Could Get Millions to Turn Factory into Condos, Is Not Selling
nytimes.com
nytimes.com
> The shop closed two years ago. Since her father died,
> the factory space is Ms. Galuppo’s to use as she wishes,
> but she is not rushing to rent it out. Before seeking a
> new commercial tenant, she wants to find the right way
> to dispose of all the old equipment, file cabinets and
> other workplace detritus.
What would be bad is allowing the space to disintegrate like what happens in many other cities.
Makes sense, given the property tax bill is apparently $283,000 per year! [3]
[1] https://commercialobserver.com/2017/07/marketing-agency-prod...
[2] https://www.pivotdesk.com/locations/us/ny/new-york-city/42-b...
For all we know they are seeking partners by saying we don't want to sell. This article was probably pitched
Compared to that the waste-tales of socialism start to sound more idyllic every day.
This reminds me of the Anthony Bourdain visit to the Congo. They visit a defunct train station, which even after twenty years has a small band of people coming in every day, trying to keep the trains and machines in good repair, waiting for when there's sufficient government to restart the service. People love their machines...
They do - and HN readers who manage technical people should remember it. Break that bond and detachment will ensue. For example, if you are scaling up and getting rid of snowflake servers with cute names and personal history, consider giving the admins something else to bond with.
In this case she's already a heir- but there will be heirs after her.
There's also the issue of slightly sketchy property tax reassessments that are a hallmark of many neighborhood revitalization projects. There is almost always a law stipulating the maximum year-over-year rate increases but slap the maximum rate on a stubborn holdout for enough years in a row and that 15% maximum annual reassessment increase (the maximum in my city) can turn even the least valuable property imaginable into an unaffordable anchor around the owners neck within a few years.
Oh yes, the old 'tax them off their land' strategy.
Many old timers who 'owned' land in the gulf islands near Vancouver Island complain about that one.
My whole point is: people have been (almost) making it sound like a typical speculator (in NYC) can just grease a few palms and get some tasty piece of property condemned and handed over to them.
Maybe in Rhode Island, but in NYC... no.
https://www.nc-eminent-domain.com/eminent-domain-basics/priv...
Basically in a gentrifying market (i.e. the very properties "they" are after) that tactic (even if you could pull it off these days) isn't applicable.
Here's the top google result for example: https://www.wisbar.org/NewsPublications/InsideTrack/Pages/ar...
Yeah, in wisconsin the post-blight-declaration seizure was through eminent domain instead of bankers and private investors, but honestly, the wisconsin shennanigans really blur that line.
What I was trying to suss out is whether there's any evidence that this is a (widespread, feasible) tactic outside of ED land grabs.
It would probably be giving the 'financial engineers' who came up with credit default swaps too much credit to say that they planned it that way all along.
But as a side effect, tons of properties dropped in value and were, surprise surprise, sold mostly in blocks.
Everything from systematic harassment to unleashing the local code enforcement to torching the building can be used to make your life miserable.
Light up the building and get it declared unsafe, the city then bulldozes the building and hands the bill to the owner.
(This is very different from how CA appraises property, and doesn't take into account how counties appraise tangible business property.)
The closest thing to a comparable use method listed on the page is a rental-based method, for which the example given is residential.
I'm not saying you are wrong, but your claim is certainly not supported by the only authority cited in the thread.
The Cost Method entails: - assessor calculates the cost to replace a structure with a similar one using today's labor and material prices - subtract depreciation - add the market value of the land - used to value industrial, special purpose and utility properties
This is not a rental-based method. #3 (Income-based) is a rental-based method, and is used for residential and commercial non-industrial (i.e., retail or office) sites.
The property mentioned in the NYT article is currently an industrial site and would be governed by method #2: replacing the current factory with a similar facility (i.e., comparable use) based on today's costs.
I wouldn't be worried about that. Unless there's some major structural issue at play, even a rent stabilized building can easily pull in enough income to keep the place from "deteriorating".
The detailed analysis of how this woman who wants to hold on to a piece of sentimental property is actually mistaken, is destroying the neighborhood, is willfully naive for not exploiting her position to make as much money as possible, etc, etc is predictable but tiring.
Fears about about "cash being the sole nexus between human beings" seem pretty realized on HN. It's as if no one - or at the very least the VC crowd - accepts that anyone could be doing anything _other_ than living their life in pursuit of profit.
And if they are, they're ignorant, naive - even selfish - for not aligning their intent with a profit motive.
https://www.google.com/maps/@37.3622129,-121.9960813,3a,75y,...
I believe there is a documentary movie someone made about it maybe in the 90's.
It used to be bigger but the part furthest from lawrence expressway must have been parceled out because it was developed into homes.
Sounds like a smart investment strategy.
I have actually run into this before many times.
Also part of the tell tale sign is that she plans to rent it out. That is another signal that she just plans to wait. Most likely the lease will be written in a way that allows her to terminate it if she wants with some kind of liquidated damages payment.
