Equity and debt markets are now demonstrating a better
understanding of how the novel coronavirus or COVID-19 is impacting
supply chains, GDP and corporate profits. Many real estate investors
will gauge the impacts through a few means: changes in cost of capital,
financial performance of tenants, deceleration of tenant demand, and
reduction in valuations and returns, according to a recent report by
Transwestern.
The Transwestern research team analyzed several factors regarding
real estate and supply chains. In February, US port volumes are
projected to be nearly 13% lower when compared with the same period last
year and 9.5% lower in March, according to the report. For comparison,
the forecasts prior to the COVID-19 outbreak reflected only a 3.4%
decrease year-over-year in February and a 5.6% increase year-over-year
in March.
Delayed or canceled shipments will inhibit the usual spring stocking
of inventories, resulting in potential congestion at air cargo and
shipping terminals, as well as disarray in delivery services. For
example, it has been reported that Amazon, which represents nearly half
of the US e-commerce market, is stockpiling product made in China due to
the risks it poses to its supply chain. Delays ultimately lead to
increased storage costs and frustrated customers.
Moreover, the US Federal Reserve’s federal open market committee may
need to cut its target federal funds rate should China’s economic
deceleration infect global economies and undermine the US pace of
growth.
And with more than 15,000 commercial airlines flights into China
canceled, the impact on airline profitability could also prove
substantial.
While net absorption was already slowing in logistics, in some cases
due to lack of availability of modernized space, it will surely be
undercut by shaken confidence in supply-chain capacity utilization, at
least for the short term. Now US firms may more seriously consider
onshoring manufacturing capacity in order to limit further disruption
from global supply unpredictability, says Transwestern.
“While the Bay Area has had a few cases of COVID-19 reported, the
impacts are not localized in any particular city,” Jerry Milenbach, Bay
Area research analyst, tells GlobeSt.com. “We haven’t seen any
commercial real estate decisions being delayed or changed at this point.
We are grateful that the area has taken many precautions and will
continue to monitor the situation closely to prevent any outbreaks.”
As reported this week, UC Davis Health officials sent a letter to
employees advising a patient is being treated at the UC Davis Medical
Center for the coronavirus. This patient reportedly contracted the
illness through unknown means. https://www.globest.com/2020/02/28/is-logistics-real-estate-under-siege-from-coronavirus/
Hurricane Irma barreled through Gainesville, Fla., in 2017,
displacing some of the clients Faye Feazell worked with as a home health
aide. Ms. Feazell, unsure how she would make her monthly mortgage
payments, called her mortgage company for help.
She said the company, AmeriHome Mortgage Co., told her not to worry:
She could skip payments for 90 days. But three months later, when she
called to find out about resuming payments, she learned she was being
foreclosed on, she said. The AmeriHome employee she spoke to didn’t know
anything about the relief plan Ms. Feazell said she was offered.
“It was heartbreaking,” Ms. Feazell said. “Because I have never been behind on anything in my life.”
Mortgage companies often offer help to borrowers after natural disasters, but the programs can end up hurting them.
The scope of the problem is difficult to quantify. Hundreds of
homeowners have complained to the Consumer Financial Protection Bureau
about problems with so-called mortgage forbearance programs. Consumer
lawyers in regions hit hard by natural disasters say they have seen more
homeowners who are reported delinquent to credit-reporting firms after
accepting payment help.
“We’re just one law firm in one disaster in one part of Florida and
we saw this come up a number of times,” said Mike Ziegler, a consumer
lawyer in Clearwater.
How such programs operate, and their potential pitfalls, could become
even more important in light of the coronavirus epidemic. If the
disease spreads throughout the U.S. and puts some Americans out of work,
lenders would likely grapple with how and whether to offer assistance
to borrowers.
The problems with assistance programs often start with administrative errors that lead to bigger issues down the road.
After storms, wildfires and other natural disasters, companies
sometimes offer help over the phone but don’t record that they did so,
according to interviews with consumer lawyers and homeowners. The
companies might not make it clear when or if borrowers have to make up
the payments.
A company that tells borrowers they can miss payments might report
them as delinquent to credit-reporting firms when they do so. That in
turn can send their credit scores tumbling and make it more difficult
for them to buy a car, rent an apartment or tackle other tasks after a
storm. People with lower credit scores before a natural disaster are
more seriously affected by knocks to their credit afterward, reinforcing
their disadvantage, the Urban Institute found.
Servicers say they do their best to help borrowers and have made efforts to improve their disaster responses.
Credit-reporting firms Experian PLC, Equifax Inc. and TransUnion didn’t comment.
While such programs help many borrowers, reports of problems
highlight the need for consumer vigilance. A trade group that represents
the credit-reporting companies says consumers who skip payments after a
disaster with their mortgage company’s permission should check their
credit reports to make sure they haven’t incorrectly been reported as
delinquent.
Consumer lawyers say borrowers should accept payment relief only if
they have no other means to pay their mortgage and should call their
servicers regularly until a final repayment plan is ironed out.
A law firm helped Ms. Feazell, 67, keep her home. But she still has
to pay more than $7,000 for the attorney AmeriHome hired to process the
planned foreclosure. She wishes she had never called the company for
help.
AmeriHome declined to comment.
Susan Tellem’s home burned down when the Woolsey Fire tore through
her Malibu, Calif., neighborhood in November 2018. Her mortgage
servicer, Select Portfolio Servicing Inc., agreed to let her skip
payments for four months as she figured out how much her insurance would
pay to rebuild, she said.
