Upstate New York was once the economic envy of the nation. We were truly the Empire State.
Triggered initially by the public-private partnership that built the Erie Canal and later maintained by the construction of the New York State Thruway, companies such as Kodak, IBM, Carrier, General Electric, Syracuse China, General Motors, and Chrysler built major plants employing thousands of workers. Today, most of those manufacturing plants are closed and the jobs are gone.
Over the past several decades, we have seen economic development proposals ranging from casinos to hydraulic fracturing. Nothing has worked, and upstate New York remains stuck in the financial mud.
A new approach is needed if New York State is to grow again.
Increasingly, most of the world’s economic growth can be found in what we call the brain based economy — a marriage of education, high tech, and the design (not the manufacture) of consumer products.
Silicon Valley in Northern California and the Route 128 corridor around Greater Boston are perhaps the best known and most successful examples of economic growth fueled by combining the research and education capacity of first-rate universities, the entrepreneurial spirit of their graduates, and tax incentives provided by state and local governments.
Other states and localities took notice and have successfully copied the model— so successfully that Forbes magazine's recent ranking of best cities for high tech jobs placed Silicon Valley at number seven behind Seattle, the Washington D.C., metropolitan area, San Diego, Salt Lake City, Baltimore and Jacksonville, Fla. All these cities have used lower taxes, education, and available land adjacent to higher education research centers as the formula for economic growth.
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New York State and New York City have begun to move in this direction. Last month, the New York City Council approved the construction of a $2 billion Cornell University Technology campus and office complex on Roosevelt Island made possible by a grant of free land and up to $100 million in improvements from the city. In Harlem, the city’s Economic Development Corp. is developing space to rent to new biotech firms. Our own university is constructing a new Mind, Brain and Behavior research complex on its new campus in West Harlem, and companies like Google and Yahoo are flocking to New York City.
Upstate, in Albany, the SUNY and the State have partnered to create the now world-renown College of Nanoscale Science and Engineering, where students, faculty and private firms work together and separately to conduct education, pure research and cutting-edge commercial nano-industry products.
CSNE is now bringing this model to projects in Utica, Rochester and Buffalo. In Syracuse, the State and local governments are assisting Upstate Medical University to work with a private developer to create a mixed-use, medical and high tech research, housing and retail complex called Loguen’s Crossing on the site of an abandoned public housing project.
In May, the governor announced “Tax-Free NY,” offering new businesses an opportunity to operate completely free of New York state taxes for 10 years if they locate and partner at any of the SUNY campuses outside of New York City (some commercial space at private universities and 20 underutilized state assets are also eligible for the program). Those taxes that would be suspended include sales, property, and business/corporate taxes, and the employees are exempt from the state income tax for the same ten-year period.
The program already has the public support of the leaders of the state Senate and Assembly, the State Conference of Mayors, and Association of Counties, the Business Council of NYS, the Partnership for New York City, the chancellor of SUNY, and senior executives from GE, IBM, JP Morgan, and Goldman Sachs among others.
But the program is not without its critics and doubters. CSEA, the state’s largest public employee union, sees the program as a give-away to business and unfairly beneficial to the employees of the participating companies. Others say that New York City should be included — the governor responds that it is upstate that is in most need of new jobs. The Conservative Party opposes the program because government will choose who gets the benefits and instead suggests reducing taxes on all businesses.
Academic research on the long-term benefits of tax incentives is inconclusive— time lags need to be considered to accurately assess the full impact of the incentives and firm-level data are seldom available.
Our view is that the economic situation upstate is desperate and we need to experiment with a variety of programs to see what works.
In the words of Franklin Roosevelt, another New York governor during tough times: “It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.”
Gov. Cuomo has it right: we need to try things. We need action, not words.
We know that the communities having success in growing their tech and biotech industries have used strategies very similar to Tax-Free NY —leveraging their higher education system, location-based tax incentives, and public-private partnerships.
Particularly given the success of the College of Nanoscale Science and Engineering in Albany, New York should enact the governor’s program.
Eimicke is the founding executive director at the Picker Center for Executive Education at Columbia University. Cohen is the executive director of the Earth Institute at Columbia University. Both are professors in Columbia’s School of International and Public Affairs.
New York’s rent regulation system is defined by two competing forces: we are a city of renters, with a proportion of tenants to home owners (two-to-one) almost the exact inverse of the national balance; we are also one the most lucrative real estate markets in the country, if not the world.
As a result, we have some of the strongest protections in the country, but our rent laws and regulations are persistently undermined by loopholes and lax enforcement.
These gaps in the rent laws are created and maintained through policy interventions. Every few years, New York’s rent laws sunset. When the legislature votes on their renewal, they attach amendments, which can either weaken or strengthen their regulatory powers. Paralleling this legislative process is a series of administrative actions, which change the way the state housing agency — New York State Homes and Community Renewal — interprets and enforces the state’s rent regulations.
