Hotel Industry Braces For Impact Of Coronavirus

American hotel operators are keeping an eye on the fast-advancing spread of the coronavirus from China, as travel advisories and quarantines threaten business from one of the largest sources of U.S. tourism.

Wikimedia Commons/China News Service Staff monitoring passengers’ body temperature at a Wuhan train station during the coronavirus outbreak.

Concern about the spread of the virus grew Tuesday, after Chinese authorities reported a 60% increase in diagnosed cases and the death toll exceeded 100. As of Tuesday afternoon, nearly 4,700 cases of the respiratory infection have been confirmed in 17 countries, mostly in China. American regulators have said they are monitoring 110 cases across 26 states, with five confirmed.

The outbreak is worsening as some of the hotel industry’s biggest names gathered in Los Angeles at the annual Americas Lodging Investment Summit, the largest hospitality conference in the world. Three million Chinese tourists visited the U.S. in 2018, the third-highest source of overseas visitors, according to the U.S. Travel Association.

The impact some of the hotels represented at ALIS may feel if those consumers steer clear is substantial: Last year, Marriott reported Chinese travelers accounted for $260M on its balance sheet, while Hilton has a similar reliance on the country’s tourists, Citibank analysts said Monday.

“It is problematic,” MCR CEO Tyler Morse told Bisnow on the floor of ALIS. “We’re watching this closely.” MCR has more than 100 hotels totaling 12,000 rooms across 27 states.

In the event of an outbreak of infectious disease, hotel owners and operators would follow the lead of the Centers for Disease Control and Prevention, which notifies state and local health authorities to enact protocols that protect people and stop the spread of disease. Virgin Hotels CEO Raul Leal told Bisnow the company has a protocol to follow, adding that he has been in contact with the general manager of the Virgin Hotel in San Francisco, one of the cities that has enacted strict traveler screening at its airport.

“Generally, our protocol is to get on a conference call with all of our general managers so they can be aware of what is going on,” Leal said, stressing the importance of being prepared.

Morse said he sent out an information health pamphlet Tuesday morning to his hotel managers on the symptoms to look for in case they think a guest has contracted the virus. If fears of contagion escalate, the impact on the hotel industry could be “material,” Morse said.

“We are very concerned, like everybody is,” said Jeff Stephenson, vice president of franchise development at G6 Hospitality, which oversees 1,400 Motel 6 and Studio 6 hotels.

Panic has already hit the markets. The Dow Jones Industrial Average fell nearly 454 points Monday, stemming from fears of coronavirus and wiping out all gains made this year. Major hotel chains including Marriott, Hilton and Hyatt saw their share prices drop significantly in a market retreat Monday. Wynn Resorts, which has a large gaming presence in the Chinese special administrative district of Macau, a favorite destination for Lunar New Year tourists, saw its stock price plunge more than 8% Monday, while stock prices for online travel agencies like Expedia, Booking.com and Trivago fell between 6% and 8%. The trend followed a larger market hit for companies heavily affected by China’s tourism industry, including a retreat for airlines, retailers, hospitality and restaurants. The stock market, including hotels and airlines, stabilized Tuesday, even after CNBC reported that the White House was considering suspending all flights between the U.S. and China.

Best Western Hotels & Resorts President and CEO David Kong said his hotels in China “are hurting in a big way.” Kong oversees a global portfolio of 16 brands totaling 4,700 hotels around the world, including many in China. He declined to say how far occupancy is down in his China hotels.

“Demand is falling precipitously because of this virus,” Kong said. “It’s very scary.”

Kong said he has a trip planned to China in April, but because of the ongoing health crisis, he is reconsidering.

“A lot of travelers are not going to China,” Kong said. “It’s not just [mainland] China, it’s Hong Kong, Macau, all these locations that have our hotels. They are finding cases of [coronavirus] across Asia. I hope they contain it.”

The coronavirus outbreak is taking hold just as the hospitality industry in the U.S. is experiencing stalled growth after a decade of strong performance. For the first time since 2009, revenue per available room at U.S. hotels — the industry’s leading performance indicator — isn’t projected to grow this year, according to STR and Tourism Economics’ forecast released at ALIS.

“2019 was the industry’s worst year since the recession for RevPAR growth, which came in at an uninspiring 0.9% after nine years of increases of basically 3% or higher,” STR President Amanda Hite said.

STR predicts that hotel occupancy levels in 2020 will drop to 65.9%, a 0.3% decline from the previous year. Next year, STR expects occupancy to decline 0.1%. All of the projections were calculated before coronavirus started spreading globally.

If the industry can take any comfort, it is that similar global health scares have not had a long-term impact in the past. The 2003 SARS epidemic and the Ebola outbreak in 2014 didn’t have material impacts on lodging investment fundamentals, according to a Green Street Advisors report. Hotels still posted 7% quarterly returns during the Ebola outbreak and 19% returns during the SARS epidemic.

STR Senior Vice President of Consulting and Analytics Carter Wilson said it is still too early to predict the impact the coronavirus may have on the U.S. hospitality industry. Gateway markets like New York, San Francisco, Los Angeles and San Diego could be more impacted than secondary tourism destinations like Nashville or Austin. But what is going to hurt the U.S. hotel industry most is perception, Wilson said.

“In certain regions, it’s probably going to be significant,” he said. “Just think of all the inbound and outbound places that serve Chinese tourism.”

“Americans should know that this is a potentially very serious public health threat, but, at this point, Americans should not worry for their own safety,” U.S. Health and Human Services Secretary Alex Azar said in a press conference Tuesday. “This is a very fast-moving, constantly changing situation.”

“The precautions being undertaken are specific to travel to and from China,” U.S. Travel Association President and CEO Roger Dow said. “As we head toward a busy period for business and leisure travel, all of the current expert advice indicates that travel in the U.S. can and should continue as normal.” https://www.bisnow.com/national/news/hotel/hotel-industry-braces-for-impact-of-coronavirus-102744

West Coast Ports Are On Standby For Coronavirus

West Coast ports are on standby to enact infectious disease protocols for cargo and crew arriving in the United States, as the rapid advance of China’s virulent coronavirus continued Monday.

Port of Oakland

Courtesy of Port of Oakland

West Coast ports handle more than a third of America’s container imports, acting as a gateway for most of the Asian markets. They are a critical beginning point for the country’s supply chain and its industrial and retail sectors, which are watching the virus’ spread around the world.

Several Asian ports, including Laos, closed their borders entirely this week. Port officials in Los Angeles, Oakland, San Francisco and Seattle told Bisnow Monday they are waiting for further directives from state and federal authorities before they begin screening cargo or crew arriving from destinations that have reported outbreaks.

Port of Seattle spokesperson Kate Hudson said federal agencies are following the lead of the Centers for Disease Control and Prevention, which sets protocols for health authorities federally and at the state level. One of the five confirmed U.S. cases was diagnosed in Seattle.

A memo making its way through maritime circles and reviewed by Bisnow advises vessel operators that the U.S. Coast Guard would take the lead on some types of screening.

