New York City Developers Are Relying On A Shrinking Pool Of Buyers

Most of New York City’s largest developers are probably optimistic about the near future now that one of their own is occupying the most powerful office in the world. Bu, this very specific group of taxpayers stands to benefit immensely from several of the provisions that have appeared in the Senate or House plans: Repealing the AMT and estate taxes would allow them (and their heirs) to shave a pile of percentage points off their tax bills. And those are just two examples.

To be sure, the tax plan’s passage isn’t assured – now that Alabama Democrat Doug Jones has defeated Republican Roy Moore. With Jones expected to be seated some time after New Year’s, the time pressure facing Republicans has intensified. Because at the start of the next Congress, their already precarious two-vote majority will shrink to one. Beyond this, Republicans haven’t agreed on a final version of the bill yet, and existing differences between moderates, deficit hawks and conservatives within the party could prove insurmountable.

But regardless of what happens with the tax plan, there’s a much more pressing problem facing developers in the Big Apple: A glut of “luxury” apartments priced in the low-seven or high-six figure range is coinciding with a precipitous drop in sales volume, according to Reuters.

While prices have been steady in recent years, sales volume for condos in Manhattan are still 30% below their pre-crisis peak.

In other words, the market’s dependence on a small, well-heeled pool of buyers – a pool that is shrinking as prices rise to unsustainable levels and wealth in the US becomes increasingly concentrated in the hands of the wealthiest – could be a major vulnerability in the coming years.

In the past five years, however, Manhattan has seen a different kind of development boom. Prices for these units are higher than they ever were before but the number of units built and sold is way off levels achieved a decade ago, Warshawer said.

 

“As prices have risen, less of the market share is comprised of cheaper units,” she said.

 

In 2013, 7,787 units were sold for under $1 million for a total $4.7 billion in sales. This year is projected to end with 5,040 units sold at under $1 million for $3.4 billion in sales.

Indeed, apartments priced in the seven-figures are increasingly going unsold – while affordable housing becomes increasingly harder to

The median sales price of high-end apartments edged higher in 2017, but the closely watched average square-foot price slid a bit for condos as prices leveled off after years of heady growth, the report said.

 

While the average and median sales price for all residential units has jumped since 2007 by 61 percent to $2.2 million and 44 percent to $1.2 million, respectively, transaction volume is off 30 percent from peak activity a decade ago, CityRealty said.

 

CityRealty examined sales registrations from the city’s Department of Finance. Much of Harlem and nearby areas were excluded because its market size.

Units sold at 432 Park Avenue, a 96-story tower marketed by developers as the tallest residential building in the Americas, garnered the most number of sales in a listing of the 25 highest-priced condos, CityRealty said. But elsewhere, the ultra-high-end market is suffering as nearly a third of the apartments in Manhattan’s recently developed “Billionaire’s Row” have gone unsold.

As we highlighted back in August during Starwood Property Trust’s Q2 earnings call, CEO Barry Sternlicht warned of a doomsday waiting at the end of New York"s "Billionaire"s Row", predicting an imminent "debacle." He mentioned the out-of-balance mezzanine loan at JDS Development and Property Markets Group’s 111 West 57th Street project and predicted more distress in the luxury residential market, including at 53 W 53, a supertall condo being developed next to the Museum of Modern Art by Hines, Pontiac Land Group and Goldman Sachs.

“We are beginning to see the cracks of the high-end residential market in Manhattan,” Sternlich warned.

Indeed, and while developers stand to benefit personally from the Republican plan, proposals to eliminate or reduce the mortgage deduction or deductions on state and local taxes could further damage their sales figures by favoring renters over buyers.

Stockman Slams "The Awesome Recovery" Narrative

Authored by David Stockman via Contra Corner blog,

One of the great philosophers of recent times was surely Sgt. Easterhaus of "Hill Street Blues". As he assigned his men to their daily rounds in the crime infested streets of the Big Apple he always ended the precinct"s morning call with his signature admonition:

"Let"s be carful out there."

That wisdom has been long lost on both ends of the Acela Corridor. In the face of blatant dangers and even existential threats, their denizens whistle past the graveyard with alacrity. So doing, they turn a blind eye on virtually all that contradicts the awesome recovery narrative, the indispensable nation conceit and the Washington can Make America Great Again (MAGA) delusion, among countless other fantasies.

For example, the GOP should be literally petrified by an horrid fiscal scenario for the coming decade that entails Social Security going bust, another $12 trillion of current policy deficits and a prospective $33 trillion public debt by 2027. And even that presupposes a macro-economic miracle in the interim: Namely, a 207 month stretch from 2009 to 2027 without a recession-----a feat which is twice the longest expansion in recorded history

Instead, they have passed a FY 2018 budget resolution which implicitly embraces all of the above fiscal mayhem, and then adds upwards of $2 trillion (so far and counting interest) of incremental deficits to fund an ill-designed tax cut that is inherently an economic dud and political time bomb.

As to the former, the GOP is lost in ritual incantation and foggy Reagan-era nostalgia. Unlike the giant Reagan tax cut of 1981, the pending bills do not cut marginal tax rates measurably---or even the individual income tax burden in any meaningful sense.

In fact, if you set aside the so-called pass-thru rate for unincorporated businesses (see below), the entire 10-year tax cut on the individual side amounts to just $480 billion. In the scheme of things, that"s a tiny number; it represents only 2.2% of the $22 trillion CBO baseline for individual income tax collections over the next decade; and it also is equal to just 0.2% of the projected nominal GDP over the period.

By way of comparison, the Reagan tax cut amounted to 6.2% of GDP when fully effective; and the net cut for individuals taxpayers alone averaged 2.7% of GDP over a decade. In today"s economy, that would amount to a tax cut of $6.5 trillion during 2018-2027 or 14X more than the $450 billion net figure estimated by the Joint Committee on Taxation.

To be sure, the abused citizens of America are more than entitled to even this tiny tax cut and much more. That is, if their elected representatives were willing to cut spending by an equal amount or even raise alternative, more benign sources of revenue (i.e. a VAT on consumers vs. the current levy on producer and worker incomes). But unless a rapidly aging society wishes to bury itself in unsupportable public debt, it simply can"t afford deficit-financed tax cuts for either the principle or the politics of the thing.

