
for most of the last decade, rents for stabilized apartments have gone up a 
few percentage points, in keeping with low inflation and, to a lesser 
degree, with annual surveys measuring landlord costs and incomes.

In 2002, for instance, the board approved increases of 2 percent for 
one-year leases and 4 percent for two-year leases, even though the Price 
Index of Operating Costs, a summary of landlord expenses like utilities and 
labor, dipped for the first time. But last year, the board authorized 
increases that were dwarfed by a 16.9 percent jump in the index, the 
biggest since 1980.

This year, landlord costs grew at a much slower pace - 6.9 percent. Even 
so, landlord groups warned about the unknown impact of the city's new lead 
paint law.

The law, which regulates the removal of lead-paint hazards, including dust, 
from apartments built before 1960, goes into effect in August. City 
officials and landlord groups contended that the cost could be millions of 
dollars, but tenant groups said that figure was exaggerated.

At the end of the 90-minute session last night, the board also tentatively 
approved a range of increases for lofts and residential hotels. For lofts, 
the numbers were 2.5 to 5 percent for one-year leases and 5 to 7 percent 
for two-year leases. For hotels, the suggested annual increase was 0 to 2 
percent for one-year leases, the only kind offered.

On June 15, the public will have an opportunity to weigh in on the rent 
increases during an all-day hearing, also at Cooper Union. The final vote 
is scheduled for June 17; the resulting increases would apply to leases 
that are renewed between Oct. 1 of this year and Sept. 30, 2005.

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THE CONVENTION CENTER SHELL GAME
Steven Malanga
http://www.city-journal.org/html/14_2_the_convention.html
Spring 2004

Although Boston’s gleaming new $800 million convention center is set to 
open in a few months, so far it has booked only a handful of conventions. 
So dire is the facility’s outlook that it will need a $12–15 million annual 
public subsidy in its first few years of operation and may not reach its 
full booking potential for a decade, say Boston officials. Even that may be 
too optimistic, judging by what’s going on in Baltimore. There, a vastly 
expanded convention center that reopened in 1997 is finding it so hard to 
lure business that city officials are now searching for ways to make the 
facility more attractive, including spending millions in public money to 
build a subsidized hotel next door.

What is happening in Boston and Baltimore is not an anomaly but merely the 
latest chapter in what is turning out to be one of America’s biggest civic 
boondoggles. For more than a decade now, cities and counties have been 
rushing, at enormous public cost, to build new convention centers or add 
space to old ones, including a $191 million expansion of San Francisco’s 
Moscone Center, a $291 million new facility in Omaha, and a $354 million 
center in Pittsburgh. The increase in space has vastly outpaced the growth 
of the convention industry and often failed to generate the kind of 
economic activity predicted by boosters. Rather than energizing local 
economies, in fact, some convention centers are emerging as a drag on civic 
finances, requiring taxpayer operating subsidies on top of their huge, 
publicly financed construction costs. What’s more, the situation is only 
likely to get worse. Another eight to ten million square feet of exhibition 
space is scheduled to come on line within five years, an increase of about 
15 percent in an industry where demand is barely growing.

Although those numbers should be sobering to any city contemplating 
building yet more space, in New York officials are plunging ahead with 
plans for the most costly convention project to date­proposing to spend a 
staggering $1.5 billion nearly to double the size of the Jacob Javits 
Convention Center. The proposal comes despite the chronic fiscal problems 
of both the state and the city and the absolute lack of any credible 
evidence that the expanded center would pay back such a colossal public 
investment.

Indeed, to finance the expansion, the state and the city, both already 
heavily indebted, will likely have to float huge debt offerings and may 
even increase some taxes.

New York’s headlong plunge into this new project is evidence that local 
officials rarely let the facts get in the way of their love of big 
projects. Back in the early 1980s, when the state and city built the Javits 
Center, there were far fewer convention centers and little actual data on 
whether the business that these facilities generated helped a city’s 
economy enough to justify the investment. New York officials saw Chicago’s 
giant McCormick Place bringing visitors into the city to fuel the local 
hotel, restaurant, and entertainment industries, and figured Gotham could 
compete for that business.