Less than two months later, she got a letter from the company saying
she was in default for missing a payment. Ms. Tellem, a senior partner
at a public-relations firm, told the company she no longer wanted the
relief and started paying the mortgage again, she said.
But her servicer reported her as delinquent, according to a copy of
her credit report. Ms. Tellem’s credit score soon plunged. The company
eventually sent correct information to the credit bureaus, she said, but
her interactions were frustrating.
“It’s like a revolving door,” Ms. Tellem said. “You never talk to the same person.”
Select Portfolio Servicing didn’t respond to requests for comment.
For loans backed by Fannie Mae or Freddie Mac, mortgage servicers are
required to give borrowers the option to skip payments for up to 12
months when a natural disaster hits, though the policy kicks in only
under certain conditions. For example, the area has to be declared a
major disaster by the president. The Woolsey Fire fell into that
category, as did Hurricane Dorian in North Carolina and severe flooding
in Nebraska and Iowa last year.
Under the same rules, servicers aren’t supposed to report borrowers
as delinquent to credit bureaus while they are on disaster-relief plans.
They are supposed to regularly check in with homeowners and set up a
plan to transition back to payment.
A similar policy applies to Federal Housing Administration mortgages.
Some borrowers said their servicer told them they could skip several
months of payments and tack them on to the end of the loan — but then
were told a few months later they had to repay the money right away.
Cheryl and Garrett Bowles said that is what happened to them with Mr.
Cooper Group Inc., formerly known as Nationstar Mortgage, after
Hurricane Irma downed several trees on their property in Citra, Fla.
The Bowleses couldn’t afford to catch up with a lump-sum payment, so a
Mr. Cooper employee offered what they hoped was a way out. Mrs. Bowles
said she was told she could file paperwork requesting that the skipped
payments be added to the end of the loan.
She said that she applied right away but a Mr. Cooper agent later
told her the company had lost the documents and she had to reapply.
A spokesman for Mr. Cooper said Wednesday the company did offer the
Bowles family a loan modification but wouldn’t specify terms or when it
was offered.
Mrs. Bowles applied again. Mr. Cooper told her in a December letter
it couldn’t modify her loan because her family had “insufficient
disposable income.”
The family moved out of their 1982 Catalina double-wide mobile home
in January. Mrs. Bowles found a buyer and expects the sale to cover the
$40,000 still owed to Mr. Cooper. For now, they have moved in with Mrs.
Bowles’s sister.
Mr. Cooper settled with Florida’s attorney general in 2018 over
accusations that it misled borrowers after Hurricane Irma. The company
didn’t admit wrongdoing, but its chief executive said in a press release
its communication with some customers “was less than perfect.” https://www.marketscreener.com/EXPERIAN-PLC-9590128/news/After-a-Disaster-Some-Homeowners-Next-Misfortune-Is-Mortgage-Relief-30089067/
Homes in Southampton, New York, U.S. Photographer: Johnny Milano/Bloomberg
New York State’s sweeping tenant-protection law is causing headaches
for Hamptons mansion owners who lease out their beachside spreads for
the summer.
The new rules prohibit
landlords from collecting more than a month’s rent upfront. That’s a
problem in the Long Island resort towns, where homeowners rely on
three-month rental contracts in the hundreds of thousands of dollars,
paid in full ahead of the season.
The law — aimed at keeping apartments
affordable — took effect in June, but Hamptons homeowners are only now
catching up with its provisions as the peak leasing season gets under
way. Landlords, faced with the notion of collecting rent from partying
tenants every 30 days, are considering doing away with full summer
leases, or hiking monthly asking prices to cover maintenance costs on their lavish estates, brokers say.
“The issue is you can get stuck with a tenant who pays for June, and once August comes around, doesn’t pay,” said Frank Bodenchak,
a rental and sales broker with Sotheby’s International Realty in the
Hamptons. “The month of August through Labor Day might be worth as much
as the other 11 months combined. These are big houses that require a lot
of planning. You can’t rent these things last minute.”
Those properties can command princely sums. The owner of a
10,000-square-foot house in Sagaponack — with a pool, tennis court and
six “zones” of outdoor entertainment space — is seeking $790,000 for Memorial Day weekend through Labor Day, or $375,000 for just the month of July. In Bridgehampton, a four-bedroom home with a private walkway to the beach is listed at $300,000 for August through Labor Day and $500,000 for the full season.
On top of those rents, landlords also rely on additional upfront cash
to cover things like utilities and pool care — also banned under the
law.
When renting out her Southampton home the past two summers, Victoria
Shtainer preferred taking a lesser amount for the entire season over
having the onus of preparing for a new tenant each month. With a lease
and payment locked in, she took a vacation to her native Ukraine last
year and then rented a smaller place in the Hamptons for herself and her
family.
This year, she’s selling her house — with its saunas, tennis and basketball courts, movie theater and saltwater pool — for $9 million.
“I cannot rent it the way I used to,” said Shtainer, a Manhattan-based real estate agent with Compass. “I’m thinking about maybe becoming a tenant myself.”
The area’s brokerage community has appealed for a legislative fix, seeking an exemption for rentals of 120 days or shorter. A bill is
up for review by the judiciary committees of both houses, said Lisa
Lombardo, the legislative director for Assemblyman Fred Thiele, a
sponsor of the measure whose district includes the Hamptons.