Moreover, to pretend that the tax concoction fashioned by Congressman Brady---- with a pack of Gucci Gulch jackals nipping at his heels--- will actually generate enough growth and jobs to largely pay for itself is to make a mockery of Sgt. Easterhaus" admonition. Rather than an exercise in fiscal carefulness, it is the height of recklessness to assume that much enhanced domestic growth, employment and Treasury receipts will result from any part of the $2.8 trillion cut for the rich and corporations that is at the heart of the GOP tax bill.

Actually, it"s the heart and then some. With recent modifications (including dropping of the $150 billion corporate excise tax intended to prevent companies from hiding domestic profits via over-invoicing of imports from their own affiliates), the net revenue loss of the Brady bill is calculated at about $1.7 trillion.

That means, of course, that fully 165% of the net tax cut goes to: (1) 5,500 dead rich people"s heirs per year ($172 billion for estate tax repeal); (2) 4.3 million very wealthy loophole users ($700 billion for the minimum tax repeal); and (3) the top 1% and 10% of households who own 60% and 85% of business equities, respectively, who will get most of the $1.95 trillion of business rate cuts.

In this context, we cannot stress more insistently that Art Laffer"s famous napkin does not apply to business tax cuts in today"s world of globalized trade and labor rates and artificially cheap central bank enabled debt and capital.

That"s because the business income taxes are born by owners, not workers. The wage rates and incomes of the latter are determined in a saturated global labor market where the China Price for Goods and the India Price for internet based services sets wages on the margin.

At the same time, owners are not deterred from making investments by the proverbial "high after-tax cost of capital". That"s because it isn"t.

Even at the current statutory 35% tax rate (which few pay), the absolute cost of equity and debt capital is cheaper than ever before in modern history.

In fact, the after-tax cost of equity to scorched earth investment juggernauts like Amazon is virtually zero, while the cheap debt-fueled boom in conventional plant, equipment, mining, shipping and distribution assets over the last two decades has stocked the planet with sufficient capacity for decades to come.

In short, if you lower the business tax rates to 20% and 25% for corporations and pass-thrus, respectively, you will get more dividends, more stock buybacks and other returns to shareholders. Those distributions, in turn, will go to the very wealthy and to pension funds/non-profits. The latter will pay no taxes on these distributions while the former will pay 15%-20% at current law rates of o%, 15% and 20% on capital gains and dividends, which the Brady bill does not change.

In short, maybe the $2.8 trillion of tax cuts for business and the wealthy will generate a few hundred billion of reflows over the decade. And even that will not be attributable to the "incentive effect" of the Laffer Curve at all; it"s just tax collection mechanics at work as between the personal and business taxing systems.

By the same token, the Sgt. Easterhaus principle is also being ash-canned by the GOP on the politics side of the tax bill, as well. In fact, Republicans have been chanting the "tax cut" incantation for so many decades that they apparently can"t see the obvious. Namely, that among the middle quintile of households (about 30 million filers between $55,000 and $93,000 of AGI) the ballyhooed "tax cut" will actually be a crap shoot.

When fully effective, roughly two-thirds of filers (20 million units) would realize a $1,070 per year tax cut, while another 31% (roughly 9.5 million filers) would experience a $1,150 tax increase!

That"s a whole lot of rolling dice----depending upon family size, sources of income and previous use of itemized deductions. Yet for the heart of the middle class as a whole----30 million filers in the aforementioned income brackets---the statistical average tax cut would amount to $6.15 per week.

That"s right. Two Starbucks cappuccinos and a banana!

So we"d call the GOP"s noisy advertising of a big tax cut for the middle class reckless, not careful. Indeed, the Dems will spend hundreds of millions during the 2018 election season on testimonials and tax tables which prove the GOP"s claim is a pure con job.

They will also prove the opposite--- that the overwhelming share of this unaffordable tax cut is going to the top of the economic ladder. After all, the income tax has morphed into a Rich Man"s Levy over the last three decades. So if you cut income taxes----the benefits inherently and mechanically go to the few who actually pay.

Thus, in the most recent year (2015), 150.5 million Americans filed for income taxes, but just 6.8 million filers (4.5% of the total) accounted for 35% of all AGI ($3.6 trillion) and 59% of taxes paid ($858 billion).

By contrast, the bottom 64 million filers reported only $928 billion of AGI, and paid just 2.2%  ($20 billion) in taxes. That is, owing to the standard deduction, personal exemptions and various credits the bottom 44% of taxpayers accounted for only 1.4% of personal income tax collections.

Even when you widen the bracket to the bottom 123 million tax filers (82%), you get $4.3 trillion of AGI and just $284 billion of taxes paid. In other words, the bottom four-fifths of filers pay only 6.6% of their AGI in tribute to Uncle Sam. They may not be getting their money"s worth from the Washington puzzle palaces, but you can"t get blood from a turnip, either.

In short, Flyover America desperately needs tax relief for the 160 million workers who actually do pay up to 15.5% of their wages in employer/employee payroll tax deductions. Yet by ignoring the $1.1 trillion per year payroll tax entirely and recklessly and risibly claiming that its income and corporate tax cut bill materially aids the middle class, the GOP is only setting itself up for a thundering political backlash.

Nothing makes this clearer than some recent (accurate) calculations by a left-wing outfit called the Institute for Policy Studies that boil down to the proposition that "It Takes A Baseball Team".

That is, the top 25 US persons (like the full MLB roster) on the Forbes 400 list now report about $1 trillion in collective net worth. That happens to match the net worth of the bottom 180 million (56%) Americans.

Needless to say, that egregious disproportion does not represent free market capitalism at work; it"s the deformed fruit of Bubble Finance and the vast inflation of financial assets that the Fed and other central banks have enabled over the past three decades.

In terms of the Sgt. Easterhaus metaphor, monetary central planning has planted some exceedingly dangerous political time bombs in the precincts, neighborhoods, towns and cities of Flyover America. Accordingly, if the GOP succeeds in passing some version of its current tax bill, it may be what finally brings the Dems back into power on an out-and-out platform of socialist healthcare (single payor) and tax redistributionism with malice aforethought.

Even as the GOP recklessly plunges forward with gag rules and its sight unseen legislative steamroller (echoes of ObamaCare in 2010), it will never be able to hide what is buried in the bill"s tax tables. Namely, an average tax cut for the top 1%---even after accounting for elimination of upwards of $1.3 trillion of itemized deductions----that would amount to $1,000 per week.