“Vessel representatives are required to report sick or deceased crew/passengers within the last 15 days to the CDC under 42 CFR 71.21,” reads the advisory, issued by Coast Guard Capt. Kailie Benson, out of the Office of Emergency Management and Disaster Response. “The Coast Guard will continue to review all ‘Notice of Arrivals’ in accordance with current policies and will communicate any concerns stemming from sick or deceased crew or passengers to their Coast Guard chain of command and the CDC quarantine station who will coordinate with local health authorities.”

The U.S. Department of Transportation’s Maritime Administration, the Coast Guard and the National Security Administration would work in tandem with health authorities and West Coast ports to spot goods or people that may need to be quarantined. In several places, ships and goods come through a central port first before heading to a regional one, including in Oakland, where U.S.-bound goods first enter the Port of Los Angeles before heading north.

“[The] Coast Guard confirms health of crew with vessel master before boarding ships, and the Coast Guard reports illnesses to [the] Centers for Disease Control,” Port of Oakland spokesperson Mike Zampa said Monday. “No incidents have been reported.”

The coronavirus originated in Wuhan, China, and has spread virulently despite a lockdown by the Chinese government of that city and nearly a dozen of its neighbors. As of Monday afternoon, at least 82 people were confirmed dead of the virus worldwide, and Chinese authorities said at least 2,800 are currently infected, with the virus increasing in strength, possibly allowing it to spread before a patient is symptomatic.

The mayor of Wuhan said Monday that he estimates 5 million people have already left the city. Several West Coast airports, including San Francisco and San Jose, have been screening travelers arriving from affected areas of China.

Also on Monday, the U.S. State Department issued travel advisories for Americans planning nonessential travel to China, ratcheting their threat level up to 3, and saying, “Travelers should be aware that the Chinese government could prevent them from entering or exiting parts of Hubei province,” and noting that restrictions on travel might be put into effect with “little or no advance notice.”

American authorities said Monday that they are investigating around 100 possible outbreaks in 26 states. The CDC said Monday that the coronavirus does not appear to be spreading in the U.S. The agency maintains a list of its 20 quarantine stations here.

“We understand that many people in the Unites States are worried about this virus,” Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases (part of the Centers for Disease Control and Prevention), told ABC News. “At this time, in the U.S., the virus is not spreading in the community. For that reason we continue to believe that the immediate health risk from the new virus to the general public is low at this time.”

https://www.bisnow.com/national/news/economy/west-coast-ports-coronavirus-102716

NYC public housing residents fear privatization of buildings

The NYCHA Warren St. Houses in Brooklyn, where Williams Latimore is afraid he and his family will be evicted. (Theodore Parisienne/for New York Daily News)
His decision to return to his childhood home to care for his ailing mother three years ago could leave Williams Latimore and his two children without a place to live, thanks to management changes at the city’s housing authority.

After his mother died, Latimore, his 10-year-old daughter and his 14-year-old son found themselves living his mother’s Boerum Hill NYCHA apartment even though his name is not on the lease. They now face eviction — even though members of the Latimore family have lived in the building for more than 50 years.

“It’s a very stressful situation,” Latimore said.

The New York City Housing Authority is transferring control of the building on Warren St. to a private company, which Latimore, 53, fears will be less lenient when it comes to the lease.

His predicament is one that many NYCHA tenants fear they’ll face under what Mayor de Blasio has touted as a key tool to saving public housing.

Under the federal Rental Assistance Demonstration program, or RAD, private entities assume control of NYCHA developments, fund upkeep, and turn a profit in exchange.

Critics of RAD say there are downsides. One, they argue, is that private landlords tend to be stricter.

How many NYCHA residents live in buildings without leases is not entirely clear; estimates range from anywhere between 100,000 and 200,000 people.

More than 15,000 NYCHA residents now live in buildings slated for RAD. How many of them don’t have leases is also unclear. But what critics claim is clear is that an exodus of non-lease holding city housing tenants would further strain an already buckling homeless infrastructure.

Councilman Ritchie Torres (D-Bronx), who grew up in public housing, said it’s common for people without leases to live in NYCHA apartments.

Council member Ritchie Torres (Angus Mordant/for New York Daily News)

“It’s widespread in public housing,” he said. “Families who are hanging on by a thread have no incentive to increase their rent by reporting every family member.”

The city, he added, has offered very little in the way of reassurance or a plan to account for them as RAD expands.

“I have not heard the city articulate a policy on amnesty, and I don’t know if they could legally,” Torres said.

Granting amnesty to people who aren’t on leases would essentially amount to giving them a pass for illegal behavior.

That puts the city in a tough spot. One NYCHA official said that while the agency does not want to evict people — and thereby increase the city’s homeless population — the city is obligated to collect rent according to the number of people per unit.

NYCHA spokeswoman Barbara Brancaccio noted that every RAD lease deal includes provisions for residents to add household members to the lease before conversions are finalized.

“NYCHA works with Legal Aid to organize ‘lease addition days’ and ensure residents’ rights are protected under the new lease,” she said.

The only RAD conversion fully realized in the city so far was at the Ocean Bay Houses in Far Rockaway. Councilman Donovan Richards (D-Queens), who backed the deal, said the Legal Aid Society met with tenants before it was finalized.

Councilman Donovan Richards (Go Nakamura)

“We wanted to make sure it was as seamless as possible,” he said.

The legal consultations did not stave off evictions for people who were not on a lease, were involved in drug activity, or who were behind in their rent, said Richards.

Those evictions have made critics distrustful of Legal Aid, which gets city, state and federal funding.

“They’re supposed to be an organization that advocates for tenants and the people. What I’ve seen is that they’re pro-privatization,” said Marni Halasa of the anti-RAD Fight For NYCHA group. “They know that RAD is an eviction machine.”

Legal Aid spokesman Redmond Haskins said the group has worked to preserve public housing for decades.

“The city has made a decision to bring RAD to more developments,” he said. “It is our obligation to ensure that residents fully understand these changes.”
https://www.nydailynews.com/new-york/ny-rad-nycha-de-blasio-privitization-20200126-iszwy43cejf5no7odlr62vd7ry-story.html

Tenant Package Delivery Management Latest Must-Have Rental Perk

The 2019 holiday season was a good one for many retailers, especially online. E-commerce sales grew again during the busiest retail stretch of the year, as they did each year through the entire decade. For consumers, the convenience of delivery keeps improving. It’s easier than ever to tap a few buttons and watch the items show up a day or two later. In the country’s millennial-dominated urban centers, that convenience is magnified for the increasingly car-free masses. For the owners and managers of those shoppers’ apartment buildings, ballooning e-commerce means headaches that grow just as fast.

While new-construction buildings are devoting more space and resources to packages, older buildings are getting overwhelmed with the onslaught of boxes and bags, especially during major online shopping events.

“Our biggest surge in package deliveries this year was the Wednesday after Cyber Monday,” said Draper and Kramer’s Bill Van Senus, property manager of the 418-unit Grand Plaza Apartments on State Street in Downtown Chicago. “The building received about 900 packages on that day alone, with all of the two-day deliveries ordered on Cyber Monday arriving then.”

Two years ago, the building received 300 packages, he said. The package déluge came just three days after the second-busiest day of the year: the Sunday after Black Friday.

Lori Torres, the CEO of package managment company Parcel Pending, said the volume of packages handled by her company’s lockers was up 88% year-over-year in 2019.

