A Phil Hall Op-Ed: There is a quote attributed to the ancient Chinese philosopher Lao Tzu that, roughly translated into English, goes like this: “Governing a great nation is like cooking a small fish – too much handling will spoil it.” Lao Tzu’s wisdom is clearly a lesson that is not being learned in New York City and Chicago, where government intervention into residential and commercial real estate runs the risk of too much handling in the projects while ignoring the greater problems that burden these cities.
Last week, New York City was aflutter as Mayor Eric Adams, Gov. Kathy Hochul and a slew of bureaucrats, union leaders and other left-wing notables gathered to unveil the “City of Yes for Housing Opportunity,” a new government initiative designed to create 80,000 new homes over the next 15 years by investing $5 billion in taxpayer money towards infrastructure updates and housing policy changes.
Among the features of the City of Yes initiative is the launch of a Universal Affordability Preference (UAP) to allow roughly 20% more housing in medium- and high-density developments, provided the additional homes are permanently affordable. The endeavor also legalizes small accessory dwelling units (ADU) for one- and two-family homes that would enable backyard cottages and converted garages to be used as housing.
Furthermore, this effort will permit transit-oriented development and Town Center zoning to enable the construction of three-, four-, and five-story apartment buildings near most transit and along commercial corridors, and it would allow for height-limited multifamily development on large campuses or lots, including those owned by faith-based organizations. Parking mandates would also be reconfigured to accommodate residents with automobiles.
This all sounds intriguing, but how is it being budgeted? From the $5 billion being allocated, Mayor Adams is committing $1 billion for housing capital and $2 billion in infrastructure projects including sewer and flood needs, street improvements and open space. $1 billion in expense funding is being targeted over 10 years in tenant protection, voucher assistance and combatting “source-of-income discrimination, flood monitoring and neighborhood planning,” while Gov. Hochul is committing another $1 billion to housing capital over the next five years – provided the lawmakers in the New York State legislature approve this scheme.
Over in Chicago, the city government and the Illinois state government is planning to create the Illinois Quantum and Microelectronics Park, which will be located on a 128-acre property where US Steel once employed 20,000 people. According to a Wall Street Journal report, Illinois is investing $500 million in IQMP while Chicago’s city government and the Cook County government will invest $5 million each. PsiQuantum, the first and only tenant committed to this development, will receive $200 million in further incentives from the state – provided that the company creates at least 154 full-time jobs. Related Midwest was named to be the lead developer for the park and surrounding property.
Outside of PsiQuantum, no other tenant has been signed for IQMP. Reportedly, organizers of this effort are reaching out to other quantum laboratories in the region – and one must assume these entities will have to be incentivized with considerable tax breaks to relocate to the new development, which is supposed to break ground next year.
The problem with the New York and Chicago plans circles back to the earlier Lao Tzu quote about too much handling in the governing process. Yes, changing the New York City zoning laws should, in concept, encourage new housing development. And, yes, quantum computing is a significant growth industry, and it would be exciting for Chicago to see that sector blossom in the Windy City.
But throwing billions of taxpayer dollars into real estate development projects is not the answer. Both the New York City and Chicago municipal governments – and, by extension, the New York State and Illinois governments – are making the tactical error of creating grand projects in cities that have significant problems that need to be addressed first before any new projects take place.
Both New York City and Chicago have seen dramatic deterioration in their respective quality of life environments. These are expensive, high-tax metro areas burdened with crime, and both are paying a lethal price for their so-called sanctuary city statuses that resulted in a flood of illegal immigrants who have exhausted the social services in both locations. In both cities, the socioeconomic problems have resulted in idiotic revenue-raising schemes – Gov. Hochul has imposed a “congestive pricing” plan that charges tolls on drivers going into Midtown Manhattan, while Chicago Mayor Brandon Johnson has repeatedly tried and failed to jack up property taxes to pay down his city’s $1 billion budget deficit.
Instead of spending billions on government-funded housing or tax breaks to lure computer companies, both New York City and Chicago plus their respective state governments should use existing funds to address the problems that created cesspool conditions in the two once-mighty cities. Private sector housing and commercial developments will come into markets that have the right socioeconomic environments to sustain growth and profit. They will not take root in badly managed cities with housing shortages, high taxes, high crime and a fraying quality of life.
At this point in time, government should not be in the business of building homes and corporate parks, and the new schemes being offered in New York City and Chicago risk being the equivalent of emptying a wallet’s contents into a toilet. Clearly, taxpayer funds can be prioritized in better ways.
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].
According to IL congressman Spain newsletter, the IQMP project will be wholly owned by the Chinese government. There are concerns that it will generate massive personal data transfer to said government. If IL has $500M to spend on projects, why not use it to address their chronic pension shortfall or housing for homeless, especially veterans. Also consideration should be given to the very possible increase to the flood plain
Very well written article, Mr. Hall. These cities continue to dig their own deficit holes and refuse to acknowledge their slipping grip on escalating crime rates. I wish our country would acknowledge and prioritize the terrible mental health issues and lack of facilities to treat this epidemic, which is another issue that permeates all of these problems our nation faces.
Economically speaking, it’s impossible for low wage earners and public assistance recipients to afford NYC and Chicago. Many (most?) middle class households consist of two wage earners. How does “living in a garage” level the playing field?
To create real “opportunity” and parity, government must demand a public educational system that never promotes failure. A system that rewards the top learners by accelerating their programs and, equally important, a system that recognizes and concentrates their efforts to bring those “slow learners” up to the standard.
Core proficiency in reading, writing, speaking, and mathematics must be the minimum standard, and an acknowledgement that tradesperson programs are valued as “higher education”.
In 2025, we still use the grade 1-12 paradigm of the previous century – how ridiculous! Easily, three years of needless subject matter can be removed from grades 5 to 12, as testified to by singer Paul Simon in his 1973 song “Kodachrome”: “When I think back on all the crap I learned in high school, It’s a wonder I can think at all”.