Privately owned multifamily buildings in New York City, many built decades ago, are struggling with maintenance issues due to insufficient monthly payments from residents. While lawmakers have not provided significant assistance to rent-stabilized buildings, they have directed substantial support to Mitchell-Lama co-ops.
Since Governor Kathy Hochul took office, Mitchell-Lama properties across New York have received nearly $500 million in aid, averaging $4,762 per unit. Some buildings have received even more; one agency allocated $265 million to 24,000 Mitchell-Lama apartments, or more than $11,000 per unit. In contrast, if the same level of support were extended to the city’s 966,000 rent-stabilized units, the total would reach $4.6 billion.
Earlier this year, Hochul and state legislators approved a budget that reduced taxes for Mitchell-Lama buildings by half, resulting in annual savings of $50 million. However, this tax relief did not initially include Penn South, an “Article V” co-op in Manhattan. The shareholders at Penn South have kept maintenance fees low, which has affected the building’s upkeep. To address this, the state is allowing the city to provide Penn South with a $2 million annual tax cut.
Kenny Burgos, CEO of the New York Apartment Association, commented to The Real Deal, “I commend the governor for recognizing the sky-high costs to operate housing and her work to help Mitchell Lama buildings across the city from choosing between deferred maintenance or double-digit rate increases. I can only hope the same approach and attention is offered to the nearly 2 million residents living in rent-stabilized housing.”
Mitchell-Lama co-ops were created in 1955 as a middle-class housing option. Over time, lawmakers have continued to provide financial support to these properties, often described as acts of public service. However, some see these measures as bailouts for shareholders who have deferred maintenance costs.
On Tuesday, Governor Hochul held a bill-signing event at Penn South in Manhattan for legislation sponsored by Sen. Brad Hoylman-Sigal and Assembly member Tony Simone. The new law allows the city to reduce property taxes for Penn South. Hochul’s press release stated, “Penn South faces rising operational costs, which threaten to impact building quality and future affordability for its residents.”
While rising operational costs also affect rent-stabilized buildings, the state has not provided similar support. Instead, landlords are expected to manage these costs on their own, with foreclosure as the last resort if they cannot.