“It’s gone through the roof,” Van Senus said.

Overall e-commerce sales grew 18.8% during the 2019 holiday season compared to 2018, according to Mastercard. That year, online sales grew by 18.4% over 2017. E-commerce sales were 14.6% of total retail sales during the 2019 holidays, which the company defines as Nov. 1 to Dec. 24, a percentage that has been steadily growing over the years. On Cyber Monday, shoppers spent a record $9.4B online, according to Adobe Analytics data, up 19.7% over 2018. Black Friday e-commerce sales also ballooned in 2019, rising to a total of $5.4B, up 22.3% year-over-year.

Because of the intense volume, when packages comes to Grand Plaza Apartments, they don’t go to the management office or a locker system. They go to the dry cleaner on the first floor. The dry cleaner has extra space to keep the items, Van Senus said, and the building has contracted with the owners of the business to help scan the packages in.

“It’s old school, but many Chicago buildings still do it that way, for now,” Van Senus said. “High-rises are going to have to hire a package person and have a package room. In the future, it will be someone’s job just to deal with packages.”

One resident couple was out of town the week after Black Friday, Van Senus said, and did a lot of shopping from the road on Cyber Monday. Throughout the week, more than 20 packages of varying shapes and sizes arrived for them, so it fell to the Grand Plaza staff to organize them and have them waiting when the couple returned home.

Many newer properties are opting for lockers, included in the plans from day one. The 492-unit 727 West Madison tower in Chicago’s West Loop neighborhood uses a Luxer One locker system, which involves sending residents a text message or email alerting them that a package is in the access-code-protected locker, according to building General Manager Beth Argaman. But during the holidays or any other surge period, it isn’t enough for landlords to set a locker system and forget about it, even if the building is just a year old, like 727 West Madison, and designed for this era’s onslaught of cardboard.

“During the holidays, the property management team increased their daily audits to three times a day, printing the list of packages delivered and cross-checking the Luxer lockers and overflow package room, which was set up to sort packages by apartment number,” Argaman said. “The building is equipped to handle packages,” she added. “Older buildings have more difficulty. Storage is always a challenge.”

Back in 2015, one major U.S. multifamily landlord, Camden Property Group, decided in the face of rising deliveries that packages couldn’t be delivered at all to its management offices. Rather, they can be delivered to tenant doorsteps (without a signature) or tenants can pick them up elsewhere. The Houston-based REIT cited the expense of handling packages, which it said totaled about $3.3M per year, as a key consideration.

“Five years later, we still believe this is the best approach, particularly with the consistent increase in online ordering and the number of packages delivered to daily,” Camden Executive Vice President of Operations Laurie Baker told Bisnow in an email. “We constantly evaluate our processes and our customers’ living experience and will adjust as necessary or if other solutions become available that make more sense.”

Most other apartment owners still hold onto their tenants’ packages, at least for now.

“Package delivery is one of the top-valued services of our residents,” Bozzuto Management Co. Managing Director of Property Operations Nancy Goldsmith said in an email. Bozzuto owns or manages 255 communities nationwide, including properties in Washington, D.C., New York, Chicago, Boston and South Florida.

“Residents value the convenience,” Goldsmith said. “They like the option of either a concierge handing them a package or retrieving it from a locker, and the convenience of text message or email alerts.”

The company uses a number of locker systems, including Luxer, but also Amazon Hub and Package Concierge and Butterfly MX, she said. It uses Yardi RENTCafé CRM for resident messaging.

“We provided our residents with extended package pickup hours, assistance with large package delivery, increased messaging regarding holiday hours and package delivery on the holiday eves,” Goldsmith said.

Sixty-seven percent of apartment landlords still hold packages at a management office or other room, though more than half of landlords also leave packages outside residents’ doors — some landlords do both — according to National Multifamily Housing Council survey data. About a third of the communities surveyed by the NMHC use package lockers of some kind, while about 10% use resident-accessible package rooms.

“There’s no single strategy that’s going to work for every apartment landlord,” NMHC Vice President of Industry Technology Initiatives Rick Haughey said. “Landlords are still trying various solutions.”

That isn’t only because the volume of deliveries is up — so is the variety of deliveries.

“Tires are being purchased online more than ever before, because it’s cheaper than at store,” Haughey said. “Where do they usually end up? In leasing offices. Four tires, stacked up next to someone’s desk until the resident can pick them up. No one would have imagined such a thing when most apartments were being developed.”

Tires might not be arriving at most buildings, but perishable grocery deliveries are arriving more regularly, Haughey said. Higher-end properties can install refrigerated lockers, but that is hardly a solution for every building. Even regular lockers can be a stretch for old properties.

“Lockers take up space and represent an expense,” Haughey said. “Other options might be better for some properties, such as a secure package room, or package tracking software.”

Lockers aren’t a new solution, but they still have room for growth. Driving the growth in part is tenant demand, Parcel Pending’s Torres said. Instead of luxury amenities used occasionally — resort-style pools, clubrooms or basketball courts — residents expect daily-use, integrated amenities, including systems (and not only lockers) that facilitate timely and safe package delivery, she said.

Now that the holidays are over and the packages delivered, a new challenge is coming: dealing with the empty boxes. This has been such a challenge that RMK Management Corp. opted to engage an outside recycling provider to just pick up the cardboard and recycle it at its Halsted Flats property in Chicago’s Lakeview neighborhood.

“The company comes out as needed, which is typically two to three times a week, to pick up the empty boxes and recycle them. Sometimes, especially during the holidays, they may even come daily,” RMK Management Executive Vice President Diana Pittro said. “The cost for this service is less than scheduling additional trash pickups to accommodate the overflow from the boxes. All residents have to do is leave their boxes in the hallway on specified days and they’re picked up and recycled,” Pittro said.

Grand Plaza is fortunate to have a large trash and recycling room on each floor, Van Senus said.

“People put boxes there, and a janitor comes through to empty them,” he said. “During the holiday season, we were filling up two to three elevator cars a day with nothing but used boxes for recycling.” https://www.bisnow.com/national/news/property-management/apartments-struggle-to-keep-up-with-delivery-surge-and-package-debris-102507

Federal Government Is Looking To Lease Coworking Space Nationwide

Careers in federal government are known for job security and generous pensions, but also for layers of bureaucracy and cold, gray, impersonal buildings. The bureaucracy is unlikely to change, but soon, government workers around the country could be organizing hurricane relief, investigating regulatory infractions or rubber-stamping Social Security payments while natural light flows around them and kombucha pours freely from tapped kegs.

The federal government is on the hunt for coworking space, and it wants to lease from small businesses. The General Services Administration has put out a request for proposals, seeking coworking space around the country. The request is classified as a “Partial Small Business Set-Aside,” which means that the government is aiming to award at least part of this contract to small businesses. Contract amounts could range from $1K to $10M per vendor. The RFP asks for pricing on coworking space over a one-year period, plus four additional one-year periods.

Francesco De Camilli, Colliers International vice president and head of flexible workspace consulting, said that the GSA has a few one-off deals for coworking already in place, but “this is the first formal RFP at a national level.” (De Camilli was formerly the chief operating officer of Bisnow Media.)

