Among housing advocates, the term “warehousing” is a dirty word. It refers not to storing goods in industrial spaces, but to the practice among some developers of buying up a residential property, clearing out any tenants, then leaving it empty for a period of years.
At first glance, the goal of warehousing seems counter-intuitive. Why would anyone buy a building, then leave it empty (continuing to pay the property taxes) when it could be bringing in income and serving local needs?
Yet urban developers do this all the time, often causing terrible hardships to tenants and their communities. When this happens, it’s usually because an investor has coldly calculated that the building’s short-term yields from limited rents are not worth the upkeep or necessary renovations to make it more habitable. Still they may buy the building anyway and clear it out, if they believe the property will become more valuable over time.
If the landlord can manage the taxes—or grieve them down by saying the building is now empty—the investor(s) may be prepared to wait five, ten or even twenty years for the surrounding neighborhood to become more “desirable” or for financing terms to become more favorable. Then they can either flip the building at a profit that more than covers their warehousing costs, or else renovate it themselves in an improved rental market.
That’s why warehousing is considered noxious by many housing advocates, who believe it’s morally wrong to keep such spaces empty on purpose, especially in communties facing the challenges of rising rents and growing homelessness. Working people lose their homes so that someone who already has plenty of money can roll the dice on the chance their building will appreciate in value. One can only imagine the thoughts of someone walking by a shuttered building they once called home, wondering why on earth someone would keep it locked up and empty.
It happens that one of my first jobs out of college was doing part-time work for the Citizens Housing and Planning Council in Manhattan. The term “warehousing” came back to mind when I heard of a proposal by developer T. Eric Galloway and his Lantern Group to build tens of thousands of new square feet of housing stock from scratch, rather than renovating some of his many existing units which have been empty for some time.
This latest Galloway proposal will be introduced to the Hudson Common Council tonight. It evidently would benefit from various tax breaks and public financing opportunities by making units available as “transitional” housing for the homeless, mentally ill, and recovering addicts. As has become typical of Galloway’s plans for Hudson, it’s already generating a fair amount of local controversy.
Many of the objections being aired by some Council members and business leaders have to do not with the need for such housing, but with the uniqueness of the proposed location. The empty lots at the corner of 5th and Warren streets are arguably the choicest commercial location in the City. Such concerned citizens hasten to add that they are not opposed to affordable or transitional housing. Rather, they wonder why such an unusually prime location would not be used instead to augment the bustling business district, and generate more tax revenue, while Hudson also pursues other opportunities to serve housing needs. They hope to convey that the type of housing proposed by Galloway and Lantern is welcome locally, but that other sites make better planning sense.
(Note: One former Hudson official suggested to me this morning that the City or County ought to simply buy up several of the underutilized motels in the area, which public agencies are already renting out at exorbitant rates to address homelessness and other crisis housing needs, but that’s another matter.)
Nevertheless, those bringing such legitimate concerns to the fore are bracing for the possibility of another wave of accusations that they’re just callous gentrifiers who want to run poor people out of their own backyards. In the past, those who questioned the City’s shoddy management of HUD and other public housing grants have taken great pains to stress their support for such efforts, as distinct from whether the City has the capacity and willingness to administer them honestly and fairly.
But such arguments (that affordable housing should be spread around the City to create mixed-income neighborhoods, rather than concentrating poverty in one neighborhood, or that landlords who received guaranteed rents from Federal and State sources should be required to meet basic standards of decent housing) have tended to fall on deaf ears and been met with vicious personal accusations meant to silence debate. Some continue to believe that the lip service paid by local leaders to affordable housing over the years has been a cynical one, meant to stir up “us vs. them” sentiment while securing Federal and State dollars which officials can spread around to preferred contractors and developers. The charge—going back to the ’80s and ’90s, if not longer—is that the plight of the poor is sometimes used to prop up the area’s entrenched political and economic elite, rather than those who urgently need better, more affordable places to live.
However, there is some hope among Hudson politicos that this time around, the topic may get debated on the merits, without such heated charges and countercharges flying back and forth. Tonight’s meeting will be a test of that premise.
My own main question about the Galloway proposal is slightly different, and has to do with the issue of warehousing. A back-of-the-envelope calculation suggests to me that there is some 150,000 square feet of boarded-up potential housing stock in Hudson. And some of it is apparently owned by Galloway himself.
For example, 202-204 Warren Street was for many years a run-down apartment house owned by a notorious Columbia County landlord. Many people were glad to see the building out of that landlord’s hands, and hoped that the new owner would upgrade the living conditions while continuing to provide affordable housing to its tenants.
Eric Galloway bought that building in roughly the Spring of 2003. But rather than renovating its apartments and retaining its tenants, the existing occupants were soon moved out. And the structure has, to all appearances, remained empty ever since, for nearly seven years now. Similarly, it is said that Galloway has recently regained title to another big apartment house, this one at the corner of Union and 5th Streets, which once was home to a large number of working people. It, too, has stood empty for several years. In short, the current situation has every appearance of a developer proposing new housing construction in the heart of Hudson’s business district, even while warehousing residential properties in other parts of town.
A natural question then is: If everyone agrees that there is a need for more affordable housing in Hudson, then why isn’t there more effort (and if necessary, pressure) to get landlords to put their empty units back on the market? The answer would appear to be simply that there is a lot of public funding available for new construction right now. But it would be useful to know what assistance is out there for rehab, so that the tens of thousands of square feet of space being warehoused right now could be renovated instead, while preserving 5th and Warren for other opportunities.
A final note: Some of us have been saying for several years that Hudson should consider enacting some form of tenants’ rights legislation. Many renters don’t even have leases, and can be thrown out on a few weeks’ notice, let alone enjoying any kind of rent stabilization or other protections from uncaring landlords.
