Why you should care
Because if New York can pull off its big dreams, the whole world will have some new tried-and-true ideas about housing, real estate and the economy to play with.
Alicia Glen has a habit of swimming with sharks and surviving. As head of Goldman Sachs’ Urban Investing Group for more than a decade, she piloted the notoriously hard-nosed financial group into projects with a social impact — and solid cash returns.
Now, as New York City’s deputy mayor for housing and economic development, she’s leading the effort by Mayor Bill de Blasio to build or preserve 200,000 units of affordable housing to help bridge the city’s widening gulf between rich and poor. That means jumping into another tank of man-eating, razor-toothed beasts: New York’s real estate developers.
Her challenge is to implement de Blasio’s 10-year “Housing New York” plan, just as real estate and land prices in New York have reached yet another peak. Sales of Manhattan condos have a median price of $1.2 million, up 17.4 percent over the past year, and Russian and Egyptian billionaires are dropping $90 million for apartments in the newest skyscrapers. Glen’s success — or failure — will be closely watched by other U.S. cities wondering if they too can spread the wealth while stretching their limited budgets.
As Glen prepares to take on the establishment, it’s easy to forget that she’s very much of the establishment.
It’s no easy task to create homes for people earning as little as $15,000 or even for the middle-class workers the city relies on (like police officers, bus drivers and teachers). Land prices are high and landlords have a ready market for expensive homes. Moreover, with only $8 billion to spend on public housing over the next 10 years, the cash-strapped city has little leverage when it comes to negotiating with developers who’ve won generous tax breaks and zoning waivers and are loath to give them up.
But Glen has emerged as the odds-on favorite to win over the city’s real estate establishment, led by a dozen or so families that control much of New York’s property.
In March, she invited a group of leading developers to City Hall, and in April she discussed subsidies for affordable housing with the developers of the Atlantic Yards in Brooklyn. The Real Estate Board of New York, the lobbying group of the city’s largest developers, says it welcomes Glen’s open-door policy but warns that its cooperation may depend on members getting the returns they want — and keeping some of the hefty tax breaks that New York, like many U.S. cities, uses to entice development.
How high are the stakes? “These developers will build in other places — Shanghai or Sao Paulo or Washington, D.C.,” says Jamie McShane, a spokesman for the group. “They don’t have to build in New York.”
As Glen prepares to take on the establishment, it’s easy to forget that she’s very much of the establishment. Born on the Upper West Side, her father served as a city attorney under Mayor Ed Koch and her mother was a State Supreme Court Justice who became dean of the City University of New York School of Law. Glen, with degrees from Amherst College and Columbia Law School, first championed affordable housing while serving in city government as assistant commissioner for housing finance under Mayor Rudolph Giuliani in the 1990s.
“If anyone can do it, she can,” says Andrea Kretchmer, managing director of POKO Partners, an affordable housing developer in New York City. “She is an extremely smart and determined individual and she’s not afraid to speak truth to the weak and the powerful.”
Glen isn’t Robin Hood looking to separate the Big Apple’s wealthiest from their riches. That’s de Blasio in the tights.
But Glen’s drawn fire before — if not as often as praise. One of the loudest examples came in late June, when Crain’s New York Business reported that as Mayor de Blasio urged a city board to freeze regulated rents during its annual review of regulated apartments, Glen was urging board members to reject the freeze in favor of a minimal increase. In the end regulated rents did rise, much to the mayor’s avowed displeasure. It’s not clear if Glen’s effort was condoned by City Hall or a freelance move. In any event, it appeared to be an effort to placate both landlords and tenants, which certainly pleased the landlords.
Just four days later, as de Blasio celebrated a deal to build two towers of what he labeled affordable housing at the Atlantic Yards, local news organizations studied the agreement’s fine print, negotiated in part by Glen, and found that two-thirds of the 600 new apartments will be for families earning more than $100,000 a year. Monthly rents of $3,000 are hardly anyone’s definition of affordable, even in New York.
But while her Wall Street credentials may raise some eyebrows, others hope the time Glen logged turning Goldman Sachs into a leader in politically progressive finance equipped her to accomplish two major goals: streamlining New York’s notoriously slow planning and approval process, and using market incentives to stretch the city’s limited dollars in a boiling real estate market.
“She is bold and innovative, smart and fearless, and knows how public policy can drive change in communities,” says Jerilyn Perine, a commissioner of housing under Mayor Bloomberg. Her challenge? Build as many as 80,000 units of new housing and keep another 120,000 within reach of the city’s poor — a perfect match for Glen’s financial skills and her empathy with ordinary New Yorkers, adds Perine.
One thing is clear: Glen isn’t Robin Hood looking to separate the Big Apple’s wealthiest from their riches. That’s de Blasio in the tights. Glen is his pragmatic, market-favorable counterpart — who, in fact, may not even be working for her first choice; she donated more money to de Blasio’s center-left opponent during the primaries. But now it’s time to put all that aside and serve — which Glen will tell you is best done by letting New York’s private developers grow rich, so they’ll be more amenable to sharing their wealth with the less fortunate.
“We want markets to stay hot,” Glen told the The Real Deal, a New York real estate newspaper. “That’s good for us. The more people want to build, the more there is to talk about the percentage of affordable housing and the more the industry is happy to engage in these conversations.”
With a foot in each camp, this pragmatic liberal may alienate some New Yorkers — but she also may be exactly what the city and its populist mayor need.
*Corrected: a previous version of this article incorrectly stated Andrea Kretchmer’s position as President of POKO Partners. She is the Managing Director.