The GSA occupies some 370M SF of office space nationwide, so to have even 2% or 5% of its space in consideration for coworking “represents a huge opportunity,” De Camilli said. “Their approach is to pick the best-in-market operators, not to establish a single point of contact with a national platform.”

Coworking spaces would be ideal for emergency response teams that need to set up offices following a hurricane, he said, but also for various other project-based initiatives. Some federal budgets are set for 12-month periods, so it makes sense for real estate contracts to follow the same short terms.

Coworking operators do need to have a presence in four markets to be considered, according to the RFP.

“I wouldn’t be surprised if you see small operators teaming up amongst themselves,” De Camilli said.

This would enable them to qualify, plus offer pricing power and scale. He said the RFP lets the GSA “be in a position to have pre-negotiated rates and terms with a network of cowork service providers such that when the need hits, they can quickly turn on office space.”

The solicitation asks for pricing for unreserved and reservable workstations and reservable offices. The GSA does not want proposals to include costs for refreshments. Federal rules prohibit alcoholic beverages in certain instances.

“Working beyond the confines of traditional government offices has become more common,” the solicitation reads. “Government employees are now commonly equipped with technological tools to work from anywhere … [The change could] promote a responsible use of taxpayer dollars.”

The GSA is looking for space in Tier 1 markets New York, Los Angeles, Chicago, the Bay Area, the D.C. area, Boston and Cambridge, and Seattle. Some of the Tier 2 markets it is interested in are Salt Lake City, Atlanta, Philadelphia, Houston, Dallas-Fort Worth, Phoenix, San Diego, Minneapolis, New Orleans, Las Vegas, Cleveland, Austin, St. Louis and South Florida. Applicants will be chosen based on experience, past performance and management plans. The closing date is Jan. 30, so interested parties will want to submit their materials soon. https://www.bisnow.com/south-florida/news/coworking/federal-government-coworking-nationwide-102613

New Subway Line Could Connect Brooklyn And Queens

The MTA is considering opening a new subway line to connect Bay Ridge to Midwood, East New York, Bushwick and Astoria, officials said. (Courtesy of the MTA)

A new subway line could run through outer Brooklyn and into Queens after the MTA signed up for a $1.3 feasibility study, officials announced Wednesday.
The proposed subway line would open on a freight-only rail connecting Bay Ridge to Astoria through Midwood, East New York, Bushwick, Middle Village and Elmhurst and crossing 19 subway lines, according to the MTA.
“This project is hugely exciting,” said MTA Chief Development Officer Janno Lieber. “Putting mass transit on the Bay Ridge Branch could allow the MTA to serve more neighborhoods and provide better connections to thousands of people throughout Brooklyn and Queens.”

The southern part of the 16-mile line is owned by MTA Long Island Rail Road and the northern part is owned by the freight railroad CSX Transportation.
The engineering firm AECOM will work with subcontractor WSP to study the feasibility of the plan, said the MTA.

The new subway line could offer connections to intersecting subway lines and the LIRR. https://patch.com/new-york/new-york-city/new-subway-line-could-connect-brooklyn-queens

EB-5 In 2020: Managing The ‘Stun Gun’ That Just Hit The Investment Program

In November, the price of a U.S. permanent residency visa through the EB-5 program jumped by 80%, and the federal government tightened the rules on what qualifies as a legitimate EB-5 investment.

In response, demand for the visas has slowed significantly, experts tell Bisnow, because EB-5 is either beginning a long slide into irrelevance as a source of capital, or a pause as investors adapt to the new reality — depending on who you ask.

The new rules specify that investors must commit $900K in Targeted Employment Areas, up from $500K, or $1.8M for projects outside TEAs, up from $1M. The new rules also make it much harder to invest in areas that aren’t in need of economic stimulus, one of the chief criticisms of a program that was used to funnel $1.2B in low-interest investor loans to the $25B über-luxury development Hudson Yards.

“The program’s been hit with a stun gun,” said Debbie Klis, a shareholder and real estate attorney at Polsinelli. “Investor interest has certainly waned since the regulations went into effect in November,” EB5 Capital Senior Vice President of Global Operations Brian Ostar said. “Many investors filed their petitions before then to take advantage of the lower investment amount, and those who didn’t are now waiting.”

The new rules — and consequent drop in investment activity — are only the latest tumult for EB-5, which has had a bumpy run as it enters its 30th year as federal immigration policy. In its early years, it was largely ignored. But during the recession, developers discovered it as a source of less-expensive capital, and Chinese investors in particular latched onto EB-5 as a (relatively) less onerous way to land highly prized green cards. Anyone with $500K could apply, and when their money was placed, they would have a chance to emigrate.

With popularity came criticism that EB-5 wasn’t creating jobs as much as providing capital to investors who didn’t need it. Application backlogs swelled. There were calls to abolish the program, and efforts to reform it in Congress that went nowhere. Cases of fraud bubbled up and cast a pall over the program’s reputation.

The new regulations may have helped assuage concerns over misuse, but they are a shock to the cottage industry that has formed around the EB-5 program over three decades of the industry, Klis said. Most of the projects that didn’t make the November deadline will disappear altogether — the vast majority of EB-5 projects this cycle have been in TEAs — which are drawn by each state — because the deals relied on immigrants paying $500K, a Government Accountability Office study found. Doubling the minimum investment to $1M, and restricting states from gerrymandering TEAs to include luxury developments, could seriously limit the available funds for the foreseeable future, she said.

Complicating factors for the new U.S. regulations are those in other countries regarding the exporting of large sums of capital.

“Perhaps even more significant, investors will have more difficulty surmounting currency export controls when they are trying to move $900K or $1.8M than they did in moving $500K,” Klasko Immigration Law Partners’ H. Ronald Klasko wrote. “In a country like China, where investors often needed to involve 10 or more friends or family in effectuating currency exports, one would need a calculator to determine the number of friends and family members who would be involved in a transfer of $1.8M.”

Fewer Investors, But Just As Much Money?

There is no public data yet on the impact of the new EB-5 regulations on visa applications, for which investors would use a form the government calls I-526. In January, U.S. Citizenship and Immigration Services released data on applications for permanent residence in the United States, including I-526s, for all of fiscal year 2019, which ended Sept. 30. That was before the new EB-5 regulations came into force in November, but not before the new regulations governing the program were published in July, near the beginning of the fourth fiscal quarter. From October to December 2018, USCIS received a total 1,808 I-526 forms. Over the next six months, the numbers dropped to 580 and 615, respectively, but from July to September 2019, the last quarter of the fiscal year, the number shot back up to 1,191.

The impact of the new regulations will be significant, but not necessarily damaging, said Reaz Jafri, head of the immigration practice of the international law firm Withers.

“Most of our clients are ultrahigh net worth individuals, so we are receiving inquiries,” Jafri said. “The number of deals might go down, but the dollar volume might be similar, with higher investments by each individual.”

“Fewer immigrants will be able to afford the higher minimum investment levels,” said NYU Stern School of Business Scholar-in-Residence Gary Friedland. “But the increased minimum investment amounts will require fewer investors to raise the same amount of EB-5 capital.”