But today, after a generation of frenetic building and with much better 
data available, the inescapable conclusion is that few of these new 
projects are worth doing. Boston, for instance, spent nearly $230 million 
to renovate its existing convention center in the 1980s, and the result was 
barely a blip upward in its hotel occupancy, says political scientist 
Heywood Sanders of the University of Texas at San Antonio, the foremost 
expert on publicly built convention centers. Yet Boston officials brushed 
that experience aside and went ahead and built its brand-new­and already 
troubled­center anyway. Similarly, a vast expansion of Chicago’s McCormick 
Place, costing $1 billion in the mid-1990s, didn’t prevent a drop in that 
city’s share of major conventions. Meanwhile, Atlanta’s huge expansion of 
its convention space has done little for the city’s struggling downtown: a 
major retail project there, Atlanta Underground, has struggled to survive 
even as the city’s convention business has grown. “The payoff is not 
there,” says Sanders.

But local politicians have typically argued that their projects will work 
better than those in other cities­on scant evidence for such conclusions. 
New York officials, for instance, justify expanding Javits on the grounds 
that the city is already a major trade-show destination and therefore won’t 
suffer like other cities from significant new competition. Yet Chicago was 
an even bigger force in the business when it expanded McCormick, but still 
saw its market share decline. And even if a bigger Javits were to attract 
some new business, it is highly unlikely to generate enough spin-off 
activity to justify its enormous public cost (including the eventual cost 
overruns likely with such a gigantic public project).

Gotham officials are relying on the optimistic predictions of 
government-sponsored economic studies that an expanded center would create 
thousands of temporary construction jobs and up to 16,000 permanent new 
jobs, mostly in the hospitality industry. But political scientist Sanders 
argues that such studies tend to be unrealistically optimistic. For 
instance, says Sanders, one study used to justify expanding Javits does not 
take into account that the center doesn’t generate nearly as much hotel 
business as other centers, because many convention attendees already come 
from the New York area, and because New York’s high hotel rates discourage 
some conventions from using the city. Another word of warning: 
city-commissioned studies almost always wind up recommending convention 
centers­meaning that the industry of consultants who churn out such studies 
has a pretty lousy track record, considering the long list of 
underperforming centers around the country.

But politicians ignore such inconvenient facts. For them, building big 
projects is often far more engrossing than building a strong economy, 
because giant construction projects directed by government agencies offer 
opportunities to reward friends and potential supporters with plum 
contracts. Thus the original construction of the Javits Center was perhaps 
the quintessential New York boondoggle, an effort rife with mob influence, 
bid rigging, and cost overruns that brought the ultimate bill to $486 
million, 30 percent more than projected. And the center has never fulfilled 
all the promises. When it opened, a New York Times headline proclaimed the 
widely held belief that the new center “kindles dreams for West Side,” but 
in 18 years, the center has had almost no impact on its neighborhood.

New projects also enjoy the support of private-sector interests likely to 
benefit from them. In New York City, a perfect storm of private interests 
is raging to push forward the Javits expansion, including the construction 
industry that would build it, the Wall Street bankers who would underwrite 
the financing, and a hospitality industry hungry to benefit from even a 
marginal increase in its business no matter what the public cost. The hotel 
industry has even signed on to a possible hotel tax increase to pay for the 
Javits expansion, when a decade ago the same hoteliers vociferously 
protested a rise in the tax, producing studies showing that the increase 
hurt the local economy. Small wonder that politicians often doubt the 
claims of executives that taxes kill jobs when an industry reverses itself 
as cavalierly as the city’s hotels are now doing. In fact, of course, the 
innkeepers were right the first time: after New York cut its hotel tax by 
six percentage points, hotel occupancy rates jumped to 84 percent from 
under 76 percent in just three years.

The Javits expansion, as expensive as it is, only partially encompasses New 
York’s grand design for the Far West Side of Manhattan. Hoping to lure the 
2012 Olympics to Gotham, the Bloomberg administration also wants to build a 
domed sports stadium adjacent to the convention center, which boosters 
argue could provide hundreds of thousands of square feet of extra 
convention space when needed.

