Push Begins to Jumpstart Mitchell-Lama in New York State

The Wall Street Journal
February 7, 2014

A powerful group of state Democrats plans to unveil on Friday a $750 million plan to build new middle-income housing, an effort to revive the 1950s-era Mitchell Lama program that built more than 100,000 units around the state.

The Independent Democratic Conference, a group of breakaway Democrats who share power in the state Senate with Republicans, are proposing the construction of several thousand units over the next five years in New York City, Yonkers, Rochester, Buffalo and Syracuse.

The plan would require the state to spend about $150 million a year to finance more affordable mortgages for developers and create a new tax credit for the developments.

In New York City, units would initially be targeted at residents making from about $75,000 a year to $100,000 a year for a family of four. Rents for a family of that size would range from about $1,900 to $2,500 a month.

State Sen. Jeffrey D. Klein, the Bronx Democrat who is the Senate’s co-majority leader, said the housing plan is a top priority for his group. “When you talk about affordable in New York, you have to talk about middle-income housing,” he said.

Mr. Klein’s group of four Democrats shares power with the Senate’s 29 Republicans and a conservative Democrat who caucuses with Republicans.

In December, Mr. Klein unveiled the broad outlines of his group’s legislative agenda, focused on creating an “Affordable New York.” The agenda also includes a guarantee of six weeks of family leave, fully funding day-care subsidies and providing $300 checks to seniors to offset rising utility costs.

The Mitchell-Lama program was created in 1955 through legislation sponsored by New York state Sen. MacNeil Mitchell and Assemblyman Alfred Lama to provide affordable rentals and co-ops to middle-income families, resulting in the creation of more than 100,000 apartments. Similarly styled boxy developments sprung up with a palate of gray and beige—from Co-op City in the Bronx, with more than 15,000 units, to Clinton Plaza in downtown Syracuse, with 305 rental units.

After at least 20 years, rental landlords and co-op boards can choose to exit the program by paying off the mortgage, and there has been a steady decrease in units.

Of 169 state-supervised Mitchell-Lama buildings, 93 have voluntarily left the program, totaling about 31,700 units.

Sue Susman, a 66-year-old resident of Central Park Gardens on the Upper West Side, a Mitchell-Lama rental that left the program about eight years ago, said it created a community where neighbors knew each other and children grew up together and got together for events like Halloween parties.

“You could have a community that developed over 20 years, 30 years, where some people did well, some people did not do so well, but they could be neighbors,” she said.

Housing experts, some of whom have reviewed the specifics of the independent Democrats’ plan, applauded an effort to create more middle-class housing—as long as it doesn’t come at the expense of housing for lower-income residents.

“In the last 10, 15 years as New York has grown…it’s really pricing out a lot of middle-class people,” said John Kelly, an attorney specializing in affordable housing who is chairman of the National Housing Conference.

Middle-income housing is typically more costly for the state than housing targeted at lower-income residents because there aren’t federal subsidies available.

“The rub is the concern about allocation of resources. The governor has a strongly ambitious housing program that works with the most needy,” Mr. Kelly said. “I would not want to see resources taken away from those people to build middle-income housing.”

Nicholas Petragnani Jr., a senior vice president for the Community Preservation Corp., who focuses on central and western New York, said there is a need for middle-income housing that exceeds demand for low-income housing in places such as Syracuse, Rochester and Buffalo. He said low-income residents are well served by state and federal programs, while higher-income residents have benefited from the revitalization of downtowns.

“The group that’s left behind is that middle-income group,” he said.

It is unclear how difficult a political battle Mr. Klein’s group would face getting funding for the program. Gov. Andrew Cuomo has publicly made tax cuts a priority, but he also recently announced $100 million in funding for affordable housing.