File #: Res 0575-2024    Version: * Name: Providing for annual adjustments to the rental and carrying charges for Mitchell-Lama developments based on increases in the Consumer Price Index.
Type: Resolution Status: Committee
Committee: Committee on Housing and Buildings
On agenda: 9/26/2024
Enactment date: Law number:
Title: Resolution calling on the New York State Legislature to pass, and the Governor to sign, legislation providing for annual adjustments to the rental and carrying charges for Mitchell-Lama developments based on increases in the Consumer Price Index.
Sponsors: Amanda Farías, Farah N. Louis
Council Member Sponsors: 2
Attachments: 1. Res. No. 575, 2. September 26, 2024 - Stated Meeting Agenda, 3. Hearing Transcript - Stated Meeting 9-26-24

Res. No. 575

 

Resolution calling on the New York State Legislature to pass, and the Governor to sign, legislation providing for annual adjustments to the rental and carrying charges for Mitchell-Lama developments based on increases in the Consumer Price Index.

 

By Council Members Farías and Louis

 

Whereas, The Mitchell-Lama Housing Program was created in 1955 by the Limited Profit Housing Act to provide affordable rental and cooperative housing to middle-income families; and

Whereas, Mitchell-Lama program compliance is overseen by the New York City Department of Housing Preservation and Development (HPD) and New York State Homes and Community Renewal (HCR) and involves regulating rental and carrying charge increases, capital reserves, property inspections, and waiting lists for affordable units; and

Whereas, According to HCR, 269 Mitchell-Lama developments, with over 105,000 units in total, have been constructed since the program’s inception in 1955; and

Whereas, Under the New York State Private Housing Finance Law, Mitchell-Lama developments receive a subsidy allowing tenants and cooperators below a certain income level to pay below-market rental or carrying charges; and

Whereas, When a Mitchell Lama development's budget shows that its current income is insufficient to cover its financial obligations, the development can apply to HPD or HCR to increase its rental or carrying charges; and

Whereas, The NY State Comptroller conducted an audit from January 2019 through January 2023 to determine whether tenants living in four Mitchell-Lama developments supervised by HCR (753 Classon Avenue Housing Company, Cathedral Parkway Towers, Findlay House, and Jamie Towers) provided safe and clean-living conditions; and

Whereas, The audit also aimed to verify if funds were properly accounted for and used for intended purposes; and

Whereas, The audit revealed that tenants in these developments endured unsanitary conditions, including pest infestations and water leaks, potentially causing mold and allergens that can be harmful to human health; and

Whereas, The audit also highlighted that many of these hazards had remained uncorrected for years; and

Whereas, The Comptroller's audit revealed that Jamie Towers was facing a severe financial crisis, with rising operating costs and revenue losses; and

Whereas, Bronx News, an online news publication, reported that residents at Jamie Towers received a notice regarding a 49% increase in their carrying charges, effective May 1, 2024; and

Whereas, Bronx News reported that residents who are seniors living on fixed incomes have expressed concerns about this change; and

Whereas, The substantial carrying charge increase poses a serious threat to the financial stability of many of the impacted residents; and

Whereas, According to news reports and the Comptroller's audit, prior to requesting the 2024 increase, Jamie Towers' most recent request to HCR for increased carrying charges was in 2017; and

Whereas, Each Mitchell-Lama development is required to maintain a reserve fund to cover major repairs and replacements of common areas such as roofs, elevators, and heating systems; and

Whereas, The amount each development must contribute to such fund each month depends in part on the development’s rent roll; and

 

Whereas, This reserve fund can help ensure that repairs are made in a timely manner, but ineffective management of the fund by board members or property owners, or insufficient resources in the fund due to low rental or carrying charges, may result in deferred maintenance; and

Whereas, Proper maintenance preserves and extends the life of a building's assets, while deferred maintenance reduces the lifespan of building components and accelerates the need for large capital expenditures to replace them; and

Whereas, The National Association of State Facilities Administrators, a national organization that develops best practices for maintaining facilities, has calculated that the cost of deferred maintenance in a building structure is anywhere from 15 to 30 times the cost of early intervention; and

Whereas, The rental/carrying charges at a Mitchell-Lama building should be regularly adjusted to reflect changes in the overall cost of building maintenance, with increases tied to rises in the Consumer Price Index; and

Whereas, This practice would ensure that sufficient financial resources are set aside for future repairs as costs increase; and

Whereas, This practice would also ensure that Mitchell-Lama buildings can maintain their financial stability and continue to provide affordable housing while safeguard against the need for large, sudden increases to rental or carrying charges; now, therefore, be it

Resolved, That the Council of the City of New York calls on the New York State Legislature to pass, and the Governor to sign, legislation providing for annual adjustments to the rental and carrying charges for Mitchell-Lama developments based on increases in the Consumer Price Index.

 

JLC

LS 16828

9/6/2024