For example, Friedland said, a project seeking $50M of EB-5 capital required 100 investors under the old rules, compared to 28 or 56 investors at $900K or $1.8M, respectively. The value of permanent residency in the United States is such that there will still be investors willing to pony up the higher levels, Friedland said, but investors’ expectations about the investments themselves are likely to change.

“Based on normal supply-demand principles, the fewer investors are likely to demand a higher rate of return on their investment than the one-half of 1% rate accepted by many investors under the old rules,” Friedland said.

Cracking Down On TEA Gerrymandering

Another change under the new regulations is just as contentious as raising the minimum amounts for EB-5 investments: taking the power to designate TEAs away from the states and giving it to the federal government, specifically the Department of Homeland Security.

“The recent EB-5 regulations address the most-publicized flaw of the program, which was TEA abuse,” Friedland said.

Under the old rules, capital primarily flowed to large real estate projects in affluent urban areas sponsored by major developers, Friedland said, with states putting together census tracts so the average employment rates were low, even though the EB-5-funded developments themselves were in well-to-do neighborhoods. Aside from Hudson Yards, the $3B Wharf development in D.C. and developer Harry Macklowe’s $1.5B luxury condominium conversion of One Wall Street each scored more than $100M in low-cost financing from immigrant investors, largely from China. Both were drawn into TEAs. Under federal oversight, such gerrymandering is far less likely.

“In many cases, these projects would have been funded and built without the injection of EB-5 capital, and so the jobs would have been created anyway,” Friedland said. “EB-5 capital merely served to reduce the capital costs of the developer.”

Klis disagreed with that assessment. Without cobbling together census tracts, many deals would not have been done, she said.

“Projects in Manhattan, for instance, were made possible by cobbling together census tracts from Brooklyn and Queens as well,” Klis said. “Jobs were created, though the workers might have to commute from other boroughs. What’s the harm in that? Creating jobs is the goal of the program.”

The Lingering Issues

In the 2010s, EB-5 became known for cases of fraud and long waits for visas under EB-5, in extreme cases over 10 years. Critics of the new regulations say that they do nothing to deal with those issues.

Fraud has been a persistent blight on the program. In 2015, the Government Accountability Office warned that fraud risks in EB-5 were “constantly evolving.” Two years before that, the Securities and Exchange Commission took emergency action against fraud in the program, including a $156M investment scheme orchestrated by a person who falsely claimed he was going to develop the “world’s first zero carbon emission” hotel in Chicago. Developers who planned to expand the Jay Peak ski resort in Vermont commingled EB-5 investor funds in what investigators said amounted to a $200M Ponzi scheme, which has been in litigation since 2016. More recently, a group of EB-5 middlemen in California were indicted last summer for swindling 200 Chinese EB-5 investors out of $110M.

EB-5 is barely regulated, and its rules are based on the original program, which did not contemplate the funding of sophisticated real estate projects, Friedland said. The USCIS falls under the Department of Homeland Security and is ill-equipped to investigate the complex transactions.

“Investors have no idea of the status of the fund and where or when the funds flow,” Friedland said. “Neither does USCIS, until it’s too late. Account transparency and fund administration — which are aimed to deter, detect and recover the misappropriated funds — are vehemently opposed by industry and its congressional proponents.”

Now that the investment requirements are higher, investors will likely scrutinize the deals more closely than before, Mark Migdal & Hayden attorney Isaac Marcushamer said

Even so, the new regulations do nothing about potential conflict of interest arising from attorneys representing both sides of the deal, and cultural differences mean that non-U.S. investors might not be aware of the problem, Marcushamer said.

“In the U.S., a lawyer can’t serve two masters,” Marcushamer said. “That concept isn’t universal.”

As long as there is geopolitical instability, there will be demand for the EB-5 program, Marcushamer said, and so a spotlight needs to go on cases of fraud and mismanagement.

“If you have poor management, it’s going to go poorly, and it isn’t that hard to take advantage of investors,” Marcushamer said. “Real estate deals can go catastrophically bad in an EB-5 context.”

Florida EB-5 Investments President Marty Cummins felt so strongly about the new regulations that he has filed suit in federal court to overturn them. Cummins asserted that the new rules were written without the proper administrative steps taken, like sufficient background research or economic studies, and he said were designed to kill the EB-5 program. Among other ill effects, Cummins said, the new regulations add to the impression around the world that the EB-5 program isn’t reliable, which will deter investors.

“With the new regulations in place, I don’t think the market will come back to be as robust as it was, and the regulations don’t do anything to prevent fraud,” Cummins said.

Cummins admitted that he isn’t sure how the lawsuit will play out, but he said he is hopeful.

“If the law is followed, we will prevail, but we have no idea whether that will happen,” he said.

Many EB-5 experts see Cummins’ suit as a long shot, as the repeated efforts in Congress to reform the program have been.

“Most observers don’t believe there’s going to be a rollback of the new investment levels, in court or otherwise,” Jafri said. “The industry will adapt to them.” https://www.bisnow.com/national/news/capital-markets/eb-5s-in-2020-the-futures-uncertain-and-the-end-is-always-near-102635

NYC Transit’s Andy Byford, subway savior, quits amid Cuomo-ordered reorg

New York and its governor proved too much for Andy Byford, an outsider and veteran transit executive hired two years ago to be the savior of New York City’s subway system.

Byford resigned Thursday as president of NYC Transit, citing a reorganization of the Metropolitan Transportation Authority spearheaded by Gov. Cuomo as the reason for his departure.

That reorganization, formulated by the consulting firm AlixPartners to make the byzantine agency more efficient, stripped Byford of his control over transit construction projects.

“The AlixPartners MTA transformation plan called for the centralization of projects and an expanded HQ, leaving agency presidents to focus solely on the day-to-day running of service,” Byford wrote in his resignation letter.

 

“I have built an excellent team and there are many capable individuals in Transit and others within the MTA family, who could perform this important, but reduced, service delivery role.”

As the MTA made a series of senior-level hires this month to implement the AlixPartners reorganization, Byford quickly lost his grip on projects he helped plan.

Andy Byford Resignation by New York Daily News on Scribd

“There has been a very quick ascendance of the transformation folks,” said an MTA employee who asked not to be named because they were not authorized to speak on the matter. “They’re in there and they’re cleaning house and rearranging a lot. It’s very clear that there’s a big team.”

Cuomo called Byford “a good man” and said “he did good work,” but also acknowledged that Byford was upset about being sidelined by the reorganization.

“I think he feels that the agency heads are basically about train operation and bus operation because centralized functions are centralized, and that’s true,” Cuomo said at a news conference.

Thursday wasn’t the first time Byford has called it quits at the MTA, but it appears to be the last.

In a three-page resignation letter in October, Byford laid out a a laundry list of complaints, including gripes about “gubernatorial interference,” MTA sources told the Daily News.

Byford quickly rescinded that resignation after MTA officials agreed to let him keep oversight of the modernization of the subway’s outdated signal system.

But that concession proved not to be enough.

MTA President Andy Byford is pictured Thursday after announcing his resignation in New York City. (Jesse Ward/for New York Daily News)

Cuomo was eager to dispel reports that he butted heads with Byford. “Most of my dealings were with [MTA chairman] Pat Foye, but I’ve had a fine relationship with Andy,” the governor said.

