City Offering $250 Million to Mitchell-Lamas to Stay Put

For more than half a century, Mitchell-Lama co-ops have been a bulwark in New York City’s affordable housing stock. But they have come under siege in recent years as galloping real estate values have induced many shareholders to opt to leave the program and go to market-rate sales – some 20,000 units over the past 30 years. While many wallets have been fattened, the city’s affordable housing stock has suffered. 

On the eve of next week’s Election Day, Mayor Bill de Blasio has dangled a very plump carrot in front of Mitchell-Lama co-ops that are considering leaving the program. De Blasio, whose re-election bid is built partly on a promise to provide more affordable housing units, has set aside $250 million for loans, tax breaks and repairs at Mitchell-Lamas – provided they agree to stay affordable for at least another 20 years. 

“There are about 45,000 apartments in this city in Mitchell-Lama buildings that now are threatened with falling out of affordability and going market-rate,” de Blasio said in announcing the windfall. “Our job is to stop that.” The city’s goal is to create 300,000 affordable apartments by the year 2026, an effort that is thwarted every time a Mitchell-Lama votes to privatize. 

The announcement was cheered by advocates of affordable housing, but many say a bigger commitment is needed. 

“I think any effort the city makes to preserve Mitchell-Lamas is good,” says attorney Erica Buckley of Nixon Peabody, who worked in the state Attorney General’s office for nine years, on the privatization process and other issues. “If you have a co-op that’s on the edge, like St. James in Brooklyn, those additional funds to stay in the program will make a world of difference. On the other hand, if you have a co-op that just wants to cash in and go to market rate, it won’t matter.” 

The temptation to cash in, Buckley notes, is acute. “The New York City real estate market just seems to grow and grow,” she says. “Some Mitchell-Lama co-ops are in prime locations, where selling a 1-bedroom apartment for $1 million is like hitting the Lotto.” 

Buckley could have been referring to Cadman Towers, a 421-unit Mitchell-Lama in Brooklyn Heights, where shareholders have campaigned repeatedly – and so far unsuccessfully – to privatize. Successful campaigns to privatize are having an adverse effect on the city, in the eyes of Cadman Towers co-op board president Toby Potosky. 

“My fear is that we’re moving toward New York becoming a gated community – not just in Manhattan, but in the outer boroughs, too,” Potosky says. “I think this $250 million is a small step toward the mayor’s goal of creating and keeping affordable units. I really would like to see the mayor put together a consortium of developers and offer a billion-dollar incentive to build affordable housing. You’ve got to take the bull by the horns. This city needs thousands of affordable units – and it’s doable.” 

Adele Niederman, president of Cooperators United for Mitchell-Lama, tells DNAinfo that the $250 million cash infusion will play a “crucial” in convincing shareholders to stay in the affordable-housing program. It will allow co-op boards to tackle major capital projects – elevators, windows, heating systems – while keeping maintenance fees low. “You can’t use the money and [then] say five years later, ‘Bye-bye!’” Niederman says. “It’s an incentive.”