The Streets Were Paved with Gold (5 page)

Manhattan property values soared by over $200 million in 1977, but City Comptroller Harrison Goldin reported in early 1978 that $214.2 million worth of real estate was removed from the tax rolls that year—the third consecutive year in which the value of city real estate declined. Outside mid-Manattan, abandoned housing multiplies like a cancer. There are 25,000 pieces of property—now mostly razed buildings and lots—off the tax rolls. Even more serious, according to Deputy Mayor Herman Badillo, by June 1979 “the city will pick up a minimum of 25,000 buildings this year.” These buildings, called IN REM properties, are being abandoned by landlords
usually because they lose money. Said Badillo, “That means the city will be forced to take over 150,000 apartments, or over one-half million people this year. That’s a disaster. That’s a whole city.” Shaking his head, Badillo added, “By the end of the year the city could have 50,000 to 60,000 buildings.”

Housing Commissioner Nat Leventhal pegs the number at 25,000 and says there are three alternatives: the buildings can be sold to tenants or to landlords, hopefully returning them to the tax rolls, or the city itself must own and manage them. When I asked Leventhal the “optimum” percentage of buildings he thought could be returned to private or tenant ownership with the most vigorous city effort, he answered, “Perhaps 15 percent.”

Thus the city program is destined to fail even if it succeeds. For the foreseeable future, the city will be saddled with the fuel and other costs of managing these buildings. Worse, it is deprived of real-estate taxes, its prime tax source. And it has a difficult task in collecting rent. According to one study, only 7 percent of these buildings’ tenants paid rent. Mayor Koch, in urging their eviction, said less than half paid rent. Many tenants see little reason to waste rent money on buildings with no improvements. Others know the city cannot easily collect. Many simply can’t pay. A 1976 federal study found that between 1970 and 1975 the city’s median rent climbed 57 percent—three times faster than the median income of renters. With costs rising, many landlords—particularly those in Brooklyn, the Bronx, north and south Manhattan—can’t afford the buildings, while beleaguered tenants can’t afford the rent.

Not only are buildings being abandoned, but New York’s aging infrastructure is crumbling. The City Planning Commission issued an eighty-nine-page report in early 1978 warning that “renewing the city’s capital stock is second in priority only to resolving the fiscal crisis.” Alarmed, they found that many of the city’s 51 bridges “face collapse,” as did some of its 6,000 miles of sewers, 80 sewage pumping stations, 6,200 miles of paved streets, 6,700 subway cars, 4,550 buses 1,695 sanitation trucks, 32 million feet of water tunnel trunk, 20,000 trunk valves, 25,000 acres of parkland. Because of the fiscal crisis, the city could not borrow sufficient funds to finance its capital budget. Even if the federal government were to approve long-term loans to the city, the report noted, Mayor Beame’s four-year fiscal plan did not provide adequate funds for capital improvements. Ominously, it concluded, “Yet the city’s infrastructure—worth billions and billions of dollars—is an irreplaceable
and essential asset. It is the platform on which the economy rests, the basis of all amenities, and the anchor for neighborhoods. Were it to break down, many thriving activities associated with New York City would come to a halt.”

Which represents a true picture of New York: booming Manhattan or Charlotte Street? Those neighborhoods coming alive or those that are dying? The burst of tourism or burgeoning abandonment? Is New York’s economic decline a snapshot, taken at one point in time and subject to reversal, or a continually moving picture? Like the proverbial glass of water which is either half full or half empty, the answer depends on feelings as well as facts. One can choose to emphasize the rise of Brooklyn’s Carroll Gardens or the fall of Coney Island; one can point to the fact that New York has three times as many Fortune 500 companies as its nearest competitor or that its total has fallen from 140 to 90.

