Some basic facts about the privatization of Mitchell-Lama housing program buildings in New York include that the process requires occupants to pay off all subsidized mortgages, give up all real estate tax abatements and pay increased real estate taxes based on market rates. Privatizing Mitchell-Lama buildings ultimately decreases the amount of affordable housing available within the state.Continue Reading
The Mitchell-Lama bill, enacted in New York in 1955, created 270 affordable-housing developments that allowed moderate-income families to buy a co-op or rent an apartment at far below the market price and benefit from real estate tax abatements, low-interest mortgages and rent stabilization, depending on the unit type. The development has the option to opt out of the Mitchell-Lama program and go private after a certain period of time.
In the case of cooperative developments, owners purchased units far below market value in the past, opening the possibility of a huge gain in value if the development opts to go private and the unit is assessed at current market value in neighborhoods that have changed for the better. For a cooperative development to privatize, a 51 percent majority of the shareholders must first vote to pay for a professional feasibility study. After the study is complete, a two-thirds majority of shareholders must vote to buy out of the program, and the board must file a notice of dissolution with the state to officially leave the program. Comparatively, landlords of rental-based Mitchell-Lama developments need no occupant approval and can simply inform tenants of the intent to exit the program.Learn more about Corporations