Financial Tools for Maintaining the Affordability of Mitchell-Lama Housing
Committee on Finance | Committee on Housing and Buildings · July 15, 2026 · 3hrs 22m
Source: https://hearinghearings.nyc/hearings/committee-on-finance-financial-tools-for-maintaining-the-affordability-of-mitchell-lama-housing-2026-07-15/
Video: https://councilnyc.viebit.com/vod/?s=true&v=NYCC-250-8-1_260715-131259.mp4

================================================================

(00:00:02)

Hello? OK, no ball. Good afternoon. Welcome to the Committee on Finance and Housing, joint with... excuse me. Welcome to the Committee on Finance joint with Housing and Buildings. At this time we ask that you please silence all electronics and at no point please do not approach the dais.

(00:00:27)

Chair, you begin. Great.

(00:00:32)

Thank you. Good afternoon. I am CM Linda Lee, chair of the Finance Committee, and welcome to today's oversight hearing concerning financial tools for maintaining the affordability of Mitchell-Lama Housing. I am pleased to be joined... I know the Speaker is going to be joining us soon, and my colleague, chair of the Committee on Housing and Buildings, CM Pierina Ana Sanchez. We have also been joined by CM Narcisse, CM Maloney, CM Aldebol, CM Gennaro and I believe CM Joseph is on Zoom as well. Welcome also to our partners from the Department of Housing Preservation and Development and the Department of Finance. Thank you all for joining us today to answer questions.

Before I go any further... we are going to have her do her statements later. So we are here today as the housing affordability crisis continues to challenge New York City, even as we in City government continue to work to ease the burden on New Yorkers. This hearing is not intended to litigate the value of the Mitchell-Lama program. This Council has long supported and continues to support the feasibility and longevity of the program. As was highlighted during our last oversight hearing on Mitchell-Lama affordability, the City Council has taken multiple steps to preserve Mitchell-Lama Housing, extending property tax exemptions for developments that had paid off their mortgages, incentivizing them to remain in the program, enacting laws expanding benefits previously unavailable if improvements were financed through government loans or grants to Mitchell-Lama buildings that commit to stay in the program.

Further, the Fiscal Year 2025 New York State budget, with support from the Governor, local and state legislature, further reduced the local tax burden on these developments through the New York shelter rent tax law. This law caps local and school taxes at 5% of a development's annual shelter rent, down from the previous minimum of 10%. Some properties qualify for greater exemptions depending on prior Board of Estimate resolutions. Even with these actions, it is essential that this oversight continues with our agencies and the administration as we look forward to exploring existing and potential new tools to support the long-term viability of Mitchell-Lama developments from our counterparts at the Department of Housing Preservation and Development and the Department of Finance, and not passing the burden to tenants in Mitchell-Lama developments, rentals and co-ops. I now want to turn it over to my co-chair for this hearing, CM and Chair Sanchez, for her opening.

(00:03:13)

Statement. All right. Thank you so much, Chair Lee, and good afternoon everyone. I am CM Sanchez, chair of the Committee on Housing and Buildings, and I am pleased to co-chair today's joint oversight hearing with CM Lee, as well as... I am calling him the honorary co-chair, CM Dinowitz, who brought us together regarding Tracy Towers. For more than 70 years, the Mitchell-Lama program has provided an essential source of stable, affordable housing for middle and moderate income New Yorkers, but today that promise seems to be in peril. Residents are living with hazardous conditions, deteriorating building systems, rising rents and carrying charges, and growing uncertainty about whether they will be able to remain in their homes. This is not a minor problem at a handful of isolated buildings. It is a deeply troubling trend across a critical affordable housing portfolio, and it demands more than just descriptions that our buildings are aging and costs are increasing. We need our agencies to come to the table with solutions that stabilize developments that are already in distress, protect residents from displacement, and fundamentally strengthen the City's oversight so that we prevent the next crisis instead of merely reacting after a development has reached a breaking point.

(00:04:30)

Created in 1955, Mitchell-Lama encouraged private developers to build rental and cooperative housing by offering low-interest mortgages and property tax exemptions. In exchange, owners accepted limits on their profits, resident incomes, rent levels, purchasing prices and carrying charges. Since the program began, 269 developments containing more than 105,000 apartments have been built statewide. An estimated 170 of those are in New York City and about 60% of those are supervised by the City. These developments were made possible through public subsidies and public oversight was intended to preserve their affordability, financial stability and physical condition.

(00:05:12)

For City-supervised developments, HPD approves budgets and rent or carrying charge increases, monitors finances, oversees tenant eligibility and waiting lists, and conducts inspections. The City and State have also invested significant public resources in preservation. HPD testified just earlier this year that its 10-year capital plan includes $1.1 billion for Mitchell-Lama Housing, some of which was secured through this Council through the City of Yes negotiations, while the State's Fiscal Year 2027 budget, as Chair Lee mentioned, includes $80 million in new appropriations accessible to developments in the City.

(00:05:48)

Yet despite decades of public oversight and substantial public investment, too many Mitchell-Lama residents are living with deteriorating conditions and rapidly rising housing costs. At least 10% — as is our understanding — of the City's remaining Mitchell-Lamas are experiencing financial distress, and in 2025 alone, 32 to 37 developments received rent increases averaging approximately 29%. Compare that to this year's 0% increase for rent stabilized apartments. A March 2026 audit by the State Comptroller found hazardous or unsafe conditions as well as structural issues at 12 of 15 developments examined statewide, including every single one of the 10 New York City developments that were sampled. The audit also identified approximately $2.3 million in misspent or inadequately documented funds.

Those findings should set off alarm bells. They demand basic and urgent questions like: how can housing that has been continuously supervised by the government fall into such severe financial and physical distress? Was not this oversight intended to prevent precisely this outcome? And if HPD has been monitoring these developments all along, when did it first see warning signs? What did it do in response? How were reserves, mounting debt, deferred maintenance and deteriorating building systems allowed to reach crisis levels? And most importantly, what is HPD going to do differently moving forward?

(00:07:17)

In addition to the situation at Tracy Towers, which we will talk about at length, I highlight Kingsbridge Arms in my neighborhood. 2865 Kingsbridge Terrace presents another deeply troubling example. The development has over $1 million in debt. Its physical and financial conditions have become so dire that management actually relies on additional debt to cover even basic operating expenses, including something as simple as trash bags for the garbage room, while major renovations and essential repairs remain unaddressed. Residents call us, they email our offices, they stop us at community events because they need help. In closing, oversight should mean more than simply monitoring a building's

(00:07:56)

decline and then presenting residents with enormous rent or carrying charge increases as the only available solution. It must mean proactive capital planning, maintaining adequate reserves, enforcing timely repairs, ensuring responsible management, requiring transparent accounting so that our affordable housing can remain as such in the long term. It must mean detecting stress early and intervening decisively before residents and developments reach a breaking point. We are looking forward to a productive and solutions-focused discussion because Mitchell-Lamas were founded on a public promise that New Yorkers can have safe, stable and affordable homes, even if they could not afford the private market. Our responsibility is not simply to celebrate that promise, but to make certain our City is continuing to keep it.

(00:08:44)

I look forward to the testimony and before I close, I want to just thank my team: Kim, Gerard, Dylan, Maria, Maria Jose, Soraya and Oriana from our district, and the Housing and Buildings Committee staff: Senior Legislative Counsel Austin Malone, Legislative Counsel Billy, Senior Policy Analyst Jose Condit, Policy Analyst and Finance Analyst Carla Moran, and Spencer Kun. But that back to Chair Lee, thank you.

(00:09:57)

Begin. Great. Can you all hear me? Yes. OK. Good afternoon, Chair Sanchez and Chair Lee. Thank you for the opportunity to testify. I am Adam Phillips, the First Deputy Commissioner of HPD, and I am pleased to be joined by my colleagues Aleka and Pre Samuel, Deputy Commissioner of Asset Management and Property Management, and Julie Walpert, our Assistant Commissioner for Housing Supervision.

The Mitchell-Lama program is a critical and unique part of our City's affordable housing stock. The program was created by the State Legislature in 1955 to serve middle class families and since then it has provided opportunities for hundreds of thousands of New Yorkers. Today there are approximately 90,000 Mitchell-Lama apartments in 134 developments spread across New York City. Approximately half of these apartments are supervised by the City through HPD and the other half are supervised by the State. The Mitchell-Lama portfolio: two thirds are co-ops and one third are rentals. All Mitchell-Lamas, whether they are co-ops or rentals, are privately owned and managed by housing companies that are subject to oversight by HPD. In the Mitchell-Lama rental building, a private landlord is the owner and is responsible for maintenance and long-term capital planning. Mitchell-Lama co-ops are controlled by their residents who are shareholders. Each year the residents elect a volunteer board of directors that has the responsibility of overseeing operations and long-term capital planning for their co-op on behalf of the shareholders. The responsibility to serve on a board of directors is great.

And we thank all the residents who take on the task. We have seen thousands of New Yorkers build their lives in these affordable co-ops and rentals. Although the program was originally designed to house middle income families, over time Mitchell-Lamas came to offer New Yorkers at a range of incomes a chance to find stability in neighborhoods they love, giving them an affordable place to pursue their ambitions, raise their families and age in place successfully. We are deeply committed to ensuring the affordability and physical condition of this stock for decades to come. While the Mitchell-Lama program has been incredibly successful at providing affordable housing to families across a broad range of incomes, it now sits at a crossroads. The portfolio faces rising operating costs, significant capital improvement needs and uneven rental or maintenance fee income streams. We will discuss each of these concerns in more detail and provide a path to stabilize the program for the years to come.

The Mitchell-Lama portfolio has experienced massive increases in operating costs, as has been seen across all types of affordable housing. Insurance premiums have skyrocketed, utility costs are increasing, salaries for maintenance and building staff have increased significantly. All these rising operating costs have made it more challenging than ever for Mitchell-Lamas to maintain a balanced budget, let alone chart a sustainable path for major capital improvements. Much of the Mitchell-Lama housing stock was constructed between 50 and 70 years ago. As a result, co-ops and rentals alike have major building systems nearing the end of or surpassing their useful lives. The age of the housing stock, deferred capital improvements and compliance with carbon emission requirements has led to high estimated capital needs amounting to billions over the next decade.

In many cases Mitchell-Lamas experience inconsistent rent or maintenance fee increases. This is a result of the unique regulatory structure of the program. Whereas rent stabilized buildings follow a framework for rent increases as advised by the Rent Guidelines Board, Mitchell-Lamas follow a completely different process, determining their rent or maintenance fee increases based on the need to keep a balanced budget. Per state law, HPD is legally required to approve rent and maintenance fee increases up to the amount necessary to cover a building's costs. Failing to approve an increase could risk violating state law. It is not HPD's role to determine whether to increase rents. The responsibility and decision making around the process is in the hands of the private housing companies. When buildings finally do raise their rents or maintenance fees, it can sometimes be making up for many years all at once. HPD understands that this practice can be painful for tenants and shareholders and HPD is reviewing their income and expenses to maintain a balanced budget.

In 2025, 37 Mitchell-Lama developments saw rent or maintenance fee increases. They saw an average 29% increase over multiple years, comparable to the 30% at Tracy Towers. In this context, it becomes clear that Tracy Towers is not entirely exceptional. The financial challenges facing it are similar to those facing the portfolio as a whole. We are committed to reducing the number of households impacted by helping them take advantage of screening criteria and advocating for additional rental subsidies from the federal government. We are also committed to reducing operating costs to minimize the necessary increases across the portfolio.

In addition to the sometimes erratic frequency of rent or maintenance fee increases, statutorily Mitchell-Lamas cannot increase rents or maintenance fees for only those who can afford it. Under the original Bill text, higher income households cannot be charged higher increases than their lower income neighbors. This is a common practice used to equitably support the finances of mixed income buildings, but this is not an option available to Mitchell-Lamas. While there is a modest surcharge for over-income households, it is capped by statute, meaning that we cannot use higher revenues from those who can afford it to cross-subsidize those who might not be. These challenges are not insurmountable. Early on, this administration recognized the

(00:15:26)

Challenges facing the Mitchell-Lama portfolio, and we took proactive steps to address them in the Block by Block Housing Plan. The administration laid out a plan to dedicate hundreds of millions of dollars across fiscal years 27 and 28 to specifically target capital improvements in City-supervised Mitchell-Lamas. We are also committed to taking a holistic, portfolio-wide approach to addressing the capital needs and broader challenges facing the City's Mitchell-Lama portfolio. Recognizing the importance of this housing stock and the challenges it faces, we committed to developing a comprehensive set of tools to put the Mitchell-Lama portfolio on a more sustainable path, to lessen the impact of rent and maintenance fee increases while ensuring a balanced budget, and to commit to enrolling eligible households in SCRIE.

Recently, the statewide income cap for households eligible for SCRIE increased from $50,000 to $75,000 with legislative action from the City Council. We can begin enacting this change on the local level. On the expense side, we continue to work with the private housing companies to contain operating costs. We are also exploring new revenue models to enable capital improvements and reduce, where possible, future increases. Some Mitchell-Lamas are exploring the sale of their parking lots and other undeveloped land where new housing would be built. This could provide millions of dollars to fund a trust that would offset increasing expenses, helping to minimize future rent or maintenance fee increases. It could also pay for climate upgrades and major capital needs such as roof repairs, elevator replacements and more. In the process, it will also create more housing to help address our citywide housing shortage.