Byford’s last day at the agency will be Friday, Feb. 21. He is English, and holds an H-1B visa that authorizes him to work in the U.S. Byford will have 60 days after his resignation takes effect to leave the country if he does not find another U.S. employer to sponsor his visa.

Byford’s resignation shocked transit employees and MTA board members, who held their monthly public meeting Thursday.

“It’s unbelievable. This changes everything,” said Craig Cipriano, the MTA’s acting head of buses, who reports to Byford.

When Foye told board members that Byford was leaving, the room gave a round of applause to thank him for his service.

At the end of the meeting Byford thanked “New Yorkers for bearing with me, for putting up with me, for giving me this tremendous opportunity to live in this wonderful place.” (Jesse Ward/for New York Daily News)

At the end of the meeting Byford thanked “New Yorkers for bearing with me, for putting up with me, for giving me this tremendous opportunity to live in this wonderful place.” He also paid gratitude to the 50,000 transit workers who work for him, calling them “wonderful, decent, hardworking human beings.”

Before coming to the MTA, Byford served five years as head of the Toronto Transit Commission. He’s also held management jobs at transit agencies in London and Sydney.

Byford last year poached Pete Tomlin, a former colleague in Toronto, to oversee subway signal upgrades at the MTA. Tomlin said he plans to stay on at the MTA.

It’s unclear who will replace Byford as head of NYC Transit. Foye said a decision has not yet been made.

A chorus of transit advocates, riders and elected officials bemoaned Byford’s resignation — and City Council Speaker Corey Johnson even said he would try to get him to change his mind.

“I’m going to plead for him to stay and hopefully figure out with Pat Foye and other folks involved how to empower him,” Johnson said at a press conference. He called Byford’s departure “devastating and a really bad day for New York City.”

FILE – Cuomo, pictured in this MTA file photo, was eager to dispel reports that he butted heads with Byford. “Most of my dealings were with [MTA chairman] Pat Foye, but I’ve had a fine relationship with Andy,” the governor said. (Marc A. Hermann/MTA New York City Transit)

Johnson also said Byford’s departure shows why New York City should take over the subway and bus networks, which are now run by state government. Johnson has been campaigning for city control of buses and subways since last year.

Rachael Fauss, an analyst at the good government group Reinvent Albany, blamed Cuomo’s management style for Byford’s departure.

“Byford is widely known to have chafed at the politicization of the MTA under Gov. Cuomo, whose penchant for secretiveness, message control and top-down directives conflicted with Byford’s philosophy of building trust through consultation, personal accountability and transparency,” Fauss said.

Gov. Andrew Cuomo is seen here greeting Metropolitan Transportation Authority President Andy Byford on April 12, 2018. (Kevin P. Coughlin/Office of Governor Andrew M. Cuomo/Office of Governor Andrew M. Cuomor – Kevin P. Coughlin)

Lisa Daglian, executive director of the Permanent Citizens Advisory Committee at the MTA, said Byford’s replacement should be hired from within the agency. She worried that Byford’s departure could signal trouble for MTA efforts to attract and keep talented managers.

“The MTA has huge shoes to fill and must commit to continuing the tremendous strides that have been made under Andy Byford’s tutelage,” Daglian said.

David Bragdon, executive director of TransitCenter, credited Byford for rescuing the subway system from a crisis. “He made quick reforms, providing more clarity about the underlying causes of subway delays, and taking immediate steps to improve subway operations,” he said.
https://www.nydailynews.com/new-york/ny-andy-byford-resigns-mta-20200123-ezvqdjmlgffijnpojkz7pqi3b4-story.html

Hamptons Homebuyers Come Back, Lured by Deep Seller Discounts

• Price cutting spurs the first increase in purchases since 2017
• Fourth-quarter reductions were biggest in more than four years

Homebuyers are interested in the Hamptons again. It took the biggest price cuts in more than four years to bring them to the closing table.
Purchases in the Long Island beach towns jumped 11% in the fourth quarter from a year earlier, the first annual increase since the end of 2017, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Seller discounts averaged 12.9%, the largest since 2015.

“This confirms that the buyers are there but they’re waiting for the sellers,” said Jonathan Miller, president of Miller Samuel.

Listings have piled up in the Hamptons as shoppers balked at overpaying for vacation homes in a market where prices aren’t rising the way they used to. Wall Street jobs and bonuses — the pillars of demand in the area — are on the decline. And federal law changes that limit the tax benefits of ownership have further dented buyers’ willingness to shoulder high carrying costs.

The median price of Hamptons homes that changed hands in the quarter slipped 8.9% to $906,250, the firms said. Eighty-seven percent of all deals were completed below the asking price, up from 81% a year earlier.
“Sellers are traveling farther to meet the buyer, but they were much more aggressive in setting high prices to begin with,” Miller said.
The sudden burst of activity made a dent in the stockpile of available homes. The inventory dropped 13% — the first decline in more than a year — after rising more than 75% in each of the past four quarters.
But sales were still tepid in the context of history: With 400 deals, it was the second-weakest fourth quarter in 11 years, Miller Samuel and Douglas Elliman said.
https://www.bloomberg.com//news/articles/2020-01-23/hamptons-homebuyers-come-back-lured-by-deep-seller-discounts?srnd=markets-vp

Philadelphia refinery expected to be sold to real estate developer

The bankrupt Philadelphia Energy Solutions is expected to sell its fire-damaged refinery site to real estate developer Hilco Redevelopment Partners, three sources familiar with the situation said on Tuesday.

The agreement between PES and Hilco, a Chicago-based developer, is expected to be announced later on Tuesday. PES and Hilco did not immediately respond to requests for comment. A city official declined to comment.

The sale reduces the possibility that the more-than 1,300-acre (526-hectare) Philadelphia site would be resurrected as an oil refinery, but it is possible that Hilco could lease it to a refinery, biofuels or other heavy industrial operation, the sources said.

The 335,000 barrel-per-day refinery is the largest and oldest on the U.S. East Coast, but was shut after a fire and series of explosions on June 21 last year that destroyed a key processing unit.

There were more than a dozen initial bidders for the site, but only one bidder had publicly stated intentions to revive the site as a refinery. Any sale would have to be approved by the United States Bankruptcy Court for the District of Delaware.

A bankruptcy court hearing is set for Feb. 6, which could confirm any potential sale of the site.

PES had struggled financially for years and had only exited a previous bankruptcy in 2018. More than 1,000 workers were laid off after the site closed last summer.

https://www.marketscreener.com/LONDON-BRENT-OIL-4948/news/Exclusive-Philadelphia-refinery-expected-to-be-sold-to-real-estate-developer-sources-29869861/?countview=0

Smaller Landlords Try to Sell Stabilized Buildings In Wake of Rent Reform

When the seven-story apartment building at 2301 Broadway in the Upper West Side hit the market a year ago, the longtime owners wanted $60 million for the 33-unit property, of which 19 were rent-regulated dwellings. 

