Mitchell-Lama Legislation Proposed

[consigliere]

The story below, by Curtis Taylor, appeared in the July 23, 2003 online edition of New York Newsday:  
 
Tenant Protection Proposed
Changes take aim at Mitchell-Lama law
 
City Council Speaker Gifford Miller introduce legislation today designed to protect more than 25,000 Mitchell-Lama tenants who face eviction under state laws that allow building owners to "opt out" and convert the city-subsidized units to market-rate housing.
 
The Mitchell-Lama Conversion Protection bill would create a series of administrative loopholes making it more difficult for building owners to leave the program, including extending the city conversion notification length from 12 to 18 months.
 
"Instead of exacerbating our city's growing housing crisis, we should be making every effort to solve it," Miller told a crowd of angry Mitchell-Lama tenants protesting possible evictions at the City Hall rally. "At a time when tenants are already being hit with an unfair rent hike and the gradual erosion of rent protections, we have to say clearly that enough is enough."
 
The bill would also impose a $1,000 per unit administrative fee to offset the city's Housing Preservation and Development agency (HPD) cost for managing strict, local and state compliance regulations to exit the program, Miller said. It would also check to ensure owners had complied through the years with the terms of the original state agreement.
 
The bill would require approval from Albany lawmakers, officials said.
 
City Councilwoman Margarita Lopez (D-East Side) has re-introduced legislation, pending in Albany, that would grant home rule authority to New York City to institute rent stabilization for Mitchell Lama buildings where owners choose to leave the program.
 
The Miller legislation comes a day after the Bloomberg administration announced that it would spend $50 million to build 300 units of middle-income housing in Lower Manhattan. It was not immediately clear whether Mayor Michael Bloomberg would support the proposed legislation.
 
The Mitchell Lama program was created in the 1960s providing builders with large state subsidizes to stimulate development of more than 150,000 units of affordable, middle-class housing that included a sunset provision allowing owners the option to leave the program after a set period.
 
Owners of the Independence Plaza complex in Tribeca have notified tenants of plans to "opt out" and charge current market rates for the units.
 
Protester Neil Fabricant, tenant association president of the 1,300-unit Independence Plaza North, said: "We have to keep New York a place where it's possible to live decently, even if you're not a millionaire."
 
The owner of the Independence Plaza complex was not immediately available for comment.
 
City Council Members Alan Jay Gerson (D-Lower Manhattan), Robert Jackson (D-Washington Heights, Christine Quinn (D-Chelesa), Eric Gioia (D-Woodside), and Hiram Monserrate (D-Corona) also attended the rally.
 

[consigliere]

The article below, by Lisa Colangelo, appeared in the July 23, 2003 online edition of the New York Daily News:
 
Delaying Mitchell-Lama hikes
 
Tenants in some of the city's most desirable affordable housing may get a little extra time before their landlords can hike rents to market rates.
 
A bill unveiled yesterday by City Council Speaker Gifford Miller would require owners of buildings in the Mitchell-Lama program to give tenants 18 months' notice before raising rents, instead of the current 12.
 
"We all know New York City is in the midst of a tremendous affordable housing crisis," Miller (D-Manhattan) said at a City Hall news conference.
 
The Mitchell-Lama program had its heyday in the 1960s and 1970s. It encouraged developers to build affordable housing for middle-class families in return for breaks on taxes and mortgages. But landlords can leave the program after 20 years.
 
Miller's bill would force the city's Department of Housing Preservation and Development to conduct a community impact study before approving conversions and make sure an owner has "substantially complied" with all regulations.
 
Developers dislike the plan
 
"The Mitchell-Lama program stands as a contract between government and the private sector, and any change being proposed by the City Council would clearly be a breach of that contract," said Steven Spinola, president of the Real Estate Board of New York. "Changing the rules now would be a serious breach of faith and would dissuade investors from creating much-needed units of new affordable housing in the future."
 

[consigliere]

The item below, by Winnie Hu, appeared in Metro Briefing: New York in the July 23, 2003 online edition of The New York Times:
 
BILL SEEKS HOUSING PROTECTION
 
The City Council plans to introduce legislation today that would expand protections for middle-income tenants of city-subsidized housing developments built under the Mitchell-Lama program in the 1960's and early 1970's. The proposed bill would require owners who want to remove their buildings from the program and charge higher rents to give 18 months' notice to tenants, instead of the 12 months currently required. The bill would also direct the city's Housing Preservation and Development Department to undertake a community impact study of a proposed building conversion to assess, among other things, how many tenants would be forced to move.
 

[consigliere]

The article below, by Albert Amateau, appeared in the July 23, 2003 online edition of The Villager:
  
Miller backs Mitchell-Lama protection bill
 
More than 200 residents of Mitchell-Lama housing developments throughout Manhattan came to the steps of City Hall on Tues. July 22 to hear City Council Speaker Gifford Miller introduce legislation aimed at protecting tenants at risk of losing affordable housing when landlords leave the Mitchell-Lama program.
 
Tenants chanted "Save our homes," and cheered the provisions of the proposed Mitchell-Lama Conversion Protection bill, which has the support also of Councilmembers Alan J. Gerson, Christine Quinn and Margarita Lopez.
 
The Mitchell-Lama law, enacted 43 years ago, allows landlords to leave the program and charge market-rate rents after 20 years if they pay off outstanding mortgages and taxes.
 
The proposed legislation is intended to make it more difficult and expensive for owners to leave the affordable housing program. If enacted, the bill could affect an estimated 25,000 Mitchell-Lama units in the city, including 1,340 apartments at Independence Plaza North in Tribeca and 420 apartments in West Village Houses in the Village, which are in the process of leaving the program.
 
I.P.N. and West Village Houses tenant associations want to acquire the buildings and create limited-equity co-ops.
 
"We're here for one specific reason," Gerson told the crowd. "That is to say we will not be moved. This is a fight for the heart and soul of the community. The tenants of I.P.N. moved in when this was a barren neighborhood and built a community. Then after 9/11 they lived through the worst of the worst. We're not going to let a so-called sunset provision in the Mitchell-Lama law do what the terrorists were not able to do — force us out of the neighborhood."
 
However, Steven Spinola, executive director of the Real Estate Board of New York, denounced the proposed legislation in a statement released later on Tuesday.
 
"Changing the rules now would be a serious breach of faith and would dissuade investors from creating much-needed units of new affordable housing in the future," Spinola said. "The Mitchell-Lama program stands as a contract between government and the private sector, and any change being proposed by the City Council would clearly be a breach of that contract resulting in the loss of trust in government. We also question the City Council's authority to enact such changes, but even the attempt to do so is sending a terrible message."
 
Miller, however, said that while the state has tremendous authority in Mitchell-Lama matters, "we believe that these steps can be taken by the Council." The proposed legislation, he said, "gives the Department of Housing Preservation and Development the tools to negotiate on behalf of the tenants and the city."
 
Referring to the $50 million city, state and federal program to build 315 affordable apartments in Lower Manhattan that was announced by the mayor and the governor on July 21, Miller said, "That's really good.  
We need 315 more units of affordable housing. But what about the 25,000 affordable Mitchell-Lama apartments that can be saved at a fraction of the cost?"
 
The proposed legislation would apply to Mitchell-Lama rental apartments supervised by the city Department of Housing Preservation and Development and built after Jan. 1, 1974, meaning that they are not subject to rent stabilization if landlords buy out of the program.
 
H.P.D. would be required to do an impact study on the effect of a building's leaving Mitchell-Lama. The study would examine the rent increases that tenants would have to pay, the availability of affordable housing and the number of families likely to be displaced as a result of higher rents. The owner would then have to pay for mitigating any adverse effects on tenants.
 
Miller said the legislative process would begin when the Council reconvenes in September.
 

[MikeW]

Does anyone think this bill stands a snowball' chance in hell of passing? I certainly don't. I doubt it will ever see the light of day in the state senate.

[consigliere]

MikeW asked:
 
Does anyone think this bill stands a snowball' chance in hell of passing? I certainly don't. I doubt it will ever see the light of day in the state senate.
 
 
This bill is being proposed by the New York City Council -- not by the state legislature. With Speaker Miller's backing, the bill will likely pass. Whether Mayor Bloomberg will sign it, or whether the Council will override a mayoral veto, are separate issues.
 
The City Council has passed very little Mitchell-Lama legislation. Many years ago, the Council passed a law which requires HPD to hold a hearing to evaluate a landlord's request for a rent increase in a city-supervised Mitchell-Lama development. The Mitchell-Lama law has no such requirement, and I don't believe that DHCR holds such hearings for state-supervised Mitchell-Lama developments.
 
There could also be a question whether the bill conflicts with the Urstadt law, which limits what the city can do in the way of regulating rents, at least for rent controlled and rent stabilized apartments.
 

[consigliere]

The article below, by Cassi Feldman, appeared in the July 28, 2003 online edition of City Limits Weekly:
 
MITCHELL-LAMA DRAMA: CITY BILL DIVIDES A CAMPAIGN
 
As City Council members push a bill to save Mitchell-Lama housing, tenants in some of those subsidized developments say the legislation simply detracts from the larger effort to keep the buildings affordable.
 
New legislation to protect residents of city-run Mitchell-Lama apartment buildings was announced with much fanfare on the steps of City Hall last week- but not everyone is cheering. Some longtime tenant activists say the law, which only applies to 13,446 of the nearly 120,000 Mitchell-Lama housing units in New York City, threatens to divide the broader movement.
 
A statewide program started in 1955, Mitchell-Lama offered tax breaks and low-interest loans to developers in exchange for keeping buildings affordable for 20 years. Now these contracts have begun to expire, giving owners the right to opt out of the program -- and, in some cases, dramatically raise rents.
 
The new bill, sponsored by Councilmembers Alan Gerson, Christine Quinn, Gale Brewer, and Speaker Gifford Miller, would require owners of city-supervised, post-1973 Mitchell-Lamas to give tenants 18-months notice before leaving the program, and to pay the city $1,000 per unit in administrative fees.
 
Meanwhile, the city's department of Housing Preservation and Development (HPD) would make sure owners had fully complied with the terms of their contracts, and conduct "community impact studies" on how the conversions would affect residents. The owner would have to mitigate any negative consequences by working with tenants or with HPD.
 
At face value, the bill looks great, and several tenant associations and community groups have already signed on. But some members of the Mitchell-Lama Task Force, created by Manhattan Borough President C. Virginia Fields in 1999, worry that the bill is too narrowly focused to help most tenants, and could divert attention from more expansive bills pending in Albany, where the fates of most Mitchell-Lamas are controlled. One bill, sponsored by Assemblymember Vito Lopez, would offer landlords another period of tax breaks if they stay in the program. It has already passed both houses and only awaits Gov. George Pataki's signature.
 
"This is directed at city-owned Mitchell-Lamas, not state-owned ones, and it's geared mostly toward rentals and not co-ops. I think there is a danger in pitting tenants [against each other]," said Louise Sanchez, co-chair of the Mitchell-Lama Residents Coalition.
 
Others have expressed concerns that the legislation might not stand up to a constitutional challenge. "My prediction is it's going to be beaten down by the courts," said Bob Woolis, also a coalition co-chair.
 
Councilmember Brewer, who has 21 Mitchell-Lamas in her district, hopes he's wrong. The legislation, scheduled for hearings in September, isn't a cure-all, she says, but it brings new energy and publicity to a battle she's been fighting for years. "Albany can really fix the problem and they either will or they won't," she says, "But I don't think this legislation will come in the way."
 

[consigliere]

The article below, by Albert Amateau, appeared in the July 29, 2003 online edition of the Downtown Express:
 
Council says bill would protect middle-income housing
 
More than 200 residents of Mitchell-Lama houses throughout Manhattan came to the steps of City hall on Tues. July 22 to hear City Council Speaker Gifford Miller introduce legislation aimed at protecting tenants at risk of losing affordable housing when landlords leave the Mitchell-Lama program.
 
Tenants, many of them from Independence Plaza North in Tribeca, chanted "Save our homes," and cheered the provisions of the proposed Mitchell-Lama Conversion Protection bill, which has the support of Councilmembers Alan Gerson, Christine Quinn and Margarita Lopez.
 
The Mitchell-Lama law, enacted 43 years ago, allows landlords to leave the program and charge market rate rents after 20 years if they pay off outstanding mortgages and taxes.
 
The proposed legislation is intended to make it more difficult and expensive for owners to leave the affordable housing program. If enacted, the bill could affect an estimated 25,000 Mitchell-Lama units in the city, including 1,340 apartments at I.P.N. and 420 apartments in West Village Houses in the Village, which are in the process of leaving the program.
 
I.P.N. and West Village Houses tenant associations want to acquire the buildings and create limited equity co-ops.
 
"This is a fight for the heart and soul of the community," Gerson told the crowd. "The tenants of I.P.N. moved in when this was a barren neighborhood and built a community. Then after 9/11, they lived through the worst of the worst. We're not going to let a so-called sunset provision in the Mitchell-Lama law do what the terrorists were not able to do – force us out of the neighborhood."
 
However, Steven Spinola, executive director of the Real Estate Board of New York, denounced the proposed legislation in a statement released later on Tuesday.
 
"Changing the rules now would be a serious breach of faith and would dissuade investors from creating much-needed units of new affordable housing in the future," Spinola said. "The Mitchell-Lama program stands as a contract between government and the private sector, and any change being proposed by the City Council would clearly be a breach of that contract resulting in the loss of trust in government. We also question the City Council's authority to enact such changes, but even the attempt to do so is sending a terrible message."
 
Miller, however, said that while the state has the tremendous authority in Mitchell-Lama matters, "we believe that these steps can be taken by the Council." The proposed legislation, he said, "gives the Department of Housing Preservation and Development the tools to negotiate on behalf of the tenants and the city."
 
Neil Fabricant, I.P.N. tenants association president who helped draft the bill, said later he was sure the measure "would help push Mitchell-Lama landlords, and in particular, Larry Gluck [new owner of I.P.N.] to do the right thing and reach a reasonable agreement with tenants."
 
The proposed legislation would apply to Mitchell-Lama rental apartments supervised by the city Department of Housing Preservation and Development and built after Jan. 1, 1974 and therefore not subject to rent stabilization if landlords buy out of the program.
 
H.P.D. would be required to do an impact study on the effect of a building's leaving Mitchell-Lama. The study would examine the rent increases that tenants would have to pay, the availability of affordable housing and the number of families likely to be displaced as a result of higher rents.  
The owner would then have to pay for mitigating any adverse effects on tenants.
 
Prior to final approval of a buy-out, H.P.D. would have to determine whether the owner had substantially complied with Mitchell-Lama laws and regulations. If the agency finds the owner did not comply, the new legislation allows a civil penalty equal to three times the amount of damages suffered by tenants or the city.
 
The bill requires landlords to notify tenants 18 months in advance of a buy-out, compared to 12 month notice required now. In addition, the bill authorizes owners and tenants to enter into voluntary comprehensive agreements intended to maximize preservation of affordable housing for any tenant in a building at the time of a buy-out.
 
The legislation would set an administrative fee of $1,000 per apartment to offset the cost to H.P.D. of administering the law.
 

[consigliere]

The item below appeared in the July 22, 2003 online edition of Crain's New York Business:

New proposal for Mitchell-Lama

City Council Speaker Gifford Miller is expected today to propose legislation that would make it harder for owners of Mitchell-Lama buildings to opt out of the program.

Under the proposal, landlords opting out of the program would have to give more than the year's notification now required and would have to submit to a study of the impact on tenants and affordable housing. The law also would encourage owners to develop agreements with tenants to preserve affordable housing in the city.

The speaker's proposal is the latest parry in a battle by tenant advocates to block landlords from leaving the Mitchell-Lama program or from charging market rents when they do. Currently, if owners of Mitchell-Lama rentals built after 1973 leave the program, the apartments can be rented at market rates. An earlier attempt this year to short-circuit the market rate provision failed when an Assembly bill that would have made such projects subject to rent stabilization laws died. What's not clear is whether the city needs state approval to impose new requirements for Mitchell-Lama buildings.

The Mitchell-Lama program offers tax breaks and low-cost mortgages to developers who accept below-market rents and limits on profits. Developers can leave the program if they prepay their mortgages. At the beginning of the second quarter, a dozen Mitchell-Lama projects were seeking to leave the program, including eight post-1973 projects with 4,547 units, all of them in Manhattan.
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[consigliere]

The item below appeared in the July 29, 2003 online edition of Crain's New York Business:

Tenant advocates see Mitchell-Lama snag

Some tenant advocates say that the proposed City Council bill that would make it difficult for landlords to opt out of Mitchell-Lama projects will actually undercut attempts in Albany to expand the rights of tenants.

The bill would require that landlords notify tenants of their intentions 18 months in advance instead of 12, would call for an impact study and would levy a $1,000-per-apartment fee on landlords that opt out. The measure would apply to some 14,000 post-1974, city-supervised rental units, or about 12% of all Mitchell-Lama units in New York City.

If it passes, landlords are expected to sue to overturn it -- a move that could result in months of litigation and put off any pro-tenant action at the state level.
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[consigliere]

The article below, by Thomas Adcock, appeared in the August 18, 2003 online edition of the New York Law Journal:

New York Associate's Pro Bono Project Becomes City Bill

Behind the hot-potato housing bill to be considered next month by the New York City Council are key questions raised by Chad A. Marlow, a litigation associate at Orrick, Herrington & Sutcliffe with a useful background in politics.

Mr. Marlow, 31, a graduate of the University of Virginia School of Law who worked in Washington, D.C., for Senator Edward M. Kennedy, D-Mass., simply asked himself:

* Why have all legislative attempts in Albany to keep tenants of modest means in apartment buildings structured by tax law under the Mitchell-Lama Housing Program of the 1950s come to nothing?

* Limited as they may be, what powers might New York City have to accomplish what Albany cannot or will not do?

These questions arose two years ago when Mr. Marlow's firm represented a tenants' group at Independence Plaza, an apartment complex in lower Manhattan built as Mitchell-Lama housing. Because Orrick is not a licensed lobbying firm, Mr. Marlow signed off when firm's immediate pro bono project was complete. He then went privately political, with the help of the Village Independent Democrats, of which he is currently president.

The result is the Mitchell-Lama Conversion Protection Bill, sponsored by City Council Speaker Gifford Miller, D-Manhattan. The proposed law would utilize the city's power of neighborhood impact fees to draw landlords and tenants into negotiations when the original owners of Mitchell-Lama become free under their state contracts to sell their properties for profit. In practice, these "buyouts," as they are called, often boost rents beyond possibility for long-term tenants.
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