“Don’t underestimate the need of most homeowners to rent their homes
during the summer months to offset the costs of owning and maintaining
them,” Judi Desiderio, chief executive officer of Hamptons brokerage
Town & Country Real Estate wrote in a letter to lawmakers earlier
this month.
She said another provision of the new law, requiring the return of a
security deposit within 14 days, is also unrealistic in the Hamptons.
Thousands of properties are vacated after Labor Day — “Tumbleweed
Tuesday” — leaving their owners to vie for scarce local contractor
services to assess damages and costs.
Without a law tweak, expect some Hamptons rentals to be more costly
this year — and for homeowners to demand extra assurances from seasonal
tenants, like recommendations from previous landlords, Shtainer said.
“It’s owner beware,” she said. “You have to be more vigilant than before because you don’t have much recourse.” https://www.bloomberg.com/news/articles/2020-02-28/hamptons-mansion-rentals-get-snarled-in-state-s-pro-tenant-law
California governor Gavin Newsom devoted almost his entire State of the State address to homelessness, though observers who follow the issue recognized no new analysis or important proposals. Some critics charge that
Newsom lacks strategic vision. Ten to 15 years ago, homelessness
policymakers had vision to spare: they were ramping up their “campaign
to end homelessness,” and Newsom, then mayor of San Francisco,
participated energetically in that nationwide push. It wasn’t
successful, but the “end homelessness” rhetoric has endured. In his
speech this week, Newsom asserted—as if we’re still in 2004—“I don’t think homelessness can be solved; I know
homelessness can be solved.” Bold applause lines and “make no small
plans” promises long ago ceased to be inspiring—or even credible—for
most people.
The speech’s best ideas had to do with mental health. Newsom called
for more use of conservatorships and outpatient civil commitment, both
of which have the potential to stabilize thousands of seriously mentally
ill Californians. Californians have heard hopeful proposals about
mental health many times before, however; time will tell. Newsom praised
a recent initiative in San Francisco that modestly expands conservatorship for the mentally ill, though local progressives opposed it.
Newsom said nothing about inpatient psychiatric care. Amid the flood
of homelessness-policy reports coming out from public task forces and
commissions, inpatient psychiatric care receives virtually no attention.
It’s an area where the Trump administration, with its recent push to eliminate the so-called IMD Exclusion—which
bans Medicaid funding for mentally ill adults in specialized
psychiatric institutions—is doing more for the homeless than
California’s leadership.
California particularly needs state leadership on homelessness due to
the uniquely regional character of the crisis. Local policies on
homelessness in California don’t stay confined within local borders.
Regardless of what role personal choices did or didn’t play in their
circumstances, the homeless clearly do exercise some preference about
which communities are best to be homeless in. Progressive localities
offering generous municipal services for the homeless often resent how
they wind up providing those services for people from other communities,
whose governments don’t invest as much in supportive housing, shelter,
or outreach.
Newsom declined to offer state leadership on the issue of greatest
regional importance: law enforcement. With the Ninth Circuit’s 2018
ruling in Martin v. Boise, which effectively prevents
municipalities from outright bans on street camping, cities possess
fewer options on disorder-related questions, such as how to deal with
mass homeless encampments. Say you’re the mayor of a modest-size city in
the Central Valley, and you want to do something about a downtown tent
encampment. As soon as you start raising the issue, you get a letter
from a Los Angeles-based lawyer threatening to sue if you don’t adhere
to the ACLU’s dictates on encampment policy. Most local officials in
that scenario will back down from trying their case in court. Thus, the
practical effect of Martin is policymaking by legal advocates.
This satisfies no one, but to what extent can cities push back? Can a
mayor of, say, Sacramento expect broad-based support if he decides to
make public disorder his Number One priority?
Oftentimes, the simplest explanation is the best. California
politicians don’t want to commit themselves on public disorder because
fence-sitting is the safer alternative. Polls in California show strong
support for the goal of reducing public disorder but more ambiguous
support as to the means. How much firmness the public would tolerate
isn’t clear. One recent survey
of 1,000 likely voters found that about three-fourths supported
coupling encampment restrictions with a “right to shelter” policy.
That’s not too far from the official position of the Ninth Circuit and
legal advocates. Limiting street camping on the condition that cities be
equipped to offer indoor shelter to every individual who may request it
is unduly burdensome, even for well-off communities. But localities can
expect little help or guidance from Governor Newsom on this thorny
issue.
Given the current level of concern about homelessness in California,
it would be strange had Newsom not devoted his State of the State to the
topic. San Francisco’s and Los Angeles’s crises in the streets are
internationally notorious, much like the South Bronx in the late 1970s,
though at that point New York’s murder rate had yet to peak. Sometimes,
policy challenges have to get worse before they get better.
Californians’ confidence in a solution to homelessness is very low.
Could the worst be yet to come?
Stephen Eide is a senior fellow at the Manhattan Institute and contributing editor of City Journal.
Sarah Feinberg, a former Obama transportation official who has
served on the MTA board since last year, will be the new interim chief
of New York City’s buses and subways following the resignation of Andy Byford, the agency announced Tuesday.
Feinberg, 42, served under President Barack Obama as chief of the
Federal Railroad Administration and chief of staff for the US Department
of Transportation. She is known to have a close relationship with Gov.
Andrew Cuomo, who appointed her to the agency’s board last February.
“This might actually be the best job in transportation in America,”
she told reporters at a press conference in Lower Manhattan on Tuesday.
“There’s no bigger thrill than being able to deliver for 8 million
riders a day.”
