Hunters Point South is thirty acres of prime waterfront property directly across the East River from Manhattan in Queens, New York.  Until a year ago, it arguably could have been considered the most valuable piece of land in America1.  In addition to unparallelled views of all five boroughs, especially the iconic Manhattan skyline, it provides easier access to Midtown(New York’s largest central business district, the busiest single commercial district in the United States, and among the most intensely used pieces of real estate in the world)2 than most places within Manhattan, whether by car or subway.  When combined with the ability to create new construction containing all the features desired by Chinese tycoons, Russian oligarchs, private equity titans, and others of that uber-wealthy ilk; this extraordinary once in a lifetime property could demand top dollar.  Instead, it is owned by the City of New York, which has decided to use this choice parcel to develop something they have  termed “affordable housing.”

‘Hmm,’ you’re thinking, ‘that seems to be a very benevolent thing to do, maybe the politicians finally got it right?’  They did not.  They completely missed, or intentionally utilized, the sleight of hand that takes from one middle class strata and gives to another.In so doing, they continued the assault on the upper-middle class in a stealthy ‘death by a thousand cuts’ method.  Why do I say this?  Because adjacent to this plot of land is another ~30 acre tract with a dozen or so market-rate buildings, filled with refugees (ok, that’s a bit over-dramatic) from Manhattan’s extremely high real estate prices.  But most of these people, despite looking for a little economic relief, would not qualify for the Hunters Point South(HPS) housing.  Are you following me so far?  No?  Then here is a simple back of the envelope summary:

$111,000 – $141,000 in annual income and you qualify for affordable housing in HPS.  Based on a 25% rental discount and an average monthly rent of $4,000 in the current market rate units, those that qualify will pay $3,000 a month on average, and thus will save $12,000 a year after taxes.

$141,000 – $500,000 – this is what most people in the adjacent piece of land earn in a year3  They will not qualify for the 25% discounted affordable apartments in HPS, nor save $12,000 a year after taxes by living there.

Though the distinct contrast above seems extremely unfair, taken in isolation most people in the latter group would throw up their hands and say “That’s just the way things are, you win some you lose some.” But the tangible juxtaposition of the two 30-acre properties listed above, got me thinking about other inequities, many of them less obvious, and it made me realize that this type of housing and the clear cut redistribution of wealth is not just an isolated case. Instead, government policy at all levels, has led to an enormous flattening of the middle class, whilst leaving the two extremes: the uber-wealthy and the poor, untouched.  Almost all news coverage has focused on the growing gap between the extremely wealthy and everyone else, and it has intensified greatly since the publishing of Thomas Piketty’s book.  Yet there is an equally pernicious trend that has been building steam for over a decade, and over the next few weeks, I will show you exactly how the flattening in the middle has occurred, by dissecting the following topics:

1. The Federal Income Tax Code

2. Affordable Housing

3. College Costs

4. Pensions

5. Fannie Mae/Freddie Mac limits

6. Healthcare

7. Social Security and other entitlements

8. Inheritance Taxes

Then, because no great writer can complete a novel without an ending, I will provide you with a solution, or several actually.  Stay tuned to …

Want to be kept apprised of the weekly postings, newsflashes, and musings of The Shadow Banker?  Follow us on twitter @TheShadowBanker and/or put your email address in the box below to receive the weekly posting directly.

  1. Here’s the math and thesis: []
  2. []
  3. This is a guesstimate, but I’d be willing to bet that over 3/4 of the residents fall into this camp []

Leave a Reply