The Seven Worries of New York City’s Mitchell-Lama Tenants

Between 1955 and 1978, the state’s Mitchell-Lama Housing Program produced about 135,000 units of affordable housing statewide by offering low-interest loans and tax exemptions to developers to build affordable rental and cooperative buildings. Yet as developments paid off their initial mortgages and reached the end of the 20- to 35-year initial term of the program, thousands of Mitchell-Lama buildings have privatized, reducing the total program stock to less than 97,000.

The City Council held a series of hearings during the height of the exodus—in 2000, 2003, 2009—but oversight waned as the recession cooled the privatization frenzy. As the housing market heats back up, the city once again faces the threat of losing units.

On Monday, about 300 people packed Brooklyn Borough Hall to discuss the state of the city’s Mitchell-Lama developments. The four-hour hearing, convened by the Committee on Housing and Buildings and co-hosted by Borough President Eric Adams, began with the beep admonishing the two agencies that manage the program. “The New York City Department of Housing Preservation and Development and the New York State Division of Housing and Community Renewal must do more to support these developments and protect the affordability for current and future residents,” Adams said.

But he added that the City Council also bears responsibility for the lack of oversight of the Mitchell-Lama program, which faces seven broad problems, according to tenants who testified.

1. Skipping the lines

Since 2008, three separate audits (by the state comptroller, the city comptroller and a state inspector general) have shown many Mitchell-Lama developments fail to comply with rules governing admissions to vacant apartments, such as by failing to follow the order of applicants on the waiting list.

HPD has pledged to digitize waiting lists to provide more transparency, and has hired two new staff members to ensure building managers are in compliance. HPD Assistant Commissioner Julie Walpert explained that HPD ensures applicants who have been wrongly skipped receive priority for the next opening apartment.

The Committee on Housing and Buildings was not too pleased with the progress of reform. Jumaane Williams, chair of the committee, expressed frustration that the department did not have an aggregated list of skipped applicants, or a list of people complaining they have been skipped. Councilmember Helen Rosenthal urged Walpert to ask the City Council for funding so that the agency could start putting waiting lists online.

2. Untrained boards

At cooperative Mitchell-Lamas, which make up two thirds of the city’s Mitchell-Lama stock, a board of directors makes key decisions about finances and management. Elected officials were appalled that HPD had discontinued its training program for board members.

“Why did you stop?” Williams asked.

“Resources,” answered Walpert.

“That’s not good. Did HPD request any resources from the city to continue the board training?”

“We did not, no.”

Asked when exactly the training program had been discontinued, Walpert couldn’t recall.

3. Suspect elections

Shareholders from multiple developments complained about undemocratic election processes. About a dozen residents of Lindsay Park—where the board is currently under investigation for corruption by the Brooklyn District Attorney—complained about mismanagement by their board, which they believe has stayed in power for over a decade using an unfair “proxy” system in which residents are encouraged to sign over their voting privileges to others. Board President Cora Austin has repeatedly rejected the charge that the proxy system is unfair, and in 2014 HPD told DNAinfo that the building’s proxy system complied with HPD rules.

City Council members clearly wanted HPD to take more responsibility for correcting problematic elections, but had difficulty pinpointing how HPD should change its policies. Walpert said HPD is committed to ensuring boards are elected fairly and that the agency overlooks all election documents to ensure they comply with each building’s bylaws, but that she had no legal power to ban a proxy system.

 4. Exiting co-ops

While about half of the state’s rental Mitchell-Lamas have left the program, cooperative Mitchell-Lamas can only exit through a supermajority vote by shareholders and so far only 7 percent of cooperatives have left the program. Yet privatization can be tempting to shareholders: while residents in Mitchell-Lama cooperatives can only sell their apartments at the price they bought, privatization allows shareholders to sell their apartments at market rates.

HPD has negotiated with many Mitchell-Lama landlords and cooperative owners to stop units from exiting the program. Currently, about 70 Mitchell-Lamas in HPD’s portfolio are locked into a regulatory agreement, while another 20 are at risk of privatization. Five of those twenty, including one rental and four cooperatives, have expressed interest in privatizing.