Moreover, for the top o.1% (150,000 filers), the Dem campaign ads will show a cut of $5,300 per week; and for a subset of 100,000 of the top 0.1% filers, the GOP"s tax cut would amount to $11,300 per week .

That"s right. Each and every one of the very ultra rich would get a tax break equivalent to that which would accrue to every 2,000 middle bracket filers under the Brady bill.

As Sgt. Easterhaus might have said: They have been warned!

Meanwhile, at the other end of the Acela Corridor, the good precinct sergeant gets no respect, either. Indeed, gambling in today"s hideously over-valued and unstable casino is exactly the opposite of being careful; it"s certain to lead to severe---even fatal---financial injuries on the beat.

In this context, we have been saying right along that the essential evil of monetary central planning is that it systematically falsifies asset prices and corrupts all financial information. That includes what passes for analysis by the Cool Aid drinkers in the casino.

But when we ran across this gem from one Steve Chiavarone yesterday we had to double check because we thought perhaps we were inadvertently reading The Onion.

But, no, he"s actually a paid in full (and then some) portfolio manager at the $360 billion Federated Investors group who appeared on CNBC, and then got reported by Dow-Jones" MarketWatch just in case you had the sound turned off during his appearance on bubblevision.

So here"s how the bull market will remain "alive for another decade." According to Chiavarone, millenials who don"t have two nickels to rub together will make it happen. No sweat.

“Millennials are entering the workforce, but their wages are going to be under pressure their whole career,” he explained to CNBC’s “Trading Nation” on Friday. “They won’t make enough money to pay down their debt, fund their life and fund retirement where there is no pension. So, they’re going to need equities.”

Then again, aspiration and capability are not exactly the same thing. In fact, the frequent yawning difference between the two puts us in mind of the Donald"s characterization of his primary opponent as Little Marco Rubio. The latter never stops talking about himself as the very embodiment of the American Dream come true----so for all we know perhaps Marco did aspire to be an NBA star.

But when he famously couldn"t reach his water bottle from atop a stool during his nationwide TV rebuttal of an Obama SOTU speech a few years back, it was evident that NBA stardom wasn"t ever meant to be.

Nor during the coming decade of stagnant wages and rising interest rates is it any more obvious how millennials will beg, borrow or steal their way to massive purchases of equities. That is, how they will finance what will actually be an avalanche of stock sales by 80 million fading baby boomers who will need the proceeds to pay their nursing home bills.

But never mind. MarketWatch caught the full measure of  what shines on the inside of Mr. Chiavarone"s financial beer goggles:

 The risk is not being in this market,” says Chiavarone, who helps run the Federated Global Allocation Fund. The firm’s current price target is for 2,750 on the S&P by the end of next year and 3,000 for 2019.

 

“We are probably frankly low on both of them,” he said. “Tax reform could push up the markets.” That’s not to say there won’t be some pain along the way, specifically the potential for a recession in 2020 and 2021, according to Chiavarone.

 

What’s an investor to do in that case? “Buy the recession,” he said.

Indeed, it doesn"t come any stupider than the market blather that is constantly published on MarketWatch. Today it also informs us that not only have US earnings been galloping forward in recent quarters, but its actually a global trend:

However, this is hardly a U.S.-only story. Corporate earnings have been improving globally, and some of the fastest growth has come from international companies, as seen in the following chart from BlackRock, which looks at U.S. growth against the globe, excluding the U.S.

The chart below is supposed to be the evidence, but we are still scratching our heads looking for the point. It seems that global corporate earnings ex-US based companies have surged.....all the way back to where they were in 2011!

You can"t make this stuff up. Did these geniuses notice that China just went full retard in credit expansion to insure that the coronation of Mr. Xi was the greatest since, apparently, the Ming Dynasty invited the civilized world (not Europe) to the coronation of its fourth emperor in 1424?

In fact, the 19th Party Congress is now over, and the Red Suzerains of Beijing are back to the impossible task of reining in the massive malinvestment, housing, debt and construction bubbles which have turned China"s economy into a $40 trillion powder keg. So right on cue it reported a sharp cooling of its red hot pre-coronation economy last night.

Thus, value-added industrial output, a rough proxy for GDP, expanded by just 6.2% in October compared to double digit increases a few months back.

Likewise, fixed-asset investment climbed 7.3% in the January-October period from a year earlier. Notably, that"s way down from high double digit rates during most of the century, and, in fact, is the slowest pace since December 1999.

Needless to say, the latter data point amounts to a clanging clarion. At the end of the day, the ballyhooed Chinese growth miracle is really a story of construction and debt-fueled asset investment gone wild. And that party is now over.

So whatever Sgt. Easterhaus actually meant during the seven seasons of "Hill Street Blues" which always started with his famous admonition, we are quite sure that today it would not have meant buying the dips in a casino that is rife with unprecedented danger.

Finally, when it comes to real danger we think the most precarious spot along the Acela Corridor is about one mile from Union Station. We are speaking, of course, of the Oval Office and the Donald"s questionable tenure therein.

Even as he meandered around Asia double-talking about trade and basking in the royal reception put on by his duplicitous hosts in Tokyo, Seoul and most especially Beijing, the Donald did manage to hit a fantastic bull-eye stateside.

Indeed, his takedown of the three stooges---Brennan, Clapper and Comey-----of the Deep State"s spy apparatus will be one for the ages. Not since Jimmy Carter has a president even vaguely admonished the intelligence agencies, but as it his wont, the Donald held nothing back---naming names and drop-kicking backsides good and hard:

“And then you hear it’s 17 agencies. Well, it’s three. And one is Brennan and one is whatever. I mean, give me a break. They’re political hacks. So you look at it — I mean, you have Brennan, you have Clapper, and you have Comey. Comey is proven now to be a liar and he’s proven to be a leaker,” Trump told the reporters on Air Force One.....   

Yes, the next day he backed away in what appeared to be a pro forma nod to be his own courage-challenged appointees.

We don"t think so, however.

The truth is, the Deep State is already in the precinct house. And Sgt. Easterhaus is talking to the wall.

 

NYC Rents Fall For First Time In 20 Months As New Development Prices Collapse

A flood of new apartments in Manhattan are finally starting to take their toll on a subsection of NYC real estate that had remained quite resilient up until now.  As Bloomberg points out this morning, with rent concessions now being offered on 35% of high-end apartments in the Big Apple, the median rent for non-doormen buildings fell in October for the first time in 20 months.