The building at the corner of West 83rd Street finally sold in December for $37 million. That price included the 61,200-square-foot apartment building, 33,650 square feet of air rights and four fully leased ground floor retail spaces. The Polak family, which had owned the building since 1976, still walked away with a tidy profit. The buyer is an anonymous LLC represented by real estate law firm Goulston & Storrs. 

The family and their price drop are emblematic of the sea change in New York City since the newly Democratic-controlled state legislature passed a raft of sweeping rent reforms last June. Tenants have the strongest protections they’ve had in half a century, but landlords have lost many of the mechanisms they would normally use to raise rents. Investment sales brokers say that many small and mid-sized landlords — particularly families that might own one or two buildings with rent-stabilized or rent-controlled units — are either selling their properties or preparing to sell. 

“The people that are putting properties on the market right now tend to have a lot of equity, and they can be more discretionary sellers,” said Michael Tortorici, an investment sales broker at Ariel Property Advisors. “These are generational families that are moving on or splitting up partnerships. Or it’s owners that have some holdings [in which] they have a decent amount of equity, and maybe [the property] doesn’t fit in with the rest of their portfolio.” He added that baby boomer owners retiring and getting their estates in order will also be a factor driving these kinds of sales over the next couple years.

Under the new law, owners essentially can’t raise rents by deregulating apartments and can only pass on $15,000 worth of apartment renovations over 15 years to tenants. The legislation also lowered the percentage of building-wide renovation costs that can be added to tenants’ rents from 6 percent to 2 percent. 

All of this means that many property owners have woken up to a world where their buildings are worth 30 to 50 percent less than they were a year ago, according to investment sales experts. 

Purchase prices for stabilized apartment buildings have dropped so dramatically that some landlords might not want to sell at all, said Tortorici. Others might be waiting to put their properties up for sale on the chance that the real estate industry can reverse the rent laws, either through lawsuits or by lobbying the state legislature, he suggested.

And the sales market is mirroring these fears. The number of multifamily apartment building deals in the $7 million to $75 million price range fell 57 percent over the past year, from 385 sales in 2018 to 212 sales in 2019, according to data provided by commercial brokerage Ackman-Ziff. PropertyShark found similar trends in its November sales report: In the first 11 months of 2019, the city recorded $7.3 billion in multifamily transactions, which is $3.8 billion less than what was sold in the same period in 2018, the real estate website’s data showed.

But the drop in pricing isn’t all bad news. Now that New York City apartment buildings are selling at a discount, investors from other parts of the country — and the world — are starting to take a closer look at the five boroughs. 

“Multifamily operators from around the country see New York as a buying opportunity,” said Tortorici, because they “see value in New York and see discounted prices that they haven’t seen in a long time.”

Ofer Cohen, an investment sales broker and founder of Brooklyn-focused brokerage TerraCRG, said “large semi-institutional families and institutional investors” from Europe had been expressing interest in Brooklyn apartment buildings recently because they weren’t afraid of rent regulation. Germany, for example, has rent regulation written into its legal code, and Berlin recently tightened its rent control to ban almost all rent increases for the next five years.

He added that many local investors who are wary of buying in the five boroughs right now are looking at cheaper cities instead. 

“Before you buy another 1,000 units here, you’re going to look in Texas; you’re going to look in other states,” said Cohen. “There’s also a sense that politics are increasingly going against business in New York State. If you have a choice, you will diversify.”

Shaun Riney, a broker who focuses on multifamily sales at Marcus & Millichap, said that many small and mid-sized landlords are trying to sell because they don’t see many other options. 

“We’ve put a lot of newer listings on the market from people who wouldn’t sell if there were any other way of making money,” Riney noted. “What the [state] has done has stripped out all the ways of making money from rent-stabilized buildings.”

He added that “there’s a lifestyle choice that also comes into factor. You’re asking people to show up every day, work 60 hours a week and have no idea if they’re going to increase their net operating income. And you are targeted and treated like you’re an evil person at every step. There’s a lot of people doing that lifestyle gut check feeling like, ‘This is not how I want to live my life.’ ”

Larger buildings with 50 or more apartments are still selling, Riney explained, because those properties attract institutional buyers and local real estate families with cash to spend. But “there’s very little buyer action” on 10- to 40-unit buildings like 2301 Broadway. “There’s just nobody that wants it.”

However, the new rent laws aren’t the only issues making New York City landlords nervous. 

A State Supreme Court judge last month to overturned the Inwood neighborhood rezoning, which was originally approved by the City Council in 2018. Justice Verna Saunders argued that the city’s environmental review process failed to property analyze the socioeconomic impacts of the rezoning, including the displacement of residential tenants and minority- and women-owned businesses. 

Andrew Sasson, an investment sales broker at Ackman-Ziff, called the Inwood decision “the most terrifying thing I’ve ever seen in New York City real estate. You have people in Inwood that may have lost 70 to 80 percent of the equity from that rezoning in one night. I don’t think there could be anything worse.”

He also pointed to the proposed Bushwick rezoning, which faces strong opposition from local Councilmember Antonio Reynoso and is unlikely to move forward, as another example of the headwinds facing real estate in the city.

Longtime owners of two to five buildings are the ones looking to sell at the moment, he said. They want to unload their properties because they realize the rent laws may not change for at least five years, Sasson explained, and they don’t want to wait that long because the economic outlook could be worse by then. And folks who can afford to buy right now are “families who own massive portfolios in the neighborhoods they’re already in and operators who partner with funds.” 

But he argued that the biggest contributors to the slowdown in apartment building sales are sellers who expect pre-rent-reform prices. 

“I think until sellers come to the table and realize what the reality is, it’s going to be tough for more transactions to happen.”

Smaller Landlords Are Trying to Sell Stabilized Buildings In the Wake of Rent Reforms

De Blasio Needs a NYCHA History Lesson

Asked last week about problems at the New York City Housing Authority—the nation’s largest public-housing system—Mayor Bill de Blasio blamed Ronald Reagan. NYCHA, said the mayor, has “now gone through about 40 years of systematic disinvestment because of what’s happened in Washington. . . .  Where is the federal government we knew from the 1930s to 1980—actually, 1933, I should say, to 1980—that actually was a major partner in affordable housing?”

The mayor has long blamed the federal government for its purported failure to support NYCHA. Asking him about NYCHA is almost guaranteed to bring a mention of Reagan’s election in 1980 as the moment when things began going wrong. “I think we can say that the physical decline of NYCHA dates to 1980,” de Blasio said in June 2018, “and this is not a partisan statement, this is an analytical statement. When Ronald Reagan was elected is when the federal government started pulling back from support for public housing.”

Last February, the mayor explained that “the entire concept of public housing was that it was chartered by the federal government on the assumption of adequate federal support and that started to change with the election of Ronald Reagan in 1980 and it got worse and worse and worse.” De Blasio subscribes to a version of public-housing history that sees the New Deal as a moment of historic promise—steadily fulfilled through the era of postwar prosperity and amplified by the Great Society’s expansion of the welfare state before climaxing under Jimmy Carter. Then the neoliberal reforms of the Reagan era began rolling back decades of progress.

