New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021

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ARCHIVE ARTICLE

The $250 Million Payoff

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.

In November 2017, Mayor Bill de Blasio had an offer for Mitchell-Lama co-ops that were considering leaving the program. De Blasio, whose re-election bid was built partly on a promise to provide more affordable housing units, had 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. 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, a partner at Nixon Peabody who worked in the state attorney general’s office for nine years on the privatization process. “If you have a co-op that’s on the edge, those additional funds to stay in the program will make a world of difference.” 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 one-bedroom apartment for $1 million is like hitting the Lotto.”

Adele Niederman, president of Cooperators United for Mitchell-Lama, told DNAinfo, a now-defunct website, that the $250 million cash infusion will play a “crucial” role 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 said. “It’s an incentive.”

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