The median rent in buildings without doormen fell 1.9 percent in October from a year earlier to $2,840. It was the first decline for the category in 20 months, and the biggest since February 2014, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

 

It’s not that tenants were more willing to pay up for pools and yoga rooms. But landlord concessions at some of these fancier buildings -- such as rent-free months and complimentary access to gyms -- have made the properties a compelling, if slightly costlier, option.

 

“A lot of these doormen buildings have a lot of vacancies and they are offering quite a bit of incentives,” said Hal Gavzie, who oversees leasing for Douglas Elliman. “Rental customers are looking for the best deal they can get.”

 

At buildings with doormen, concessions were offered on 35 percent of all new leases signed in October, the second-highest share this year, according to Jonathan Miller, president of Miller Samuel. At non-doorman properties, 20 percent of deals included incentives.

 

“If you’re looking at two apartments,” Miller said, “and one is in a full-service building and one isn’t, and the difference in rent is a hundred bucks after concessions, maybe you go to the doorman building.”

Meanwhile, increasing rent declines come as the purchase market also seemingly softened in Q3 2017 with Douglas Elliman noting an 11.5% plunge in average purchase price per square foot and listing discounts that nearly doubled YoY.

Of course, as we"ve noted frequently over the past couple of quarters/years, it seems that the inevitable negative consequences of the massive overbuild of new developments in Manhattan are finally starting to take their toll with average new build prices down 27% YoY and 18.3% on a per square foot basis.

Perhaps the efforts of Jimmy McMillan are finally starting to pay off?

"$100,000 Bought Me The Mayor": Shocking Testimony Of De Blasio Donor Revealed

You don"t have to look around too hard to realize that the "political swamp" in America stretches from sea to shining sea and from the highest offices in Washington D.C. to the lowliest of city halls on Main Streets all across the country. 

The latest evidence of such comes to us from New York City where a Mayor Bill de Blasio donor-turned-felon testified in extraordinary detail yesterday that he and his businessman pals wrote the book on city corruption — buying off the Mayor’s Office and the Police Department using brazen pay-to-play tactics.  As the New York Post details today, 34-year-old Jona Rechnitz went into staggering detail in his testimony about political favors he received from City Hall for a small $100,000 donation.

“We’re going to become significant contributors, but we want access,” Jona Rechnitz, 34, testified telling de Blasio fundraiser Ross Offinger after Hizzoner clinched the Democratic nod for mayor in 2013.

 

De Blasio soon paid Rechnitz a visit in his office, the disgraced businessman told jurors in Manhattan federal court.

 

De Blasio — who last year called his relationship with Rechnitz “not a particularly close’’ one — handed the wheeler-dealer his private cellphone number and email address, the witness said.

 

The pair then began chatting “at least” once a week about “different issues in the city” — as Rechnitz funneled about $160,000 to de Blasio’s campaign and pet political projects, said the government witness.

Rechnitz appeared as the star witness in the bribery trial of former city corrections union chief Norman Seabrook. He is accused of bribing Seabrook to get him to invest $20 million in union pension money in a pal’s ailing hedge fund.  But testimony quickly veered toward de Blasio, as Rechnitz was questioned about his ties to the ­administration.

Rechnitz said he had high hopes for the kinds of favors he could potentially receive.

“My mind was limitless,” he said.

 

Business pal “Jeremy [Reichberg] had told me in the days of Giuliani, people made a fortune.

 

“I was focused on making money, getting my name out there, becoming a big player in town. So I figured maybe I’ll buy an office building, and I’ll get the city as a tenant. Maybe I’ll need to get special permits to make residential developments.”

 

Rechnitz and Borough Park businessman Reichberg initially targeted the NYPD in their pay-to-play scheme, doling out gifts and cash to cops in return for favors. Then they set their sights on City Hall, Rechnitz said. “We had the police going for us — and now it was time to get into politics,’’ he testified.

 

Rechnitz started calling Offinger every time he needed a favor — including one involving a friend’s massive water bill and violations Rechnitz faced for a tenant subletting a residence on Airbnb.

Rechnitz even admitted to using "straw donors" to circumvent caps on individual political contributions, a scam which he says De Blasio"s fundraisers were privy to.

In 2014, Rechnitz donated another $102,300 toward a failed effort led by de Blasio to help Democrats wrest control of the state Senate.

 

Rechnitz said some of the dough was from straw donors, which is illegal.

 

“A couple of people in my office, I had them write checks, because I wasn’t allowed to give more than $4,950. And I reimbursed them for those donations,’’ Rechnitz said.

 

Rechnitz said he promised Offinger to hit target donations — and the fundraiser would stop by his office to check on the fundraising.
“I had a lot of pressure from him to bring that amount in,” Rechnitz said of the pledged amount.

But it wasn"t just De Blasio"s office where Rechnitz attempted to buy political favors as he admitted that his pay-to-play scams stretched north to the affluent suburbs of Westchester County and involved County Executive Rob Astorino. 

During his hourlong testimony, Rechnitz said the corruption even extended beyond the Big Apple.

 

Westchester County Executive Rob Astorino gave him and Reich­berg positions as police chaplains in exchange for their ­financial contributions — even though neither of them is a rabbi or a priest, Rechnitz said.

 

“It meant that I got my parking placard,” said Rechnitz, whose firm JSR Capital donated $15,000 to ­Astorino’s campaign in June 2013.

 

He said Astorino once approached him with a picture of a Rolex watch and asked for help in procuring it.

 

“I told him I’m happy to give it to him; he doesn’t have to buy it,” Rechnitz testified.

 

“He told me that he couldn’t take it as a gift. He had to pay something because that wouldn’t be allowed. It was a $7,000 to $10,000 watch, if I remember correctly.”

 

In the end, Astorino agreed to pay $1,000 to $2,000 — and Rechnitz covered the rest, he said.

Not surprisingly, De Blasio"s office dismissed Rechnitz" testimony saying "the administration has never and will never make government decisions based on campaign contributions"...clearly just more attempts to "criminalize behavior that is normal."

Amazon Has Received 238 Proposals For The Company"s Second Headquarters

Just days after we reported that in the mad dash by virtually every American city to become Amazon"s second headquarters, in which some such as New Jersey offered as much as $7 billion in state and city tax credits, today Amazon announced that that it has received 238 proposals from "cities and regions in 54 states, provinces, districts and territories around North America" who want to host the company"s second headquarters, also known as HQ2.