We believe that with responsible financial stewardship and new investment, the Mitchell-Lama portfolio can serve New Yorkers for decades to come, allowing more families to stay in their neighborhoods while paying affordable rents or maintenance fees, or to experience the stability of homeownership for the first time. Thank you for sharing our concerns for the physical and financial future of these developments. After 70 years, their needs are great, but so is their potential. We will continue to work collaboratively with you all to protect these developments, maintaining their affordability and their physical upkeep for the next generation. Any questions? Okay, perfect.

(00:17:54)

Thank you. I also want to recognize that we have been joined by CM Sanchez as well as CM Brooks-Powers on Zoom, and I am actually going to first turn it over to Chair Sanchez for her questions.

(00:18:06)

Thank you, Charlie, and good afternoon again. Thank you so much for that context and testimony. My first question — I just want to start with a point that you make in your testimony, which is that HPD is legally required to approve rent and maintenance fee increases up to the amount needed to cover the building's costs, and that failing to approve an increase would risk violating state law. I highlight this point in your testimony because it does not answer a fundamental question that we here at the Council have, which is: what is your asset management model? Are you fundamentally being proactive or reactive? Are you waiting for the buildings to come to you with an application for an increase, or are you monitoring, as an agency, the building's health and the financial health of the building so that you can smooth out over time the increases that are needed at the building?

So our housing supervision team works with the housing companies to regularly review income and expense statements from each housing company and their annual financial audits. So by reviewing the existing financials, we can work with the co-op boards or the private owners to come up with a plan to address any increases that could be coming up.

(00:19:23)

So then why is it that...

(00:19:24)

...if you are regularly reviewing financials as an agency, building increases can be presented in a way that is making up for many years at a time? So in some cases we are planning for long-term capital improvements, and more often than not, Mitchell-Lamas will not come to us for an increase until the pre-development process is completed to do the capital work. So it becomes kind of one fell swoop of addressing any increases to meet operating needs...

(00:19:53)

...and then support major capital improvements. Okay, thank you. I still think that something is being missed here. If you are having regular conversations, there should be gradual increases over time. I think that is a direction the...

(00:20:07)

...agency should try to move into, to smooth things out for tenants and shareholders in these properties. So stepping back at a programmatic level: how does HPD understand its asset management responsibility after the initial development and preservation of a deal, after the financing of a deal closes? Is the agency's model designed to prevent financial and physical distress, or primarily to intervene once a project has become high risk?

(00:20:36)

So after a project closes on financing, during construction we monitor construction along with the private lender, which is typically HDC. So during construction we are working monthly to ensure that requisitions are processed appropriately and that capital needs are being addressed. Then after the construction period ends, our housing supervision team continues to work with the board or the owner of the housing company to monitor income, expenses and future capital needs.

(00:21:07)

Thank you. What explains the five-year increase in the Mayor's Management Report's high-risk rental and cooperative indicators that are showing that we are moving in the wrong direction in terms of the physical stock in these properties? Sorry, can you repeat the question? So in the Mayor's Management Report, there has been a five-year increase with respect to management of high-risk rentals and co-ops. What explains that?

(00:21:44)

Are these Mitchell-Lamas specifically, or rent-stabilized? No, it is broader than Mitchell-Lamas but includes Mitchell-Lamas. So for any distressed portfolio or any distressed building, we will work with the owner to ensure that they can put together a loan application and enter our pipeline for preservation...

(00:22:06)

...outcomes. Right. Thank you.

(00:22:06)

I want to acknowledge that we have been joined by Speaker Menin, and I want to give her the floor. Thank you.

(00:22:12)

So much. I really want to thank Chair Sanchez for convening this very important hearing. I have got an opening statement but I am going to go right into questions, and I apologize for my tardiness, but we actually have a hearing across the street that I will just say is quite crowded on a very hot topic.

So first of all, for generations New York City's Mitchell-Lama program has provided, as we all know, affordable and stable homes for working-class families, for older adults and for middle-income New Yorkers. These residents keep our city literally running. They are teachers, postal workers, caretakers and police officers. Allowing them not only to stay here but to thrive here is absolutely essential to their future and to our City's future as well.

Today's hearing comes at a pivotal moment. On June 25, 2026, I and other elected officials penned a letter to the mayoral administration seeking answers on how the administration plans to address a proposed cumulative 30% rent increase at Tracy Towers. This rent increase has brought renewed attention to the financial challenges facing Mitchell-Lama developments across the City — rentals and co-ops alike. The president of the tenant association of Tracy Towers warned that if approved, some residents would be forced out of their units. Tenants' jobs, families and homes are at stake. The tenants' lives literally just depend on this response.

(00:23:44)

While Tracy Towers is of course the immediate catalyst for this conversation and for this hearing, the issues before us extend beyond one single development. They raise fundamental questions about whether New York City is doing everything within its power to preserve affordability while ensuring the long-term financial health of its Mitchell-Lama portfolio. No one disputes that these developments are facing real financial pressures. Rising insurance premiums, labor costs, utility expenses, security costs, debt service and decades of deferred maintenance have placed significant strain on so many buildings.

At the same time, residents are asking difficult but very reasonable questions. If tenants are being asked to absorb rent increases approaching or exceeding 30%, why do longstanding maintenance issues persist? Why are buildings still grappling with aging elevators, deteriorating infrastructure and other conditions that have gone unaddressed? And are rent increases becoming the default solution before every available financial and preservation tool has first been exhausted?

A recent State Comptroller audit identified chronic physical deterioration at many Mitchell-Lama developments as well as weaknesses in financial oversight and accountability. The findings truly underscore that preserving these buildings requires more than just balancing operating budgets. It requires strong stewardship, transparent management and strategic public investment as well.

This hearing is not about questioning whether Mitchell-Lama developments need financial support — they do. It is about examining how that support is delivered and whether this City is making full use of the tools at its disposal before asking these tenants to bear the cost. We should be asking whether preservation financing, capital investments, operating subsidies, insurance reforms, refinancing opportunities and stronger oversight of management practices can reduce the need for significant rent increases. We should also examine whether the oversight framework provides sufficient transparency and accountability, whether residents have meaningful opportunities to participate in decisions that are affecting their homes and their livelihoods, and whether existing affordability protections — including proactive SCRIE enrollment required under Local Law 44 of 2024 — are being fully implemented.

Ultimately this hearing is about balancing two responsibilities that are not in conflict: preserving the financial viability of Mitchell-Lama developments while preserving the affordability that defines the very program itself. These goals must go hand in hand. I look forward to today's hearing and working collaboratively to identify policies which ensure that balance is being maintained. So I am just going to jump right into my questions. We sent a letter on June 25, so I would like to just get an update on some of the questions that we asked in that letter. First and foremost, to provide a comprehensive list of City-run Mitchell-Lama developments and the rent increases they have incurred over the past 10 years and the proposed upcoming rent...

(00:27:03)

...increases. So I think it would be easiest for us to supply that information after the hearing. It is a very long list with a long schedule of...

(00:27:11)

...increases. No, no — that is the purpose of this hearing. The purpose of the hearing is to go on the record and to talk about which buildings are getting a rent increase. I mean, look, we know about Tracy Towers, but we are hearing from Mitchell-Lama residents throughout the City who are saying they are getting a rent increase. So that is the whole purpose of this hearing. We want that being...

(00:27:32)

...discussed now. Great. If you can just give us a second to go? Sure, absolutely.

(00:27:47)

All right, so we will work on it as the hearing is going on. If you do not mind, we can work on putting the list together and then report back later in the hearing. I mean, I do just want to say we never received a response to our letter, and this hearing is underway. We are not asking some surprise question. This is literally something we asked on June 25 and that you all should be prepared to be providing to us.

(00:28:19)

Understood.

(00:28:20)

Okay. I am going to ask the second question then. Has a comprehensive review of the financial condition of all City-supervised Mitchell-Lama developments — including which developments are currently experiencing financial stress or projected to require the most significant rent increases within the next five years — been conducted? These are all from the letter. So again, these are not new questions. They are ones that we have literally asked you all weeks ago and we have received no response.

(00:28:45)

So we regularly work with the Mitchell-Lama housing companies to review income and expenses.

(00:28:50)

Right. So you regularly get...

(00:28:52)

...income and expenses and audited financials, and work with the companies to ensure that we can minimize rent or maintenance fee increases.

(00:29:02)

So has there been a comprehensive review of the financial condition of all of the City-supervised Mitchell-Lama developments?

(00:29:10)

We are regularly reviewing the financials of all City-supervised Mitchell-Lamas.

(00:29:16)

And okay, can you share the results with these two committees for every single Mitchell-Lama? I mean, that is — really? What is that? That is the point of the hearing, is to look at the financial oversight. I mean, I do not have that in front of me right now, unfortunately. That is basic information.

(00:29:34)

I mean, we asked about this in the letter. I am just surprised, given that we sent this letter, that the administration is not prepared to answer the questions that we asked about three weeks ago. Unfortunately, I do not have that...

(00:29:47)

...in mind. Okay. So we would like to get that, and we want that in the coming days. So that is a confirmation that these two committees will get that information?

(00:29:57)

We will work our best to supply you with that...

(00:30:00)

...information. Okay. The fourth question we asked in the letter was to describe the oversight and accountability mechanisms that HPD utilizes to ensure management companies fulfill their obligations. So we...

(00:30:13)

...work with the private housing companies. It is the private housing companies' responsibility to hire a property manager, and then we oversee the private owners and the co-op boards to ensure that the property managers are fulfilling their requirements under the property management agreement.

(00:30:31)

What are the additional resources and strategies that HPD plans to deploy to prevent rent increases similar to those that are occurring at...

(00:30:42)

...Tracy Towers? So we have SCRIE already at our disposal, and we would request collaboration with the City Council to, on the local level, increase the income cap from $50,000 to $75,000. So on the state level that was legislated, but we still have to do something locally to ensure that the cap goes from $50,000 to $75,000. We also would appreciate collaboration with the Council to advocate for additional federal sources. The biggest operating subsidy outside of SCRIE that we could all advocate for is additional Section 8. That is a federal source that has been neglected, to put it lightly, for quite some time, and we are working as best as we can to advocate for additional Section 8 resources...

(00:31:30)

...to help mitigate any maintenance or rent increase. And how many City-supervised developments have closed under the Multi-Family Housing Rehabilitation Loan Program or the Mitchell-Lama Reinvestment Program? Just one second...

(00:31:46)

...I have those numbers. So currently we have 12 projects in our pipeline, and we are looking for the number — I believe we have it with us — for total projects that have ever closed on an MRL loan.

(00:32:30)

And which developments have applied for this, and has Tracy Towers applied for it?

(00:32:36)

Sorry, could you repeat that? Which developments — you mentioned 12...

(00:32:40)

Yeah, which developments, and is Tracy Towers one of...

(00:32:43)

...them? So Tracy Towers is in a two-phase closing. We closed on financing at the end of June 2026, and then we expect by the end of calendar year 2027 to close on the second phase of financing. Okay. Sorry, just to jump back — we do have the list of projects with the rent increases pending. Okay, we can just read them into the record. How...

(00:33:13)

...many are there? And it is...

(00:33:18)

...a large list? Well, let me read it and then we can... Sure. And there are different stages of them. So these are all the Mitchell-Lama — just to be clear — these are all the Mitchell-Lama developments across the City that are going to face rent increases. Correct? Yes.

(00:33:35)

Okay, so they are in different stages of the increase. Can you specify the amount of the increase at the same time? So I can specify the amount that they have requested, but we have not done any of the reviews yet for the list that I am about to...

(00:33:58)

First, I am just going to go through what they sent me. Washington Square Southeast is a co-op and they are looking at a three-stage increase of 15, 10 and 5. The next one is Sam Burt, which is also a co-op. With both of those, those are just the applications that were received. The increase that they requested is 15, 7 and 7, and again this is the co-op board requesting this. The next is Trinity House, which is a rental where the public hearing is scheduled, and they are looking at three stages of 7, 7 and 7. The next is First Atlantic Terminal, which is a co-op. They are looking at two and a half and two and a half percent. Next is Jefferson Towers, and they are looking at a 10 and a 6, and the hearing is scheduled for their... Tracy Towers, we recently held a hearing. Masaryk Towers is looking to increase their... to 15, 5 and... Rupert House, that was completed and they are looking at 15, 10 and 5. Lincoln in Amsterdam, the hearing was completed and they are looking at a 30 and a 10, but I just want to actually note on that one, they have not had an increase in 25 years. Jefferson also has not had an increase in many years. They both have commercial space that supports the development. And those are... that is what we have.

(00:36:06)

Okay. And how is this going to help these tenants who are all going to be facing very significant rent increases? So we do...

(00:36:18)

Targeted outreach to enroll households that are eligible. I will let my colleague Alec just talk a little bit about what our process is to do outreach to the households that are eligible.

(00:36:35)

Good afternoon, everyone. I just wanted to give you some highlighted, high-level numbers related to the question around the past 10 years and the proposed rent increases, because we will be able to give these numbers and then follow up with what these numbers actually mean. I just wanted to get this on the record.

We have had 37 Mitchell-Lama developments that saw rent and carrying charge increases in 2025. So 37 Mitchell-Lama developments saw increases in 2025. These saw an average of 26% increase over multiple years. That was comparable to what the First Deputy Commissioner was saying with the 28% at Tracy Towers. 15 were initiated in 2025 and the rest were initiated between 2022 and 2024. 25 of those involved a 20% or greater increase over several years and seven of those involved a 20% or greater increase in just 2025. 5 Mitchell-Lama developments have filed for and received rate increases so far this year in 2026.

