IPN Tenants See Hope in New Council Bill

 by Ronald Drenger

Sponsored by Council Speaker Gifford Miller and Councilmembers Alan Gerson, who represents IPN tenants, and Christine Quinn, the bill seeks to preserve the affordability of Mitchell-Lama apartments by imposing new requirements and costs on building owners who want to pull out of the program and convert their properties to market-rate housing.

IPN’s tenant association, led by Neil Fabricant, spearheaded the effort to develop the bill as part of its attempt to block IPN’s new owner, Larry Gluck, from withdrawing from, or “buying out” of the subsidy program. Fabricant said that the bill would force owners to think twice before buying out and converting Mitchell-Lama developments to market-rate housing.
A rally at City Hall in July in support of the City Council bill was led by, from right to left, IPN tenant leader Neil Fabricant, Councilwoman Christine Quinn, Council Speaker Gifford Miller at microphone, and Councilman Alan Gerson. Photo by Carl Glassman
• Up until now landlords had nothing to worry about,” Fabricant said. “Tenants could tie the case up in court for a while, but there was little cost. This will give the Department of Housing Preservation and Development (HPD) enormous power and gives landlords a lot to worry about.”
• The tenant group worked for a year with lawyers, finance experts and City Council members to craft the legislation, which has five main components:
• Building owners would have to give 18 months notice of a buyout, rather than the current 12 months.
• Owners buying out would be required to pay HPD a fee of $1,000 per apartment, which the bill’s supporters say would offset the city’s costs of supervising the withdrawal from the program. (That would amount to a $1.33 million bill for Gluck at IPN.)
• HPD would be required to study the impact of a buy-out on tenants, including probable rent increases,
  number of units likely to remain at below-market rent, the availability of other below-market housing in the area and the potential displacement of families.
• Before approving a development’s withdrawal from Mitchell-Lama, HPD would be required to conduct an investigation, including a public hearing, to determine if the building’s owner had complied with all the program’s requirements and any other city contracts. (IPN’s tenant association has charged that the complex’s former owner and management company didn’t adequately maintain the buildings and may not have followed all the rules for offering vacant apartments to people on waiting lists. They deny those charges.)
• Building owners and tenants would be encouraged to negotiate a “comprehensive conversion settlement” that would preserve the apartments’ below-market rents. The bill’s other requirements, including payment of any remaining administrative fees by the owner, would be waived if a settlement were reached.
The legislation would apply to Mitchell-Lama rental developments supervised by HPD—but not those overseen by the state—and built in 1974 or later. (Mitchell-Lama developments constructed earlier are covered by rent stabilization.)

The bill’s sponsors estimate that 25,000 tenants would be affected in more than 65 Mitchell-Lama developments, including those such as IPN, where a buyout has been initiated but not yet approved by HPD.

Gerson insists that the city must protect tenants at IPN and other Mitchell-Lamas around the city who have helped develop neighborhoods.

“The people of IPN are the people who moved in here when this was a barren residential area, the people who
Mitchell-Lama tenants from around the city crowded onto the City Hall steps to show their support for the legislation that was about to be introduced.
IPN tenant leader Neil Fabricant, who helped draft the new bill with lawyers hired by the tenants, addresses the rally.
with their civic commitment and with their heart and soul built this community,” Gerson said.

The Real Estate Board of New York, which represents building owners and developers, opposes the legislation, charging that it is improper to modify regulations that were set out in the Mitchell-Lama program some 50 years ago. Under that law, Mitchell-Lama owners can withdraw from the program after a minimum of 20 years.

“Changing the rules now would be a serious breach of faith and would dissuade investors from creating much-needed units of new affordable housing in the future,” the group said in a statement. “We also question the City Council’s authority to enact such changes, but even the attempt to do so is sending a terrible message.”

“For anyone who entered into an agreement to build affordable housing with the expectation that, 20 or 30 years down the road, it could be converted to market rate, this violates that agreement,” said Micheal Slattery, senior vice-president at the Real Estate Board. If it is public policy to preserve low- and moderate-income housing, then that should be publicly funded. It shouldn’t be placed on the backs of private property owners to take care of this obligation.”

Supporters of the bill say that building owners can still buy out, as provided in the Mitchell-Lama law, but that the city is allowed to establish new conditions in response to changing circumstances.