As CNBC reports, bids for the new headquarters were due to Amazon on Thursday, Oct. 19. Cities big and small from across over America, from Newark to Boston and hundreds inbetween are trying to impress Amazon and the more than $5 billion it plans to spend on its second headquarters. One Georgia town"s mayor went so far as promising he would rename the town "Amazon" if the company agreed to build there.

Amazon didn’t name any of the bidders or say when it would come up with a short list for its potential picks. Cities including New York, Boston, Atlanta, Nashville and Austin, Texas, have said they applied for the new corporate site, which is expected to generate 50,000 high-paying jobs over nearly 20 years.

As noted previously, Amazon had very specific requirements for cities that are interested in placing a bid: it wants a city with an established mass transit system, easy access to international airports, availability of software developers and other tech talent, cultural fit and the ability to move into a

phase-one site as early as 2019. Other items on its wish list: a metro

area of more than one million people and tax incentives.

Still, as the WSJ adds, it is unclear where Amazon might land. “I don’t think any one market fits everything. It’s going to be a balancing act of the various attributes,” says Dave Bragg, a managing director at Green Street Advisors, which conducts real-estate research.

Amazon has increased its workforce from a few thousand to more than 40,000 over the past decade. And it is still planning to add 2 million square feet and 6,000 people in the next 12 months.

 

But to keep growing, the company needs more space. Amazon has said that it will give its team leaders a choice between staying in Seattle, relocating or being based out of both. It has said that the average pay for the new jobs will be around $100,000, depending on where it locates.

Recently Bloomberg laid out some of the cities that have a good shot at hosting HQ2:

Atlanta: The southern U.S. city, home of Amazon delivery partner United Parcel Service Inc., is a major flight hub, and the greater metro area houses a dynamic population of almost 6 million, as well as the headquarters of major corporations like Coca-Cola Co. and Home Depot Inc. Still, Atlanta is a relatively suburban city, compared with the urban HQ1 of Seattle.

 

Boston:  Several Amazon executives have already advocated putting HQ2 in Boston, due to its proximity to Harvard University and Massachusetts Institute of Technology; an airport with nonstop flights to Seattle and Washington D.C.; and a lower cost of living than some other large urban areas. Amazon has ties with Boston already, having purchased local robot maker Kiva Systems Inc. for $775 million in 2012. The city also won General Electric Co.’s 2015 new headquarters bid, and has provided more than $100 million in grants, property tax relief and programs for GE – though the city has said it won’t negotiate any incentives with Amazon until Boston makes it past the first round of the selection process.

 

Chicago:  The Windy City ranks second in Anderson Economic Group’s analysis of 35 cities competing for the precious HQ2, focusing on its talent, diverse ecosystem and access to transportation in its bid. Just last month, Illinois Governor Bruce Rauner reauthorized the Economic Development for a Growing Economy (EDGE) tax-credit program, which provides special tax incentives to companies relocating to Illinois or expanding operations in the state when another state is actively competing, according to BNA. One issue? The city isn’t known as a center of technology.

 

Denver:  Denver has a busy international airport and is surrounded by a highly educated workforce. It’s also home to a surge of millennials looking for high-tech and energy jobs in Colorado, and boasts an outdoorsy lifestyle that’s an easy fit for Amazon’s quality-of-life considerations. Colorado has also chosen eight sites that meet Amazon’s requirements for HQ2. Still, other cities are offering larger tax breaks than Denver.

 

Detroit:  Detroit offers low rent and the potential for larger tax breaks, because the city and the state of Michigan are still trying to turn themselves around and diversify from manufacturing. Michigan is also home to three big universities that produce a broad pool of talent. According to Michigan State University, 70 percent of its engineering graduates remained in the state. Even so, Governor Rick Snyder has said he will not ask the state legislature to approve additional incentives just for Amazon, according to Crain"s Detroit Business. The city’s mass transit system also isn’t on par with some other cities in the running, and Detroit has a smaller tech scene.

 

New York:  In its bid for HQ2, the Big Apple is pitching its diverse workforce, robust university ecosystem and access to advertising, fashion and other industries. Brooklyn is emerging as an attractive component of the bid, with its building boom and throngs of young residents. New York is so serious about HQ2 that Mayor Bill de Blasio had landmarks around the city, including the Empire State Building and One World Trade, lit up in "Amazon orange" on Wednesday night. (Neighboring Newark, New Jersey, is also jumping in to bid, offering practically the same workforce with $7 billion in potential tax credits.) The bid by the biggest U.S. city may be at a disadvantage because of limited space for construction and already-high housing costs.

Amazon is expected to reveal the home of its new headquarters some time in 2018.

Separately, in its quest to consume all possible information about its clients, next month Amazon customers in select US states will be able to order take-out from certain local restaurants directly through the Amazon app. Users will be able to browse participating restaurants, place their order and checkout with stored payment information all through the app, without any additional accounts or logins needed.

The expansion of Amazon Pay integrates Clover point-of-sale systems, sending orders directly to restaurants in select states in the Northeast U.S.  "Clover has the technology and scale we needed to bring this vision to life," Amazon said in a statement. "We"ve had an ongoing partnership with Clover — we used them to great success with our Kindle pop-up stores — and it was only natural to expand on that."

According to CNBC, the restaurant take-out service is already available for orders from T.G.I. Fridays as of July and will expand to include restaurants in New York, Massachusetts, Connecticut, New Jersey, Pennsylvania, Maryland and Washington D.C. — and, of course, the Seattle area.

Look Out, New Yorkers: GM To Begin Testing Driverless Cars In The Big Apple

If you happen to see a driverless car trundling down Fifth Avenue, don’t panic.   

Compounding the misery that Elon Musk is likely feeling right now, General Motors has scored yet another victory in its quest to build the first commercially viable self-driving car.  
New York Gov. Andrew Cuomo on Tuesday granted GM’s Cruise Automation division permission to begin testing fully autonomous vehicles on New York City roads – meaning GM will become the first automaker to begin testing autonomous cars in the northeast.

The company will begin testing the cars early next year. The New York decision follows a similar move by California regulators, who earlier this month granted GM’s request to nearly double the size of its autonomous test fleet being tested in San Francisco, ignoring a troubling spike in accidents that has unnerved automobile safety groups.