Byford, a British railway professional popular with many MTA staff
and transit advocates, abruptly resigned last month amid tensions with
Cuomo, who appoints the agency’s chairman and the majority of its board.
During his 25-month tenure in office, the subway hit its highest on-time performance rate in over six years.
Feinberg, whose first day will be March 9, acknowledged Byford’s
looming legacy, and named public safety, subway speeds, accessibility
and the bus network redesigns as her top priorities.
“Subways and buses have made tremendous progress over the last two
years,” she said. “I will be laser focused on maintaining and continuing
to build on the gains that have been achieved.”
During her time as a board member, Feinberg was personally involved in crafting the MTA’s response to fare evasion as well as worker and rider assaults — which led to the authority’s controversial decision to add 500 new police officers late this year.
She was one of the more vocal board members to support the hirings — while also championing the idea of banning serial subway crooks from the system.
Last June she even proposed publicly shaming turnstile jumpers by publishing security footage of farebeaters who are caught in the act.
“When people are publicly embarrassed by this kind of behavior, it helps address it,” she said at the time.
Advocates on Tuesday welcomed Feinberg taking the reins.
“She is a high-level government professional with experience in
transit, so I think that will serve us in good stead,” said Danny
Pearlstein of the Riders Alliance advocacy group.
“As riders, we want to see the improvements of the last two years
continue apace, which means faster trains, fewer delays and the
completion of the MTA’s bus network redesigns.” https://nypost.com/2020/02/25/mta-announces-interim-bus-and-subways-chief-sarah-feinberg/
Homeless families will be able to apply for housing in luxury buildings thanks to a new city rule.
Developers who are unable to fill affordable units in their luxury
buildings through the housing lottery will be required to provide those
apartments to shelter residents, Bloomberg reported. The rule applies to
developers who received tax breaks in exchange for setting aside
affordable units.
About 200 vacant units were eligible as of Friday, Bloomberg
reported, citing data from the city’s Department of Housing Preservation
and Development. The city will pay the building owners to lease the
apartments.
It is the latest effort to address the city’s homeless crisis. In December, the city passed
a requirement for developments of 41 or more units that receive
financial assistance from the city to set aside at least 15 percent of
units for homeless tenants.
“We saw an opportunity to provide high-quality, permanent housing to
some of our homeless neighbors, and we’re seizing it,” Matthew Creegan, a
spokesman for HPD, told Bloomberg.
Luxury developments with units set aside for middle-income families —
such as Essex Crossing on the Lower East Side and The Dime in
Williamsburg — are most likely to be affected, Bloomberg reported. Those
middle-income units are only slightly below market-rate rents, so
potential tenants sometimes don’t realize they are eligible or prefer
not to go through the lengthy approval process.
But a spokesperson for The Dime project said its affordable units are
likely to be filled by the usual lottery process before HPD makes them
available to shelter residents. “The developers of The Dime believe that
given the number of applications, there will be more than enough
qualified candidates to fill the 54 apartments,” the spokesperson said,
noting that 12,500 applications have been received since the lottery
opened Jan. 28.
A spokesperson for Delancey Street Associates, the owner of Essex
Crossing, said the development has “zero vacancies” among middle income
units and has a “significant” waitlist of qualified tenants.
“We have no reason to believe that Essex Crossing will be impacted by this new policy,” the spokesperson said.
Developers and landlord advocates do not see an upside to the new
city requirement, and some builders might consider pulling out of the
program, according to Jordan Bardach, COO at landlord consultant City5.
“The developers who agreed to enter their property into a lottery
process — this is not what they were signing up for,” Bardach told the
publication. https://therealdeal.com/2020/02/19/new-city-rule-requires-luxury-rental-buildings-to-house-homeless-families/
They call Los Angeles the City of Angels, but it seems that even here, within the five-by-10-block area of Skid Row, the city contains an entire cosmology — angels and demons, sinners and saints, plagues and treatments.
Walking down San Pedro Street to the heart of Skid Row, I see men smoking methamphetamine in the open air and women selling bootleg cigarettes on top of cardboard boxes. Around the corner, a man makes a drug transaction from the window of a silver sedan, a woman in an American-flag bandana flashes her vagina to onlookers, and a shirtless man in a bleached-blond woman’s wig defecates behind a parked police car. Slumped across the entryway of an old garment business, a shoeless, middle-aged junkie injects heroin into his cracked, bare feet.
Skid Row is the epicenter of LA’s addiction crisis. More than 12,000 homeless meth and heroin addicts pass through here each year, with thousands living in the vast network of tent encampments that line the sidewalks.
For decades, LA has centralized public services in this tiny city-within-a-city. The result: It’s become an iron cage of the social state, with the highest concentration of homelessness, addiction, and overdose deaths in Los Angeles County. Fire Station 9, which covers Skid Row, is now the busiest firehouse in America, responding to 35,518 calls for service last year, including a record-high number of overdoses and mental-health emergencies.
The scale of the crisis is astonishing: 40,000 homeless men and women in Los Angeles County suffer from addiction, mental illness or both. More than 1,000 will die on the streets this year.
As I survey the human wreckage along Skid Row, my fear is that the city government is creating a new class of “untouchables,” permanently disconnected from the institutions of society.
For the past decade, political leaders have relied on two major policies to address the crisis — “harm reduction” and “housing first” — but despite $619 million in spending in 2018, more people are on the streets than ever.