For many years, New York’s rent protections were on the decline. A string of weakening amendments was added to the rent laws, making it easier for landlords to raise rents and bring apartments out of the rent regulation system. In 2000, the Pataki administration initiated a major revision of the Rent Stabilization Code, the document that guides interpretation of the rent laws, and sets policies for enforcement. In a set of changes over 150 pages long, HCR pushed through changes that were described by tenant advocates at the time as “an attempt to deregulate apartments on a wholesale basis.” Those revisions drastically reduced the agency’s ability to protect tenants and preserve affordability.
Recently, the tide has begun to turn back towards tenants. In 2011, for the first time in nearly two decades, the rent laws were renewed in Albany with strengthening rather than weakening amendments. One of the most important victories that year was a promise, written into law, that HCR would issue new regulations on rent law enforcement.
Following that announcement, tenants took action to make sure that promise was kept. They met with agency staff, testified at public hearings, and protested in front of Governor Cuomo’s office, calling for swift and definitive action.
Finally, on April 24, HCR issued their proposed regulations: a set of new guidelines touching on some of the most important issues facing tenants, from resetting fraudulent rents to stopping landlord harassment. The proposed regulations are far from comprehensive, but they are a definitive turn away from the agency’s prior orientation and an important shift towards tenant protection. They will create more tools to fight fraud and prevent rent theft.
Take the case of a renter who is currently organizing a tenants association in Washington Heights. Glenda (not her real name) moved into her apartment in 2011. She was told to sign a rider saying the apartment had left rent stabilization because the rent rose above $2,500.
After doing some research, she found that her apartment never should have been deregulated, and that the last legal rent for the apartment was just under $1,500.
Why had the apartment been deregulated? Had any significant work been done in the apartment between tenancies that could have justified that rent hike?
Glenda is currently fighting an overcharge case through HCR, which will likely take months if not years to settle.
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Under the new proposed regulations, however, the landlord would have been forced to provide documents explaining how and why the apartment became deregulated, and proved that rent increases were justified by real, documentable costs. This change would help maintain the affordability of rent stabilized apartments and prevent illegal deregulations.
There is, of course, much more the agency can do with these regulations. HCR could strengthen the succession rights of tenants, who are routinely denied the right to take over an apartment from their loved one because of minor technicalities of no fault to the tenant. They could also take the opportunity to roll back the rents of apartments that were illegally deregulated while landlords received tax breaks. HCR’s proposed regulations are an important step forward, but they alone are not enough to fully correct the giant leap backward the agency took in previous years.
On Monday June 10, HCR will hold hearings on their proposed regulations in Manhattan, Westchester and Nassau counties. The agency needs to hear from members of the public that in the current climate of rising rents and stagnant incomes, tenants need new rules for stronger enforcement.
Samuel Stein is the Rent Regulation Campaign Coordinator at Tenants & Neighbors, a grassroots organization that helps tenants build and effectively wield their power to preserve at-risk affordable housing and strengthen tenants’ rights.
NEW YORK — There's a joke about banking: That it's only for people who don't need it.
If you really need a loan you won't qualify, but if you don't it'll always be available at a low interest rate and with a smile. Like most humor, there's truth in it.
New York City's Association for Neighborhood and Housing Development studies how the federal government's attempt under the Community Reinvestment Act to make banks serve the communities they operate in actually affects low-income neighborhoods in the city. The findings aren't very good.
Banks are bringing in record earnings but ANHD finds their investment insufficient "to truly help meet the credit needs of low- and moderate-income New Yorkers." They report the city's 23 largest banks have deposits in the city exceeding $590 billion but lend or invest only 1.35 percent of it in a way that benefits low- and moderate-income residents.
That's an amount they say is insufficient "to satisfy their obligations under the CRA."
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More is less. Deposits are up and so is lending. Again, it's just that little of it goes to low-income neighborhoods. ANHD found lending for multifamily properties is "steeply" down in low- and moderate-income neighborhoods and of course low- and moderate-income people live in multifamily rental units.
CRA-qualified lending doubled in 2010 as the economy recovered but investments and lending to nonprofits in New York City decreased 30 percent.
Even given that so much "community reinvestment" bypasses moderate- and low-income people, the ANHD study asked how much reinvestment is enough.
Even with average re-investment of 1.35 percent, the study found several banks — Bank of America, JPMorgan Chase, Sovereign, Apple Bank, Astoria, Emigrant, Ridgewood, Morgan Stanley, Deutshe and Bank of NY Mellon — each reinvested less than 1 percent of their New York City deposits in New York City.
JPMorgan reinvested just .36 percent of its more than $256 billion in city deposits and Duetsche Bank just .35 percent. Two smaller banks, Emigrant and Astoria Savings Banks, reinvested .18 percent and .15 percent respectively.
ANHD says 5 percent is a fair minimum for re-investment. That minimum would pump another $12 billion into the city's economy from JPMorgan alone.
