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August 2003

Council Speaker to Introduce Landmark Bill to Preserve Affordable Housing — Including IPN

At a July 22 press conference on the steps of City Hall, some 200 tenants from IPN and other Mitchell-Lama developments stood behind City Council Speaker Gifford Miller as he announced the introduction of the Mitchell-Lama Conversion Protection Bill.

It was a sweltering, humid day, but tenants, labor union leaders, council members, and Working Family Party organizers withstood the heat, and wildly cheered Miller and other speakers as they reaffirmed their commitments to do everything in their power to thwart the evictions of thousands of tenants whose owners plan to buy out of the Mitchell-Lama (ML) program and thereby end its rent protections.

Television cameras rolled, radio and print media were in attendance, and reporters conducted interviews of a number of Mitchell-Lama tenants. The Campaign to Preserve Affordable Housing is gaining momentum, and IPNTA is playing a leading role.

Bill’s Major Provisions

The bill, long supported by IPNTA and other ML tenants in the city, is likely to become law after it is formally introduced, because it has the Speaker’s clear commitment.

First, it would require, as a condition of buying out, that the owner demonstrate that the building or complex has been in “substantial compliance” with all M-L rules and regulations. Such compliance pertains to maintenance issues, corruption, waiting lists, and the like. Tenants, of course, could present any evidence they have alleging non-compliance.

If the owner fails to establish such compliance, the City could impose civil penalties amounting to three times the level of damages to the City or to the tenants.

Second, the bill would require the owner to pay a fee of $1,000 per apartment to HPD to administer all the bill’s provisions.

Third, it would require the City’s Department of Housing Preservation and Development (HPD) to conduct a community impact study. The study would evaluate the impact on tenants and the communities of the loss of affordable apartments stemming from the buyout, recommend measures for lessening the impacts, and calculate the cost of implementing each recommendation.

This provision is similar to environmental protection laws, which require impact studies on the environment before approval of any major development.

Fourth, after the study is done, the bill would require the owner to carry out the study recommendations, mitigate the adverse impacts that the study identifies, or deposit a sufficient amount of money in a segregated account to allow the City to implement the study recommendations and mitigate the impacts.

The bill would also increase from one year to 18 months the notice the landlord must give to HPD regarding its intention to buy out.

Miller, decrying the relentless loss of affordable housing in the city, said the bill was not intended to “demonize” anybody, including owners. Rather, he said, it was designed to provide tools for landlords and tenants to work out a solution.

In effect, the owners could avoid the various provisions, if they and a majority of the tenants reach a mutually acceptable agreement. This bill will encourage owners to negotiate in good faith with tenants. Until now, they have not negotiated in good faith because they didn’t feel they had to. The result has been lengthy lawsuits, and settlements that have heavily favored the owners – and the loss of thousands of affordable homes. Signing onto the bill along with the Speaker were Council Members Alan Gerson, who represents IPN in the downtown Manhattan area, Christine Quinn, and Gale Brewer.

Gerson and Brewer had joined Miller a month earlier at a rally to kick off The Campaign to Preserve Affordable Housing. Held at the Borough of Manhattan Community College, that rally was organized by IPNTA and the Working Families Party. The WFP has effectively replaced the Liberal Party as the most significant third force in New York City politics. Some 800 M-L tenants from all over the city attended the rally.

At Tuesday’s City Hall press conference, Neil Fabricant, president of IPNTA, applauded Miller for “stepping up to the challenge of representing the people who live in taxpayer-financed affordable housing developments that are being converted to market rates. We have to keep New York a place where it’s possible to live decently, even if you’re not a millionaire.”

Before the bill can become law, the Council must schedule public hearings. In this case, the hearings will most likely be held in September.

Real estate interests, which are among the richest, most powerful political funders and lobbyists in New York City, are expected to oppose the bill, for obvious reasons.

Under the Mitchell-Lama law as amended, owners were given the option of buying out of the program by pre-paying any mortgage debt after 20 years. This buyout option was a type of “gravy”--added to the many benefits owners received for participating in the program.

Such benefits included a guaranteed profit, steep tax abatements, and--in cases where the federal government gave its own subsidies--government funding of 95 percent of development costs. (In the case of IPNTA, which secured federal funding as well as state moneys, the original owner also received magnificent Hudson River waterfront property for a pittance. That land alone is now worth incalculable amounts.)

In effect, participation by owners was never a “risk,” as real estate spokespeople often argue. On the contrary, it came with enormous subsidies, but accepted by tenants—taxpayers—who had few other means of finding affordable apartments.

It is widely recognized that the ML program is one of the most successful in the city, if not the country, in having provided low, moderate and middle income tenants with decent, affordable shelter. This bill, when it becomes law, should help keep it as such.

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