The Mitchell-Lama Debate Buying out or selling out?

Here in New York, where real estate values have risen to unprecedented levels, limited equity co-ops created under the Mitchell-Lama program are presented with the choice of either embracing their own dizzying market value by removing the restrictions imposed by the program and converting to free-market housing or remaining limited equity where both purchase and sale prices are limited to several thousand dollars a room. So how is the buy-out issue affecting cooperatives? Are they rushing to claim their share of the windfall? What are the economics of their situation? Is it even ethical to be reducing the stock of affordable housing at a time when no new affordable housing is being created?

A Short History of Affordable Housing

Ethnic and union groups were the first to develop affordable cooperatives for their members in the ’20s and ’30s. During the Depression, 75 percent of these housing efforts folded, though some, such as Amalgamated Housing in the Bronx, managed to survive. Others were built later; Penn South, a complex of ten buildings between 23rd and 29th streets and Eighth and Ninth Avenues in Manhattan, was put up by the International Ladies Garment Workers Union in 1962.

Hundreds of affordable cooperatives across the country were made possible in the ’50s and ’60s by Section 213 of the Housing Act of 1950. Albert F. Pennisi, president of the Federation of New York Housing Cooperatives and a partner at the law firm of Pennisi, Daniels, & Morelli in Rego Park, Queens, says that Section 213 housing was probably the forerunner of the Mitchell-Lama program. He explains that the Federal Housing Administration (FHA) guaranteed the mortgages granted by banks, and pursuant to that guarantee, the banks granted mortgages well below then-current interest rates, some at as low as three-and-a-half to four percent. The FHA regulated these cooperatives that did not receive any tax abatements; however, the low mortgage rates created what in effect was affordable housing. When the mortgages–usually 40-year loans–were paid off, they became free-market co-ops with no controls by any governmental agency. Pennisi says that the nationwide program was so successful they very rarely had any foreclosures. Because most of them have paid off their mortgages, there are only two-dozen or so such co-ops left.

In 1955, the Mitchell-Lama housing program–which has since become known as the most successful affordable housing program ever–was created in New York State. The program took its name from its legislative sponsors, former Manhattan State Senator MacNeil Mitchell and former Brooklyn Assemblyman Alfred Lama. James Garst, a member of the current board of the Mitchell-Lama Council, reports that a total of 422 Mitchell-Lama developments, representing about 150,000 apartments were built in New York State under the program. Of these developments, 102–representing more than 67,000 units–were co-ops.


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  • hello my name is Raul Rivera i live in one of the Mitchell-Lama Housing unit's in the bronx called stevenson commons. in the last few's week's there has been construction going on in the front plaza of the complex i think they are trying to give the complex some kind of face lift so then they could be sold. can you tell me if this complex at 755 white plain's rd. is UP FOR SALE???? my e-mail is ......................... Thank You have a great day!!
  • When changing over building management, should the old manager be present when interviewing.
  • I live in a Mitchell Lama Housing in the bronx, after you move out of an apartment you continue to pay maintenance charges up to 3 months in addition to any fees that will deducted from equity. Is this legal?
  • I'm on waiting list for apartment Michaell Lama and I'm co-owner of my sister house. I n addition I'm helping help her with bank loan. Does anybody know how that effects my application? and what to do about it? thank You
  • Every year my friend fills out her income affidavit for her mitchell lama co op apt. If she's late she gets charged a late surcharge. She's on HPD section 8 and she was told that they are not supposed to charge her and she don't even have to file every year. If this is true, can you send me something stating that management is not allowed to charge her. Thank you.
  • Is anyone in the legislation currently working on raising the income levels for Mitchell Lama Co-op apts? Currently the limits are too low and quite unrealistic for todays public servants.
  • CoOp Resident 133 on Sunday, July 4, 2010 12:02 AM
    My monthly rent just went up $500.00 +. My wife and I are retired. I have to take out money from my 403B plan and that is considered earned income. I feel as though it'snot right that I'm being penalized after working for so long. $6,000+ means a lot and is more than I made when I firststarted working 45 years ago. What can I do to reduce this surcharge?
  • I live in mitchell lama apt. in manhattan if i live in another state, can I still keep my apartment as long as i pay the rent?
  • john on Tuesday, December 21, 2010 11:07 AM
    my mothers home became an estate when she died and was left to me and 2 brothers and my sister. i am living in an apartment in the home and want to move into a mitchell-lama co-op that is being offered to me after being on the list for 9 years..Will this be a problem?? The co-op will become my primary residence....thank you
  • confused and upset on Saturday, May 10, 2014 11:42 PM
    I was on the list for east midtown plaza. one bedroom. after 7 years I went to office to find out what number they were up too. I was told by management that I could not have a one bedroom. they would let me write a hand written request for a very tiny studio apt. I was annoyed but did not want to loose my chance for an apt .Now several years later I received a letter saying come to interview etc . I was shown a very tiny studio that was filthy beyond belief. it was empty for 5 to 7 years. nothing worked . I told them my 25 year old grandson would like to live with me and own half of the apt. they said ok. so now if we get this tiny apt I will be sleeping in the closet next to the bathroom. wonder why we were stoped from getting a one bedroom.? we gave them all info and income and our pictures and had a home visit . now they called me and said we have to pay a 25% surcharge. I checked all hud sites and our income is within the guidelines. wonder whats wrong. I also had to pay $750.00 dollars to the management company for the credit check and home visit. I asked if this was a brokers fee? I was told no the money would go to hud/? I don't think so.= wonder what kind of games are being played at this michell lama complex.