The Housing Gap

Anyone wrestling with the high cost of housing in New York City — in other words, most of us — would do well to pick up a copy of a new report from the Manhattan Institute called "New York City's Housing Gap: The Road to Recovery."The report, released yesterday and written by Peter Salins, a senior fellow at the institute who is provost of the State University of New York, offers a compact recap of just why it is that it costs so much to live here. Two-word answer: the government.

One reason, Mr. Salins noted over lunch yesterday, is government price controls. The report says that fully half of the city's rental housing is subject to rent regulation that "makes housing for all but its already vested beneficiaries scarcer and more expensive."

But there are other reasons why New York's housing production rate is lagging far behind that of cities like Atlanta, Houston, and Indianapolis. One cited by the report is our complex zoning laws. "New York has a vastly more complex set of zoning rules affecting residential development than any other major American city," Mr. Salins writes. New York has 34 different zones, while Chicago manages with just eight, Dallas with 16. Each zone is a set of rules about what can't be built there — namely, an apartment you and your family can afford.

Would-be developers face other time-consuming, and therefore costly, bureaucratic hurdles in New York City that they don't face in the rest of New York State. The report names the city's Uniform Land Use Review Procedure and the City Environmental Quality Review as particular obstacles. These processes have spawned whole industries of consultants and lawyer-lobbyists and fixers, all of whom must be paid for their work by the developer. The result is that building housing in New York is too often left to well-capitalized big players building luxury housing whose payoff will cover the costs of getting the project approved. For smaller players or those who would build housing for the middle class, it's not worth the expense or the hassles.

The Bloomberg administration has attempted to simplify some of these procedures and has moved toward simplifying another major barrier, the city's construction code. But there's still an awful lot of work to do, as the Salins report makes clear. "An accelerated schedule of housing production won't be realized by churning out more proactive housing plans and subsidies," he writes. "Rather, all of the city's policy energy must be dedicated to sweeping away barriers to development."