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Affordable Housing and the State Legislature

by: SteveWFP

Tue Feb 27, 2007 at 14:44:35 PM EST

( - promoted by am)

The fight for Starrett City - a proxy in the larger fight over affordable housing - is expanding to a second stage as state legislators propose the "Save Starrett City Law", which would protect nearly 65,000 apartments by closing a loophole that lets building owners benefit from affordable housing programs but then stop providing affordable housing.

The Working Families Party supports the Save Starrett City Law. Here's Executive Director Dan Cantor quoted in a New York Times article:

"Starrett City represents everything that we really think this city should be about . . . It's called the 'Save Starrett City Law,' but it really should be called the 'Save New York City Law.'"

SteveWFP :: Affordable Housing and the State Legislature

The state's Mitchell-Lama affordable housing program exchanges tax-exempt financing for affordable housing. Currently, if a building was built after 1973 and the owners leave Mitchell-Lama or Section 8 they're not subject to rent stabilization laws. The Save Starrett City Law would mean building owners who leave Mitchell-Lama or Section 8 affordable housing programs would still have to follow rent stabilization laws.

Expect this to be a major fight in Albany, with Assemblymember Nick Perry of Brooklyn announcing that:

"Protecting the tenants of Starrett City and all tenants living in Mitchell-Lama and Section 8 buildings in every borough is job number one right now for the Black, Puerto Rican, Hispanic and Asian Legislative Caucus in Albany."

State Senator Kevin Parker of Brooklyn outlined the problem:

"Over 13,286 apartments have already left New York's Mitchell-Lama program and gone straight to the luxury market. We can't let this happen to the nearly 12,000 residents of Starrett City. We can't let this happen to residents of the other 45 complexes beyond Starrett City that are also at risk . . . New York's Senate Democrats plan to work with our colleagues in the Assembly and make a full court press to pass this bill in Albany in time to save the tenants of Starrett City."

How the fight over Starrett City plays out over the next few weeks will be a bellweather over how the issue of affordable housing will be treated this legislative session. More to come.

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Affordable Housing and the State Legislature | 2 comments

Going, Going Gone....... (0.00 / 0)

I think its great that Starrett City has galvanized some real talk about the fundamentals that are driving affordable housing developments to opt out of these programs. However, the reforms that are being proposed will address only a small portion of the problems. For example, making these units regulated solves a very small portion of the problem. The current Mitchell-Lama rents will rise to market levels --they will be readjusted to reflect similar developments whose rents were not controlled by the Mitchell-Lama development. Copied below is a copy of my previous post made prior to this important shift if legislative thinking.

I am affraid that it will do little to address the fundamentals of why developers are leaving in droves from affordable housing programs or why we have so little affordable housing in New York City.

While they may be able to stop this sale, the underlying problem will not be solved until the people own the property. Here is why:

1) Rents in the development have no relationship to the surrounding market because the development is part of a state Mitchell-lama program that limits developer profits to 6%. After twenty years, the developer can leave the program by pre-paying state low interest loans. Since the development was built after 1973, stabilized rent laws upon leaving the program do NOT cover the apartments. Few dedicated developers can be forced to stay in the program.

2) About 45% of the people in the development live in units covered by a federal project based section 8 contracts. To get this you must be considered low income. This contract gets renewed about every two years. Upon leaving the program the federal government will pay the difference between 30% of tenants income and market rents. No one can make the owner stay in the project based section 8 program.

3) The development was built using a federal program called Section 236, which gave low interest loans and insurance that reduced interest rates to a few percentage points. In the 70s this was a big deal. Upon pre-payment of the loan, the federal government will pay income eligible tenants the difference between 30% of their income and full market rents. This program captures people making 80% of median income, which would capture nearly everyone not living in project-based section 8 units.

So, by "leaving" the federal/state programs, the developer can double or triple the rental income and keep the same tenants. If its not purchased by the public its going going gone.

The existing tenants will be relatively protected (they will now have to pay 30% of their income in rent) since their existing leases will be valid. But as they leave the development will serve only those that can pay market rents.

The solution is build lots of housing. Make all private sector affordable housing limited equity coops -- not rentals or straight homeownership that serves one owner that moves on after selling for market rate.

by: milesblack @ Wed Feb 28, 2007 at 03:19:47 AM UTC

Good comments. Here are my thoughts: (0.00 / 0)

I think there's a good chance of stopping the sale of Starrett City.

I agree that Starrett City has galvanized real talk about affordable housing. I think this is the start of something bigger, rather than just a fight over Starrett City (which is pretty big!).

The Save Starrett City law would change the current situation that you've described so affordable housing built after 1973 that's taken out of Mitchell-Lama or Section 8 would be subject to rent stabilization laws.

Opting out of Mitchell-Lama also means giving up tax breaks. Under current law, developers who convert once affordable housing to luxury condos profit outrageously, lost tax breaks notwithstanding. But if taking affordable housing out of Mitchell-Lama or Section 8 means the buildings are under rent stabilization laws then that changes, and the tradeoff of tax breaks for rent stabilized rents is a much more even one.

But I agree more needs to be done. The fight over Starrett City is an opening salvo, with much more to come.

by: SteveWFP @ Wed Feb 28, 2007 at 03:47:54 AM UTC

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