The reality is that Los Angeles has adopted a policy of containment: construct enough “supportive housing” to placate the appetites of the social-services bureaucracy, distribute enough needles to prevent an outbreak of plague, and herd enough men and women into places like Skid Row, where they will not disrupt the political fiction that everything is OK. Roughly a decade ago, Skid Row’s future looked more hopeful. In 2006, then-LA Police Chief Bill Bratton and LAPD Central Division Commander Andrew Smith implemented a strategy of Broken Windows policing for Skid Row called the Safer Cities Initiative, which led to a 42 percent reduction in major felonies, a 50 percent reduction in overdose deaths, and a 75 percent reduction in homicides.
“We’ve broken the back of the problem,” Bratton said at the time, reporting that the overall homeless population had been reduced from 1,876 people to 700 people — an astonishing success.
The progress proved short-lived. Arguing that Broken Windows policing “criminalizes homelessness,” activists slowly dismantled the Safer Cities Initiative through civil-rights lawsuits and public-pressure campaigns. Today, Skid Row’s homeless population is estimated to be at least 2,500 people, and crime has been rising for years.
At the LAPD’s Central Police Station, a consensus is emerging that it’s only a matter of time before the neighborhood explodes.
“I was a Marine officer [and] served overseas,” says LAPD veteran Sgt. Pete Kouvelis. “Skid Row rivals anything that I have seen to date … in terms of the conditions that people live in.”
He says that Skid Row territory is divided into sections by street gangs from South Los Angeles, who control the markets for meth, heroin, prostitution, cigarettes and stolen goods.
“This is pretty much the epicenter in LA for maintaining your addictions,” Kouvelis says.
“You’ve got the gang element that markets their drugs, and it’s predatory. The more people addicted, the better.”
Over the past 30 years, activists and political leaders have successfully shifted public policy regarding addiction and disorder away from a so-called punitive model that relies on prohibition, incarceration and abstinence, and moved toward a “harm-reduction” approach that takes widespread drug use as a given and attempts to reduce rates of infection and other negative effects.
‘This is pretty much the epicenter in LA for maintaining your addictions.’
Mark Casanova, executive director of Homeless Healthcare Los Angeles, has been working with addicts on Skid Row since 1985. His Center for Harm Reduction distributes 2.4 million clean needles to more than 12,000 addicts each year. As I walk through the door to the waiting room, I see a gaunt young man waiting to collect needles, swabs, and fentanyl testing strips. A woman with floral tattoos covering her scabbed-over arms slides a tray of used needles into the metal sharps container. On the wall is a large map of the city, with hundreds of blue pushpins marking each spot where an overdose was reversed with a naloxone inhaler provided by the center.
“Since I’ve been here, so many decades, the percentages of the type of drug users has shifted,” says Casanova. “Right now, about 70 percent of [the homeless drug users on Skid Row] are crystal-meth users or a combo of crystal meth and heroin, crystal meth and cocaine … The remaining percentage is probably about 25 percent heroin and a fair number of cocaine users.”
While having such a high percentage of meth users means fewer fatal overdoses per capita in Los Angeles than in cities with higher rates of heroin addiction, like San Francisco, it also means that service providers here must contend with the unique properties of metamphetamines, which flood the body with dopamine and noradrenalin and can induce psychosis and lead to violent behavior.
The Center for Harm Reduction unquestionably saves lives: its needle exchange reduces the rates of infectious-disease transmission, and its naloxone kits reverse hundreds of overdoses per year. Still, it’s a brutal calculus, measuring overall “harm reduction” against a baseline of worst-case scenarios.
And outside this limited framework, no evidence exists that harm reduction reduces overall rates of addiction, crime and overdose deaths. In fact, despite a steady expansion of harm-reduction services, last year was the deadliest on record for Los Angeles County, with meth-related overdose deaths up more than 1,000 percent from 2008, claiming Skid Row as its epicenter.
In the Central Division, crime has increased 59 percent since 2010, with officers responding to 13,122 incidents last year, including 2,698 assaults, 2,453 thefts and 1,350 car break-ins, a trend doubtless intensified by the addiction crisis.
Harm reduction’s major limitation is that its practitioners lack a viable method for moving addicts into treatment and beyond their addictions. Though the center provided clean needles and supplies to more than 12,000 addicts last year, less than 1 percent voluntarily enrolled themselves in its free outpatient drug-treatment program.
“There’s a mysterious element to that moment [when people decide to enter recovery that] all of us that work in treatment would love to be able to understand,” says Lori Kizzia, the center’s addiction specialist.
“It’s mysterious in that it’s a part of the human spirit that surfaces … But we really feel like even if it was only one person that we were able to be present for and help them make the changes … that would be well worth it.”
The problem, however, is that “changing one life” is not an adequate standard for a public-policy agenda. As I watch Casanova and Kizzia walk through the clinic, I’m touched by the kindnesses that they perform for the desperate and disordered people who walk through their doors. But I can’t escape the conclusion that harm reduction will never be enough.
The people working here — the administrators, the addiction counselors, the medical teams — are making heroic efforts to keep people alive, but no one has figured out how to reduce addiction and fundamentally alter the trajectory of life on Skid Row.
Three blocks from Skid Row, I follow a small flock of public workers across North Main Street from the Art Deco–style City Hall — where addicts sleep on the front lawn — to the modernist-style City Hall East. Signs posted on the side of the building announce an upcoming cleanup. Earlier this year, investigators from the California Division of Occupational Safety and Health fined the facility’s administrators for exposing workers to trash, bodily fluids, and a rat infestation that left one deputy city attorney with a typhus infection.
