Cadman Towers in Brooklyn Heights Becomes HDFC, Ensuring Future Affordability

Cadman Towers, an affordable, 421-unit Mitchell-Lama co-op in Brooklyn Heights, has made history. For the first time, the city council has approved a tax break that allows the co-op to convert into another type of city-sponsored affordable co-op known as an HDFC, for Housing Development Fund Corporation.

“It’s to make sure we’re affordable for the next 50 years and beyond,” Toba Potosky, the co-op board president, tells The City.

Under the conversion plan, known as the Article 2 to 11 program, shareholders who sell their units will do so at prices pegged as affordable to households earning 80% of the area median income, equivalent to about $100,000 in income for a family of two. The added revenue for the co-op will come from a transfer fee, also known as a flip tax. First-time sellers must give 50% of their profits back to Cadman Towers to cover building needs and the co-op's existing $62 million in debt. For future sellers of the unit, the fee drops to 3%.

Though 77% of the shareholders voted in favor of the conversion, it has stoked heated debate. In an article in Habitat last year, Potosky argued that the conversion was the ideal solution to the co-op's problems, which include steep maintenance increases in recent years. The conversion, he wrote, is "designed to restore financial stability and preserve affordability for aging Mitchell-Lamas at no additional cost to the city, the state or existing residents."

Also writing in Habitat, Adele Niederman, president of Cooperators United for Mitchell-Lama, derided the conversion plan as "privatization lite." She contended that it is "untested, unsound, destructive and unnecessary. All it achieves is the unjust enrichment of current shareholders at public expense. It should be immediately discontinued."

One thing everyone can agree on is that the big losers are the people on the waiting list to buy an apartment at Cadman Towers. With the conversion, the old list gets wiped out and a new one will be created by lottery through Housing Connect, run by the Department of Housing Preservation and Development.

Councilmember Lincoln Restler, a Democrat who represents Brooklyn Heights, supported the conversion but acknowledges the hard decision. “This is a transition from one type of affordable housing cooperative to another type of affordable housing cooperative,” he says. “We have a choice to make between hurting the existing low-income residents at Cadman or hurting future low-income residents who want to live at Cadman.” Restler adds that he has “great sympathy” for someone on the old waitlist, but he doesn't believe “we can afford to make decisions for the future stability of affordable housing developments based on a waiting list.”