I don't know quite when it occurred, but I am intrigued to see that the sale of a piece of land is no longer described in dollars per acre, or dollars per square foot of land, but rather in dollars per square foot of permitted development. This item is about a lot at the corner of 56th and Lex in midtown Manhattan. The lot size isn't even mentioned.
The article mentions that it includes seven vacant small buildings! Imagine! Vacant buildings in midtown Manhattan! Not even so-called "taxpayers."
The lot can accommodate 88,000 square feet of development, and while the expectations are that the space will hold a hotel, its flexible zoning means it could host offices, retail or residential. Kiska, which is led by Kagan Gursel, created the Marmara-Manhattan extended stay hotel on East 94th Street, which was converted from a condominium. Gursel runs Marmara out of Istanbul. The site encompasses seven vacant small buildings and runs from 678, 680, 682 and 684 Lexington Avenue around the corner to 131, 122 and 135 East 56th Street.
What sort of incentives do we have in place if this many buildings can sit vacant? The assessor must be valuing them at some token value, rather than at their genuine land value. The existing buildings may be worth nothing -- but the land clearly has value. Setting things up so that owners can afford to let that land sit unused is dumb! A property worth $33.9 million, as a teardown, should be paying something approaching 5% of that amount in land taxes per year. That would be $1.7 million in taxes. If we only collect 4%, and leave the other 1% as a bonus for the landholder, that would still be $1.36 million -- far better than collecting that same amount in sales taxes or wage taxes.
NYC may have its reasons for not collecting the rental value of its land. Maybe it has plenty of revenue already to meet all its needs. But the federal government and even NYS could use that revenue, and ought to be collecting it if NYC chooses not to.
I wonder what the sellers would tell us they did to earn their $33.9 million. When did they buy these sites, and how much did they pay? How much have they earned in rents on them since then? And what did they do to produce the increase in value in the intervening time? (How many people have they housed? How many jobs have been made within those walls within their ownership?)
Some people work very hard to earn a living (at $50,000 a year, $33.9 million represents 678 years of work). Others leverage a small down payment and a few years of mortgage payments, and walk away with a significant gain, taxed as a "capital" gain, at a lower rate than the wages of those who work for a living.
Comments