The reason why I mentioned these numbers is because we have the pattern and the trend and we can provide you on an individual basis, working directly with the members on the developments within their districts that have asked, about the increases and what is going on. That is the work that our portfolio analysts actually do with the managing agents and with the shareholders. They go through these numbers on a regular basis and we can provide you with that information, because our portfolio analysts are the asset managers in our housing supervision in the department. They have this information. This is nothing that is all of a sudden happening. We have seen increases recently that are drastic, but our portfolio analysts are in these buildings every single day. We have the information for you and we can sit with each member.

(00:38:54)

That they have exhausted all HPD refinancing options before a rent or carrying charge increase to fund repairs, and if not, why is that not a precondition?

(00:39:12)

Yes, we absolutely do that. When a rent increase comes in, we take a broader view of what is happening at the development. We are analyzing the expenses, we are analyzing the income, we are taking a look at the existing debt and how we can refinance or restructure some of that existing debt. So when the increase comes in, we are not just looking at only the expenses. We are looking holistically at the entire project to figure out what is going to be the best stabilization outcome for the development.

(00:39:42)

So for Tracy Towers specifically, what financial tools did you explore before...

(00:39:48)

Determining this proposed approximately 30% rent increase. So there is existing debt on the project and there is new capital that went into the project and will go in in tranches. The increase that the residents are experiencing is not going to pay for any of the debt service that is related to the City capital that is being put into the project. So by ensuring that our debt is not being paid at all by the residents, that limits the amount of the increase. Additionally, the shelter rent tax was recently lowered from 10% to 5%, which I think we all know was really helpful to ensure that the increase was not as large as it would have been maybe a couple of years ago without the lower property tax amounts.

(00:40:37)

Okay. One last question before I pass it over to my colleague. So in the Fiscal 2027 Executive Budget, a hundred million dollars was added to support a City-backed insurance program. Will Mitchell-Lamas be eligible for this City-backed insurance program?

(00:40:54)

Yeah, absolutely. More broadly, we are hoping that the insurance plan will not only benefit the units or the owners that go into the program. We are hoping that it will move the needle on the entire market and lower premiums for everybody. That is the intent — to lower insurance premiums for any project, not just the ones that enroll into the program.

(00:41:15)

Yeah, and I mean, I would note we are about to pass in the City Council an insurance accountability Bill, which sets up a new, first-in-the-nation insurance accountability office to lower premiums. So we look forward to working with the administration on that. Okay, let me pass it back over to...

(00:41:31)

I do have a list of the Mitchell-Lamas that closed on the HRP loans, the housing... So if you do not mind, I can... Yeah, you could read that in.

(00:41:43)

Riverbend, Ryerson Towers, Village East, Atlantic Second... Second Atlantic Terminal. Sorry. Crime Gardens, Kings... Kings Bay One. Chatterton, Bright... Bright and House, Dennis Lane, Highland, Harris... and preservation of those. Sorry, the chicken scratch is hard to read. Bronx River Tower, Bronx Wood Tower, Masaryk Towers, Mazurek Towers and Village East. And sorry, one more — Cedar Emanuel Mutual Housing Court.

(00:42:30)

Okay, I am going to pass it over to Chair Sanchez.

(00:42:33)

Thank you. Could you clarify the list you were reading out and exactly what applies to those?

(00:42:39)

Oh, so these are all projects that have closed on the Multifamily Housing HR Rehabilitation Loan Program. Sorry, I just want to quickly note — 2021.

(00:42:51)

Okay, we have been joined by CM Avilés, Banks, Morano, Williams, and a majority.

(00:42:57)

Leader, are you... Sorry, go ahead, Chair. Oh, and...

(00:43:02)

Oh, CM Wilson. Oh, there we go. Okay, thank you. Well, we have a quorum. We can do stated now. Okay. So I am just going to ask a couple of questions and then, because we have so many colleagues here, just want to move things along. Chair will ask her questions and we will go to colleagues. So just getting a sense of the physical conditions of Mitchell-Lama properties across the City, can you give us a sense of how often Mitchell-Lamas are conducting a physical needs assessment per property?

(00:43:38)

Any project that comes to us is required to complete what is called an Integrated Physical Needs Assessment. It is used to assess the outstanding capital needs — short term, medium term, long term — and it is also an energy audit and provides recommendations to do energy efficiency upgrades. So every project that comes through our pipeline is required to come with one. We are constantly seeing Mitchell-Lamas come to us with an application to apply for City capital.

(00:44:10)

So of the 134 properties in the City, how many of those have come to the agency in the last five years, or whatever timeline you have the answer for? How many? About 90 developments.

(00:44:26)

Really? Okay. All right, so we have 90 developments in our portfolio. We do not have the exact number that have gone through and have a current one, but all of the projects that I listed previously that received a loan through HRP, they all had one. Any project that has closed on financing with us recently would have completed one. Thank you.

So Mitchell-Lamas are not proactively conducting them — they are conducting them when they are coming to HPD for financing. I would say some are not. It depends on the individual housing company, it depends on the individual co-op. Some are more proactive with diagnosing capital needs while others wait until the last minute, and this is not unique to Mitchell-Lamas. We see this with the privately owned rent-stabilized stock as well.

(00:45:16)

Like high school students that leave their homework for the last...

(00:45:19)

Minute. Yeah, exactly.

(00:45:21)

Exactly. Just to add to that — I am not sure if we were talking about this number, but among the supervised Mitchell-Lamas, we have 48 that have had one. Another six are currently in the process of obtaining one, and HPD helped to facilitate that, which HPD helped to facilitate the conversation with... So 48 have completed since 2020. Do you have a roll-up number of the cost of the capital for these...

(00:46:00)

Of 48 developments? We can get that to you. Okay, thank you.

(00:46:04)

And then last question before going back to the Chair. How does HPD monitor whether rent and carrying charge increases, or the work that you finance, is translating into improvements in building conditions? So the capital work is overseen by the private lender and by HPD. Monthly, when construction is happening, they have to requisition for construction loan funds and the architect, the contractor and a representative from the bank have to sign off that work was adequately done, and then the funds are released to pay for that work. So every month during construction, we have folks going out to ensure that the work is being done per the scope of work and drawings.

I saved one related last question: do you have a breakdown of violations in the Mitchell-Lama portfolio? Not offhand, but we can provide that. Yeah, that would be helpful. Thank you. Okay, we have also been joined by Council Members Brewer and Epstein.

Really quickly, just wanted to go into SCRIE. So I know that the Department of Finance manages the main rent freeze programs and as part of their work they use their data to estimate how many households are eligible for SCRIE. Their most recent report from 2025 estimates that there are about 8,000 households in Mitchell-Lama developments that are eligible. So out of those 8,000, how many of the housing units are currently enrolled in SCRIE rent freeze programs?

(00:47:41)

So SCRIE is administered in Mitchell-Lamas by our housing supervision team and I think the data point of 8,000 or so households is probably just looking at purely income and it is not looking at whether or not they have an existing rental subsidy.

(00:47:56)

If you have a housing choice voucher, which we call Section 8, you are not eligible for SCRIE, and vice versa. You can only have one rental subsidy program. We have in our Mitchell-Lama portfolio on Section 8, we have 5,500 vouchers, and we have about 6,000 households who are on SCRIE.

(00:48:20)

Okay. And what is the outreach like? Is there any additional targeted outreach to residents that are subject to significant rent increases, and if so, was such outreach conducted for residents of Tracy Towers as well?

(00:48:36)

Yeah, I think I was alluding earlier that my colleague...

(00:48:40)

Mallika? Yes, now is your time. So within our housing supervision department, we have portfolio analysts who work with the managing agents and shareholders related to the finances, but we also have a team of constituent service coordinators, and those are the individuals who go into the building and work directly with the tenants. They are doing outreach and engagement. Thank you to some of the Council Members who work with our constituent services team to do workshops. Some of the Council Members have done work in their offices to assist. That team does the direct engagement and it is almost like case management services, where individuals who are not able to complete the applications or have the information — they hold their hands and go through every single detail and then also look, as benefits specialists, at what else the tenants are eligible for, even down to working with HRA to see if there are any rental arrears. So it is a whole process conducted by our constituent services coordinators.

(00:49:40)

Okay, and of course the pre-filled SCRIE applications. Council, do you know? That is really, really helpful. Yes, we want to reduce the burden on the tenant to ensure that they can stay stably housed, and that was a big help. Perfect. Thank you. And then, tenants associations and nonprofits — do you partner with any of those? Because when I was on the nonprofit side for many years, I know that we helped a lot of our residents and constituents do the casework like you are saying. So are there partnerships like that, and also how many different languages are you assisting them in?

(00:50:12)

We are always looking for partners. This is a collaborative effort and so yes, we do. As far as languages, we actually have a language line that assists us — the City language line. Okay, because sometimes that is questionable, I am not going to lie. But yes, I mean, I will admit it is better to have some sort of assistance than none. But I would really encourage... especially there are a lot of culturally competent, language-proficient nonprofits out there as well, so I know that they are doing this work on the ground and it would be great to see the partnerships there. And what is the main eligibility...

(00:50:47)

What is the primary reason that eligible households — sorry — do not enroll? From what you are hearing back when you do the outreach?

(00:51:01)

It just runs the gamut. It could be anything from they do not enroll because of the income of the people in the household. It is just continuous engagement, reaching out to people, assuring them that they should complete the forms. It is just so many different issues.

(00:51:20)

Yeah, that is why the pre-filled forms are hopefully going to help. And then also just considering — because I know that sometimes agencies work in silos, not with all best intentions, I know they try to coordinate and work together — how has that been with partnering with the Department of Finance? Because I know that there probably needs to be a lot of coordination there. So how has that looked? So we fully enroll and run the SCRIE program for Mitchell-Lama. So the overlap...

(00:51:48)

With us is very minimal and not really necessary. Okay.

(00:51:55)

Yes, the DRIE applications are completed by the Department of Finance, but when we go out to do a workshop we bring those applications along with us. So we do coordinate with them.

(00:52:08)

Okay, perfect. And then in terms of the tax assumption and tax liability — in 2025 the State imposed a cap, as we heard before, and the cap for each development is either 5% of its shelter rent or carrying charges. Presumably some developments will not reach the cap because the value of their tax exemption entitles them to a lower tax liability. So how many Mitchell-Lama developments in the City will reach the cap this year and how many will have a local tax liability less than the cap? Yeah. So every Mitchell-Lama development has already moved from the 10% shelter rent tax down to the 5% shelter rent tax. We are also excited for J-51 to be reauthorized because that is another tool in our toolbox — if there is capital work happening, to be able to lower their property tax liability. So if we can layer that as we are doing capital work, that is another tool that we could use to minimize the increases.

(00:53:08)

Okay. And how many Mitchell-Lama developments are delinquent by more than a quarter on their shelter rent tax and water bills? What is the total arrears? I think we just checked this — about 47 and a half million in arrears for property tax and charges that we administer. I do not have the number for water because we do not bill those. Okay. And has there been engagement with solutions for resolving that, because I know that those costs have also increased? So has there been any engagement in terms of how to bring relief for that as well?

(00:53:52)

We are looking at options internally to figure out a way to lower water costs for Mitchell-Lamas. Okay. And...

(00:54:00)

Considering the delinquencies are a red flag for financial distress, how does HPD monitor these delinquencies and what do you do when you see the properties still delinquent for municipal charges like property taxes?

(00:54:18)

Yeah. So when we review the income and expense statements and the audits, we will immediately see if there are property tax arrears or any other kind of municipal arrears, and that is when we continue to engage with the housing company to ensure that they are going to put together a balanced budget and then start talking about what the increase would look like to satisfy the arrears. We also use that as a jumping-off point to figure out what kind of capital work we can do at the same time.

(00:54:45)

Sorry, I just want to follow up on the previous question. So are you saying that no building will be charged less than 5% of the shelter rent or carrying charge every... can you phrase that again? I am sorry. Sorry. So are you saying that no building will be charged less than 5% of their shelter rent, or did you mean the carrying charge?

(00:55:11)

The shelter rent. So everybody, every Mitchell-Lama is now paying a 5% shelter rent tax. Okay. And have you compared the value of each development's exemption against the cap to determine which is lower? I do not have that information on us, but I think the larger benefit is the 5% of the shelter rent.

(00:55:35)

Okay, perfect. Also, just a side question, because this is a Bill that we are looking at as well, but for Mitchell-Lamas: are there any exemptions for Local Law 97 in terms of the future penalties that are coming up? Because I know those charges are going to be quite a bit.

(00:55:51)

Yeah, so they are exempt through 2035, or until 2035, and then...

(00:55:57)

After 2035, because I know that it is increments of the increases, how much is it going to be increased to? Is it at a lower percentage than some of the other co-ops?

(00:56:06)

I do not have that off the top of my head, but we can supply that.

(00:56:09)

Okay. Only because I know with insurance costs and everything else going up, that could be a potential cost in the near future that would be...