None of this seems to deter Los Angeles Mayor Eric Garcetti, who projects relentless optimism and insists that homelessness is primarily a housing problem.
The centerpiece of the mayor’s plan — endorsed by activists, unions and the Democratic establishment — is the construction of new subsidized and permanent supportive-housing units. In 2016, LA voters approved Proposition HHH, authorizing $1.2 billion in new spending, with the goal of constructing 10,000 units of “affordable housing” over the following decade.
Nearly three years later, the city has finished only 72 units, costing $690,692 apiece, a cost inflation that the city comptroller has called “utterly unacceptable.” In total, Los Angeles spent $619 million on homelessness in 2019 — more than double the previous year’s budget — but the number of people on the streets rose by 16 percent.
Regardless, in his most recent State of the City address, Garcetti boasted that Los Angeles has “nearly $5 billion to spend on our work” and that, “based on the evidence, the money that’s been invested, the new hires that have just been made, the time we’ve dedicated, I know that things will turn around.”
He blamed the lack of progress on delays in “getting the machinery going,” but promised that “in this coming year, we will start seeing a difference on our sidewalks and in our communities.”
Progressives have rallied around the slogan “Housing First,” but haven’t confronted the deeper question: And then what?
It’s important to understand that, even on Skid Row, approximately 70 percent of the poor, addicted, disabled, and mentally ill residents are already housed in the neighborhood’s dense network of permanent supportive-housing units, nonprofit developments, emergency shelters, Section 8 apartments, and single-room-occupancy hotels.
When I toured the area with Richard Copley, a former homeless addict who now works security at the Midnight Mission, he explained that when he was in the depths of his methamphetamine addiction, he had a hotel room but chose to spend the night in his tent on the streets to be “closer to the action.” Copley now lives in an SRO unit at the Ward Hotel — which he calls the “mental ward” — where he says there are frequent fights and drugs are available at all hours of the day.
Even worse, as a condition of receiving federal money, many of the permanent supportive-housing projects must allow residents to use alcohol and drugs on the premises. In recent years, overdose deaths in subsidized homeless housing have been an all-too-frequent occurrence. The truth is that homelessness is not primarily a housing problem but a human one. Mayors, developers, and service providers want to cut ribbons in front of new residential towers, but the real challenge is not just to build new apartment units but to rebuild the human beings who live inside them.
Unfortunately, this isn’t the kind of work that can be “scaled” like a product. Still, the builders have prevailed. Every few weeks, Mayor Garcetti and a rotating group of public officials announce new projects, shovel dirt and cut ribbons. On Skid Row, a nonprofit developer is building two permanent supportive-housing projects — the Flor 401 Lofts and Six Four Nine Lofts — that will provide studio apartments to 153 homeless men and women, at a cost of $65 million. Though Skid Row is undoubtedly one of the most difficult places in America to achieve sobriety and reclaim a normal life, the city’s political class continues to centralize the problem.
This is the iron grip of homelessness, addiction, and mental illness in Los Angeles: You can’t arrest your way out, you can’t harm-reduce your way out, and you can’t build your way out. Beneath the optimistic rhetoric of the politicians lies a growing anxiety that the crisis has moved beyond its control.
“This is a FEMA-like, Red Cross–like disaster,” says Andy Bales, a critic of the Housing First model who has spent the last year calling for the National Guard to intervene and help prevent the outbreak of an epidemic. “We have actually left homelessness to grow exponentially to the point that it has put all of us in danger.”
https://nypost.com/2020/02/18/the-moral-crisis-of-skid-row-las-most-notorious-neighborhood/
A clear picture of the global economic impact of the deadly coronavirus has begun to emerge, and U.S. real estate companies are monitoring how the crisis could play out on construction sites and in development pipelines.
Coronavirus caused more than 2,000 deaths and infected more than 75,000 people as of Thursday, and while most of those are still concentrated in China, where the pathogen originated, its global reach is coming into clearer focus. Coronavirus has impacted the bottom lines of some of the world’s biggest companies. Apple said Monday its latest smartphones would be delayed as a result of the virus, affecting its first-quarter sales. A drop in demand for international travel due to flight cancellations will cost airlines some $29B this year, the International Air Transport Association announced Thursday. Disney has warned of a hit to its park profits in China — they closed to prevent further spread — while Facebook is enduring a backlog in fulfilling orders for its Oculus Quest virtual reality headset. U.S. retailers are feeling the pinch, though Chinese factories have slowly begun reopening.
While most U.S. real estate impact has been contained to businesses with direct ties to China, material supply chains that begin in China on which construction sites and developments rely could start to be affected by disruptions as the crisis stretches on.
“For the first time this week I heard from two general contractors that they had materials caught up in ports because of the coronavirus — we’re starting to see some of that,” Hoffman & Associates Executive Vice President Maria Thompson said at a Bisnow event in Washington, D.C., this week.
Hoffman and Madison Marquette are co-developers of the massive mixed-used development The Wharf on the city’s Southwest waterfront.
“[It’s] something we hadn’t necessarily thought through,” Thompson said. “We were thinking more about the labor impacts associated with it and not necessarily getting materials here to the States. So I think that’s a real thing to consider over the next couple of months.”
Thompson isn’t the only one worrying about what the future could hold. Though some commercial real estate sources said they aren’t feeling any impact just yet, others said they are already operating with the worst-case scenario in mind.