Specifically, Cuomo granted GM permission to begin testing a “level 4” autonomous vehicle, which is considered fully autonomous with no option for human intervention. While a level 3 car still needs a steering wheel and a driver who can take over if the car encounters a problem, level 4 promises driverless features in dedicated lanes, Reuters reports. Meanwhile, a level 5 vehicle is capable of navigating roads without any driver input and in its purest form would have no steering wheel or brakes.

GM, along with many of its competitors in the self-driving car space – a group that includes Google/Waymo, Uber, Audi, Tesla and Ford – has been testing its automated cars in a number of ities, but busy San Francisco has been the most important testing ground because it allows cars to collect data from congested and often chaotic urban environments, an effort that one might expect to be fraught with complications given that the slightest error on the car’s part can be easily amplified given the volume of traffic.

GM and Cruise Automation will begin conducting tests in Manhattan with an engineer in the driver’s seat to monitor the performance, and a second person in the passenger seat, according to the governor’s statement.

The company will deploy a fleet of self-driving Chevrolet Bolt electric cars early next year in a 5-square-mile section of lower Manhattan that engineers are mapping, said Kyle Vogt, chief executive of Cruise Automation, the driverless-car developer GM acquired last year. The move could be seen as a threat to the thousands of taxi drivers piloting yellow cabs around New York, as autonomous robot-taxis operated by GM and its rivals are seen eventually displacing human drivers, according to WSJ.

While GM appears to be pulling ahead in the race to build the first driverless car, it has passed over more than a few bumps in the road. GM’s self-driving cars were involved in 6 accidents during the month of September – a month where the company finished expanding its fleet of self-driving cars from around 30 or 40 cars to more than 100.

As WSJ pointed out, Deutsche Bank analyst Rod Lache said in a research note earlier this month he believes GM could launch a commercial autonomous-ride service—without anyone at the wheel—“within the next few quarters, well ahead of competitors.” Citing recent briefings with company officials, he thinks GM will offer its own service that could be “highly disruptive” to ride-hailing giants Uber and Lyft Inc.

Cars are already driving themselves on roads in California, Texas, Arizona, Washington, Pennsylvania, and Michigan. One-quarter of miles driven in the U.S. by 2030 could be through shared, self-driving vehicles, according to an estimate from the Boston Consulting Group.

But of course, whether the driverless-car future is three years – or 30 – years away remains to be seen.

Read the full statement from Cuomo’s office below:

Governor Andrew M. Cuomo today announced General Motors and Cruise Automation are applying to begin the first sustained testing of vehicles in fully autonomous mode in New York State in early 2018. Through Governor Cuomo"s recent legislation allowing the testing of autonomous technology, GM and Cruise are applying to begin testing in Manhattan, where mapping has begun in a geofenced area. All testing will include an engineer in the driver"s seat to monitor and evaluate performance, and a second person in the passenger seat. In support of this work, Cruise is expanding its presence in New York and will begin building a team of employees in New York City.

"Autonomous vehicles have the potential to save time and save lives, and we are proud to be working with GM and Cruise on the future of this exciting new technology," Governor Cuomo said. "The spirit of innovation is what defines New York, and we are positioned on the forefront of this emerging industry that has the potential to be the next great technological advance that moves our economy and moves us forward."

The legislation, included in the FY 2018 budget, allows for the testing of autonomous technology in New York through a pilot program. Cruise"s planned testing would be the first time Level 4 autonomous vehicles will be tested in New York State, presenting opportunities for future autonomous vehicle development in the state and cementing New York"s role as the hub of autonomous vehicle innovation in the nation.

Kyle Vogt, CEO of Cruise Automation, said, "Testing in New York will accelerate the timeline to deploying self-driving cars at scale. New York City is one of the most densely populated places in the world and provides new opportunities to expose our software to unusual situations, which means we can improve our software at a much faster rate. We look forward to working with Governor Cuomo as we work toward bringing next-generation transportation solutions to New York."

The Department of Motor Vehicles and State Police will work with Cruise and GM to ensure all testing meets relevant safety, vehicle and insurance requirements.

In June, Audi of America Inc. performed New York State"s first autonomous vehicle demonstration. Lieutenant Governor Kathy Hochul took a test drive in the vehicle. Also in June, Lieutenant Governor Hochul participated in road testing of an autonomous Cadillac SUV organized by University of Buffalo on campus roads. The demonstration was part of the annual summer meeting of the Council of the University Transportation Centers, a Washington, D.C.-based organization that represents more than 90 universities and colleges nationwide, including UB. In September, Cadillac embarked on the first official Coast-to-Coast hands-free drive on freeways, in New York City. The cars used were Cadillac CT6s equipped with Super Cruise - the first hands-free highway driver assist system. This was also the first-time self-driving cars were officially driven on New York City roads.

Lieutenant Governor Kathy Hochul said, "The time to embrace this revolution in transportation technology is now, which is why Governor Cuomo is positioning New York State at the forefront of autonomous vehicle testing and research. I have taken part in three AV demonstrations in 2017, and there is no question that we are on the brink of a breakthrough for the automotive industry and our state economy. This partnership with General Motors and Cruise Automation is an exciting step into that future."

Manhattan Borough President Gale A. Brewer said, "New York is the ultimate proving ground for autonomous vehicle technology. We have a streetscape that is unrivaled in its scale and complexity, and so it"s fitting that General Motos and Cruise Automation are finally bringing this technology here for testing and development. I thank Governor Cuomo for pushing the legislation that paved the way to this milestone. I"m proud and excited that more and more, the future itself is being made in New York."

Matt Mincieli, Northeast Region Executive Director for TechNet, a trade association comprised of over 70 of the nation"s leading technology companies, said, "Governor Cuomo"s announcement of the Cruise Automation partnership proves that New York State is serious about bringing AV technology to the Empire State and taking a leadership role in safely, but aggressively, testing this rapidly evolving technology. This private/public partnership spearheaded by the Cuomo Administration is the type of innovative approach to adopting burgeoning technology that will ensure New York State continues to attract the talented workforce and venture capital dollars necessary to remain a top tech hub."