Now I have seen people not want to sell 'at any price' genuinely because they do run a business, don't need the money, and most importantly (and this is key) it gives them something to do. Typically they are older people who want to show up for work every day. This woman doesn't fit that MO though.
My bet is it's a selling strategy.
I just wanted to have fun and create a little garden for myself. Now I have to become some ugly combination of Soros, Orwell, and Nader[1] because the people with money right now are all people that cared about money, or—ethically better, but consequentially worse—they're techno-optimists.
[0] The feedback function, really. Startups are just organizations in search of a feedback function.
[1] Yes. I'm aware of the irony.
Maybe. In that neighborhood, it would likely be very expensive condos, which would likely not be rented by someone already living in New York. I really doubt the extent to which all this new luxury construction is actually easing the housing problem, versus just creating additional demand akin to what happens when you add a lane to a highway.
Profits are a signal, and a powerful one at that. Outside of rent seeking, which I regard as fairly rare, profits signal that an entrepreneur is delivering value in excess of the costs to produce the value. Spread out over the size of a community, region, or nation, that's like magic!
Furthermore, they're not cold and unemotional, as is suggested here. Value almost always has an emotional component. The profitable condos that people want to build aren't going to be inhabited by automatons. They'll be inhabited by people - people who will date, get married, have children, people that will graduate from high school and college, people that will march in parades, protest in political movements, enjoy and create culture. To look at the value that companies want to create in this space like a shameless cash grabs ignores the very humanity that assigns that value in the first place.
Profits are not evil. They're a signal of efficient production of value, and value implies a benefit for humanity.
They also provide the surplus needed to deal with pollution and other externalities. It's not a coincidence that unfree economies are the worst environmental disasters.
This is a big assumption to make. Successful rent seeking is very much a constant interest of profitable organizations--why would a business leave low risk, high margin money on the table? Competition for rentier status would be just as lively as market competition were it not for regulation, and even with it the focus only shifts to competition for regulatory capture.
Big corps are making huge profits while laying people off.
Pursuit of an outcome alone isn’t enough. The process too must be in service to humanity at large to reach your conclusion.
Too many processes today benefit a minority.
Furthermore, they're not cold and unemotional, as is suggested here. Value almost always has an emotional component. The profitable clothes that sweatshops produce aren't going to be worn by automatons. They'll be worn by people - people who will date, get married, have children, people that will graduate from high school and college, people that will march in parades, protest in political movements, enjoy and create culture. To look at the value that companies want to create in sweatshops like a shameless cash grab ignores the very humanity that assigns that value in the first place.
Sweatshops are not evil. They're a tool for efficient production of value, and value implies a benefit for humanity.
Sweatshop (n.) Factory located in a country whose peasant farmers are so poor that I'd rather not think about them, and serving an export market.
These days economic architecture reigns, and probably for good reason. It's no longer affordable to have ornate brick-work or any kind of embellishment. Interiors are functional and efficient, we've done away with unnecessary mouldings and again dispensed with ornate detail in general.
I wonder how the economics of the property market used to bear the additional cost of all that extra work? Were people just more proud of what they made, or was labour just so incredibly cheap that making a building beautiful made little difference to the bottom line?
Yet just because there is personal sacrifice involved lots of people seem to be applauding her for not selling.
Edit: Anyone care to explain why if you're downvoting? I'm genuinely curious why people seem to think this is such a bad way to think about it.
It is hers, she can choose to maintain it for its current use if she wishes, unless it is causing harm. There is a grey area here with derelict sites, as that is a waste of space and often they can be dangerous, but that does not appear to be the case here.
A rich person has every right to burn a pile of money or spend it on some extravagant luxury, but we still consider it distasteful when they do. Particularly when that pile of money is unearned, which seems to be the case here - it's only an accident of birth, and an accident of factory location, that means the factory is now on such valuable land.
In my ideal world there would be a land value tax so that people paid a fair rate to the rest of society for the land they were taking up, rather than the lottery of buying land once and owning it forever.
In that case it falls into the derelict site grey area and genuinely wasteful, not providing any real worth even to the current owner's whims.
Nagged maybe?
IMHO, the reaction to a story like this should be "shrug" or "cool building, interesting story", not "what a hero!"
Isn't this woman exercising her property rights in a perfectly fair way within the market economy that we have, in exactly the same way that so many developers have exercised their rights to tear down X and replace it with Y, where many people might have preferred to keep X?
If she weren’t so notably irrational, the New York Times wouldn’t be writing an article on her.
Only she knows what's best for her property. There's nothing irrational about doing what you want with what you got. It's the opposite that's irrational.
Wait, so is it supposed to be the market deciding or this one lady?
But it's her right. I hope it bites her, but it's her right to be irrational.