“It takes three-plus weeks on a good day to get anything from China to the U.S., through customs, etc.,” said FullStack Modular founder Roger Krulak, whose firm makes modular buildings at a factory in the Brooklyn Navy Yard and has four projects underway in New York City right now. While the company’s modular factory is local, it sources materials from China. He said construction in the U.S. has a heavy reliance on material that emanate from that country, and specifically pointed to plumbing fixtures, electrical fixtures, concrete boards and flooring tiles. So far, FullStack’s imports have not been affected, Krulak said, but he is expecting that could happen soon. And he is predicting the ripple effects to be felt industry-wide.
“Even a slight curtail in a booming construction market is just going to cause supply constraints,” he said. “From a financing perspective, it’s incredibly concerning … [It could mean] construction delays, delays in finishing buildings, delays in certificates of occupancy, increased construction costs.”
The company is looking at sourcing materials earlier than it normally would and possibly looking to rely more heavily on suppliers in Malaysia, Turkey and Thailand.
Lenders have their eye on the problem, too. Avana Capital co-founder Sanat Patel, whose firm has provided construction financing for Marriott International’s AC Hotel in Manhattan, as well as projects in California and Georgia, said he is monitoring the situation.
“We do anticipate it coming down the line. Our concern is really delivery times,” he told Bisnow. “If projects are already in production, there is nothing you can do. But if I were starting a project today … as a lender, I would advise them to get ahead on the lead time because of this.”
In China, it is hard to move goods by truck because of the government’s strict quarantine measures, and there are reports of products arriving at ports with no one there to load them, said Omar Nashashibi, a partner at The Franklin Partnership. His D.C.-based firm does lobbying and government consulting, as well as helps companies and organizations navigate global supply chains.
“You get a lot of steel bars and rods and those items that go into construction that actually come from China,” Nashashibi said. “We are expecting significant delays and disruptions throughout all industries and sectors.”
Complete Manufacturing & Distribution founder Paul Stepanek, who advises companies on getting supplies in Asia and works with hundreds of factories in China, said different areas in China seem to have different rules with the pathogen, which originated in Wuhan, the capital of the Hubei province. In one region, he said, factory owners were threatened with fines if there was a case of the virus detected at their business. Others are providing free train tickets and chartered planes for people to come back to their homes to work.
“It’s very patchy, but I would say the silver lining, if you will, is that things are moving. Customs is open, trucks can make pickups and deliveries,” Stepanek said. “What we had forecasted to ship in February, there is no way we are going to be able to hit that volume. The factories simply were not open.”
The fallout of coronavirus has come as tensions between China and the United States continue, despite the U.S. and China reaching a Phase 1 agreement in January to de-escalate their ongoing trade war. President Donald Trump had announced increased tariffs back in August on the $300B worth of Chinese goods that hadn’t already been affected.
Joy Construction principal Eli Weiss, whose firm is working on a 200K SF mixed-used development in the Bronx, said coronavirus would have been a major problem for construction eight years ago, but not so much in 2020.
“One, because of pricing, and then second, because of tariffs,” he said. “We have really shifted away from buying in China for a long time, and I don’t think that’s unique to us.”
Joy Construction is sourcing more materials from Canada and other Asian markets, like Vietnam, Weiss said.
“I think it’s a good place for some … We’ve had success with China in the past importing materials and we’ve had times at the end of the process, we’ve thought to ourselves, ‘Was the squeeze worth the juice? Did we really save money?’ ” he said, noting tariffs were a bigger concern for him than coronavirus. “Just a year ago, we went through a real reverberation in the market with tariffs,” he said. “This is like the third iteration of having to readjust everybody’s approach to dealing with China.”
Bond, a property technology firm that focuses on last-mile delivery, is taking a page out of the book of co-working firm WeWork. The New York City-based start-up scouts out underutilized commercial space in dense city areas to establish “tiny warehouses” for last-mile delivery and is plotting an expansion in New York and two Northeast cities.
Recently, Bond raised $15 million in a funding round to complete its technology infrastructure for the launch of three mobile applications to support the new service targeted toward online retailers, open “tiny warehouses,” which the company calls Nano Distribution Centers and to expand to two additional cities. Bond plans to open six more NDCs in the New York metro area by March, as well as dozens more throughout the year as it expands into two additional cities by the third quarter of 2020.
“The round will enable Bond to help online retailers deliver products – and accept returns – faster and with an enhanced positive experience, starting in New York, where it is opening a number of NDCs,” Michael Osadon, Bond co-founder and chief revenue officer, tells GlobeSt.com. “The number of locations depends on the coverage and density that each NDC will handle and support in the most efficient way. In order to warrant opening up a new NDC, we must be able to monetize the space and have enough delivery demand.”
Bond defines its mini-warehouses as typically between 600 and 1,000 square feet, on a ground floor with a storefront and accessible for bikes local delivery crews, such as electric tikes. Brands pay Bond for storage, pick-and-pack services, and deliveries to Manhattan and Brooklyn. The price range is between $8 and $12 per item, depending on the weight and number of delivery windows needed. For the storage of retail products, the price depends on the number of pallets and frequency of use.
“In order to become the post-purchase market leader, and to make a significant impact on worldwide retail, we maintain cost efficiency and still progress very fast,” Osadon said. “The number of locations depends on the coverage and density that each NDC will handle and support in the most efficient way.”
