New York City mayor Michael Bloomberg has always been interested in real estate. The billionaire media tycoon owns—as The Weekly Standard goes to press—11 homes, including his primary residence, a 12,500-square-foot townhouse on East 79th Street. (He’s the only New York mayor who’s completely shunned the city’s official residence, Gracie Mansion, where mayors have lived since 1942.)
So Bloomberg may simply have been acting on his lifelong passion for property when his administration announced a Request for Proposals last summer for architectural firms and developers to design a building of so-called micro-apartments, with units measuring between 250 and 370 square feet (as the Wall Street Journal noted, about four times the size of a prison cell on Rikers Island). The contest drew some 33 entrants, and in late January, the mayor personally announced the victorious bid.
The winning entrant will construct a building containing 55 micro-apartments, all featuring small balconies, 9- to 10-foot-high ceilings, and that old standby of early-20th-century, impoverished urban living: the Murphy bed. About half the units will be income-restricted—though at a minimum of $914 a month for 250 square feet, not exactly cheap—and the other half will rent at market rates. Bloomberg hopes that this “pilot project” will prove a success and that micro-apartments will soon pop up all over Gotham.
It’s been widely reported that no taxpayer money is involved in the development. “The city will not be subsidizing the project,” reads a typical report, from Reuters. But New York City taxpayers are indeed—albeit slightly indirectly—subsidizing the project. Here’s how: The new building will be constructed on a city-owned parcel of land in Kips Bay. The city sold the Manhattan property to the winning development company for $500,000. That’s a laughably measly sum. Through the first eight months of 2012, the average land price in Manhattan was $323.43 per square foot, according to data from a Brooklyn-based real estate agency. The city sold the parcel at a rate of only a little more than $100 per square foot. An independent agency values the land at $1.2 million, more than twice the price at which the city unloaded it. And that’s not the only way private developers are profiting from Bloomberg’s public policy. Since 1987, under an anti-slumlord statute, New York City has required that new apartments be a minimum of 400 square feet; his administration is also unilaterally waiving zoning regulations for this particular project.
While there’s a case to be made that micro-apartments might make sense in densely packed Manhattan, where housing is limited and far more people live alone than the national average (even if the subsidy is unjustifiable), the micro-apartment trend is spreading into cities with plenty of elbow room. Cleveland, where the population has declined some 60 percent since its postwar high, is now seeing micro-apartment development. In Providence, Rhode Island, where the population has declined significantly, the Arcade, America’s first indoor shopping mall—an early nineteenth-century architectural jewel, modeled on the passages of Paris—is being converted into micro-apartments. In Redmond, Washington, in a region of the country famed for its wilderness and low population density, the Tudor Manor apartment building has units as small as 150 square feet. Some micro-apartments feature their own full kitchens, but those on the smaller end come with only private kitchenettes and shared kitchens. Just about all come with tiny private bathrooms.
Not all micro-apartments receive taxpayer subsidies, but many do. Seattle’s Solana apartments (depressingly referred to as “aPodments” by the real estate company), averaging 170 square feet per unit, is one of four micro-apartment buildings receiving tax exemptions in the Emerald City. (Seattle mayor Mike McGinn has championed micro-apartments as “affordable, transit-friendly options for city dwellers.”) In Santa Monica, the Olympic Studios, with units as small as 361 square feet, are income-restricted, meaning the developers receive tax credits each year from the U.S. Department of Housing and Urban Development. And where they don’t receive direct subsidies, developers—as in New York—are often freed from zoning regulations. Late last year, San Francisco reduced its minimum unit size to 220 square feet (on a “trial basis”) so as to allow for the construction of a 375-unit micro-apartment building filled with 220-square-foot units.