A Second Look at Mitchell-Lama Housing

David R. Jones, The Urban Agenda

Sixty years ago New York enacted a law that led to the creation of one of the great successes in housing policy.

During its heyday, the Mitchell-Lama Housing Program – a joint local and state effort -- succeeded in serving a diverse mix of people, with teachers, police officers, firefighters, municipal employees and transit workers living side by side with those who were close to or living in poverty.  Over time the tenants in these subsidized developments helped stabilize communities further illustrating the great potential for government to partner with the private sector to produce affordable housing that was both ethically and economically diverse.

From 1955 to 1981, more than 66,000 subsidized rental apartments and 69,000 coop apartments were created in New York City under the program. The only major flaw in Mitchell-Lama was the lack of permanent affordability protections. As the city’s housing market evolved, owners took advantage of “buy-out” provisions added to the law that made the program susceptible to massive market conversions after 20 years. Today, half of the city’s Mitchell Lama rentals and seven percent of the coops have been lost as affordable housing.  And the fear is market conditions will continue to put these units at risk of being privatized in the years to come.

More Housing Needed for Poor and Near Poor

Some of the same conditions that led to the creation of Mitchell Lama sixty years – namely inadequate housing for low and middle income households – prevail today.    

New York City is facing a housing crisis driven by rising rents, a dramatic decline in the supply of apartments low-income New Yorkers can afford, and a private market that is focused on serving a small, high-income, and even higher-income subset of the population. These market forces have combined to cause a net loss of 385,000 apartments affordable to low-income New Yorkers from 2002 to 2011.

In an effort to replenish the city’s stock of affordable housing, Mayor de Blasio has committed nearly $7 billion in city capital funding for affordable housing production and preservation over ten years. The concern with the mayor’s Housing New York plan is its focus on middle-income households rather than the poor or near poor. Under the mayor’s plan, only eight percent of the units would be accessible to New York families with the lowest incomes, up to $23,000 for a family of three, and another 12 percent from there to $38,000. Families at those income levels make up 73 percent of those paying more than 30 percent of their income for rent.  They bear the highest rent burdens and, once rent is paid, have little left over to meet other basic needs.

Tools to Ensure Permanent Affordability

While we would prefer to see the mayor’s plan better target the lowest income New Yorkers, the reality is it costs much less to provide housing subsidies to families with higher incomes for the simple reason that they can afford to pay a greater share of the construction and operating costs of their homes. It’s also true that the city’s private housing market does not do a particularly good job of serving people with incomes of even $60,000 or more – the great majority of our city’s people.

This week, my organization released a report calling on New York to build on the success of the original Mitchell-Lama program to fund a new housing production program centered on serving those with a clear need for better and more affordable housing. The report, “Reinventing the Mitchell-Lama Housing Program,” would direct 25 percent of the new housing to families living below or near the poverty line, and another 50 percent to those making $31,000 to $46,000 annually for a family of three.

In order to avoid a repeat of the massive loss of Mitchell Lama rental housing that has occurred over the last 20 years, the report calls for linking future housing production to a combination of tools to ensure permanent affordability. One way to achieve this would be through retaining public ownership of the land used for development with a 99-year lease to the private affordable housing developer.

Another way would be to create a Community Land Trust to own the land that is contributed to new affordable housing developments, vesting long-term stewardship of the land to a non-profit organization controlled by tenant and community representatives.

The gap in funding created by insufficient federal action justifies that the city, and especially the state, commit more resources for housing. To be sure, implementing a modern version of Mitchell Lama would require a considerable investment in public resources. But the benefit would be the creation of a permanent housing resource that would help New York respond to some of its most urgent housing needs.

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