No one is immune to subjective judgments, not even Herb Bienstock. The regional head of the federal Bureau of Labor Statistics makes his home in Bayside, Queens, and his living collecting, compiling and interpreting facts. The city has been his home for fifty-odd years, and not even the grim numbers spewing from his computers can blight the beauty he sees in New York. Several years ago, I visited the Bureau’s Times Square office to meet with Bienstock and three of his economists. We reviewed the city’s depressing facts—the lost jobs, shrinking population, rising taxes and living costs, racial polarization, abandoned housing. After two hours, the three economists and I felt almost suicidal.

Not Herb Bienstock. Slowly, he lifted himself from a deep chair and wandered over to the wide windows overlooking Times Square. Thirty-four stories below stretched a panorama of empty office buildings, abandoned hotels, porn theaters and massage parlors. “Do you really feel New York is deteriorating?” he asked of no one in particular. “It looks pretty good to me.”

Today, New York City is looking “pretty good” to a growing number of urban economists and civic boosters. “I’m definitely optimistic about this city’s long-term economic recovery,” Bienstock told me in early 1978. “The reason I’m optimistic about the mid- and late eighties is that the disasters that have visited us are turning around almost on their own. In the eighties, a lot of politicians are going to be taking credit for improved employment opportunities that had their divine origin in 1962.”

In that year, the birth rate began to drop, eventually thinning the
ranks of young people looking for work. Projections by the New York State Department of Labor show that another 340,000 jobs will be lost between 1974 and 1985, but Bienstock does not see this as significant. Because of deaths and retirements, he says, there will be a net of 1 million job openings during this period. And fewer youths will be chasing those 1 million jobs. Bienstock also cites the city’s more competitive cost of living. “With our high unemployment rate,” he explains, “comes a low-level cost-of-living increase. Since 1967, living costs have risen faster in Houston than in New York, though ours are still higher. Between September 1976 and September 1977, New York registered the lowest increase—4.9 percent—of twelve metropolitan areas. The cost of living rose faster in the U.S.”

The Bureau’s calculations show that though the flight of middle-income residents temporarily ceased in 1976, the city’s population was expected to continue to decline; labor and welfare costs, which used to lead the nation, are now more comparable because they are rising faster elsewhere. A 1977 study by the Fantus Corporation, the nation’s largest business location consultants, showed that the earnings of industrial workers in New York were below the national average. Manufacturing wages in 1977 climbed only 4.6 percent compared to 7.7 percent nationally. New York city and state taxes have begun to inch down. In an energy-starved nation, New York’s density and vast mass transit system become energy savers. No matter what weight is given to somber facts, New York remains the world’s premier cultural, port, service and communications center. It is also true that trends suddenly change—two years ago, few predicted the resurgence of Manhattan real estate, Columbus Avenue or Park Slope.

But such optimism can become a narcotic. New York residential housing construction was up 41 percent in 1977; however, that amounted to only 7,600 units—one-seventh the number lost each year to fire, abandonment and demolition. The Bureau of Labor Statistics reports that by 1985 white-collar jobs will increase from 59 to 76 percent of the city’s labor force. Yet the blue-collar population, only 60 percent of whom can read at grade level (and this figure does
not
include Hispanics), will be chasing white-collar jobs which many will not be qualified to hold.

Except for the fools among them, the optimists do not argue that New York’s economy has been transformed. Implicitly, they’re saying that conditions elsewhere are growing worse or that the city’s
decline has slowed rather than stopped. But decline continues despite the rosy efforts of the Bureau of Labor Statistics. The heading on their 1977 year-end review of New York and the region’s economy, for instance, was
JOBLESS RATE AT THREE YEAR LOW IN NEW YORK–NORTH-EASTERN NEW JERSEY AND NEW YORK CITY AS AREA PAYROLLS RISE 7,000; INFLATION RATE MODERATES WHILE EARNINGS SHOW RECORD GAINS
. Bienstock’s summary gushed that New York City’s 9.4 percent unemployment rate was “about 2 percentage points below year ago levels, marking the first decline in four years.”

Read on, however, and you stumble upon the following: