Another Mitchell-Lama Buyout?

[consigliere]

Another Mitchell-Lama development, West Village Houses, may leave the program if the owners prepay the mortgage.
 
Here's the story, Buyout has West Village Houses tenants on edge, by Elizabeth O'Brien, from the December 11, 2002 edition of The Villager:
 
 
With their rent protections coming to a possible end, many residents of West Village Houses are worried that this may be their last holiday season in their homes.
 
As early as next month, the owners of the middle-income complex could begin removing it from the Mitchell-Lama affordable housing program. In July, the landlord notified the city of its intention to buy out of the Mitchell-Lama program, allowing rents to rise to market rate. Last month, representatives from the ownership group, the West Village Associates, met with tenants at a Nov. 6 meeting to discuss their plans for the 42-building complex.
 
"The tenants were sobered by the comments of the owners and they were energized by their fellow tenants' responses and questions," said Katy Bordonaro, 48, president of the West Village Houses Tenants' Association. "At the end of the meeting, the tenants were even more committed to preserving the affordability of the West Village Houses."
 
At the Nov. 6 meeting, an attorney for the owners read a prepared statement that outlined the owners' plans to pre-pay the low-interest loan that financed the complex, freeing the 420 apartments from Mitchell-Lama rent regulations. The move would allow the owners to charge market-rate rents, which are estimated to be about three times what most residents now pay. The average rent on a two-bedroom apartment in West Village Houses is $900.
 
A spokesperson for Seward & Kissel, the attorneys representing West Village Associates, stressed that the Mitchell-Lama program was designed as a minimum 20-year program, whereby owners could opt out of the program after 20 years. Without such an incentive, the private sector would not have been tempted to get involved with subsidized housing, said Steve Vitoff, the spokesperson.
 
"It's important to take note that residents of this property have experienced unusually discounted rates over the past 20 years," Vitoff said. He added that the owners of the West Village Houses could have begun opting out of the program as early as 1996. Vitoff also stressed that all leases in effect at the time of transition would be honored.
 
Article 2 of the New York State Private Housing Finance Law provides for the voluntary dissolution by the owner of a Mitchell-Lama development, said Carol Abrams, a city Department of Housing Preservation and Development spokesperson.
 
But many residents fear that a large rent hike would force them not only out of their apartments, but out of the city at large. About 13 percent of the tenants are government employees and 21 percent work for nonprofit organizations. A large number have lived in the complex for decades.
 
"I'm 54 and I'd have to leave the city for the first time in my life - it's ridiculous," said Brian Hotchkiss, a restaurant manager who has lived in the complex for more than 20 years with his partner, Joel Jacobs, 53.
 
Hotchkiss and Jacobs said that they recently received notification that they need not submit the annual affidavit of income and tax records that Mitchell-Lama residents are required to file every spring. They interpreted that as a further sign that the owners were proceeding with plans to remove the complex from the Mitchell-Lama program.
The owners said they have been responsive to tenants' concerns.
 
"The ownership immediately reached out to the tenant leadership and local elected officials literally within the day that the decision was made to transition the property out of Mitchell-Lama," Vitoff said.
 
City Councilperson Christine Quinn was among several local politicians who pledged their support to West Village Houses tenants at the Nov. 6 meeting.
 
"I am totally, totally opposed to the owners' intention to buy out of Mitchell-Lama, and I'm going to do everything I can to keep West Village Houses affordable and to keep residents in their homes," Quinn said this week. The Councilperson added that history has shown that, "When people in the West Village work together, we're almost always successful."
 
Bordonaro said that the tenants' association has taken measures against the owners' plan with the help of the organization's long-standing attorney, Carol Ule. Bordonaro declined to comment on whether any legal action was pending, saying only, "We expect that the current status will continue for a longer period of time than the owner is saying."
 
By statute, H.P.D. must approve any changes in ownership of Mitchell-Lama housing in the city, said Abrams. She confirmed that the owners have notified H.P.D. of their intention to remove the property from Mitchell-Lama, but she said that the completion of the buyout was "many months away." Abrams said that the agency was investigating the possibility of federal rental assistance for West Village Houses residents who meet certain income requirements.
 
About one mile south of West Village Houses, the tenants of Independence Plaza North are facing a similar buyout of their Mitchell-Lama complex. To protest the expected sale of the complex and the potential rent hikes, I.P.N. tenants joined more than 200 marchers outside City Hall last week to call on the mayor to address the city's growing housing crisis.
 
On Tuesday, Mayor Michael Bloomberg mentioned the need to preserve affordable housing in a major speech on the city's future housing plans. Bloomberg said that $3 billion in public spending would be allocated to finance some 27,000 new housing units and to preserve 38,000 more. Bloomberg did not mention Mitchell-Lama developments by name.
 
Many West Village Housing residents undoubtedly hoped that the mayor was speaking to their situation. If their rents are raised to market rates, Bordonaro said, "I don't think anyone would be able to take that kind of a hit."