That kind of financial investment in underserved communities is absolutely vital to those neighborhoods and residents, but it might not be the most critical thing banks fail to provide.
In the era of megabanks, too large to fail, merging and buying out smaller institutions, there's immense competition for wealth management services and private banking for multi-millionaires but diminishing interest in vital banking services for low-income and poor people.
The four biggest American megabanks — JPMorgan Chase, Citibank, Bank of America and Wells Fargo — have over 61 percent of all New York City deposits according to ANHD. They also have about half of all city government deposits in their banks amounting to over $230 million. But they're not looking for low-income city resident depositors.
According to the FDIC, 8 percent of American households are "unbanked," meaning they have neither a checking nor savings account. The number is as high as one in four in poor neighborhoods. It may be higher in New York City where both the poverty rate and the cost of living are higher.
Last month I submitted public comments to the Office of the Controller, the FDIC and the Federal Reserve, America's three big bank regulators, about the Community Reinvestment Act, along with Dr. Al Arterburn. Arteburn formerly worked as an economist for the federal government. We wanted to make the case that banks should provide basic services to poor and low-income Americans at affordable costs. But, of course, they usually don't.
Poor and very-low income consumers desperately need basic services like checking and savings accounts. They need them far more than high income consumers do but bank imposed minimum balances, service fees, check charges and punitive penalty fees often make it unreasonable for low-income people to establish or maintain accounts.
"The ability to open and maintain checking accounts is important to those underserved consumers because an inability to have those services requires them to utilize very expensive and sometimes predatory check cashing services, to incur expensive money order or similar charges, to endure the inconvenience and expense often involved in these services and exposes them to often unregulated and sometimes unreliable operations," we wrote.
Of course, it also makes it more difficult to pay bills on time and impossible to save.
These aren't theoretical concerns. Our letter was sent on behalf of and at the request of Care for the Homeless clients in New York City, based on their first hand experiences.
They know that without an account they can't have direct deposit forcing them to pay up to $7 to cash a check and incentivizing them to carry cash. They know not having checking means payments for necessities requires buying a money order. They know without a savings account their difficult struggle to save $5 a paycheck is likely to fail.
They've lived the unpleasant and dangerous inconveniences the inability to use direct deposit, automatic savings or on-line payments force on them.
"Pay day" loans are illegal in New York, so check cashing services in New York aren't allowed to offer them, or any loan above the state's 16 percent usury limit. "Loan-sharking" has always been illegal, yet in the cash and costly world of check cashing apparently pay day-type loans are sometimes available.
The CRA is perhaps the best tools bank regulators have to incentivize financial institutions' involvement and investment in their communities. It operates through bank regulator evaluations of individual banks performed about every 2-to-4 years.
The CRA has been used to push banks to reinvest and has helped reign in "redlining" of poor communities, the long-time practice of not offering mortgages in "bad" neighborhoods.
Though the Federal Reserve website invites comments because they and the other regulators are "currently considering what can be done to make CRA a more effective regulatory incentive going forward to address an unprecedented set of community needs," the CRA has never even rated the availability of basic banking services for underserved consumers.
Enter New York City and the "Responsible Banking Act." Enacted by City Council in 2012 by a 44 to 4 vote over the Mayor's veto, the Responsible Banking Act sets up a Community Investment Advisory Board to review how well financial institutions serve low-income neighborhoods and requires an annual report that the city Banking Commission must consider in determining which banks are eligible to get city government deposits.
Currently 25 institutions are eligible, including JP Morgan Chase and Bank of America.
There's been a glitch, though. When the New York City Banking Commission approved the current eligible depositories on May 13, 2013, it didn't take the annual review into consideration. Actually, there has been no review and no annual report.
More precisely, the Advisory Board required by statute hasn't been fully implemented and awaits appointments by city officials, including by Mayor Michael Bloomberg's administration.
Crain's New York Business reported last week that City Council Speaker Christine Quinn sent a letter to the Bloomberg administration urging them to select a candidate soon.
In fairness, the city has recognized the problem of lack of access to banking, too.
A 2008 city neighborhood financial services study concluded "for many low-income households, banking has become costly, unpredictable, and out of step with their actual needs" so "hundreds of thousands of New York families living on low incomes choose to remain 'unbanked' and "rely on 'fringe' financial service providers such as check cashers and pawnshops."
With 13 percent of New Yorkers unbanked, almost double the national average, Manhattan Borough President Scott Stringer launched the "Bank on Manhattan" program to identify better services for poor families.
The Mayor's Office of Financial Empowerment encouraged the unbanked to open accounts through their NYC Safe Start program.
But the numbers of unbanked moving to banking really hasn't moved.
This is hardly a theoretical problem. Surveys show poor "unbanked" people spend hundreds of dollars annually on check cashing and hundreds more on money orders. And what's the value of automatic savings to struggling very-low income people? Think of it as priceless.
Jeff Foreman is policy director at Care for the Homeless. Follow him on twitter at @JeffForeman2.