(00:56:15)

Big, but hopefully the J-51s and everything else will help as well. Okay. And then just a last couple of questions on the capital funding: do you provide expense funding to Mitchell-Lamas, either for non-capital-eligible repairs or for general operating support? No, we do not provide any levy or expense funds for Mitchell-Lamas. We only provide, like any other affordable housing project, city capital to pay for capital rehab items. Okay. Again, the biggest benefit, or one of the largest benefits that we could get, is additional Section 8 to mitigate the rent increases, which I think we all know is an uphill battle.

(00:56:59)

Yes. Okay. During the fiscal year 2027 preliminary budget hearing, HPD testified that the agency has spent $1.1 billion for Mitchell-Lamas over the past 10 years. Has the amount of capital spending changed since the preliminary budget, and how much capital funding has been utilized for Mitchell-Lama preservation in fiscal years 2025 and 2026? So the total preservation budget for fiscal year 2027 is... excuse me, $1.32 billion, and of that, Mitchell-Lama developments will benefit and will receive some of that. Okay. Do you know how

(00:57:40)

much? So we are expected to preserve in fiscal years 2027 and 2028 about 2,800 units, plus or minus. It will depend on the overall capital needs and the overall construction costs as we get closer to closing. Okay. Have the

(00:58:03)

capital commitment rates changed significantly over the past 10 years, like the amount that we are lending to Mitchell-Lamas? Yeah, I mean, I think

(00:58:11)

it has gone up over the past 10 years. We have been committing more city capital than we previously had. And in the housing plan, there is specifically hundreds of millions set aside and called out just for Mitchell-Lamas, which I am pretty sure has not happened in the past.

(00:58:28)

Okay. And also moving to the executive plan for fiscal year 2027, we saw a total capital commitment of $4.9 billion for preservation for the five-year capital plan, as well as a $500 million total increase in fiscal year 2031. So how much of the five-year capital commitment plan is budgeted for Mitchell-Lama preservation?

(00:58:48)

So we do not break out specifically for Mitchell-Lamas versus other rent-stabilized stock that is coming through our preservation pipelines, but we have more capital than we have had in the past, and we know that the needs are pretty significant in Mitchell-Lamas. As they work through our pipeline and they are prepared for construction loan closing, we will deploy capital as needed.

(00:59:09)

Okay. And then just in terms of how you are determining how many units, since you do not separate it out, are you seeing year over year that percentage-wise

(00:59:18)

it is pretty similar year over year, or have you seen significant increases or decreases, and what has caused that?

(00:59:27)

Yeah, I think we have seen increases in the amount of Mitchell-Lamas that are coming to us. I think there are probably two reasons. I think one is just the age of the housing stock. Some folks — and it is not unique to Mitchell-Lamas — can put their heads in the sand and hope that they do not have to address their capital needs, and then they wake up and it is time. I think in other cases, when our housing supervision team is working with the Mitchell-Lamas, we want to make sure we are addressing capital needs, and I think we have been a little bit more forceful with saying it is time to... we really need to do a preservation.

(01:00:04)

Okay, perfect. I just want to recognize we have also been joined by CM Wong and anyone else I may have missed. Okay. So we are going to move into questions from our Council Members and colleagues, and I want to start with CM Abreu, followed by CM Hudson.

(01:00:22)

Oh, right, you are a de facto chair. Okay. Thank you. Thank you, Chair Sanchez, and I want to thank Chair Sanchez and Speaker Menin for their support in this, not just for the residents of Tracy Towers, some of whom are here, but for residents of Mitchell-Lama throughout the City. Thank you for signing the letter. This is really critical, and I want to thank you for coming to Tracy Towers. You know, Mitchell-Lamas were designed for working class and middle class families, and you saw the promise of Mitchell-Lama. You saw firsthand what happens when we disinvest from our Mitchell-Lama housing stock: that the residents of Tracy and residents throughout the City are not only being hit with a 31% rent increase but living with rats, living with mold, living with leaky roofs, living with unrepaired elevators, even though the money was put in for all that.

I think the amount of time we are spending on SCRIE is a little ridiculous. It is a band-aid to the structural problems. Nevertheless, it is a solution to some of them. So I do want to ask quickly: are you in compliance with Local Law 44 of 2024, my Bill to provide pre-filled SCRIE applications to residents of City-run Mitchell-Lama

(01:01:35)

housing? Yes, we are fully in

(01:01:39)

compliance. I have had numerous people come to my office who are eligible for SCRIE, and we have had to assist them in filling out the SCRIE applications. It is my belief that you are not fully in compliance, given that we have had to fill out so many applications. Can you tell me how many pre-filled applications you have sent out to residents of Mitchell-Lamas with increases in place? Not so... Julie just

(01:02:02)

mentioned a good point. The increase has not gone into effect yet, so the applications are not pre-filled until the increase actually happens. So no increases have happened at Tracy Towers yet. They are planned.

(01:02:16)

There were still... well, there were still people at Tracy, and I think last year the previous commissioner testified it was fully in compliance. Nevertheless, still this year we are filling out the applications, so it should have been the case even last year that they would have filled out those applications, because you would have received their income affidavit at that point.

I want to move on from that because we have a lot of people here, all of whom... their Mitchell-Lama is facing upwards of 20% to 30% rent increases. Deputy Commissioner Phillips, you testified you are legally required to prevent maintenance fee increases up to the amount necessary. I want to understand this a bit. Has there ever been a time that you have rejected a proposed rent increase from someone seeking a rent increase?

(01:03:03)

I do not have that knowledge off the top of my head, but to ensure that the building is operating appropriately, we want to make sure that the income can cover the

(01:03:13)

expenses. I understand what the purpose of the rent increases is, which again, 31% is outlandish. And I do have to say, for the residents of Mitchell-Lamas, for the residents of Tracy, Cannon, King's Arms, all in or near my district, 31%, 40%, 50% — I think anywhere a big increase is not only big, it is in the face of an administration who has made affordability a centerpiece of their campaign and who campaigned on 0% rent increases. So it is not just about saying the rent increase is too much. It is about what feels unfair when you see that disparity. But my question still is: has HPD ever rejected or modified a proposed rent increase, or has it served as a rubber stamp for the company seeking the rent increase?

(01:04:08)

We have modified in the past, and the way we would be able to modify an increase is if we can find a way to

(01:04:16)

lower expenses. So when the rent increase comes in, it has to cover operating expenses. We know operating expenses are wildly out of control. I want to talk about one of those operating expenses. For Tracy Towers, their financials for fiscal year 2025 show security costs totaling about $1.8 million. In the fiscal year ending 2027, they jumped to $2.8 million — nearly a 50% increase in that two-year period. That is $267 a month per unit in security costs. As you say you go over these financials, does that seem like a reasonable amount for security costs to increase? I mean, that is quite a large increase. I am not going to say it is not... we are bringing in the property management firm to meet with us and go into even more detail than we already have in the past to get your...

(01:05:10)

But I am sorry, you are doing this after the rent increase was already proposed. So help me understand what work was done before they even proposed an outlandish 31% rent increase on these hard-working tenants. We have one example here of a 50% increase in security costs alone. Help me understand what work you are doing beforehand.

(01:05:31)

The rent increase has not gone into effect yet.

(01:05:35)

It has not gone into effect.

(01:05:39)

It has been proposed, and you have... absolutely, it has been proposed, and it is a requirement

(01:05:43)

so we can close on the capital financing to start addressing some of the urgent physical conditions. Now that we have closed on financing, the increase has not gone into effect yet. We still have a chance to work with the property management firm to take an even deeper look at the operating costs.

(01:06:01)

We are not stopping just because the increase has been

(01:06:04)

approved. I will note that your hearing was at 4 o'clock, and for many tenants at Tracy Towers who have jobs, that made it impossible for them to attend in the community room or to testify online. I would urge you in the future, knowing that so many middle class and working class New Yorkers live in these Mitchell-Lama developments, to have these hearings at a time that actually meets the needs of the residents who live there.

I want to talk about the fiscal history. So it is unclear... you have to submit whatever the management company says they need to increase, publicly, and then you go over what it should be. We do an additional review. So you reviewed the financials before they proposed it. You then presented it at a public hearing. Before the public hearing, did you review the financials of

(01:07:11)

course? We are constantly reviewing the financials of every Mitchell-Lama development. I do not want to harp on the security costs, but it does not look to me like you went over the financials beforehand. I mean, that is a huge red flag — an increase of 50% for the security costs alone.

(01:07:30)

Yeah, I mean, it is

(01:07:31)

a large increase, but we are going over the expenses and we are going to continue to go over the expenses to see where we can cut.

(01:07:39)

Okay. I want to talk about capital needs. I mean, I...

(01:07:42)

A brief history of Tracy Towers — tell me if any of this is off base. This is according to financial documents for Tracy Towers. In 1971, it was built with a $40.7 million loan. This low-interest, no-interest loan was part of a larger arrangement, and by 2012, Tracy owed the principal and an additional $106.2 million in interest. Is that

(01:08:15)

accurate? I mean, I have to look more deeply into the existing debt on Tracy Towers. This is different... the $136 million was supposed to be $265 million. It was withdrawn before...

(01:08:29)

Do you want to mention...

(01:08:31)

So when the development was first being developed, there was supposed to be a federal subsidy that would bring down the interest rate, and prior to occupancy that subsidy was withdrawn. Again, that predates me. I have been here a long time, but it still predates me. But the question is still: we start with a $40-point-something million dollar loan, and by 2012 there was $106.2 million...

(01:09:01)

I am sorry. By 2012, there was $106.2 million in interest on that

(01:09:07)

loan, plus the principal, because it was not being subsidized. Yeah. So the program that was referred to would have subsidized the interest rate or the interest rate payments, and without that subsidy, that is the

(01:09:24)

result over the course... so it sounds like over the course of 50 years, nothing was done to try to lower those interest payments, nothing was done to pay off the principal, and now residents today are paying the price. I mean, I would not

(01:09:40)

agree with that statement.

(01:09:42)

Okay. That is why I am asking you — please clarify the history.

(01:09:45)

This is going to be my last question for now because I will come back for a second round if that is okay, because I know there are a lot of other people. Those arrears would have been on the tenants to address, and so what we worked to do was balloon those arrears, put them aside, not require any payment on them, and it will just remain affordable for 50 years at this point. But it was actually done that way to protect the tenants so that they would not have to face increases to pay the rent to pay the debt service.

(01:10:17)

Okay. I am going to follow up on this later, but we have a lot of other people. Thank you so much for the opportunity.

(01:10:22)

Thank you. Okay. We have CM Hudson, followed by CM Reilly.

(01:10:25)

Thank you so much, Chair. Just a couple of quick questions. What accountability measures are in place to ensure that loans and grants awarded for Mitchell-Lama capital improvements are used effectively, completed on schedule and produce measurable improvements for residents?

(01:10:43)

So during construction, prior to construction, we require, like I mentioned before, a physical needs assessment which outlines the potential scope of work. Then we have an architect work to develop the scope of work and a contractor that completes the scope of work.

(01:10:55)

During construction, the private lender monthly goes to the building to ensure that work is completed, and then after that work is completed, payment is released to the contractor. So every month there is the lender and HPD, if we have city capital in the project, monitoring construction to ensure that the capital is spent correctly and in accordance with the scope of

(01:11:19)

work. And so that would obviously be the case for Tracy Towers. That should be the case for any project that has a private lender. Yes. So HDC, as the private lender, would do monthly walk-throughs for the construction

(01:11:35)

period. Okay. It would be great — my office will follow up with you directly on that, because Tracy Towers has had ongoing construction for years and continues to find new issues and concerns. And so a follow-up on that: from Mitchell-Lama, on the households that do not qualify for SCRIE but still cannot afford rent increases, what additional assistance or policy options is HPD considering to help prevent displacement?

(01:12:05)

So ideally we would be able to offer Section 8 vouchers to those households. Unfortunately, we are in a shortfall, so we do not have that ability at the moment. I would say the best thing we can do is advocate for additional federal resources so we have more Section 8 to offer tenants. Okay,

(01:12:22)

thank you. That is it. Thank you. CM Reilly,

(01:12:25)

followed by CM Banks. Thank you.

(01:12:31)

Chair, good afternoon, everyone. Thank you for being here today. I just want to share the same sentiments as CM Abreu. I think Tracy Towers residents are really afraid right now. They do not know what is going to happen with these increases. So I think that is what you hear the passion about, and you see a lot of the residents here today. The administration has committed hundreds of millions of dollars in fiscal years 2027 and 2028 for capital improvements. How much money is specifically dedicated to City-supervised Mitchell-Lamas, and how are those developments selected, and how much will that investment reduce projected resident rent increases?

(01:13:10)

We do not break out our total preservation budget by the Mitchell-Lama stock versus other types of affordable housing stock that come through our pipeline. Whenever there is a Mitchell-Lama development in our development pipeline, we work as quickly as possible to close on financing. Sometimes it can take quite some time because of the pre-development activities that are required to get ready for the loan closing. Doing the environmental review for a large development usually takes quite some time. Then you have to hire a design team to be able to put together the scope of work and drawings. Then we have to get approvals, and the project has to be competitively bid to a contractor. As you can imagine, we have a lot of due diligence that we put people through to get through a loan closing, so all of that can stretch out the development timeline for some folks. But we move through that development process as quickly as possible.

(01:14:11)

Okay, we commit to providing the Council with a development-by-development capital needs assessment for all City-supervised Mitchell-Lama developments. We have — and I think my colleague Alec has said before — the total number of Mitchell-Lama developments where we have existing data. So we can take a look at that.

