NY Times article re: Southbridge leaves Mitchell-Lama

Click here for NY Times Article

My Letter to the Editor:

Your article “Divided by a Windfall” in the on November 16 Real Estate section seems to call out the pro-privatization co-operators of Southbridge Towers as profiteers getting a windfall at the cost of affordable housing. What your article neglects to mention is that going private is the natural, planned evolution of a Mitchell-Lama co-op. The law under which the Mitchell-Lama program was created gives the right for Mitchell-Lama co-ops to buy their way out of the program after 30-40 years. The reason for this is that it was understood that buildings of a certain age start to require expensive repairs and the low maintenance scenario no longer works if the building is to be self-sustaining. If buildings stay in the program, the residents will become subject to steep assessments for repairs like new windows, roofs, major repairs, etc. or the building will become derelict.  An example of this is Co-Op City in the Bronx where the garage has crumbled and been closed for years since they do not have money to make the repairs. With the crisis of revenues for local and state governments, the governmental agencies that oversee the Mitchell-Lama properties no longer have funds to make low-interest loans to buildings that cannot afford their own major repairs.

The intent of the brilliantly conceived Mitchell-Lama program in the ’50s was that the monies received by the government agency from Mitchell Lama co-ops that buy out of the program is supposed to be used to build new Mitchell Lama projects and thus keep new, self-sustaining affordable housing stock coming into the market. This has never happened. Buildings going private also contribute more to the tax base as they no longer are eligible for tax breaks.

Buildings buying out of the M-L program impose flip taxes on the first sale of a unit of anywhere from 30 to 45%. These funds go to the co-op and are used for repairs and to keep maintenance reasonable.

Forcing Mitchell-Lama co-ops to stay in the program will result in buildings that cannot do necessary repairs and that eventually will become eye-sores or crumble into the ground. Residents that think that their low maintenance will continue in a building that stays in the Mitchell-Lama program past the sell-by date will face huge assessments to make necessary repairs to an aging property.

The choice to leave a Mitchell-Lama program is a right that was guaranteed by law. Politicians blocking buildings from exercising their right in the name of affordable housing are denying people their legal right. If these politicians want to support affordable housing, they should comply with the Mitchell-Lama plan, encourage buildings to follow the natural evolution of buying-out of the program and use the funds to build new Mitchell-Lama projects as was the intention of the plan. These same politicians should also not let every 6 story, rent-stabilized building in Manhattan be knocked down by greedy real estate developers to put up luxury, high-rises that no one can afford except wealthy foreigners. The tenants of the few remaining Mitchell-Lama co-ops should not bare the brunt of the city’s failure to maintain affordable housing stock.

Privatization bid rejected by NY Court of Appeals

In a 6-0 decision the NYS Court of Appeals ruled against EMP in it’s bid for privatization. The court ruled that:

  1. The privatization vote must be by apartments, and
  2. The Attorney General has the right to use the Martin Act for privatization issues.


The brilliance of the Mitchell-Lama program-Why buildings need to go private

This wasn’t mentioned by any of the respondents in the Privatization case. I hope that maybe the Court of Appeals judges will read it.

I don’t get why the people who support Mitchell-Lama, the politicians who are crying to save affordable housing and those in the EMP-MLO support part of the Mitchell-Lama program but not it’s true intent. The reason that buildings are allowed to leave the program after 20 years is because the framers of the Mitchell-Lama program understood that a multi-unit dwelling will start to need expensive repairs later in it’s life. Local Law 11 work, roof replacement, window replacement, pipes, boilers, concrete work, etc. are only a small part of it. Buildings are allowed to leave the program so that funds can be made available for these repairs. Without these funds, the buildings will crumble into the ground like what is happening to Co-Op city in the Bronx.

The 2nd part of this brilliant strategy is that the State and Local government is supposed to use the funds generated provided by a Mitchell-Lama building exiting the program (from the pre-payment of the mortgage) to build more Mitchell-Lama housing. This has never happened.

east midtown plaza