Walpert said HPD works to inform shareholders about the consequences of privatization, and the agency has increased the number of votes required to leave the program. HPD also offers a program called “Article II to Article XI,” which allows Mitchell-Lama cooperatives to transition into a program that restricts sales of coop units to families within a specific income range.

Yet Joyce Stickney, a resident of Saint James Tower, said HPD was unwilling to inform her building’s shareholders about the risks of privatization. “I said to HPD, aren’t you going to come out and give us some straight, unbiased information?” she testified. “They said: we can’t because we will get sued by your board. We have been sued by other boards.”

Other shareholders, representing the anti-privatization organization Cooperators United for Mitchell-Lama, called on legislators to institute new policies to restrict privatization, such as by forbidding privatization at coops receiving municipal tax abatements, and eliminating the Article II to Article XI program.

5. Decrepit buildings

As Mitchell-Lama developments age, many fall into states of disrepair. An investigation in October found that rental Mitchell-Lamas make up five of the top 12 subsidized developments with the worst mold and vermin violations.

Walpert said that HPD conducts periodic physical inspections to make sure properties are maintained and has helped Mitchell-Lama developments obtain loans to address capital needs. In the past, HPD has said that at some complexes, rent increases have not kept up with rising operating costs, leaving landlords lacking funds to make repairs. In De Blasio’s Housing New York plan, the administration vows to work with the state to find new funding streams and to encourage landlords to develop underused property in order to pay for repairs.

Yet residents complained about HPD’s response time to violations, and Williams wanted to know whether HPD should hire more inspectors. Gale Brewer called on HPD to make forgivable loans available to Mitchell-Lamas to prevent residents from shouldering the costs of repairs.

6. Sudden rent increases

To pay for repairs—or take on new debt in order to remain in the Mitchell-Lama program—many Mitchell-Lama residents say they have suffered sudden increases in rent and maintenance fees. Mary De Suze, a resident of Linden Plaza, disputed the legality of a 93 percent rent increase that hit tenants after the landlord took on a new $50 million loan to pay for renovations.

Some residents from Lindsay Park said that in 2008 they’d accepted a 31.5 percent increase in maintenance fees to cover repairs that never materialized; they were told after the fact that the increased revenue had been appropriated to pay the costs of emergency repairs. In 2012, residents said, they accepted another increase of more than 20 percent.

Brewer called on HPD to provide more oversight of rent increases. She mentioned three buildings—Independence Houses, Tanya Towers, Clinton Towers—where she says landlords asked for rent increases based on faulty calculations or improperly filed for an increase.

Betsy Eichel, a tenant organizer at Housing Conservation Coordinators, Inc., recommended that buildings should have their yearly rent increases tied to the Rent Guidelines Board’s limits on rent increases, an idea Julie Walpert also proposed last year.

7. No complaint process

Asked how residents can register a complaint about their development, Walpert said there were plenty of ways to get in touch.

“They can call us. They can e-mail me … There’s a Mitchell-Lama e-mail address…I have property managers assigned to each development. They can contact the individual property managers on my staff. They can call 311.”

Asked if complaints are given tracking numbers, she explained, “When they come in, depending on how they come in, they’re tracked with different tracking numbers, so it depends on what the issue is.”

But some residents complained of a lack of a clear process to report grievances. Linden Plaza resident De Suze said that when she contacted Walpert and another HPD official, she never received a tracking number.

City Council members also called for more coordination between Walpert and HPD’s Inspector General. Walpert said that she regularly refers hundreds of complaints to the Inspector General and communicates frequently with that office, but she did not know how often complaints had been dismissed and how often they had been successful.

HPD certainly heard the complaints offered at Monday’s hearing: Contrary to what some on the dais perceived, agency representatives remained at the hearing after Walpert’s testimony. The place was so full of concerned tenants, however, that HPD had to listen from the overflow room, according to a spokeswoman.