(01:14:34)

Okay. We can provide you with a list of what we have and work with your offices on the costs associated with the capital needs.

(01:14:39)

Thank you. Your testimony discusses selling parking lots and undeveloped land to generate revenue. What protections will be placed to ensure residents are meaningfully involved before land connected to the development is sold or developed on?

(01:14:58)

Yeah, so we want to make sure — and I think it would be a little bit different for the co-ops versus the rentals. For the co-ops, they would be completely driving that process. The board of directors has a fiduciary responsibility to ensure that they are doing capital planning and reporting back to the shareholders, so that would be more of a collaboration directly with the shareholders. It would be more up to the shareholders to decide what they want done with their land if they have the space to develop. With the private rentals, I think the situation would be a little bit different, and we would make sure we would do outreach to work with the housing companies and engage the tenants so that any undeveloped land is benefiting the existing residents in the development.

(01:15:44)

I just want to actually add the fact that we are sitting here talking about the operating costs and some of...

(01:15:49)

...the subsidies that we do not have access to right now, like the Section 8 vouchers. So we need to be creative on ways to be able to get more resources into these buildings. If we are talking about the opportunity to develop on land, we need to really have those conversations in a thoughtful way. I just wanted to lift that up because if we do not have tools, this could be one of them, and we have seen this play out in other housing...

(01:16:14)

...portfolios. I think the Council is ready to work with you on being innovative and coming up with those creative ways. My last question is: you stated that Tracey Towers is not exceptional. Respectfully, is that not the problem? Because if 30% increases are becoming common across the board, that demonstrates a systematic failure within our system.

(01:16:36)

So I think there are creative ways that we could think about improving this down the line, because no one here believes that a 30% increase in anything is acceptable. It is something that is substantial.

(01:16:47)

Yeah, and we are happy to work together with folks to take a look at more creative ways to reduce operating expenses. The reauthorization of J-51 is a really good tool that we could use to layer into the 5% shelter rent tax to lower expenses. More collaboration on things like that would be great. All right, thank you. Thank you, Sanchez.

(01:17:14)

Thank you, Chair. First of all, I want to thank the Speaker and the entire leadership for bringing this hearing together on capital investment in and preservation of Mitchell-Lama. Recently there was an audit ordered by the State Comptroller DiNapoli, which identified persistent, unresolved issues across Mitchell-Lama developments, including mold, pest infestation, infrastructure deficiencies and other hazardous conditions that directly impact residents' quality of life. Given the significant capital needs facing many Mitchell-Lama properties, what specific investment has the City made to preserve and rehabilitate this housing stock, particularly City-supervised developments? Additionally, how has the agency measured the effectiveness of those investments? Can the agency provide examples of where capital funding has resulted in measurable improvements for residents?

(01:18:18)

Yeah, so we are happy to work with every development that is in our pipeline and is willing to come into our pipeline to do a major capital improvement project. When we do a major capital improvement project, the goal is to cure underlying conditions. We want to make sure that we are addressing the most hazardous and urgent conditions first and then ensuring that we get to the rest of the work that is outlined in the scope of work. As for examples of a successful closing and improved conditions, I think we will be able to provide some. I do not have one off the top of my head unless Julie, you do. Okay. We can provide that to the committee later. Thank you.

(01:19:02)

When it comes to accountability, the Mayor campaigned on voter affordability and accountability, particularly as it relates to housing. When serious deficiencies are identified in Mitchell-Lama developments and remain unresolved for years, who ultimately bears responsibility? Is it the building management, the cooperative board, the contractors or the oversight agency themselves? More importantly, what concrete accountability measures has the administration implemented to ensure all parties are meeting their obligations and that both taxpayers and residents are seeing tangible results for every public dollar invested?

(01:19:52)

We have authority to oversee the Mitchell-Lama developments, and part of that authority is to review the financials and ensure that the project is being managed appropriately. I think the situation is a little different when it comes to the co-ops versus the rentals. But obviously we want to provide as much support and technical assistance as we have available to ensure that these developments do not get into this situation in the first place, and when it comes to financial stability.

(01:20:23)

A recent City Limits article reported on a Mitchell-Lama development in the East Village that is considering selling a parking lot to generate revenue for capital improvements and rising operating costs. Does HPD view this type of asset sale as an innovative preservation tool or as a warning sign of deeper financial distress within the Mitchell-Lama portfolio?

(01:20:52)

I am a glass-half-full kind of guy, so I am going to say that it is an opportunity. It is a massive opportunity for the Mitchell-Lama developments to be able to use undeveloped land and come up with a completely different source of funding that...

(01:21:04)

...we do not have available. We would want to work with co-ops and private rental companies in conjunction with the City Council to ensure that it is equitable development.

(01:21:22)

Just to add one thing — I know the good in it — just because your colleague just walked in and I wanted to say again, as he said over and over, this is a collaborative effort. We have to do this together. Thank you, Councilmember, for having the conversation with our team about the development in your district.

(01:21:39)

And I get it, it is in my good friend's district, but there is obviously opposition to it as well. That has obviously been pointed out, but nevertheless I guess the conversation needs to be had because parking is a large need throughout the City. Obviously what should be part of the conversation is how to continue to reduce the need for parking.

My last question, and hopefully the Chair will indulge me: Linden Plaza, which is in my district and which is a Mitchell-Lama development currently undergoing major rehabilitation — prior to these investments, residents endured deteriorating conditions for many years. As someone who regularly visited this development and knocked on many doors, I personally observed the deterioration that was taking place and the concerns that existed. Going back to oversight: what oversight responsibilities did HPD have before this rehabilitation effort began, and how were these conditions allowed to deteriorate to such an extent before meaningful intervention had...

(01:23:03)

...occurred? So our oversight authority, like I mentioned, is reviewing financials and providing some sort of technical assistance and advice to the owners, the management companies and the shareholders. I think the outcome of Linden Plaza is actually a really positive one from what I have seen so far, and maybe I am talking out of...

(01:23:25)

...line here, but I think where Linden Plaza is today is a really good place. I would agree it has definitely made a lot of progress. On Linden Plaza, I agree, but also on the question of accountability: the management company that ran Linden Plaza into the ground — we need to hold them accountable. That is the reason why I am bringing that up. There has to be some type of justice exacted on those folks who put it in that condition by refinancing the property and not investing in the development. Thank you, Madam Chair, for the indulgence.

(01:24:01)

Thank you. Can I just say one quick thing? I just want to highlight that when the team and others visited Tracey Towers, we went intentionally. We left Tracey Towers and we went to Linden Plaza to look at some lessons learned and best practices, and that was intentional that day. I just wanted to highlight that. Thank you. CM Sanchez, followed by Council...

(01:24:26)

Thank you, Chair, and thank you, Chair Sanchez, for helping to put everything together today. I have a few questions. There are two Mitchell-Lama developments in the South Bronx — Men's Plaza and... Houses — that have numerous really hazardous violations, and they are both run by the same management company. So when a single manager shows a pattern of neglect across multiple projects in their portfolio, what tools does HPD have to intervene at the management level rather than building by building?

(01:25:07)

So at a minimum, we would be bringing the property management firm in to talk about the conditions. Like I mentioned for Tracey Towers, we are bringing the property management firm in to discuss what exactly has happened at Tracey Towers and whether it is indicative of conditions across their entire portfolio. We would be happy to call in the same property manager — or whatever the property manager is — for these two developments and have a conversation with them to do a much deeper dive than we have in the...

(01:25:40)

...past. Is there any automatic trigger or alert notice that you get once a developer or a property owner receives a certain number of violations across a number of their portfolio projects?

(01:25:56)

So we have a code enforcement team, and there is a program — the Underlying Conditions Program — and Mitchell-Lama developments are not exempt from those programs.

(01:26:08)

Similarly, does HPD have the authority to remove or disqualify a managing agent from Mitchell-Lama developments? If so, is there a threshold...

(01:26:16)

...that would trigger that? We do have the authority to... I do not believe that there is a specific threshold, but we are able to work with the housing company to find a new property management firm if that is what the residents want.

(01:26:35)

Has there been... what is the history of that? How frequently or infrequently does this happen?

(01:26:46)

Yes, I actually just wanted to lift up that we are seeing challenges with property management companies and managing agents across every housing portfolio that you can imagine. So whereas in the past we would deal with building-specific issues, we are, as the First Deputy Commissioner mentioned, really working with the entire portfolio of the management agent. I also want to say that we are seeing more management companies leave the portfolio, and there is a conversation about how we get more property management companies to be interested in working with our portfolios. Again, this is not just specific to Mitchell-Lama. It is the entire housing industry when it comes to property...

(01:27:27)

...management. Can you talk to any relationships that you have with these agents? A lot of the time they hide behind — not particularly Mitchell-Lama, but just hide behind — these pseudo-corporations where you cannot get in touch with people. How has your experience been with these managing agents in terms of actually getting responsiveness and delivery for residents, delivery for tenants and the ability for Council Members to then work with you and work with the managing companies to really get results?

(01:27:59)

I think the majority of property management firms — not just the Mitchell-Lama stock but the broader affordable housing stock — if we call them, they will come in to meet. HPD frequently audits the books of these Mitchell-Lama developments.

(01:28:19)

We require annual financial statements and annual audits, and then our housing supervision team reviews the annual financials that are submitted.

(01:28:30)

Research on my district shows I have a development that has over a million dollars in shareholder arrears. When arrears signal that the current charges are unaffordable, how does HPD justify further increases such as those at Tracey Towers while maintaining the program's purpose of affordability? Is the agency identifying a point at which rent increases become almost self-defeating?

(01:28:59)

So the biggest operating subsidy source that we have, like I said before, is Section 8, which is a federal source that we need to advocate together to get more of. That is our main tool. Besides that, there are other programs. Those are the three main sources for operating subsidies. Our City capital cannot be used as an operating source — it is only for construction. Thank you so much. Thank you.

(01:29:25)

Okay, CM Avilés, followed by Aldebol.

(01:29:30)

Thank you so much, Chair, and Chair Sanchez. I really want to be as clear as possible. Mitchell-Lama residents have waited far too long for meaningful accountability. State audits have repeatedly documented unsafe living conditions, financial mismanagement and failures in oversight, while too many residents continue to struggle with unresolved complaints, deteriorating buildings and significant carrying charge increases.

It is why I am also the prime sponsor of a resolution being heard today, Res 0083-2026, urging the State to establish stronger protections and independent oversight for Mitchell-Lama residents. But today is really about the City's role. We have an obligation to examine whether our own agencies are exercising the level of oversight and enforcement that residents deserve, and why these conditions have been allowed to persist despite years of documented warning signs. These failures are not abstract. They have real consequences for New Yorkers, as we have already heard from my colleagues, and in fact feel systemic.

When Mitchell-Lama developments fall into financial distress because of poor management, inadequate oversight or years of delayed adjustments to carrying charges, residents are ultimately the ones who are paying the price. Buildings deteriorate, essential repairs are deferred, and when the financial reality can no longer be ignored, residents are often confronted with steep and sudden increases that many — particularly our seniors and those living on fixed incomes — simply cannot afford. This housing was supposed to be a step to create generational wealth that homeowners could then pass on.

We saw this firsthand at Jamie Towers in my district, where proposed increases threatened to displace long-term residents from the homes they had counted on remaining affordable. That experience underscored for me that we cannot continue responding only after a crisis has developed. We need stronger oversight, earlier intervention and greater accountability to protect both the financial health of these developments and the residents who call them home.

I am now going to turn to my line of questioning, Chair. Has the administration put into place, or at least planned to provide, new safeguards such as reporting and monitoring to ensure that the example I gave at Jamie Towers does not occur and that maintenance charges can keep up with requirements?

(01:31:56)

So like I said before, we continuously look at developments, financials, and we are still looking for more tools in the operating expense toolbox. One paired with capital improvements, the 421 benefit could really go a long way to help mitigate the increase of rent or maintenance fees. So that is where we want to continue to look for more resources and to try to get a little bit more innovative on the income side. SCRIE and DRIE are tools that we already

(01:32:32)

have. The increase at the state level for SCRIE from $50,000 to a $75,000 limit — once that is enacted on the local level, that should be able to help some of the seniors who are on fixed incomes who might not have been eligible before, but they will be eligible going forward as long as they are under $75,000. And then lastly, again, it is the question of the operating subsidy. If we can advocate for more Section 8, that can ensure that households are better able to absorb the increases.

(01:33:02)

But I do not think this is only about those cases that you mentioned. What we are seeing happen across the board — and I know you folks are familiar with this — is a 50% increase in one fiscal year, really overnight for people. The same as what I am seeing on my side of town, with the lending capacity being extremely limited because of 20 or 25 years of a management company that is supposed to have the oversight of City agencies that are supposed to catch early on that boards are not approving a 2% increase in coffers to ensure that in 10 years or 15 years, when we need elevator replacement, roof replacement, modernization, and local laws that come into play that have to be implemented by the boards and by the Mitchell-Lama campuses themselves, there is money there to do that.

We are now doing increases where we are asking people overnight to catch up on 20 years of poor management from the City and the State, and also, you know, no increases that leave them without enough coffers or enough lending capacity to make the repairs or to implement the local laws that we are putting into play. What are you folks doing to look at how we do not do a 50% increase overnight, and instead provide some stability or some flexibility to allow a long runway of transition to get them to a place where they financially have the capacity to stay in their homes and also make the repairs that are necessary?

