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\n Photo: Eduardo Munoz\/Reuters\n <\/p>\n
It\u2019s not often that you hear socialist politicians talk about cutting taxes, but Zohran Mamdani, the Democratic front-runner, is already acknowledging that serious solutions to the city\u2019s affordability crisis need to go well beyond the \u201cFreeze the rent<\/a>\u201d slogan that rocketed him to first place in the polls<\/a>. With New York trapped in a housing emergency, Mamdani is considering some of the strategies proposed by the city\u2019s business and real-estate elites.<\/p>\n \u201cThe time has come for a change to our property-tax system,\u201d Mamdani told me as we walked down Steinway Street in his Astoria district.\u00a0\u201cI say that as someone who serves on the Real Property Taxation Committee in the State Assembly, as someone who has looked at this system, sought to introduce legislation to augment this system, and yet been told that the scale of this is one where the Assembly, the Senate, Albany in general, is waiting for the vision of the mayor.\u201d<\/p>\n Representatives of the real-estate industry have been screaming for lower taxes for years, mostly without success. \u201cThe housing crisis is a crisis of our generation. I just believe we have to arrive there in a different direction than most candidates are proposing right now,\u201d Kenny Burgos, CEO of the New York Apartment Association, which represents the landlords of rent-stabilized units, told me<\/a>. \u201cAll of my advocacy is centered around that same affordability we all want to get to. And property taxes is the beginning and the end of this conversation.\u201d<\/p>\n \u201cThere are a number of things that Kenny and I disagree on. This is one of the things that we agree on,\u201d Mamdani said.\u00a0(Burgos and Mamdani attended the Bronx High School of Science around the same time; both got elected to the Assembly in 2020 and sat a few seats away from each other in the legislative chamber.)<\/p>\n The math behind New York\u2019s affordability crisis is simple, unforgiving, and nonpartisan. Property taxes make up, on average, about 30 percent of the cost of running an apartment building with rent-stabilized tenants, and those fixed expenses, along with sky-high insurance, plus fuel and utility bills, have left thousands of buildings functionally bankrupt with landlords unable to pay for needed repairs and hesitant about renting out apartments at a loss. Vital City recently published a breakdown of the expenses<\/a> of a 75-unit building in Washington Heights that is losing more than $450,000 a year because its legally capped rents are outstripped by the combined cost of property, insurance, and payments on an $11 million bank loan that comes due in 2030.<\/p>\n Freezing rents on buildings that already can\u2019t pay their bills is a formula for disaster, said Burgos, who estimated that a staggering 200,000 rent-stabilized apartments are in buildings at risk of going belly-up.\u00a0\u201cRight now, the NYU Furman Center and the Citizens Budget Commission say about 5,000 buildings are in financial distress. We think it\u2019s much higher than that,\u201d he told me.\u00a0\u201cWhen you\u2019re charging 1974 rent with 2025 expenses, the math is never going to check out. This is why this housing stock is falling apart very quickly. And it has a complete domino effect on the remainder of housing throughout the City of New York.\u201d<\/p>\n This wasn\u2019t supposed to happen. Eric Adams is the sixth consecutive New York mayor to vow that he\u2019d fix New York\u2019s convoluted<\/a> property-tax system only to end up kicking the can down the road like his predecessors.<\/p>\n \u201cMayor after mayor has promised to tackle property tax reform, but struggling homeowners continue to wait and pay unfair bills under a fundamentally unfair and overly complicated system. I\u2019m going to immediately put in place a committee to look at these tax laws,\u201d reads a pledge from Adams\u2019s 2021 campaign<\/a>. \u201cThis will be fairly examined within our first year, with a robust outreach effort that gets maximum input from impacted New Yorkers.\u201d<\/p>\n That never happened. New York\u2019s tax schedule continues to greatly favor single-family homes, including luxury mansions, and hits rental apartments hard.<\/p>\n \u201cMike Bloomberg used to say his home on 79th Street has far lower taxes than a rental apartment down the block. And that\u2019s because of our crazy tax system,\u201d Kathy Wylde, president of the Partnership for New York City, told me recently<\/a>. \u201cI live in a co-op in Bay Ridge. My apartment is probably valued at close to a million dollars. My property taxes, pro rata for my apartment, are $2,700 a year.\u201d\u00a0Wylde\u2019s organization, which includes the city\u2019s largest employers, such as Pfizer, Hearst, Google, and JPMorgan Chase, has long advocated for lowering the cost of insurance, another big driver of apartment costs.<\/p>\n \u201cWe just issued a report<\/a> on the cost of insurance in New York, which is multiples of anyplace else. The cost of the insurance in New York is driven by the fact that the trial lawyers who bring lawsuits and court cases and do big settlements have managed to create the most expensive litigation system in the country,\u201d Wylde told me. \u201cCar insurance in New York is 49 percent higher than the average in the country. Health insurance is 12 percent higher. Property and casualty similarly. All that is passed along in the cost of living. And this has happened in the last dozen years.\u201d<\/p>\n Mamdani has been looking at the same numbers. \u201cWhat we need is a multipronged approach,\u201d he said. \u201cYes, we need to freeze rents for rent-stabilized tenants for four years. We also need to take action on the doubling of insurance costs for affordable-housing providers over the last few years, and I\u2019m quite interested in looking at the prospect of something like Milford Street<\/a>,\u201d a collective of affordable-housing groups that recently launched a so-called captive-insurance company to self-insure 80,000 apartments.<\/p>\n The fact that Mamdani is looking into insurance programs and tax schedules is a sign of how dire New York\u2019s housing crunch has become and a preview of the drastic measures the next mayor \u2014 whether it\u2019s Mamdani, Andrew Cuomo, Curtis Sliwa, or Adams \u2014 will need to consider upon taking office.<\/p>\n \u201cI think he is understanding that life is more complicated than just doing one-liners, that you\u2019ve got to figure out, Okay, what are the factors contributing to high rents, and how do we deal with them?\u201d Wylde said.\u00a0\u201cThere are experts in the private and nonprofit sector, and hopefully some of them will be going into his administration in government if he\u2019s elected. There are answers. There are things we can do.\u201d<\/p>\n Sign Up for the Intelligencer\u00a0Newsletter<\/p>\n Daily news about the politics, business, and technology shaping our world.<\/p>\n Vox Media, LLC Terms and Privacy Notice<\/p>\n