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With 'affordable housing' buildings for sale, tenants worry

(Page 2 of 2)

Starrett City, like 47 other apartment complexes in New York, was financed in part by state-backed low-interest mortgages in exchange for the developers' commitment to keep the units affordable for the length of the mortgage. The program is known as Mitchell-Lama, after the lawmakers who wrote the bill that created it. Under current state law, if a complex was built after 1974 the units can be priced at the market rate once the Mitchell-Lama mortgages are paid off.

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A pledge from the proposed buyers

The Starrett City sale will allow the current owners to pay off their Mitchell-Lama mortgage. Despite that, the potential buyers have pledged to maintain the affordable character of the complex. "We have said again and again our intention is to preserve the affordability of Starrett City," says Lloyd Kaplan, an attorney representing Clipper Equity, the proposed buyers.

On Friday, the Department of Housing and Urban Renewal blocked the sale until Clipper Equity can prove to its satisfaction that the complex will remain affordable. Also last week, state Democratic lawmakers introduced a bill that would require all units at Starrett City and the 47 other Mitchell-Llama affordable housing complexes in the state be rent stabilized if they're sold and their mortgages are paid off.

"We want the state to step in and say, 'For two generations the state has given you huge interest deductions, essentially free money with taxpayers' dollars, and you have an obligation to keep the rents affordable regardless of whether you sell it or who owns it," says Jonathan Rosen of NY-ACORN, a tenants' rights organization that is working with Starrett City tenants.

Mr. Rosen says such legislation is needed because since 2001 more than 13,000 affordable Mitchell-Lama housing units have been sold and have reverted to market rates. That has made them unaffordable to most middle-class and working-class New Yorkers.

But skeptics of regulatory responses to the loss of affordable housing note that in similar past disputes courts have sided with developers. In part, because the developers signed a contract with the state that said for 20 or 30 years they would keep the properties affordable, and after that, the state had agreed in the contract that they could go to market rate prices.

"When the Congress and other state institutions said, 'We really didn't mean that, for public policy now we can't afford for this housing to be taken out of the affordable stream, we'll give you another subsidy but you have to keep it affordable," says Narasimhan. "Virtually every court ruled against the states and said you can't go back and change the rules."

Narasimhan says the best the tenants and state can do at Starrett City may be to negotiate a "basket of goodies" to keep the rents stable for the next 20 years to encourage the developers to keep the units affordable.

Tenants like Carmichael want the new owners to respect Starrett City's diverse and supportive community. "I really hope the people that are going to buy this are going to do it to benefit the community, not just to enrich themselves," she says. "Because this is our community, this is our life. You can't just demolish that."