(01:34:37)

Yes. So typically when we do increases with the City-supervised Mitchell-Lamas — and I think the Mitchell-Lama you might be referring to is a State-supervised one. Both City and State have similar conditions across both, just different oversight, different authorities. We try to stagger the increases as best we can. We take a look at the operating expenses. We take a look at the new debt that is taking care of the capital improvements. We try to stagger the increases as best we can, so it is a bit more manageable for households rather than just overnight.

(01:35:16)

Okay. So what happens in the case of CM Restler's district, where there is a 50% increase?

(01:35:20)

Tracey Towers. That is not overnight.

(01:35:24)

How many meetings did you folks have to have that increase roll into play? When did they find out, and how much did they know ahead of time that they were getting a 50% increase? Oh, yeah — sorry, the increase is not in place yet, I heard.

(01:35:40)

That earlier. I am asking about leading up to it.

(01:35:45)

How much time was given to the families at Tracey Towers that they were going to

(01:35:49)

get... I mean, at a minimum, we have

(01:35:51)

Obviously, like I am being a bit facetious with "overnight," but like, what is the time frame? So there was the 30-day notice, which

(01:36:01)

is... but it is not overnight, but just in

(01:36:03)

one month. Okay. The increase has not gone into effect

(01:36:07)

yet. I understand that, but still — when we have inflation, we have an affordability crisis, even 30 days or three months is not going to be a sufficient amount of time for families. People are asking people to find completely different careers or get promotions in a short amount of time, and if they are retired on a fixed income... you know, I am preaching to the choir on this dais, and I am sure to the crowd, but it is still not a manageable amount of time for such an increase. I think we all can agree on that. A few more questions if I may, Chair. Thank you, ma'am.

(01:36:45)

What is required to help close out projects at Mitchell-Lama Housing developments that are unable to do so due to lack of resources and personnel? Often in my district, members designate capital dollars but their projects are stuck on hold, waiting for a project manager from HPD. In light of this, and with some of the projects stuck for multiple years, will the administration be working closely to close those projects for our Mitchell-Lamas, and by what means and methods?

(01:37:14)

By "close out," I am taking that to mean close on construction financing. Yes. Okay. So as part of the housing plan, we have been able to staff up our preservation finance team with a lot more staff. So if we have more staff in our preservation finance team, we are able to assign more projects to them and work through the pipeline more quickly.

(01:37:39)

So with that additional staff and with additional capital resources, we should be able to move more Mitchell-Lamas through the development pipeline more quickly.

(01:37:48)

Have you projected how many projects you have outstanding, and if the personnel are going to be able to assist with getting those done, and what is the timeline?

(01:37:57)

We have, I believe, 12 Mitchell-Lamas in our pipeline right now, which means they are gearing up and getting close to closing. Every Mitchell-Lama — and every project, regardless of whether it is a Mitchell-Lama or not — has its own unique development timeline based on the capital needs, the scope of work, and the development team that is working together to get to the construction loan closing. So depending on the capacity of the board or of the owner of the Mitchell-Lama, that can play a little bit into the timeline.

(01:38:32)

Does HPD have a central tracker of all their projects that are in the works and that are publicly funded in this way?

(01:38:42)

We have an internal tracker of projects that are in our pipeline, and then we report out on projects once construction closing

(01:38:48)

has happened. And does the prioritization of closings — how does that include Mitchell-Lamas? Does it just come down to the management, the timeline of the project, if it is fully

(01:38:59)

financed? Yeah, it comes down to whether or not the project is ready, and our project managers work with the development team and the owner to get them as ready as possible as quickly as

(01:39:08)

possible. I only ask because — granted, Jamie Towers is a State Mitchell-Lama — but the money that I allocate through my capital budget to Jamie Towers, they are dependent on being assigned a project manager in order to move the process along. Overall in my district, I have dedicated nearly $12 million in capital dollars to modernization and repairs on Mitchell-Lama campuses. I have given Jamie Towers four million. Over my first term, my Assembly member recently allocated another four to them, but they have not been able to move any of that money over the last three budget cycles because HPD has not assigned them a project manager.

So for me, that is a hindrance to the progress of that project. It affects whether people can move freely within the campus themselves. I am just interested in understanding: if the money is all there, their financing is in place, but we have gone three closing cycles without getting them a project manager and getting them on the closing list — what more does a campus like Jamie Towers need to prove that their project needs to be completed and started?

(01:40:31)

Yeah, and we thank you for the support with the capital funds. Every Council member, I think, does their best to put as much towards the Mitchell-Lamas as possible, and we are very grateful for that. We can look more into the timeline for a project manager being assigned,

(01:40:46)

but like I said, we are in the process of staffing up. We were able to get a lot of new hires and we are working as quickly as we can to get them on board, and then once they are on board, to ensure the project is actually ready to close.

(01:41:03)

If a project manager is assigned to a project, it does not necessarily mean that everything is in place for a construction loan closing. There

(01:41:08)

could be resources available and a project manager unassigned — not great — but on the development team side, the ownership side, they might not have done any of their due diligence or prepared for closing as well. So

(01:41:21)

it is a little bit of a give and take of

(01:41:24)

ensuring we are getting somebody assigned and helping the owner or the co-op board drive the project to a construction

(01:41:30)

closing. I would love to continue that conversation offline. With this campus itself having $8 million from the State and the City, I hope we are in a better place to move that along. I will follow up with the additional questions I have. I have gone over my time, but thank you to both of the witnesses and thank you, folks.

(01:41:47)

Thank you. Just as a reminder for folks that are here from the public: if you have not signed up to testify, if you could sign up with one of the sergeants in the back, that would be great. Okay, so we have CM Restler, followed by Brewer.

(01:42:01)

Good afternoon. Thank you for testifying today. 1950 Hutchinson Parkway Apartments — it is a co-op, and in the FY27 budget I worked to secure funding to cover one of the major capital projects of the apartment complex. By taking that large capital cost off the books of the property, the goal is to decrease the need for major maintenance increases.

So my question is kind of in line with what the previous Council member asked: what accountability measures does HPD have in place as part of your oversight to ensure that these savings are passed on to residents? The Comptroller's report included findings about financial oversight failures across New York City and New York State-managed properties. A City Council report also cited returned funding from past fiscal years due to mismanagement and money not used despite the obvious need for capital improvements. What oversight measures does HPD have to ensure that money allocated towards specific projects is used appropriately, and how can we move these projects through the pipeline faster? Because we can allocate money, but if it takes years for these projects to happen, the costs just go up, and it feels like a cycle that we can never get over. So if you have any ideas of how to move that along — you know, time is

(01:44:00)

money. So what ideas do you have to get these projects moved more timely so that the costs will not keep escalating?

(01:44:13)

Over time. So thankfully, that project that you referenced is in the pipeline. The additional project managers that we have, that are currently being hired and onboarded, will do a lot to move through the development pipeline. Like I said, it is not just Mitchell-Lamas that will benefit — it is going to benefit all of the affordable stock that is coming through the preservation pipeline. The amount of capital that we put into a project is obviously going to improve the conditions of the building and will probably lead to reduced repairs and maintenance expenses in the short to medium term, which could help mitigate the increases that the residents will have to pay. The other tools that we have available to us involve trying to get more creative on the operating expense

(01:45:03)

side. So, like I said about the 421 reauthorization — that will be really helpful to pair with capital improvements to ensure that the increases are not as high as they would have been without 421. My other question is really about getting people who are eligible for SCRIE, DRIE or any other benefits — have you worked with other agencies? I

(01:45:37)

know that Mitchell-Lama developments in my district have become naturally occurring retirement communities. We have a lot of seniors who live in Mitchell-Lama, and are you working with the Department for the Aging, are you working with other agencies that work with our seniors to make sure that they are getting all the financial assistance that they need to stay in place?

So we are working with outside stakeholders and community-based organizations when we can. And like I said earlier, I am so thankful to the Council members who have reached out and worked with us to do workshops. Some of them have done office hours, and HPD teams have worked with the Council members to actually go through applications with their constituents. I will also say that over the past year we have done 25 SCRIE outreach workshops just over the past year, and so we are always willing to partner with community-based organizations where that makes sense. Do you

(01:46:51)

have a sense of how many people may be eligible for SCRIE or DRIE and have not applied, and if the income threshold is increased to $75,000, how many more could that represent?

(01:47:12)

I do not think we have that projection available right now. But when an increase is going to be scheduled, like my colleague mentioned, we will do everything we can to do outreach and to engage seniors to ensure that they understand the eligibility requirements. Again, the pre-filled applications are very helpful and we will work as best as we can to get households signed up.

And I mean, rather than having smaller percentage increases over time... one of the — it is not New York City, but we have a Mitchell-Lama co-op that just got a tremendously large increase after 10 years of not having increases. Their response to me was, "Well, we have had to do all these capital improvements." And yeah, but, you know, it is like, why did we get

(01:48:08)

to this point where now they are scrambling to do all these capital improvements? They obviously have to balance their books, and instead of doing it on a yearly basis and having a more

(01:48:27)

regular schedule of maintenance and capital improvements, or whatever needs to happen in that building... and like, you know, I have been in Tracey Towers a number of times. I used to represent the area with

(01:48:44)

you know what it was like. There are wage increases and benefit increases for the staff, for the workers there. We are not going to not raise wages and benefits over time. We are not going to wait 10 years for people to get out-of-date wages. That has increasingly been happening over time, and the recurring maintenance needs happen over time, and putting the problem on the backs of tenants is really unacceptable.

(01:49:24)

I mean, I would say, as a former underwriter for affordable housing, we would welcome regular increases at Mitchell-Lamas if they came to us with the requests — to have a little bit of stability instead of waiting until we are not meeting our expenses, the capital needs are out of control and we are in a crisis moment. Thank you,

(01:49:53)

Council member. Brewer — sorry, Council member, just before you ask your questions, I just wanted to address — is SCRIE eligible citywide? Not

(01:50:02)

just with respect to the folks living in a Mitchell-Lama, but we have 158,214 households that are eligible for SCRIE and DRIE, but only 67,132 households received the benefit in 2023. So Council member passed a great Bill to try to

(01:50:18)

bridge that gap, but it is a really big gap in service for people.

(01:50:25)

CM Brewer. Thank you. Thank you, Julie, for 30 years of help — or 40 years, I lost track. I do not know. I do not know anybody else, but I do appreciate all of Julie's work, and also Jackie and Katie and everybody who has been doing this. Bob Bullets, rest in peace.

My question is twofold. First of all, I was not a big supporter of Knickerbocker Towers going from Mitchell-Lama to market rate. So I hope that is not going to happen in the future. Can you update me? Yeah, we do not have any Mitchell-Lamas at the moment that are on the path wanting the policy to go away to market rate. We do not have any that are trying to go from Mitchell-Lama to market rate.

Are you interested in getting rid of the policy altogether? Because this is supposed to be about affordability. I mean, I would actually say that I do not think we are in a position to say that policy should go away, because I would always put it back on the residents and the shareholders and what the people actually want in their buildings. And when you speak to some people there, they feel that it was... I know. But I am just saying we also should not say that. Okay? I do not agree with it. We have to think bigger, because people want to make money and I understand that, but I still think it should remain. I want that. Maybe we will put it in writing and try to pass a law that we do not want any more conversions like that. Number two:

(01:51:46)

changes in 2021 have slowed down the amount of conversions. Okay.

(01:51:51)

I still worry about the future. There are lots of the same situations I have got. Let me see, I certainly have Trinity House, and they want to postpone their July 29 because they have such a large increase being projected. Same problem, so we will contact you, but I want to have more discussion about these things because it is huge. Even though they have not had it in a while and it is not a bad owner, it still needs to be postponed, so we need to do that.

(01:52:18)

Clinton Towers is a mess, so that is the same issue. Who is overseeing the construction? Every single day I get calls from residents. I think we need a... I suggest this to the chairs also: we need like a roundtable. Everybody is sitting in the room — state, city, those of us who have Mitchell-Lamas. I have been doing this work since 1978. That is how long I have been doing Mitchell-Lamas, and it has to be a discussion. We want Mitchell-Lama 2.0, but we cannot figure out version one yet. So I would love to see this roundtable take place.

But meanwhile, Clinton Towers is a massive mess. The board is a mess. The management is a mess, my friends. I know them all, but it is not working. So how do we handle something like that? The balconies, the lobby, the money, everything. The Con Ed bill — I spent hours on the Con Ed bill.

(01:53:07)

Can I ask a question about that? Has there been a roundtable since 1970 or so? I mean, we were... happiness was in the air and Bob Willis was alive, to be honest with you.

(01:53:18)

Okay, that is good to know. So anyway, Clinton Towers — what are we going to do? What is an example of how do we get that so that the construction is taking place on this list?

(01:53:28)

Thanks. Any suggestions? Yeah, I mean, sure. We currently do not have them.

(01:53:31)

So we have current weekly calls because it is in our pipeline, correct. We have weekly calls to prepare for a closing, so we have a project manager that is working with the development team to get to...

(01:53:42)

...the construction loan closing as quickly as possible.

(01:53:46)

Okay. We cannot show up for the discussions — it is very, very challenging. 110 West End Avenue also has a huge increase as a Mitchell-Lama co-op in this case. So is that something that you are working on? How would I be helpful, or how could I be helpful, so it is not such a huge increase? So Lincoln...

