II. WHY WE MUST SAVE THE SUBWAY
The subway has been saved before, and the man who saved it was Richard Ravitch. Stocky, white-haired and gruff, Ravitch, now 84, is the type of civic macher you don’t see much anymore, an urban idealist who has spent his career moving back and forth between the public and private sectors. His grandfather fled the pogroms in Russia, and — classic New York story — created a successful construction business from nothing. He lost everything in the Depression, and then his son, Ravitch’s father, made his name building apartment buildings on Central Park West.
Ravitch followed his father into the real estate business. In the 1960s, he served on President Lyndon Johnson’s National Commission on Urban Problems, and in 1973, after 12 years of trying, he completed Waterside, a $78 million, 1,470-unit development for low-and-middle-income families on the East River, just south of the United Nations. A couple of years later, Ravitch played a critical role in rescuing New York City from its fiscal crisis, helping to persuade the teachers’ union to invest $150 million of its pension fund in a new series of city bonds. And in 1979, he was named chairman of the M.T.A.
Ravitch didn’t need the job or even really want it. He waived his salary and took to wearing a bulletproof vest in public after someone threatening to kill him shot an M.T.A. police officer at his office. But he was a child of the New Deal and a passionate believer in the subway, which at the time was in even worse shape than it is today.
During the fiscal crisis, drastic funding cuts had spun the subway into a downward spiral of deteriorating tracks, malfunctioning cars, increasing crime and falling ridership, a steep decline that tracked the city’s own postindustrial collapse. To reverse the trend, Ravitch prepared a detailed breakdown of the costs of repairing and replacing all of the system’s outdated equipment and proposed a sweeping plan to help fund the work. He argued at the time: “The transit situation, though lacking the drama of imminent bankruptcy, represents an equally grave threat to our economy, the social equilibrium and the survival of the greatest city in the world.”
The subway’s importance to the city begins with a single, durable economic principle: Cities create density, and density creates growth. Economists call the phenomenon agglomeration. Not only does geographical proximity reduce costs, but it also facilitates the exchange of knowledge and spurs innovation. It’s a principle that holds true for better and worse and regardless of the industry. The free-market economist Edward Glaeser has pointed out that the junk bonds and leveraged buyouts of ’70s and ’80s Wall Street were as much the product of human collaboration as they were of corporate greed. The urban-planning professor Elizabeth Currid-Halkett coined the phrase “the Warhol economy” to describe how this same sort of cross-fertilization and idea-sharing works in New York’s art, fashion and music worlds. As industries grow, they attract and create new, connected ones: Book publishers beget book agents, tech start-ups beget venture-capital firms and so on. It all begins with the ability to pack large numbers of people into small spaces and then unpack them at the end of the day. Without the subway, this process breaks down, and the city dissipates.
Ravitch took his case to editorial boards and legislative leaders. But there was a problem. No one wanted new taxes. So Ravitch cold-called David Rockefeller, the longtime head of Chase Manhattan Bank. “I said, ‘Mr. Rockefeller, this is an audacious request, but would you get up at 5 in the morning and let me show you the subway system?’ ” he told me one afternoon in his office at Waterside. “And he said yes.” Ravitch then suggested that Rockefeller bring along the chairman of MetLife and the president of AT&T. All three went and saw the dirty, graffiti-scarred system firsthand. As Ravitch tells the story, that was all it took: Rockefeller called the majority leader of the State Senate and told him to “give Ravitch what he needs.” The tax package passed, and Ravitch ultimately raised $7.7 billion — more than $17 billion in today’s dollars — much of which was spent replacing cars, refurbishing stations and increasing maintenance.
The turnaround was not immediate. A year after Ravitch’s tax plan was enacted, annual subway ridership dropped below one billion. But before long, as the system gradually became safer, more reliable and less unsavory, it started to trend up. By 2015, ridership had hit 1.7 billion, a level not seen since the late 1940s.
The rejuvenation of the subway has been intertwined with a protracted period of staggering economic prosperity — agglomeration at work. New York rebuilt the subway, and the subway rebuilt the city. It was one of the great urban renaissance stories of our modern era. But now that the city is thriving, it faces another challenge, perhaps an even greater one: how to spread this staggering wealth more evenly. The subway might again be a central part of the solution.
If the story of the subway is the story of density, it is also the story of land — and more to the point, the story of land value. Before the first tracks had even been laid, real estate speculators were gobbling up farmland and empty lots along the proposed route and then quickly flipping their parcels at huge premiums to builders. When the subway recovered from its last major crisis, it again began throwing off enormous returns for the owners of the land above it. From 1993 to 2013, the average price for a co-op or condo in TriBeCa rose from $182 per square foot to $1,569. In the process, prime real estate in Manhattan was transformed from a place where people lived and built businesses into a high-yield investment in which absentee owners parked their money and watched it grow.
As Manhattan’s business-district centers became denser and its scarce real estate more expensive, the growth started to spill out, following the subway’s snaking lines across the river, into Brooklyn and Queens. “Developers build things where the subway works, and we build far fewer things where it doesn’t,” Jed Walentas, the 43-year-old principal of the real estate development company Two Trees Management, told me recently over lunch at a cafe in Dumbo, Brooklyn’s answer to SoHo. “We put density where there’s transit.” Walentas, who was wearing the familiar Brooklyn uniform of jeans, New Balance sneakers and a blue hoodie, and his father, David, own a good chunk of Dumbo, an investment that has made them rich — house in the Hamptons, vacations heli-skiing — beyond the wildest dreams of most New Yorkers.
I’ve known Walentas since the early 2000s, when I rented a desk in one of his many buildings in the neighborhood, a turn-of-the-century factory that has since been converted into multimillion-dollar condominiums. This is pretty representative of Dumbo’s overall trajectory over the last two decades. It’s a stark transformation that would have been impossible to predict when his father first started buying up the neighborhood’s underutilized properties in the early 1980s, before it was widely known as Dumbo. What enabled it to happen wasn’t just the neighborhood’s excellent subway access — it’s sandwiched between the F line and the A line — or the city’s economic recovery, or even the exodus of rich people priced out of Manhattan by even richer people. The transformation of Dumbo required something much simpler: a change in the zoning law. For years, the neighborhood had been restricted to only manufacturing uses, a legacy of the city’s losing battle to retain industrial jobs in the 1960s. In the late ’90s, Walentas and his father were able to persuade the city to jettison these old rules and allow them to completely remake the neighborhood, filling old factories with loft apartments, design-and-tech-centric offices, retail stores, artists’ studios and new condo towers. In the subsequent 20 years, as the neighborhood changed, average condo prices rose from $200 per square foot to more than $1,500. More recently, Walentas has pushed north into Williamsburg, leveraging similar rezonings there to turn a former textile factory into the trendy Wythe Hotel (near the L train) and a 19th-century Domino sugar refinery (J, M and Z) into three million square feet of office space, retail stores, parks and apartments.
Like most good-government tools, zoning sounds boring, but it is in fact a secret means by which cities are shaped and fortunes are made. If the subway delivers density, zoning determines where that density goes by doing things like placing limits on how tall buildings can rise or how many dwellings they can contain. New York’s zoning codes are byzantine, the product of years of pushing and pulling between the desire to allow the city to evolve and grow and the impulse to keep development in check. These codes have helped preserve the city’s historic buildings and neighborhoods while preventing its streets from being forever cast into darkness by endless rows of skyscrapers. But they have also had the effect of restricting the supply of housing, which has driven up prices, especially in neighborhoods with desirable buildings and good subway access. “I rent studio apartments for $3,400 a month,” Walentas told me. “It doesn’t make any sense.”