Mitchell-Lama Housing Program

Tenants in rental buildings built before 1974 go into rent stabilization upon leaving Mitchell-Lama. That means their rents increase according to the New York City Rent Guidelines Board orders for each new lease[6] as well as according to orders by the New York Office of Rent Administration for, among other things, major capital improvements [7] and landlord hardship.[8]

Upon leaving Mitchell-Lama, the owners of rental buildings built since 1974 can raise rents without restriction. Tenants whose buildings had federally-subsidized "236" mortgages may qualify for federal "enhanced" vouchers, which allows them to pay at least what they were paying and no less than 30% of their income in rent, with a government paying the balance. Tenants who do not qualify for enhanced vouchers, including all tenants in post-1973 buildings that were not federally subsidized, must pay the rent set by the landlords.[9] That the buildings are no longer in a rent-regulation program poses a particular problem for tenants who were receiving special subsidies that may not cover the new, higher rent payments, such as subsidy programs because of poverty[10] age,[11] and disability.[12] In some of the buildings, tenant associations are negotiating "landlord assistance plans" (LAPs) to implement the increases at a slower rate and to protect some of the weakest tenants. The plans are often limited to a specific number of years, and upon their expiration, tenants may be vulnerable. LAPs do not preserve the stock of affordable housing for future tenants.

After a certain period of years, owners of Mitchell-Lama limited equity housing co-operatives may decide according to their co-op voting rules to "privatize" or demutualize their building as well. That may permit them to sell their apartments, often at a high profit, but it can potentially increase the maintenance fees of remaining residents since the building loses its tax abatement and may have increased payments for a non-subsidized mortgage. Flip taxes on resales can be used to mitigate such increases, but that is up to the co-op boards. There is some effort to require them by legislation, but that has so far been unsuccessful. Such demutualization thus simultaneously diminishes the stock of affordable housing in a given area and increases tax revenue.[13]

Some politicians have proposed bills[14] to the New York State legislature that would put all buildings leaving or that have left Mitchell-Lama into rent stabilization upon privatization. The Rent Act of 2011[15] signed into law on June 24, 2011, did not mention Mitchell-Lama rentals or co-operatives.

In November 2007, the State's Division of Housing and Community Renewal (DHCR) - now NYS HCR - adopted regulations stating that just removing a pre-1974 Mitchell-Lama from the program is not a "unique or peculiar circumstance" justifying a substantial rent increase.[16] Several landlords challenged that policy in court, asserting that it contradicts a court decision, KSLM-Columbus Apts. v. NYS DHCR,[17] and a lower court's reference to DHCR policy letters.[18] Justice Schlesinger of the New York State Supreme Court ruled[19] that the regulations are legal, and one of the owners (Steve Witkoff, owner of 95 W. 95th Street, now called "Columbus 95") appealed to the state's mid-level Appellate Division. On December 28, 2010, the Appellate Division, First Department (covering the New York City boroughs of Manhattan and the Bronx) unanimously upheld DHCR's regulation.[20] The owner of Columbus 95 failed to pursue judicial permission to appeal to New York State's highest court.[21]