(01:54:08)

Amsterdam — they have not had a maintenance increase in 25 years and the maintenance is affordable to below 30% of the median income, and with the increase it will continue to be affordable to 30% area median income. They cannot pay their bills, so it is not a construction issue. It is not that they do not need capital. It is just that they need expense money to pay their bills.

(01:54:32)

Okay, so you are thinking that it is an okay increase at this point. 30% is large — it does not matter, for anyone it is a large increase. But they need to do it. The board, actually — it is a co-op and the board came forward asking for this because they were... but there is still angst in the building. As you know, every single co-op has a co-op board, and then there are the shareholders, and they do not always get along. Right. You know that.

(01:54:57)

I can say about the board — and maybe I know that board very well — but that is something to always be aware of: the shareholders versus the board, right? But they are doing their fiduciary responsibility. All right, and then the report from the state comptroller, which was mentioned earlier — Clinton Towers is one of the disasters on it. How are you addressing that report that the comptroller came up with? So we put together responses for the comptroller report, and we actually had a follow-up meeting this morning on one of the audits with the state...

(01:55:28)

...comptroller. All right, so you are going to share that with us, particularly if it has to do with our buildings.

(01:55:35)

Yeah, I think our response is available.

(01:55:36)

Okay. And then finally, the roundtable — you will host it, you will invite the state, and we will be there.

(01:55:43)

I would love to. I will pay for coffee. Thank you for holding...

(01:55:45)

...you to that. Nice. Council Member, followed by...

(01:55:48)

Epstein. Thank you, chairs. I appreciate the commitment to and attention to Mitchell-Lama, most particularly as outlined the block-by-block plan and the millions of capital dollars committed. I do have a question about Article 5 co-ops. I have in my district Penn South, which is nearly 3,000 units of housing. It is often mistaken for Mitchell-Lama but it is actually not — it is governed differently. Right now they do not have access to the capital funds. So I am curious: how do Article 5 redevelopment co-ops fit into the plan? Can they...

(01:56:36)

...apply through the preservation pipeline like any other affordable housing development, regardless of whether they are incorporated under Article 2, Article 11 or Article 5? They are eligible for City capital funds. So we would urge the development to put together a loan application and work through our pipeline. They are not excluded.

(01:56:56)

Not to my knowledge. Not to my knowledge. No. Okay, that is good news — they thought they were.

(01:57:02)

There is a window. That is it.

(01:57:05)

I just had one question. Thank you.

(01:57:07)

Great. CM Christine...

(01:57:08)

Yeah, I want to just go back to what you said earlier about waiting to hear from Mitchell-Lamas who have not done an increase in 20 or 30 years. I am wondering why wait, instead of just reaching out to them every year saying, "Hey, we advise you to do at least a 2% increase" — the way you can do it over time instead of having to see, like CM Janowicz said, a 30 or 50% increase. I have a Mitchell-Lama that had a 10, 15, 20% increase year after year after year, and it is impossible for the residents to manage. Why not take an affirmative position to try to get them to apply for those increases, making it constant, like a 2% every year?

(01:57:43)

We do make recommendations directly to folks once we get the financials and we do a review. We make a recommendation about whether or not they should increase their rents or maintenance fees. As somebody who has worked with it, it is sometimes very hard to get a co-op board to raise their own...

(01:58:01)

...maintenance fees to cover expenses and cover capital needs. Yeah, so I will leave it there. I have hundreds of HDFC co-ops. I represent four Mitchell-Lamas. I have never heard from you saying, "Hey, we are really recommending this Mitchell-Lama do an increase — can you help us set up a meeting with them? Can you encourage the board to propose an increase?" Why not collaborate with your partners in government to make sure that happens?

(01:58:26)

I mean, we would be happy to collaborate with them.

(01:58:28)

I would love that, because we know our Mitchell-Lamas. We talk to them regularly. We do not see their finances, so we do not know what they are doing. The only time we hear about it is when there is a proposed increase and they are asking for 20% and everyone is like, "Oh my God, this is crazy." We would rather see a 2% increase every year to ease it out over time — that is easier for folks. Yeah, and I think under this administration we would be happy to reach out a little bit more...

(01:58:52)

...proactively. Great. And it...

(01:58:52)

...sounds like with Gale Brewer we can talk about all these amazing issues. I am looking forward to it. I want to be there, so please invite me. Can these Mitchell-Lamas ever get to 0% tax? I know we talked about it. I will take the win on the reduction from 10% to 5% on the shelter rent taxes — we did that last year in Albany. We wanted to get to zero, but we would love to see the administration support that next year to go to zero. I hope you will be on board.

But there are other ways to get to zero through J-51. Yeah, so you took the words right out of my mouth. We cannot get quite to zero with J-51, but we can get as close as possible depending on the capital work. Are there any other available options to get closer to zero? I do not think so, besides J-51. I think that is the biggest tool in our tool kit at the moment to get as close to zero. Is there a reason we cannot get other tools in the tool kit to help get to zero, besides making them put lots of money into capital improvements? This could be a topic for the roundtable, because I love this.

All right, I am going to keep going if I can, just a couple more. Okay, I am sorry about that. So why not put the capital dollars on the table? You are asking us to use our J-51 money. Why not have a match — we put in a million, you put in a million, and we all walk away happy? Why not do that? We do that for nature. Government money comes in from nature, we put money in for nature. Why not meet us halfway and do some free money for Mitchell-Lamas too? Yeah, so we usually do far more than a couple million dollars when we do a preservation outcome or larger recapitalization. We are usually putting in a lot of City capital, but these are loans, not...

(02:00:32)

...grants. They are loans, but they are structured on what the project is able to pay. So I think in the case of Tracy Towers, we are not requiring any payments on the debt.

(02:00:42)

It will defer and accrue, so you are willing to give forgivable loans in these...

(02:00:47)

...situations. They are not forgivable — they balloon at the end, but there is no principal and interest payments.

(02:00:52)

Why not do forgivable...

(02:00:56)

...loans? I do not think that is within our authority to do. I mean, that is a larger question that I do not know if I am fully able to answer. Another roundtable conversation. I love...

(02:01:05)

...this. Two more. I would love to see the City give more money to help Mitchell-Lamas. We know they need the money. We want to help them as much as possible. I am just a little concerned that we are not using all the tools in our tool belt. Did you say you are going to help advocate next year to reduce the shelter rent taxes to zero? I do not think I said that. Okay, can you say that? I do not think I said that. I said J-51 is a really, really good tool to pair with capital improvements, but it sounds like another conversation to have.

And I wanted to ask the last question. CM Banks flagged the issue of potential development projects on Mitchell-Lama land. I am wondering how you balance the issues of needing more affordable housing versus the potential value of that land. How do you make that determination about the need for affordability — because we need more affordable housing — and the need for making sure the Mitchell-Lama stays whole? What is that decision process internally?

(02:02:06)

Yeah. I mean, I think it is going to have to be a case-by-case basis. We have to look at the available land in each Mitchell-Lama — not every Mitchell-Lama is going to have a ton of development space available. So I think looking at the capital needs and the available land that we could develop on, I think everyone might have to be its own unique snowflake. But in collaboration with the City Council and with the board, I think we can get to a really good place to ensure that there are additional funds going into mitigating increases and paying for capital improvements outside of the City budget. Well, thank you.

(02:02:40)

And I appreciate the chairs' indulgence. Looking forward to this exciting roundtable. Are you bringing snacks? There are always snacks, and you are okay with that, right? Because it is free.

(02:02:57)

Thank you for hanging in there with us. That concludes the first round of questions. We will have a second round, so I just want to wrap up a couple more questions that I had. Just to kind of recap — I feel like every single Council Member has said a version of the same thing: maintenance increases should be gradual, we want to be a partner, we want to help so that we are not seeing dramatic increases all at once. More to come at the roundtable, but we certainly want to be a partner on that.

And just a follow-up: you said annual financial statements — are there other indicators that you are receiving regularly from Mitchell-Lama properties, and how are you taking that information into account in terms of assessing risk?

(02:03:47)

Yes. So the financials are the key indicator of the financial health and sometimes the physical health of the building. We also get a vacancy report, outstanding payables. We can also see online what the violation profile looks like, and on that topic...

(02:04:08)

...perfect, as I wait for my next question: outstanding payables. One of the things that we hear about a lot, in Kingsbridge Arms for example, is that there are a lot of shareholders that are behind on their maintenance fees. It is an issue at HPD and just so many co-ops. What does HPD have to offer these co-ops that are having these governance challenges and working with their...

(02:04:29)

...shareholders? Yeah. So HPD has a supervision team that will provide actual training and technical assistance, working directly with the boards on how to govern their buildings and what to look for. We do that in-person training, we do virtual training, we have online webinars available, and we are constantly looking for other opportunities to partner with organisations to do that. I also want to lift up the fact, since we are sitting here, that we lack resources and funding to really get into building the capacity of these boards and working with our management partners. So...

(02:05:11)

...we are doing all we can, but we would also like some resources to do more. Okay, let us know — you know the deal. We are always here to advocate for those funds. I had a specific case — it is not a Mitchell-Lama, it is an HDFC, but I think the issue carries over in terms of...

(02:05:32)

...the building that was not able to submit, for whatever reason, their property registration, that has a lot of shareholders that are in arrears, that has wanted to take folks to court and seek an eviction. We were speaking two days ago with members of the team about this very question: in addition to technical assistance, is there legal support that HPD makes available? Are there partners that offer that, or is this a gap that our City has?

(02:06:02)

Yeah, so we do not offer those types of legal resources, but there are not-for-profit legal resource providers out there that hopefully we can connect those folks to.

(02:06:11)

Any you can name so I can go back and tell them?

(02:06:15)

I think we can share that after, if that is okay, if any come up in my...

(02:06:18)

...memory. No problem, and we have a whole team to ask. Perfect, perfect.

(02:06:30)

And on Mitchell-Lamas, I want to make sure to get this on the record today. I represent a Mitchell-Lama that is in the Alternative Enforcement Program, which makes absolutely no sense from the perspective of wanting to preserve affordable housing, but then we are, as a City, giving these buildings all these violations and increasing their debts to the City and their financial responsibilities. What is the position of the administration on Mitchell-Lamas and affordable developments being in that program?

(02:07:05)

I mean, so when you look at the development side and the pipeline of projects coming through, the code enforcement side — and I think there always has been — there is a pretty strong firewall to ensure that the Housing Maintenance Code is being enforced appropriately. When a building is in it, it is a really good indication that a larger preservation and stabilization outcome needs to happen, and we should be able to apply resources to those types of projects to get them out of it.

(02:07:37)

Okay, thank you. I look forward to more conversation on that. And then my final question is coming from some of our friends in advocacy: does HPD have an accounting for how much of carrying charge increases are due to capital expenditures versus more of the operating costs? You mentioned utilities, you mentioned insurance, but do you have a sense of the relative reasons for the cost drivers?

(02:08:04)

Not off the top of my head. Julie? Yeah, I was going to say it is almost always just the operating expenses. We have the ability to structure our debt in a way where the residents do not have to pay towards our debt service payments, right. So we will defer and accrue principal and interest and there is a balloon at the end, and in that way it mitigates the increase on maintenance and rents. And one more...

(02:08:28)

...question: what happens to the balloon at the end? I mean, it gets rolled out. Usually we...

(02:08:35)

...refinance it and finance again in exchange for affordability restrictions for longer. Yeah, that is exactly right.

(02:08:41)

Thank you, CM Dinowitz.

(02:08:45)

Well, I had similar questions about the debt, but first I am also excited for the roundtable. I will be relying on CM Epstein and Brewer for snacks. I would just also say that limited equity co-ops like the Amalgamated cooperatives should be included. Not Mitchell-Lama, but in the same sphere, right, so that it functions similarly and they have some of the similar issues. So I would say that they are part of this roundtable as well. I need you to help explain how the debt works, because as I was starting my first round, Tracy had a $40 million loan, interest was $10.6 million, was refinanced to about $147 million. I am hearing you testify, well, we cannot forgive the loan, but we just roll the loan over and it just keeps growing. That is some... it keeps growing, and at no point ever in the future do those payments ever have to be made. Is that accurate? So we use the... if principal and interest payments are not being made on any portion of our existing debt, there is a balloon at the end of the loan term. So after 30 years, our balloon is there, and as CM Sanchez so eloquently put it, our hook, right. So by us having existing debt, and if it is a large balloon, then we are able to ensure that the project can still stay within an affordable program for the longer term. So none of the rent increases or maintenance increases are due to debt, the need to pay off any of these loans and...

(02:10:19)

...the project. For Tracey Towers, none of the increase is going toward paying the new capital that was put into the project.

(02:10:31)

Okay, putting that aside, talking about the new capital... I am talking about like the old capital, right? The now... all of that interest that accrued over the years. I am hearing different things. They do not have to pay it back. I am just trying to understand if any of that does have to do with the rent increases.

(02:10:46)

For Tracey Towers, different lenders, right. Each has its own city capital that is contributed to the project, and then there is an existing... there is a... sorry, I do not fully have the debt breakdown with me. But HDC has a first mortgage and that one gets paid off. So some of it... when we structure our loans, there is usually a private lender and that private lender will require principal and interest payments, and then the City comes in with subsidy, and those subsidy payments... that subsidy does not require payments. And the loan defers and accrues, and there is a balloon at the end of the 30 years. So the first debt that is in first position requires debt service payments. The city capital we put in does not require debt service.