Rushing into things, taking the first offer, etc. This is irrational. Finding the right way to "dispose" of equipment, i.e. finding the highest bidder or, failing that, the closest scrapyard, before finding a new leasee, is not irrational.
Human beings are deeply irrational, not everything has to be tweaked for maximum output / productivity / efficiency / optimisation.
So what? An increase in housing supply results in lower prices for everyone. If the "rich" are buying a condo in location A, that means they're likely not buying that condo in location B. That means the price has to be lowered since now A and B are competing. If A and B are competing for rich people, that means less "rich people" demand in location C.
In a place like Sunnyvale, houses are exceeding $1.5 million for essentially starter homes. If there were a larger supply in, say, Palo Alto, that would mean less demand in Sunnyvale, which means more people could afford to live there even if they couldn't afford Palo Alto. There just aren't enough places for sale in the area, so even if someone wanted to buy at the higher-end, the supply is constricted which means they have a lot of money to spend elsewhere. Increasing high-end housing in Palo Alto necessarily decreases demand in lower cost neighborhoods in the area. In short, building more housing for "rich" people frees up more housing for everyone.
This is not true. Building too much housing for rich people simply results in a lot of empty housing. See for example, Manhattan or Vancouver, which have hundreds of empty condos that could be occupied by locals but are instead owned by wealthy foreigners who leave the units vacant.
The solution is not to give up and stop building real estate, making it an even more attractive investment. The solution is to build so much real estate that we tip the balance, and make real estate unattractive to speculative investors.
The market can stay irrational for a long time. China has spent hundreds of billions on empty housing in planned cities the past few years, and they're still going due to speculative investor demand.
Let's face it: the evidence shows that the easiest and most cost effective way to deal with this problem is market-informed regulation.
Sales tax doesn't apply to real property sales, so presumably you meant to suggest a real estate tax that would only apply to non-residents...which could be trivially avoided by hiring a token caretaker to pay utility bills, turn on the lights, etc., to make the property look occupied (which is what Chinese investors have been doing since Vancouver introduced the vacant property tax.)
This is happening a little bit in my working class neighborhood. House goes on the market. It’s listed as sold, family moves out, nobody moves in. Likely some millionaire’s 8th empty investment house.
This kind of intuition rarely work in real life though. People migration flows and the housing market isn't a A+B=C type of problem.
This kind of "trickle down" in NYC real estate exists, sure, but it doesn't spread very far. You could make more difference for "regular" folks if e.g. you added mixed-income restrictions on the new property, but by default the market doesn't work that way.
Research [1] shows that these types of restrictions lead to the exact opposite: A shrinking supply of affordable housing and rapidly rising property prices.
[1] http://smartgrowth.umd.edu/assets/documents/research/knaapbe...
Who pays the difference between that $1200 600ft2 apartment occupied by a single New York "artist" and the market price of the rent for the same apartment occupied by a working family of two?
That middle class in NYC needs 2x more money to have as much as middle class in Houston...
Why preserve it? Because its better for our spirit to preserve some memories of the past rather than tearing them down for another handful of forgettable multi-million dollar condos.
I have an extra bedroom. It would be maximally efficient to rent the room, but I prefer to put my luggage in there.
It's not owner's job to fulfill other people's dreams or to mitigate other people's poor lives.
I think it looks great, but could use a clean-up instead of an update.
https://www.google.com/maps/@40.726082,-73.9929773,3a,60y,19...
Why not turn the whole thing into a museum? So people in the future, in the age of 3D printers, will know how things were made before them...
She's probably contacted museums already and they've probably either told her that none of the equipment she has is of historical significance or that they'd love it but they don't really have a budget for acquiring stuff. There is somewhat of a surplus of old machine shop (basically what this business was) equipment. People retire, sell most of their stuff to other shops or individuals and keep a few of their most versatile machines for themselves (and their kids then sell or scrap them). Stuff doesn't usually get scrapped until it's a) totally clapped out or b) inherited by someone wealthy enough that they're not gonna bother selling old machines for a grand or two and would rather just call a scrapper to clean everything out. Also, the larger size machines that most production shops like this aren't worth much because the market is basically limited to other shops and a few industrious individuals and other shops already have equipment (and if they don't they're rarely buying old stuff).
Also, modern building techniques could probably make it feasible to erect a high-rise that straddles the original factory without displacing it (maybe carve out a small area for an entrance/small lobby depending on how much of the lot the existing building takes up).
Though having to avoid damaging or obstructing an existing structure might make construction extra-challenging and add to the expense.
EDIT: of course she needs to pay property taxes but that’s her choice isn’t it
Her taxes will still be assessed on the market value of the property - meaning she's got to have enough revenue from the business (or just general personal wealth) to pay taxes on what the government will assess as incredibly valuable land, for a factory.
She can easily end up with a net loss. Or draining all her resources until she ends up having to sell anyway.
Probably, but maybe not. 2008 happened; something like it could happen again.