Mitchell-Lama - Rent to Own?

[consigliere]

The item below, by Cassi Feldman, appeared in the November 10, 2003 online edition of City Limits:

RENT-TO-OWN

New City Council legislation could keep thousands of Mitchell-Lama and Section 8 units affordable. Will landlords let it happen?

A new City Council bill designed to protect New Yorkers who live in affordable housing is already generating a flurry of excitement and concern. And it hasn't even been introduced yet.

The bill, sponsored by Councilmember Alan Gerson, would grant tenant associations a chance to buy their buildings if their landlords decide to opt out of an affordable housing program, such as Mitchell-Lama or Section 8. The tenants, in turn, would have to incorporate as nonprofits and agree to keep rents affordable. In Gerson's Lower Manhattan district alone, the plan could save 5,000 units at risk for conversion.

If the tenants choose not to exercise their "right of first option" within 90 days, it would be offered to local not-for-profits and then to the city itself before the building could be sold on the private market. Gerson also hopes to develop a trust fund to help tenants who wish to purchase.

He describes the bill as a "win-win-win" for the city, for tenants and for owners, who will still be able to profit from their investments. But local landlords might disagree. They will no doubt argue, as they have regarding another recent Mitchell-Lama bill, that the city is trying to change the rules of their contracts midstream. Jack Freund of the Rent Stabilization Association said he had yet to see the bill and could not comment on its contents.

Gerson, working closely with city lawyers, is confident that the legislation can withstand a legal challenge because it applies only to owners whose contracts are ending. Besides, he said, a precedent has been established elsewhere. "We're taking what's been done in other cities and applying it to New York," he said.

The legislation, still in draft stage, is expected to be introduced later this month--not a moment too soon for tenant activist Marie Christopher. Her 171-unit building at 210 Stanton Street is slated to lose its project-based Section 8 subsidy in February.

But even Christopher, who helped inspire the bill, has doubts about its future. "We know this is revolutionary legislation," she said. "We know we're in for the fight of our lives."

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[Cranky Tenant]

If the tenants choose not to exercise their "right of first option" within 90 days, it would be offered to local not-for-profits and then to the city itself before the building could be sold on the private market. Gerson also hopes to develop a trust fund to help tenants who wish to purchase.

Not that I'm particularly sensitive to landords or developers but, this seem either too good to be true, or too true to be good.

A number of years ago I looked up the purchase prce for my turn-of-the-century tenement 3.5 million dollars. If you divide that price by the number of units, it works out to about $100,000 per unit . I have no idea what it cost to build something like Independence Plaza but I doubt the cost per unit figures work out to anything more "affordable."

Allowing local Not-For-Profits to manage housing could be questionable, at best, and the City has a terrible record of maintaining housing. Last but not least, where's the incentive fo build new housing if the City will prevent builders from ever making a profit?

<small>[ November 16, 2003, 07:05 PM: Message edited by: Cranky Tenant ]</small>