HPD Proposes Restrictive Mitchell-Lama Regulations

On the eve of a new city administration, the Department of Housing Preservation and Development has proposed regulations that would sharply limit succession rights for residents of buildings in the Mitchell-Lama program.

The proposed regulations would restrict both which members of a Mitchell-Lama household could take over an apartment when the head of the household leaves, and how they could do it. They also change what will happen to the building if it is taken out of the program, and some aspects of the waiting lists. The regulations would apply to Mitchell-Lama developments supervised by HPD. (Some are supervised by the state’s Housing and Community Renewal agency.)

Mitchell-Lama tenants and M-L co-op residents packed an HPD hearing Nov. 6, as many testified against the changes. City Councilmember Gale Brewer (D-Manhattan) said they would “target those who are law-abiding, and limit valid succession by family members,” and that HPD had not given the public and residents adequate notice about the proposals and the hearing.

The proposed regulations would limit who could take over (“succeed to”) an apartment in three ways, as attorney David Hershey-Webb testified:

(1) Another household member could not take over the lease when the main tenant or cooperator, the “head of the household,” left—unless he or she either died or went into a nursing home. If there were a divorce, for example, and the head of the household moved out, the remaining family members could lose their home. 

(2) Nontraditional family members—added under an important court decision over two decades ago—could no longer take over the lease. Neither could aunts, uncles, nieces, or nephews. 

(3) To take over the lease, the remaining household member would have to file a claim within 90 days of the death (or admission to a nursing home) of the main tenant or cooperator. This is not what grieving family members are usually thinking about.

Those changes fly in the face of an October 2013 decision, Murphy v. DHCR, by the Court of Appeals, the state’s highest court. It ruled that succession regulations are meant to prevent the “dislocation of long-term residents”—including “nontraditional family members”—when the head of the household leaves.

The court stated that the goals of Mitchell-Lama succession statutes are to “facilitate the availability of affordable housing for low-income residents and to temper the harsh consequences of the death or departure of a tenant for their ‘traditional’ and ‘nontraditional’ family members.” HPD’s regulations are supposed to further those goals. If its proposed changes come to pass, many long-term residents would be dislocated.

The proposed regulations would also in some situations give tenants less time to fight their building being taken out of Mitchell-Lama, or to find out what will happen to their building on leaving the program.

Some owners take buildings out of Mitchell-Lama and create for-profit housing companies instead. In that situation, tenants get a year to research what will happen, and to fight the dissolution of the Mitchell-Lama housing company. 

But if the owner plans to transfer the building from Mitchell-Lama to a different kind of “nonprofit” housing called Article XI or HDFC—co-ops owned by a housing development fund corporation—residents get only 30 days to research what will happen and less information to do it with. That is true even though many things remain unsettled—such as whether tenants will lose the right to examine the owner’s books and stop rent increases where the landlord is making a specified return on investment; whether they can roll back rent increases once building improvements are paid for; or what will happen to the building’s capital reserve fund or tax breaks. Everything is left in HPD’s hands with little opportunity for tenant input.

As Tenants & Neighbors points out, that would promote transferring buildings from Mitchell-Lama to Article XI, instead of keeping them in Mitchell-Lama. The Mitchell-Lama program keeps developments budget-based, gives tenants a formal say in rent hikes, and keeps rents affordable to those who need it most. 

HPD could also invalidate waiting lists that don’t meet its requirements by printing a public notice in just two newspapers. That would mean that people who signed onto Mitchell-Lama waiting lists in good faith could have their applications automatically discarded. Councilmember Brewer urges that residents and advocacy organizations be given oversight of lists, and the process made more transparent—something the proposals do not address.

Veterans would lose some of their preference on waiting lists. Under the current law, they get preference if a closed Mitchell-Lama waiting list is reopened. Under HPD’s proposal, they would have to be picked by a lottery before being given any preference on the actual waiting list.

The veteran applying would also have to be present to be on the waiting list. If serving overseas, he or she would not be eligible to apply as “head of household.”

Many tenant advocates hope that these regulations will not come to pass, both in light of the Murphy case in October and other court decisions, and for overall fairness. At the very least, HPD should not rush through restrictive regulations before Mayor-elect Bill de Blasio names the next head of the agency.