There are a number of reasons why big cities cost more to live in - provision of services, concentrated demand driving up local costs, and so on. However, two of the biggest are taxes and service costs. Two recent reports highlight both aspects.
First, from New York, new "green" emissions regulations are going to make living there a whole lot more expensive.
This seldom-discussed policy is Local Law 97, or the Climate Mobilization Act, set to start phasing in next year. When that happens, the only New Yorkers mobilized by this act will be those continuing the flight to lower-cost states down south.
The law demands an unattainable greenhouse-emission standard in existing buildings more than 25,000 square feet, condo and co-op developments more than 50,000 square feet and buildings with up to one-third of units rent-stabilized.
If you’re a New York City apartment dweller, the odds are overwhelming that you’re living in a building targeted by eco-woke zealotry. A 2019 Wall Street Journal survey found that 20% of all buildings would face fines in the law’s first year, a figure that jumps to 80% by 2030.
And the penalties that eventually will be passed down to you are massive.
Failure to comply with Local Law 97 in its first year will result in fines of $268 per metric ton of carbon dioxide over the limit. Within five years, it more than doubles to $583.
What does that mean in practical terms? The Cotocon Group, a noted sustainability consulting firm, published an alarming case study on the law’s fine structure. A sample 150,000-square-foot residential building with a mid-range Energy Star score of 43 will face an annual fine of $167,000 by 2029. Thus if this hypothetical building has 100 condo units, each owner would be responsible for about $1,670 per year.
So much for any promise of alleviating our affordability crisis.
. . .
The crippling cost of compliance is so severe, the city saw fit to exempt its own buildings, meaning some of the Big Apple’s oldest carbon-challenged structures, including those the New York City Housing Authority owns, are spared. Perhaps the issue is not so urgently existential after all.
But if your building attempts to comply, we aren’t just talking about cutting the pipes to those gas stoves. This law requires massive overhauls of existing structures and HVAC systems.
The board president of Glen Oaks Village, a middle-class Queens co-op with 2,900 units, testified at a City Council hearing last year that the cost to convert their 47 boilers will amount to more than $20 million, or $7,000 per apartment, plus a 5% increase in maintenance costs. Yet even after the change, the law’s emission algorithm would still bang them out for an $800,000-per-year fine.
To make matters worse, many building managers and owners recently incurred massive costs to convert heating units from oil to gas to comply with the previous round of climate mandates. Now those will be noncompliant, even if the boilers aren’t yet paid off.
There's more at the link.
This will affect both home-owners and renters in NYC, because building owners will have no choice but to pass on such drastic cost increases to their tenants. All I can say is, I'm glad I don't live there, and have to cope with such a crippling financial burden on top of all the others we already carry.
There's also the old problem of municipal rates and taxes. Chicago provides an example of what happens when a city has to finance all its "woke" programs, and puts the screws on its property owners to pay for them.
A Chicago family said their latest property tax bill increased 440% and now their modest apartment complex could go bankrupt.
A one bedroom apartment will now cost Michael Markellos $17,494 in property taxes for one year.
"This has put us in a tremendous financial bind, the building has gone negative in the bills," he said.
He and his mother own the 10-unit Lincoln Park apartment complex. Last year's tax bill for all 10 units combined was $23,674, but now the same 10 units are $128,282 dollars this year; up 440%.
"I was outraged. These are basically simple one bedroom units for college graduates who work downtown," added Markellos.
The majority of the annual increases are from the latest installment of tax bills just sent out at the beginning of December. The payment is due before the end of the year, and in just a few months another installment of taxes will be due.
"Merry Christmas and Happy Valentine's Day," said Markellos sarcastically.
He said the only way to pay for recent tax hike would be to raise the rent on the one bedroom apartments, but the rent hike would scare renters away.
"They would have to pay $5,000-$6,000 to pay the bills. No one in their right mind will pay that," he said.
Again, more at the link.
Note, in the example above, that the actual market value of the property in question was never even mentioned. The increase in rates was accomplished by simply and arbitrarily reclassifying the property from one category to another. The owner wasn't even given advance notice of the reclassification. The city says he can appeal to have it reclassified again, back to what it originally was, but he'll have to pay at least one year of the new rates before that can wind its way through the bureaucracy - assuming he wins, of course. When the city's hungry for money, its bureaucratic processes may be more inclined to stall, obfuscate and prevaricate rather than offer speedy solutions. Yes, the property owner can sue, but then he's got to carry those legal costs on top of all his other expenses - and good luck getting any form of cooperation from the city bureaucracy while he's suing them! He might run up fines for littering, improper disposal of trash, or any other issue; and inspectors might "do an unscheduled routine inspection" and find problems with his water lines, or sewers, or electricity supply, or... get the idea?
Try putting those costs together, as an increasing number of property owners and renters in many cities are now discovering. Rates go up. Environmental taxes go up. The "double whammy" of those cost increases means that rents have to increase very steeply - but in rent-controlled areas and properties (another common big-city issue), owners may not be allowed to impose increases big enough to cover their increased costs. That means their only option is to evict tenants and stop offering their properties for rent. They'll sell them if they can, perhaps even abandon them if they can't. That, in turn, leaves their former tenants looking for other properties they can afford, at a time when fewer and fewer are affordable, thanks to rate and tax increases. Catch-22, anyone?
I'm very glad my wife and I decided to get out of a big city several years ago. Our income may have dropped as a result, but our cost of living has declined even more, making it a winning proposition for us. We wanted to achieve three objectives:
- Move west of the Mississippi, where population pressures are less;
- Move to a smaller town, where more people know each other and there's a stronger community spirit;
- Move a reasonable distance away from any major metropolis, so that the crime, violence, poverty and other stresses of inner-city environments would be further away and more controllable if push came to shove.