This narrative doesn’t square with the facts. NYCHA’s operating revenue for the last fiscal year totaled $3.5 billion; rent paid by tenants accounted for 30 percent of that amount. New York City contributed $288 million, and almost the entire balance—more than $2.1 billion—came from Washington. The federal Department of Housing and Urban Development also gives NYCHA hundreds of millions of dollars annually for capital uses, including replacing equipment and fixing roofs. It’s hardly credible to accuse Washington of “systematic disinvestment” when the feds provide 60 percent of NYCHA’s day-to-day budget—and have done so for decades.

The mayor needs a history lesson. In the 1930s, New York was especially aggressive about building public housing with local and state funding, in many cases ahead of federal financing. But the original intent of public housing in America was never, as de Blasio seems to believe, to build permanently subsidized apartments for poor people to inhabit for generations. In fact, the goal was something like the opposite: to use federal loan guarantees to erect the buildings and then fund their continuing operations through the rents of working- and middle-class occupants. Rents would cover costs and maintenance, making public housing a desirable, self-sustaining option.

Through the late 1960s, NYCHA accepted tenants only if they had enough income to pay the rent, and scrupulously evaluated applicants based on “social desirability,” frequently evicting residents on moral grounds. But political pressure forced the agency to transition from providing “model housing” for aspirational families to “welfare housing” for the very poor. Urban decline and the rise of the suburbs led many middle-class families, including NYCHA residents, to seek greener pastures. The cratering of the rent rolls—intensified by the Brooke Amendment of 1969, which, for the first time, tied public housing rents to household income—hastened the flight of self-supporting residents and the dilapidation of the physical stock.

Contrary to de Blasio’s assertion that the “physical decline of NYCHA dates to 1980,” officials identified major problems as early as the Preusse Report in 1957, which documented significant disrepair and “real obsolescence” at many projects. Broken glass and malfunctioning elevators, for example, have been a feature of NYCHA life for more than half a century. Crime has also been a persistent concern. Drug injection in the stairways and roofs was noted as a problem as far back as 1959, and by 1971, the homicide rate in NYCHA properties was rising at ten times the overall city rate. Criminal complaints increased 170 percent from 1966 to 1971—a rate even more extraordinary when one considers that NYCHA has almost no commercial establishments.

As New York City edged toward bankruptcy in the 1970s, Washington assumed additional funding responsibilities for public housing. By then, federal policymakers had changed their priorities from building massive developments like NYCHA to offering programs such as Section 8 vouchers, established in 1974, which gave poor people direct federal subsidies to find housing in the private rental market.

Those who accept de Blasio’s historical narrative point to how Reagan’s HUD scaled back federal support that had helped public-housing authorities close funding gaps. Yet even had Reagan increased support at the same levels, poor management and lax labor relations would have outpaced federal assistance. NYCHA’s 2006 proposed budget complains that, while Congress had appropriated a 4.6 percent increase in operating revenue in the previous year, “pension costs have increased 752 percent” and “collective bargaining agreements have increased labor costs 29 percent.” The city was simply unable to control costs, which quickly devoured any increase in federal aid.

De Blasio’s version of history is conveniently in line with his larger political beliefs. He takes it for granted that the federal government has primary responsibility for accommodating 400,000 New Yorkers. Thus, when that housing provision is as riddled with decay and disorder as NYCHA is, he can readily blame the feds. But it’s decisions and failures made in New York, not in Washington, that are most responsible for NYCHA’s predicament.

https://www.city-journal.org/de-blasio-new-york-public-housing-authority

Mapped: The Anatomy of Land Use in America

The United States is not just an economic and political giant on the global stage—the country also has one of the largest land masses at its disposal.

Altogether, the country spans 3.8 million square miles (9.8 million km²)—making it the third largest country in the world. Even without factoring Alaska and Hawaii into the calculations, the contiguous U.S. land mass can fit up to 30 European countries within it.

With this much ground to work with, it raises the natural question of how land actually gets used by America’s economy. For example, what percentage of land is taken up by urban areas, and how much farmland and forests exist in comparison?

Today’s maps from the McHarg Center put America’s wide variety of land uses into perspective.

The Components of U.S. Land Use

As the U.S. prepares to add 100 million more people this century, the “2100 Project: An Atlas for the Green New Deal” provides a snapshot of U.S. land use (as of 2017), aimed at managing resources to support this future.

According to this data, here is a snapshot of land use in the Lower 48 States:

Land type	Land use (%)	Land area
Total	100%	3,120,000 mi²
Forests	27%	842,400 mi²
Shrubland	24%	748,800 mi²
Agriculture	17%	530,400 mi²
Grasslands and Pasture	17%	530,400 mi²
Wetlands	5%	156,000 mi²
Other	5%	156,000 mi²
Open Space	3%	93,600 mi²
Urban Areas	2%	63,400 mi²

Let’s dive into the specifics of three types of land: urban areas, forests, and agriculture.

Editor’s note: click on any map below to see a large, high-resolution version, which will open in a new window.

Small But Mighty: U.S. Urban Areas

It’s clear that even a little space goes a long way. Although urban areas take up only 2% of land, an overwhelming majority of Americans call cities their home. As of 2018, urbanites made up over 82% of the U.S. population.

Where people go, productivity often follows. In 2018, it’s estimated that 31 county economies made up a whopping 32% of national GDP. Most of these counties were located in and around major cities, such as Los Angeles or New York.

Although urban areas are a small part of the overall land they’re built on, they’re integral to the nation’s continued growth. According to research by the McKinsey Global Institute, it’s estimated that by 2030, 60% of job growth could come from just 25 hubs.

Seeing Green: America’s Vast Forests

On the flipside, forests account for over a quarter of land in the U.S., divided almost evenly between deciduous and evergreen trees. Many protected national and state parks can also be found in and around forests.

On the mainland, California and Oregon are the states with the most forested land—unfortunately, they have also been plagued by wildfires in recent, dry summer months.

Wetlands are also included in the map above, particularly around the southern tip of Florida, where Everglades National Park is located. Over the years, many wetlands were drained to make way for agriculture, particularly in the Great Lakes megaregion. As a result, it’s estimated that their area today is only half of what they once used to be.

Home Grown: Agriculture in the U.S.

Last but not least, the final set of maps show where America grows its food. Agricultural, food, and related industries contributed $1.05 trillion (5.4%) to U.S. GDP in 2017.

Wheat, corn, and soybeans are the major crops grown in the U.S.—and cotton also makes the cut as a profitable non-food crop. Much of these crops feed not only Americans, but other parts of the world too. Soybeans, corn, and wheat are exported across the Pacific mainly to China and Japan.

Corn, in particular, is a unique crop with a myriad of uses, from food to fuels. Up to 40% of U.S. corn is turned into livestock feed, with cows consuming over half (56%) of this amount.

At present, the U.S. is the world’s largest beef producer, followed by Brazil. In fact, beef production takes up 40% of total livestock-related land use domestically.

Although fewer American consumers are opting for meat in their diets, production has remained at high rates. Further, as incomes continues to increase worldwide, the global appetite for meat is set to rise along with it.

Future Land Use

The U.S. population is set to grow by 100 million more people over the coming decades, raising the pressure on limited U.S. land and natural resources. This pressure will be felt everywhere, from dense urban land to agricultural farmland.

How the land gets utilized will shape the country’s future for years to come.

Mapped: The Anatomy of Land Use in America