Julie Samuels, Executive Director of Tech:NYC, said, "GM and Cruise"s autonomous vehicle testing in New York City demonstrates a significant step forward and ensures New York continues to lead the tech industry. From landmark investments in broadband and policies to support emerging technologies like autonomous vehicles and drones, New York is helping advance U.S. innovation. We applaud Governor Cuomo"s efforts to invest in New York"s tech industry and welcome GM and Cruise to New York City."
 

Missouri's New Minimum Wage Law Will Be... Complicated

Authored by Jazz Shaw via HotAir.com,

Generally when we see news of a new minimum wage law it relates to a city or state raising it. Missouri went in the opposite direction recently, instituting a rule which forbids any local government entities from instituting a minimum wage which is higher than that state minimum. (Currently sitting at $7.70 per hour.)

That’s going to cause considerable consternation for people in St. Louis who only recently received a raise to $10.00 per hour because of a municipal law. (Associated Press)

Thousands of workers in St. Louis will likely see smaller paychecks starting Monday, when a new Missouri law takes effect barring local government from enacting minimum wages different than the state minimum.

The law is drawing protests in St. Louis and in Kansas City, where a recent vote approving a higher minimum wage is essentially nullified without ever really taking effect.

The impact is direct in St. Louis, where the minimum wage had increased to $10 after the Missouri Supreme Court sided with the city in a two-year legal battle. Days after the Supreme Court ruling, Missouri’s Republican-led Legislature passed a statewide uniform minimum wage requirement. The state minimum wage is $7.70 per hour. Republican Gov. Eric Greitens declined to veto the bill, allowing it to become law.

This new law seems to be somewhat unique in that it effectively also sets a maximum minimum wage rather than just a minimum. I was glancing through the summaries of minimum wage laws around the country and couldn’t find anyplace else which has tried this. So is it a good idea? Keep in mind that the law obviously doesn’t forbid anyone from paying a higher rate if they wish, and in fact a number of businesses (mostly smaller ones) have signed on to a pledge to stick to the new, higher rate of ten dollars.

I suppose one could approach this from the supremacy angle and say that the state has the right to determine such rules for all the counties and municipalities if they wish. After all, the federal minimum wage overrides any states which attempt to have a lower rate as the minimum, so the supremacy aspect should flow downhill from there.

But the idea seems problematic. It might be a way for a more conservative state government to stick a thumb in the eye of more liberal cities who are in line with the Fight for 15 crowd, but the net effect seems negative. One of the major hurdles to a national minimum wage hike is the fact that the cost of living can vary so wildly between large, urban areas and more rural districts. New York has had to look at such accommodations because the average rent in the Big Apple can literally be ten times higher than in some rural, upstate regions.

A city can get carried away (see Seattle for an example) and jack up their minimum wage to the point where it shuts down businesses and costs jobs, but it’s understandable if some of them want to take the average cost of living into account. Will this be challenged in court by the City of St. Louis? Can it even be challenged? Interesting questions and I’m sure the rest of the country will be watching how this one plays out because the minimum wage is a hot topic pretty much everywhere these days.

UPDATE: I almost immediately received feedback on this subject. Turns out it has been done before in at least a few states. Alabama already passed such a law and it stood up to at least one challenge.

NYC Isn't The Only Place The "Rent Is Too Damn High"; Euros And Canadians Also Struggle To Make Rent

Jimmy McMillan III, the now infamous founder of the "Rent Is Too Damn High Party", as well as a self-described karate expert, Vietnam War vet, former postal worker and male stripper, has made it his mission for the past two decades to fight rising rents in New York City that have persistently pushed lower-income families out of Manhattan to make more room for America"s Ivy-League educated, entitled snowflakes.

But according to recent data published by Harvard"s Joint Center for Housing Studies (JCHS) and the  Organization for Economic Cooperation and Development (OECD), the Big Apple isn"t the only place where a significant portion of the population is struggling to meet monthly rent payments.  In fact, per the JCHS, the U.K., Spain and Canada join the U.S. to round out the list of the top four countries in the developed world where 20-30% of renters spend more than 50% of their gross income on rent alone.

The US, along with Spain, exhibits more pervasive and severe rental affordability problems than the other countries considered. The analysis indicates that the greater cost burdens found among renters in the US, relative to most of the other countries, are largely due to greater income inequality, to more limited housing assistance programs, and perhaps to a housing supply consisting of units that are larger and better-equipped but that are consequently more expensive. This paper is largely focused on lessons for the US from comparisons to other countries, but hopefully it will be useful for those interested in comparisons among those other countries
 as well.

As Bloomberg points out, when you lower that threshold to 40%, the numbers are even more staggering and includes a large portion of Europe.

Meanwhile, Spain wins the award for the highest percentage of gross income that goes directly to landlords, while the U.S. and United Kingdom are a close 2nd and 3rd at around 30%.

That said, while a significant portion of renters across Europe receive some type of taxpayer-funded rent subsidy, renters in the U.S. just have to rely on their federally-subsidized student loans to cover their rent and spring break trips to Cancun.

Man Who Stole $1.6 Million Bucket Full Of Gold In Midtown Manhattan Has Been Captured

The most brazen, fascinating gold heist of the year, if not the decade, is now closed.

Recall that in late November, we reported that in what may have been one of the most brazen thefts in Manhattan"s jewelry district, a man calculatedly swiped an 86-pound bucket full of gold worth $1.6 million from the back of an unattended Loomis armored truck on West 48th Street in the Diamond District on Sept. 29, in broad daylight, as tourists and locals were walking in and out of the jewelry stores that line the block. The suspect, described as 5 feet 6 inches tall, 150 pounds and in his 50s, managed to get away without a hitch. The police suspected that the unidentified man was lying low in Orlando or Miami until things blow over in the Big Apple. The whole incident was caught on closed-circuit camera.

Then, one month ago, the police said they had not only identified the man, but speculated that the gold thief had moved on from Florida, and may have fled to California. NYPD identified the man as Julio Nivelo, and was believed to be - as of late December - in Los Angeles.

NYPD Det. Martin Pastor said Nivelo, 53, is a convicted felon who"s known to the NYPD as Luis Toledo, among other aliases. He"s a career thief who"s been arrested seven times and deported four times to his native Ecuador, according to Pastor. 

Nivelo, a native of Ecuador, fled to Orlando, before heading to California, WNBC reported. Nivelo, who was living in West New York, N.J., at the time of the theft, had previously been arrested seven times and deported four times, the station reported.