(02:11:35)

Can you provide a breakdown of the city capital versus the private capital for Tracey Towers and all of the Mitchell-Lama developments? Because we were told, I think, that the rent increases are due in large part to the debt service. Otherwise the building is underwater. But my second...

(02:11:54)

This... that will be for later.

(02:11:55)

The second question is about other loans that have been taken out and oversight over those loans for capital improvements. In 2016, there was a $40 million loan taken out for elevator repairs, elevator upgrades, boiler, roof... and I mean, you were in Tracey Towers, the elevators have clearly not been upgraded. That was in 2016. The roof is leaking, so it either was not done or was not done well. So I am asking about the oversight. What oversight is actually conducted to ensure that the money that is being borrowed, that eventually has to be paid back by the tenants, that that work is actually being done and being done at a quality where they are not paying for it again just a few years later with leaky roofs and broken elevators.

(02:12:48)

Yeah, so monthly we monitor construction. And in this case, it sounds like HDC was the private first lender, and they would go out and do monthly inspections to ensure that the work was completed. Then once the construction monitor, or excuse me, the construction person from HDC and the architect sign off on the work that was completed, then the payment is made to the contractor. So every month, someone is going out to the building, and then every month a requisition is submitted and that is how the contractor gets paid for work that was completed. Okay, are those...

(02:13:27)

...documents public? Please share those documents with us, where HDC or the contractor said this work was completed. Do you have those documents available to you? I mean, I do not know if we have them available at the moment. No, I understand, but you work in collaboration for the purpose of supporting...

(02:13:47)

...people at our Mitchell-Lama developments.

(02:13:48)

Yeah, I mean, we could see what they have. Okay, we should see copies of those, because if the work was not done right, we have the documents that say the money was borrowed for maintenance and rehabilitation. There was $1.6 million for an elevator upgrade, $2.4 million for the boiler and roof, $600,000 for elevator...

(02:14:10)

...modernization. And if you are testifying that someone has to sign off on that every month and the work was not done, that means someone did something wrong. I also want to know... since I am testifying, the scope of work is very specific, right? So an elevator repair and upgrade is not an elevator replacement. Those are two very different things. Roof repairs is very different from roof replacement. Those two items are completely different, but...

(02:14:42)

...I do not think any...

(02:14:45)

...private homeowners would accept work where they completed repairs on the roof and the next year it is leaking. We should not accept that as a City either, and that is why I am interested in getting these documents. I understand it is not your agency, but you work in the same administration, the same City government, and if we are...

(02:15:02)

...all working together for the betterment of the residents of our Mitchell-Lama developments, we should all be getting those documents. And if it is happening at Tracey Towers, it is happening at all of the Mitchell-Lama developments and many of the Mitchell-Lama developments around our City where work is done...

(02:15:17)

...and there is no oversight as to the quality of work. Now there is a $36 million capital plan. I believe the work was... when you came to visit, the work was supposed to start... is that correct? The loan closing was in... when was the loan closing and when does the work begin?

(02:15:35)

So probably in the next couple of months, I would say. For any construction project, Mitchell-Lama or not, after construction loan closing there is a period where the construction crew and the contractor will continue to pull permits, continue to get all of their paperwork in order, and then mobilize to be able to start...

(02:15:54)

...construction work. Okay, so that is typical across projects. Given that this is a City-run Mitchell-Lama, what can be done to make sure that work is done in a more timely fashion than we typically see?

(02:16:08)

So sometimes... I am not a hundred percent familiar with this project, but in some circumstances and a lot of circumstances we require permits to be pulled prior to closing. I do not know exactly which permits need to be pulled for this project, but we make every effort with all of our affordable...

(02:16:23)

...housing projects to ensure we are communicating and that our projects are getting permits pulled quickly.

(02:16:28)

We see, and I am glad Amalgamated is here, we see a lot of costs accruing because of delays of things like permits. And again, I understand it is not your agency, but you work in the same administration, the same government. So you should be doing everything for our affordable housing to expedite those processes. Otherwise my office tries to do it, but we are a different branch of government. You are in the same branch of government as these other agencies, and that is a way to...

(02:16:57)

...make sure the residents of our Mitchell-Lama developments and our limited equity co-ops can get the housing they deserve and save money by not having, in their case, those sheds up for months and months on end. That was the case at Tracey Towers, by the way, in the late 2010s when they had their sheds up for years. It was years, and it was not until the Comptroller made a call and it was gone. These are just residents' money. Yeah, part of the SPEED report that was released tries to get to the root of some of those problems, to kind of get out of our own way to make sure we can do development much more quickly and much more...

(02:17:38)

...transparently. Excuse me. So SPEED was a big attempt at moving that forward. I want to ask about the $36 million for Tracey Towers. It is for elevator replacements. There were security elements in there, I believe, like the gate for the parking lot. Was one of those cameras? Was a security system part of that scope of work as well?

(02:18:01)

From 2016? I am sorry, the $36 million recent one. Yes. Okay.

(02:18:07)

So yeah, HPD actually put in, I believe, around $40 million in city capital, and the scope is broadly: garage work, some plumbing repairs... sorry, that is phase two. Elevators, facade, plaza repairs, security upgrades, playground improvements. Okay, I...

(02:18:26)

...just want to be clear. Tell me if I am off base, but when you say put in $40 million, what you mean is that the City Council through its City of Yes negotiations allocated more funding and secured more funding for senior Mitchell-Lama developments, and the Assemblyman secured $10 million, and the $40 million is actually a loan. Correct. In city capital, like we would any other affordable housing project, right. City capital was lent to the project with deferred... sorry, no principal or interest payments, payments fully deferring and accruing to the end of the loan term, right. But it is a... I just want to be clear. It is a loan. So...

(02:19:04)

...this is not the City investing a grant to improve it. It is the City investing a loan that at some point has to be paid back. Right? I mean, sure. Yeah. Okay. Loans have to be paid back. I just want to make sure we are clear because, you know, when we fight for this funding in City government, or when our colleagues in government secure this funding, and we celebrate because we are going to see improvements to the building, and then find out later that this is just a loan, it feels a little different than it should.

(02:19:40)

It is not a loan where no principal and interest payments are due until...

(02:19:47)

...until the balloon is due at the end of 30 years, right?

(02:19:49)

And then in 30 years, I guess their children will be dealing with it. I do not know. The more...

(02:20:00)

I have one more question. Okay. The same concerns about the elevators, the same concerns about the repairs, the loans that were taken out in 2016 remain the same today.

(02:20:12)

The residents of Tracey Towers say, well, 10 years ago they told us they were fixing the elevators and they are still broken. There is not a day where all six elevators in either building are working. I think last we checked, you were there 40 times this year. The Fire Department had to come for the elevators. Those are not fixed elevators. So for the residents of Tracey Towers, what guarantees do they have that someone is conducting the oversight to ensure that the money, that our tax dollars are being invested, that we are investing in our affordable housing with these loans, that there is oversight over that and the quality of the work, and that if we replace all the elevators and in two years they are not all going to break down again, that if they replace the roof it is not going to start leaking in two years. What mechanisms do you have to hold accountable the people who do...

(02:20:58)

...the work? So like I mentioned before, we have monthly construction requisitions where the contractor is only paid based on work that has been completed. So there is someone from... because we have city capital, there is someone from HDC because they are the first mortgage lender. Can I go clarify my question? I am not sure you understand. Maybe the idea is right on it. I think what we are trying to parse here is what is the actual scope of work. Is it a repair or is it a complete...

(02:21:24)

...replacement? Complete replacement of elevators, which I think was in the scope of work for this particular project, but not...

(02:21:29)

...in 2016. So let us say 2026, we are looking forward. Scope of work: brand new...

(02:21:38)

...elevators, right? You have, let us just go with that one project. You requisition that the work is being done. Great. After the work is completed and after the contractor has left, who is going to stay and monitor it to make sure it continues to function? Are they going to stay to hold the contractor accountable if it breaks down, if in five years they still do not have working elevators? Or is the only job to make sure that the work is being done on a month-by-month basis?

(02:22:08)

Our main goal is to make sure that the work is done correctly at the time it is being done. So we are ensuring that the requisitions that are going through are being processed and paid correctly and the work is done as it should be. We can have oversight and we can work with the owner to make sure that they are holding the contractors' feet to the fire. There is also typically a warranty period, right? So if after a year there are problems with the elevator, it is incumbent upon the owner to ensure that they are going back to the manufacturer or the contractor and holding them to the warranty standards. That is standard across all affordable housing projects, whether co-ops or rentals. Okay, it is just a...

(02:22:50)

...little bit about housing supervision. The portfolio analysts will still be there. The constituent services coordinators will still be there. The technical services team will still be there. The engineers that work at HPD will still be there. So whenever there is an issue, we will still be able to call on folks across the agency to come out. So it does not end when a project ends.

(02:23:14)

It sounds like there is room to go and to grow in this regard, given the experience at Tracey Towers. I see Amalgamated nodding their heads, and at all of the other Mitchell-Lama developments it seems like there is room to grow. I do not know if the one-year warranty was a hypothetical or... was that what the warranty typically is? One year? It is a hypothetical. Okay.

(02:23:35)

Every contractor is responsible for completing the work to the owner. Typically, things that are installed have a warranty period. Typically roofs have a warranty period, elevators, different mechanical equipment... it varies based on what is installed.

(02:23:49)

Right. It sounds like there is room to grow in this area and work to be done together on this, because the work done 10 years ago had a warranty and it was not fixed. We are concerned the work going forward at any of these Mitchell-Lama developments around the City... we want to make sure as a City we are holding accountable these contractors who are ostensibly doing the work, and then it falls on the tenants to pay for more repairs after the work is done. We know things go slowly in government, and that year or two years is going to go by before there is any oversight. We want to work together to make sure we are holding those accountable to keep costs down. I want to thank you for your testimony. There is lots of work to be done on this to keep these rents down, to maintain that promise of affordability that was promised to us from this administration. I stand ready to work with all of you. The tenants are ready to work with you, but they deserve dignity and affordability in their affordable housing developments. Thank you, Chair.

(02:24:51)

We do not clap in hearings. We only do the silent approval gesture, but...

(02:24:58)

Thank you so much, CM Donna... I just want to add a note on his line of questioning around the scopes of work with, you know, finance through funds. This is something that we hear, and I know... I still think about you sometimes as a Council member. We hear this all the time about financed work, you know, something that was financed five years ago is now starting to have leaks. You know, there were all those articles about the South Bronx buildings, luxury buildings that received some financing. So it is just an area that we want to make sure we have clarity on and we know how to follow up with you when there are problems. I have a question from Pam, who I do not know, who came to us from CM Banks. So you are getting a question from Pam via CM Banks via me, which is: what steps have the supervising agencies taken internally to make sure owners are not leaving apartments empty past the 90-day window? The loss of rental income has a devastating impact on the financial health of these developments. A recent Mitchell-Lama meeting confirms this is a widespread problem for a number of Mitchell-Lama rental and co-op developments. The second question is: will the agencies implement a plan to conduct a needs assessment or audit after year one of a three-phase rent and carrying charge increase, to make sure that the second and third phase increases are necessary, and then provide a detailed report of their findings to the residents of those individual developments?

(02:26:28)

So the review of the future rent increases... I mean, we are looking at the income and expense statements in the audits and can clearly see whether or not the increase is needed or not. In terms of the vacant units, we absolutely do not want vacant units in Mitchell-Lama, right? We are in the midst of an affordable housing crisis. We are trying to build our way out of it. That is not the only strategy. We do want to ensure that any unit that is vacant is brought up to code and habitable and safe for a new family to occupy. And when we are having trouble balancing the budget, when we are having trouble just meeting expenses, it leaves very little left over to do those repairs.

(02:27:11)

And individual apartments, and unfortunately sometimes we have to wait for the larger capital improvements to make those units habitable, right.

(02:27:23)

Thank you. And so just with respect to the second question, you said you can see when what increases are needed. Is there any circumstance in which a 10% increase this year means we do not need a 5% or whatever has been requested the following year?

(02:27:39)

I mean, it is project by project. We have differed in the past.

(02:27:44)

It is project by project. It is taking a critical look at the existing expenses and projecting future expenses. If we can pull any other levers on the expenses to lower certain expenses, then that will absolutely mitigate any potential increase.

(02:28:00)

So we will keep a close eye on those things as the phased increases happen.

(02:28:06)

Thank you. And just another question, just piggybacking off CM Dinowitz and the ballooning loans. Yes, they are technically loans, but they are actually kind of grants so long as you stay in the program. And so my last question is about who has stayed in the program. So 269 Mitchell-Lamas have been developed since 1955, statewide. Can you tell us how many we have lost? 65, actually, city-wide. Okay, 65. So since we have lost 65, these are folks who, as CM Dinowitz said, pay back their loans, right? And that is the way that you exit the program. Is that correct? Yeah. So that is when the loan comes due, is when a Mitchell-Lama wants to exit the program.

(02:28:52)

Got it. Yeah. Well, with that, I want to thank you so much for your testimony today, for all of these hours of hanging out with us. But we really do look forward to that roundtable, and to make sure that Mitchell-Lamas and our affordable developments remain front and center. And I say this to all the agencies: if there are folks that can stay and listen to the public testimony, I think that would be great, to hear from some of the residents firsthand. That would be wonderful. So thank you so much for all of your time.