In New York City, subway infrastructure alone has a repair deficit of around $1 billion. A “pied-à-terre” tax could bring in some much-needed revenue.
But that’s just scratching the surface. The MTA — the Metro Transit Authority of New York — has a capital budget that is projected to exceed $40 billion, according to Bloomberg.
Bloomberg reported this week that one proposal floated by New York Governor Andrew Cuomo’s (D) budget director to address the city’s infrastructure funding needs was a “pied-à-terre” tax (a tax on apartments that are only occasionally occupied by people who are not permanent city residents). Such a tax could bring in as much as $9 billion in a single year from part-time residents who are not subject to local or state income taxes.
City & State New York reported last year that between 2014 and 2017, the number of temporarily or seasonally occupied apartment units skyrocketed from just 20,000 to more than 75,000. Meanwhile, the number of available rental housing units increased by just around 69,000 units.
This means that the city’s available housing inventory was cut short by roughly 30 percent due to non-residents buying real estate that’s only occupied part of the year. And this arguably has a profound impact on the city’s homelessness crisis, as there are three times as many vacant homes as there are homeless people in the Big Apple.
As then-candidate Alexandria Ocasio-Cortez (D-New York) told Grit Post in 2018, one of the biggest problems plaguing New York City is wealthy oligarchs buying up real estate and keeping it vacant throughout the year. She placed blame on her primary opponent at the time — then-Congressman Joe Crowley (D-New York) — for facilitating that process by loosening regulations on foreign investors buying up NYC real estate.
“Over 50 percent of the luxury apartments in Midtown Manhattan are vacant. They’re being used by oligarchs to store and hide wealth. Even though they purchase these homes, they don’t live in them,” Ocasio-Cortez told Grit Post. “This is Panama Papers, Paradise Papers-type stuff, and it’s facilitated by Joe Crowley.”
“It’s turning this city into a ghost town. If you take a bus through midtown Manhattan, all you see are blocks and blocks of empty storefronts that are just anchored by a multinational bank,” she continued. “And now it’s spreading to other parts of the city working-class people used to be able to call home, like Brooklyn, the Bronx, and Spanish Harlem.”
In 2014, the Fiscal Policy Institute floated a pied-à-terre tax proposal that would impose a surcharge on all real estate valued at more than $5 million. While the policy was only estimated to bring in $665 million per year in actual cash, that money could be used to leverage billions of dollars in bonds for infrastructure projects.
State senator Brad Hoylman (D) drafted legislation last year that would have implemented the policy, though the Republican-controlled senate killed it. However, the bill has a much better chance of passing this year, as Democrats took back control of the New York senate for the first time since 2010 after the November 2018 elections.
Carl Gibson is a politics contributor for Grit Post. His work has previously been published in The Guardian, The Washington Post, The Houston Chronicle, Al-Jazeera America, and NPR, among others. Follow him on Twitter @crgibs or send him an email at carl at gritpost dot com.