In the end, it turns out that Nivello was not in Los Angeles, but had fled all the way back to his native Ecuador, where, as NBC 4 New York reported, he was finally arrested according to law enforcement sources.

Authorities had been looking for Nivelo for months, with the manhunt leading police to Nivelo"s residence in West New York, New Jersey, to Orlando, to Los Angeles before detectives from the major case squad headed to Ecuador. Nivelo was arrested there Thursday morning by federal agents with Homeland Security Investigations and The National Police of Ecuador.

He was arrested without incident after he sent the NYPD on a months-long search across the globe. It wasn"t clear when he would be extradited to New York to face charges. Police say they have recovered some of the money. 

Before he was captured, Jalopnik reported that Nivelo was a truck cargo-stealing veteran and mastermind. He had allegedly ripped off many other trucks before he finally hit the golden jackpot in September.

And so, as NBC 4 puts it, ends the saga of one of the luckiest, most brazen thefts to capture our collective imagination in some time. However, now that he has shown how easily it can be done, we expect the next such brazen "truck theft" to take place in the not too distant future.

NYC Homelessness Record High Despite Falling Unemployment Rate

Submitted by Mike Shedlock via MishTalk.com,

Salil Mehta at Statistical Ideas investigates the homeless rate in New York City. Mehta notes the streets are flourishing with a severe homelessness problem that’s escalating briskly despite a falling unemployment rate.

Please consider a The Empire City of Homelessness.

Annual Growth Rate of Homeless

Record High Homeless

Note the huge surge in homelessness after the Great Recession ended.

Curiously, New York City is also the only place in the U.S. required to provide temporary housing to anyone needing it. Yet as homelessness rises across big cities nationally, it rose at the fastest clip in the Big Apple.

City-by-City Comparison

War on Homelessness

Mehta wisely avoids offering solutions. “We don’t provide any strong remedy for such a complex and expensive social issue,” says Mehta.

The government-sponsored war on poverty failed as have all sorts of other ridiculous wars, including real wars.

Moreover, the war on terror has turned into a war of terror.

@salilstatistics NYC Homelessness Record High. https://t.co/pAeqhU69Q0 If free shelter doesn"t work, then free shelter cannot be the answer.

— Mike Mish Shedlock (@MishGEA) January 5, 2017

Man Who Stole $1.6 Million Bucket Full Of Gold In Midtown Manhattan Has Been Identified

Three weeks ago we reported that in what may have been one of the most brazen thefts in Manhattan"s jewelry district, a man brazenly swiped an 86-pound bucket full of gold worth $1.6 million from the back of an unattended Loomis armored truck on West 48th Street in the Diamond District on Sept. 29, in broad daylight, as tourists and locals were walking in and out of the jewelry stores that line the block.

The whole incident was caught on closed-circuit camera.

The suspect, decribed as 5 feet 6 inches tall, 150 pounds and in his 50s according to the police, managed to get away without a hitch. The police suspected that the unidentified man was lying low in Orlando or Miami until things blow over in the Big Apple.

Overnight the police not only identified the man, but according to their latest speculation, the gold thief has moved on from Florida, and is now to be found as far away from NY as possible.

On Tuesday, NYPD identified the man as Julio Nivelo. He is now believed to be in Los Angeles. NYPD Det. Martin Pastor says Nivelo, 53, is a convicted felon who"s known to the NYPD as Luis Toledo, among other aliases. He"s a career thief who"s been arrested seven times and deported four times to his native Ecuador, according to Pastor. 

Nivelo, a native of Ecuador, fled to Orlando, Fla., before heading to California, WNBC reported on Tuesday night. Mr. Nivelo, who was living in West New York, N.J., at the time of the theft, had previously been arrested seven times and deported four times, the station reported.

Surveillance video from the the theft showed Nivelo loitering around the truck before one guard goes to make a pickup, and the other guard heads to the front seat to grab his cellphone. Those 20 seconds were long enough for the thief to strike: he goes to grab the 86-pound bucket - roughly half his weight - and makes a run for it, though he clearly has difficulty maneuvering it. The video shows the thief setting down the heavy bucket, putting it on his shoulder, then taking a breather. He takes another few steps and pauses again. The normally 10-minute walk takes him an hour. He then jumps into a van at 49th Street and Third Avenue.

The police released several photos of Mr. Nivelo. Nivelo was a man about town before the heist, it appears: photos show him posing at Washington Square Park and with a figure of the pope at Madame Tussaud"s Wax Museum.

Loomis has offered a $100,000 reward for information leading to his arrest and conviction, police sources said.

Below is the NYPD post seeking the public"s help in finding Nivelo... and the $1.6 million in gold that is supposedly in his vicinity.

* * *

WANTED: Burglary (Manhattan)

The suspect has been identified as follow:

• Nivelo, Julio


• AKA: David Vargas


• 53 year-old Hispanic male


• 5’5″, 155 pounds with dark hair.

************************************

The New York City Police Department is asking the public’s assistance identifying the individual depicted in the attached surveillance video and photographs in regard to a armored truck burglary that occurred within the confines of the MTN Precinct. Details are as follows:

 It was reported to the NYPD’s Major Case Squad that on Thursday, September 29, 2016, at approximately 4:30 p.m. an armored truck company making a pick up discovered that a 5 gallon aluminum pail weighing 86 pounds containing gold flakes (valued at 1.6 million dollars) was stolen from the rear of their armored truck.  The truck was parked in front of 48 West 48th Street between 5th and 6th Avenues. The unidentified individual is then seen lifting the 5 gallon pail from the truck and fleeing East bound on West 48 Street toward Third Ave. There are no reported injuries as a result of this incident.

The individual is described as a:

•   Male Hispanic 5’6″, 150 lbs, 50-60 years old wearing a black vest, green shirt, blue jeans carrying a black messenger bag.

 Surveillance video and photos of the individual were captured near the corner of 5th Avenue and 48th Street.  The video shows the suspect fleeing with the stolen black aluminum 5 gallon pail.

 Anyone with information in regards to this incident is asked to call the NYPD’s Crime Stoppers Hotline at 800-577-TIPS or for Spanish 1-888-57-PISTA (74782). The public can also submit their tips by logging onto the Crime Stoppers Website at WWW.NYPDCRIMESTOPPERS.COM or texting their tips to 274637(CRIMES) then enter TIP577.

 All calls are kept strictly confidential.