The Real Deal New York

Mitchell-Lama buildings haven’t been following the rules: audit

New state comptroller report shows five developments botched waiting list requirements
By Kathryn Brenzel | August 17, 2017 03:40PM

From left: The Westview, Thomas DiNapoli and Knickerbocker Village

A new audit from the state comptroller Thomas DiNapoli’s office shows that several Mitchell-Lama buildings are bungling waiting list requirements, letting some apartments sit vacant for as many as five years.

The report focused on five developments — Westview, Knickerbocker Village, Mayflower Terrace, the Amalgamated Warbasse Houses and Towers of BayRidge — with closed waiting lists as of January 2014. Buildings participating in the state-run Mitchell Lama program, created in the 1950s, receive tax breaks and low-interest mortgage loans in exchange for setting aside housing for middle-income tenants. Those tenants are selected from the Division of Housing and Community Renewal’s waiting list. The developments can opt out of the program after 20 years.

At one of the buildings, Westview on Roosevelt Island, the audit found that 51 of the project’s 361 residential units were vacant, 10 of which had been so for five years. The building’s management, RY Management, explained that the units were being kept vacant as they started to privatize the building in 2011 but couldn’t explain why eight new tenants had then moved into the building in 2014 and 2015, DiNapoli’s office said.

According to the report, most of the buildings selected tenants through the Division of Housing and Community Renewal’s waiting list and had tenants approved by the DHCR. But Knickerbocker Village in Two Bridges, a 1,590-unit rental development, admitted one tenant who was not on the waiting list but an employee of the building, according to the audit. Employees can be assigned apartments with prior approval from the DHCR, but Knickerbocker management didn’t get approval in this case, the comptroller claims.

Representatives for Knickerbocker’s management team said that it was “in the development’s best interest” to have an assistant manager live on site to oversee major renovations related to Superstorm Sandy. They also maintained that the DHCR approved the deal.

While the audit found that most of the buildings obtained DHCR approval for tenants selected off the waiting list, the properties in most cases failed to keep proper documentation showing the order that tenants were selected. All but Mayflower Terrace also violated the internal/external ratio, which stipulates that one out of ever four available apartments be offered to external tenants, i.e. not to tenants who are already living in the building.

In May, City Council member Jumaane Williams sponsored a bill that would require the city to publish annual reports on Mitchell-Lama developments and how they manage wait lists.

Earlier this year, shareholders at the St. James Towers in Clinton Hill rejected a plan to privatize their property, passing up the change to sell publicly-subsidized units for fat profits.