The Inevitable Corruption Of "Affordable" Housing

Government handout and redistribution programs promise that they can achieve perfect justice and fairness in human affairs, but somehow we always seem to be coming up short.  The latest example arises once again in the arena of the "worst possible public policy," affordable housing in Manhattan.  

You always knew that the handing out of the affordable housing had to be corrupt.  But the secrets are well kept among the clique of insiders who do the handing to their friends and cronies.  In the last couple of weeks, elections in New York caused a small piece of the cover to be blown off.

September 12 was the date for primary elections for local offices in New York City -- Mayor, Comptroller, Public Advocate and City Council.  Those who know our city will recognize that the result of the Democratic Party primary generally determines the ultimate winner of most of these offices.  Since the City Council has term limits, many seats are open and attract multiple candidates.  That was the case in City Council District 2, which covers a swath of the Lower East Side of Manhattan -- an area that was formerly impoverished but is now rapidly gentrifying.

In District 2, the odds-on favorite candidate was one Carlina Rivera.  Rivera followed the time-tested road to a City Council seat, namely serving as a top staff person of the term-limited predecessor, who then made Rivera the designated successor.  Rivera's husband of several years is one Jamie Rogers, who has recently been serving as the Chairperson of the Community Board that covers the same area.  Rivera ended up winning her ballot line (and therefore almost certainly her seat) with 61% of the vote.  (However, note that turnout in this primary was only about 20%, and Democrats are far from all of the eligible voters.  Likely, Ms. Rivera got the votes of well less than 10% of eligible voters.)

Things started to get interesting about a week before the election when the New York Post on its famous Page 6 reported that Rogers and Rivera were living in a subsidized apartment under HUD's so-called "Section 8" voucher program -- a program whose benefits are supposedly reserved for "the poor."  From the Post:

Carlina Rivera — the leading candidate to replace her former boss, term-limited City Councilwoman Rosie Mendez — lives in federally subsidized Section 8 housing reserved for the poor.  Rivera is married to James Rogers, a Cornell Law School graduate who once worked at the white shoe firm of Sullivan & Cromwell.

Readers not familiar with the ins and outs of the New York big law firm community may not recognize Sullivan & Cromwell as not just any old law firm.  It is the principal outside law firm for Goldman Sachs and for a big chunk of corporate America.  A recent piece at Above the Law puts the starting associate salary there at $180,000, rising to more than $300,000 over several years.  

And over the next several days it only got more interesting.  Turns out that Rogers's dad is a recently-retired partner of Cravath, Swain & Moore -- again one of the very top firms in prestige and profitability.  Partners at such firms earn another order of magnitude above the associates.  The American Lawyer keeps its most recent law firm profitability figures behind a pay wall, but here is a list at Wikipedia from 2012.  Annual profits per partner at Cravath were $3.435 million.  Rogers Sr. was a partner there for about 30 years, which means that he likely has a net worth in the range of $25 - 50 million, and potentially even more.  Then there were the pictures of the younger Rogers competing in sailing regattas with his dad.  This picture from the Post has Jamie on the left out sailing, and Carlina on the right:

Jamie Rogers.jpg

Yes, your tax dollars are subsidizing the rent of these people -- because they have declared themselves to be "poor."  According to this article, their current Section 8-subsidized rent is about $1600 per month, as against a market rent for the apartment of $2775.  You pay the difference.  

You might think that at this point Rogers and Rivera would have been overcome with shame and gone off and crawled in a hole somewhere.  Of course not!  Instead, they immediately doubled down.  They went out and did interviews with the local newspaper, The Villager, which appeared immediately after the election on September 14.    The headline summarizes their defiant attitude:  "We Qualify"

In separate interviews with The Villager, Rivera and Rogers both said that it’s perfectly legal for them to live in the apartment and that their incomes were fully vetted under the requirements of the Section 8 program.

Read the full article and you find out how this works.  It basically goes back to the central deception of the poverty scam, which is the delusional presumption that a family's arbitrarily-defined "income" in any one given year inexorably reveals its permanent status in an immutably fixed social class structure.  In this case Rogers managed to engineer his "income" for one year down close to zero, and used that snapshot to qualify for a Section 8 handout for life.  Essentially, he had opened a mini-chain of coffee shops, a couple of which were not performing.  So he closed those two and took the write-off in a single year in order to offset the income from the others.  Then he and Carlina had their "income" for that year "vetted" by the friendly cronies in the housing bureaucracy.  Voila!  A housing subsidy for life for a couple that by any realistic measure is well into the top 0.1%!

(But wait, you ask -- Didn't the Manhattan Contrarian also artificially engineer his income for one year down to about zero?  Yes!  However, I did not have the gall to use that result to claim subsidized housing for life.)

Well, once Rivera claims her Council seat on January 1, Rogers and Rivera will have a much higher income that will make the Section 8 voucher far less valuable, and indeed they claim they will relinquish it.  But thanks to them for shedding a little light in on how the political insiders game the housing giveaway system.  And they are far from alone among the political class in corruptly claiming for themselves the benefits of housing giveaways intended for the disadvantaged.  Other examples:

  • Council Speaker Melissa Mark-Viverito is a crazed hard leftist who comes out of a privileged upbringing (her dad was a hospital executive) in Puerto Rico.  She lives in a townhouse in East Harlem that was built with city subsidies in the 90s.  According to this Wikipedia article, she acquired the property with a "taxpayer subsidized loan."  The website contains no valuation or transaction history for her property at 211 East 111th Street (I wonder why -- politician's privilege?), but does have information for the comparable property next door (209 East 111th Street).  The latter property was initially bought in 1999 for $349,500, and has a current estimated value of $2.72 million.
  • Then there's my long-time State Senator (recently retired), Tom Duane.  While he was a State Senator he managed to get himself a spot in the Penn South complex in the West 20s.  This is something we call here in New York a "limited equity co-op."  I won't go into the details, but again, these things are deeply subsidized by the taxpayers.  At the time Duane was admitted to Penn South, two bedroom apartments went for completely artificial prices in the range of about $18,000.  Today the market value of such an apartment would be in the range of at least $1 million to $2 million or more. 

Hey, they're politicians.  Of course they know how to work the system to their own advantage!  I have no way of knowing how many of our other politicians have managed to do something similar.

So, do you still think that "affordable housing" initiatives are going to be getting us any closer to the world of perfect justice and fairness any time soon?