Mitchell-Lama Co-ops The Pressure to Privatize

In 1955, when many city neighborhoods were deteriorating and the flight to the suburbs was going full blast, the Mitchell-Lama bill, named after state Sen. McNeil Mitchell and Assemblyman Alfred Lama, was signed into law in New York State. The purpose of the bill was to encourage the building of moderate-income housing, to keep more middle-class families in the state’s cities and to stabilize New York City neighborhoods.

By the time the last Mitchell-Lama development was built at the end of the 1970s, about 270 developments with nearly 140,000 units had been constructed under the program's aegis. Some were rentals, others were co-ops.  Some were state-sponsored, others were city-sponsored. Written into the program was a 20-year age-out period, after which the landlord or co-op corporation could buy out of the program. In most cases, that 20-year period is up, and Mitchell-Lama residents have been facing the implications of “going private.” 

Why Leave? 

For one reason, the neighborhoods where many of the original Mitchell-Lama developments were built have changed dramatically in 30 or 40 years. Areas that were once semi-deserted or even blighted have become fashionable and trendy, driving real estate values up. Indeed, a more cynical read of the bill's original intent might suggest this was one of the reasons for the law to begin with—to spur private development.

While very many Mitchell-Lama developments and buildings have decided to “go private” once the 20-year subsidy period was up, there are still many left within the program. The largest Mitchell-Lama co-op development in the city is Co-op City in the Bronx, while the largest Mitchell-Lama rental development is almost certainly Spring Creek Towers/Starrett City in Brooklyn. (In fact, the owners of Starrett City tried to opt out of the program and put the entire development up for sale in 2007— but alarmed local, state and federal elected officials got involved and forged a deal the following year to preserve affordability.) 

In the context of a Mitchell-Lama co-op, the debate over privatization almost always pits the opportunity it would give shareholders to sell their apartments in today’s lucrative real estate market against the desire to preserve the dwindling supply of affordable housing stock for future generations. In the not-so-distant past, total privatization seemed to be inevitable. However, with Mayor de Blasio’s emphasis on affordable housing, things could be changing. 

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