With a $600 million taxpayer contribution, the stadium would be an even 
worse investment than the convention facility. Numerous studies have 
already documented that publicly financed sports facilities don’t return 
anywhere near their investment. One study by economists from Stanford 
University and Smith College, for instance, estimated that Baltimore was 
receiving only $3 million a year in additional tax revenues or new job 
benefits from its $200 million investment in the Camden Yards sports 
complex. Even projects generally touted as successful often don’t turn out 
to be, under careful economic scrutiny. A mid-1990s study by urban 
economist Mark Rosentraub of Cleveland’s arena and baseball stadium, often 
held up as a model of how to build downtown sports facilities, found the 
projects created only 2,000 jobs at an average public investment of 
$160,000 for each job­an improvident use of public money.

The real role of government in stimulating development should be more 
limited than what New York is attempting with its Javits expansion and its 
stadium. Government’s role on the Far West Side should be only to develop 
the infrastructure necessary to encourage private development: to extend 
public transportation into the area and to change zoning codes to allow 
privately financed office and residential construction there as the need 
develops. To do any more would place far too much taxpayer money at risk 
and would put government officials in the role of trying to predict what 
the market wants­a task government is ill-suited to carry out. But New York 
State is contemplating the exact opposite­balking at extending the Number 7 
subway and, presuming to know better than the market, threatening to use 
eminent domain to take the land for the Javits expansion away from 
developer Larry Silverstein, who has other plans in mind for it. The 
state’s vast, monolithic scheme could well repel rather than attract 
high-value commercial development.

Meanwhile, the hospitality industry has learned that it can sit and wait 
for local government to finance its dreams these days. The Javits 
expansion, for instance, was originally tagged at a “mere” $1 billion but 
grew costlier when the center’s board stuck in a publicly subsidized hotel 
as part of the building frenzy. The hotel supposedly needs to be built with 
public money, because so far no private hotel company has been willing to 
pay to put up a property on the Far West Side.

The Javits hotel scheme is not unique by any means. Publicly financed 
hotels have now become the latest craze in the municipal convention-center 
wars. Cities like Dallas, Baltimore, and Knoxville are all contemplating 
building them, on the theory that these properties will help boost sagging 
convention-center business. Though hotel companies won’t finance these 
properties themselves, because they know they are unlikely to repay their 
investment, they are more than willing to move in and operate them after 
government has built them. The result is a version of the rat and cat farm: 
we use tax money to build a convention center that supposedly will 
stimulate the hotel industry, and then use tax dollars to build a hotel 
that supposedly will stimulate the convention industry.

The nationwide convention-center fiasco is striking testimony that much 
government-centered economic development these days is a “me-too” affair 
that involves spending public money on what others are doing, regardless of 
market dynamics­perhaps because politicians who benefit from these projects 
can avoid blame by claiming that they were only doing what other cities 
were doing. New York State seems especially infected with this disease 
right now. With its huge public complexes in Albany and its vast string of 
publicly constructed state universities, the state has always specialized 
in state capitalism, and it is not to be outdone in the area of convention 
centers. In his state of the state address, Governor Pataki advocated not 
only the Javits project but a new $185 million convention center in Albany 
to replace its existing facility and the modernizing of another facility in 
Lake Placid. Soon after, officials in Erie County renewed their lobbying 
for a publicly financed center in Buffalo, while in Syracuse, a group that 
has put forward a far-reaching plan to remake that city added a 
convention-center proposal to its agenda, too. These proposals would join 
an estimated 40 or so convention projects already under way in cities 
throughout convention-center-glutted America.

While politicians and private businesses push such efforts, resistance from 
taxpayer groups is growing. The Texas chapter of Citizens for a Sound 
Economy, the national taxpayer group headed by former House Majority leader 
Dick Armey, is opposing a publicly financed convention hotel in Dallas. 
Knoxville citizens will soon get to vote on whether to spend tax dollars on 
a new convention hotel, after opponents of the effort collected thousands 
of signatures to get the issue on a ballot. In Raleigh, North Carolina, 
government supporters of a new convention center are trying to avoid a vote 
on public financing for the project­which they are sure to lose­by 
proposing alternate but even more costly financing that doesn’t require a 
referendum.

The mounting opposition shows that the public understands what a fiasco the 
convention-center business has turned into all around America. If only 
urban leaders could figure that out, too.