A new study lays bare the inequalities spurred by city-led rezonings, and points to the dire need for the de Blasio administration to study the racial impacts of land use actions poised to reshape New York City neighborhoods, elected officials and housing advocates said at a recent rally.
The “Zoning & Racialized Displacement in NYC” report, compiled by Churches United for Fair Housing (CUFHH), used U.S. Census data to analyze two major Bloomberg-era rezonings. The findings revealed that the 2003 Park Slope and 2005 Williamsburg rezonings displaced thousands of black and Latino residents as the neighborhoods’ populations grew.
Between 2000 and 2015, Williamsburg and Greenpoint saw a population increase of more than 20,000, but simultaneously saw a decrease of about 15,000 Latino residents, according to the report. In Park Slope, there was a decrease of 5,000 black and Latino households between 2000 and 2013, even as the area’s population grew by more than 6,000 during that same period.
“Racialized displacement has followed neighborhood rezonings in New York City,” said Alex Fennell, CUFFH’s network director, during a Wednesday rally on the steps of City Hall. “Colorblind policies that pretend this is not a race issue have gotten us where we are today and it’s well past time not just to stop this, but to reverse it.”
Advocates and elected officials are pushing the City Council and the de Blasio administration to support a bill introduced by Public Advocate Jumaane Williams that would mandate the city conduct a racial impact study for land use actions that require an environmental review. Under the bill, draft and final environmental impact statements crafted by the City Planning Commission must include analysis on the “potential direct and indirect racial and ethnic residential impacts of the proposed action” and if the proposal would “affirmatively further fair housing within the meaning” of the federal Fair Housing Act.
“Rezonings are one of the primary drivers of gentrification, which leads to displacement,” said Williams. “Rezonings are so sure to pass and so sure to be beneficial to developers that even the announcement of a [review process] leads to rampant speculation that coincides with a rise of harassment and displacement.”
Mayor Bill de Blasio’s goal to create and preserve 300,000 affordable housing units by 2026 has so far spurred six rezonings in East New York, Downtown Far Rockaway, East Harlem, Jerome Avenue, Inwood, and Staten Island’s Bay Street Corridor. Three others are on the immediate horizon in Brooklyn’s Bushwick and Gowanus neighborhoods, and for a swath of the Bronx’s Southern Boulevard. City Council member Rafael Salamanca, who represents the Southern Boulevard area and holds the influential role of chair to the Council’s land use committee, is a notable backer of Williams’ bill. Salamanca vowed to oppose any potential rezonings in his district without a racial impact study.
“I made it very clear to city planning, if you cannot get this racial impact study done, this rezoning on Southern Boulevard is dead on arrival,” said Salamanca. “My recommendation is [for the city to] get your act together and stop wasting people’s time.”
North Brooklyn’s Councilmember, Antonio Reynoso, and State Sen., Julia Salazar, along with City Comptroller Scott Stringer, also support Williams’ bill.
Under former Mayor Michael Bloomberg’s administration, 37 percent of the five boroughs was rezoned for both high-density growth and the preservation of low-density neighborhoods. CUFHH’s study says its research indicates that wealthier white populations were downzoned, like with Park Slope’s 2004 rezoning, while other neighborhoods with largely low- to-moderate income minorities were up-zoned with a density boost, as with Williamsburg’s 2005 rezoning. But if Williams’ bill is passed, the racial implications of such undertakings would be clearer and enable more equitable community planning, charge neighborhood advocates.
“A mandatory racial impact analysis would promote inclusivity and reduce segregation, prevent litigation and strengthen the community’s voice in city planning,” said Cheryl Pahaham, a Northern Manhattan Is Not Sale member and Inwood Legal Action co-chair whose group is suing the city over the 2018 Inwood rezoning.
A racial impact analysis would be an additional step to the City Environmental Quality Review (CEQR) that assesses the impacts of a proposed project on a neighborhood. That environmental review process has been criticized for often being way off base from its projected impacts.
For instance, a 2005 environmental review predicted that Greenpoint and Williamsburg would experience a loss of 1.1 million square feet of manufacturing space, but 2015 data shows that the neighborhood actually lost 5.3 million square feet of manufacturing space, according to CUFHH’s report. A 2003 review projected that Park Slope would not lose a single rent stabilized apartment, according to the study, but by 2013, the neighborhood had lost 1,470 rent regulated units, data shows.
To complicate matters, there is no mechanism in the CEQR process that mandates officials re-examine those projections for accuracy once a major land use change has come to fruition. This means that the city is not fact checking its predictions and learning from failed or successful projections, and therefore, its environmental reviews are not being held accountable.
Salamaca says he is pushing for the Council’s land use committee to hold a hearing on Williams’ bill in the coming months. Council Speaker Corey Johnson has yet to take a position on the legislation; he is monitoring the bill as it goes through the legislative process, according to a Council spokesperson.
The de Blasio administration, despite stalled federal housing policy, has launched its own segregation study that’s expected to land before the end of the year, according to the Department of Housing Preservation and Development. In a statement to Curbed, Mayoral spokesperson Jane Meyers stressed that the de Blasio administration is taking a multi-pronged approach to fighting displacement, and that the results of the study will enable the city to better promote inclusive policies.
“This administration is fighting displacement with record levels of affordable housing, free legal services, rent freezes, and programs to combat harassment,” said Meyers. “We are examining the legacy of segregation and deepening our commitment to policies that promote fair housing and inclusive neighborhoods. We look forward to reviewing this legislation and working with our partners to promote equity and fairness.”
