Mayor Michael R. Bloomberg today announced an agreement between the owners and tenants of Independence Plaza North (IPN) on a plan to keep rents affordable at the 1,332-unit Mitchell-Lama development in Lower Manhattan.  The agreement calls for a rent structure for when the development leaves the Mitchell-Lama program, which protects residents who might otherwise have been vulnerable to large rent increases. The development is expected to buy-out of the program in June of 2004. 

“Former HPD Commissioner Jerilyn Perine was instrumental in bringing the two parties together to ultimately reach this agreement, and this resolution will keep rents affordable for tenants, thereby relieving the anxiety that comes with the sale of the development,” said Mayor Bloomberg. “This agreement is a win-win because it preserves affordable housing for New Yorkers, especially in neighborhoods where they might otherwise be priced out.  Our housing plan, which will build or rehabilitate 65,000 units of affordable housing in our City and includes $50 million in capital improvements to Mitchell-Lama developments that cannot afford conventional financing, strives to balance the needs of tenants, building owners, and those we want to encourage to develop additional housing.” 

“We are pleased to announce another important step in maintaining affordable rental housing for New Yorkers,” said Housing Preservation and Development (HPD) First Deputy Commissioner John Warren. “Preserving the City’s stock of middle income housing is crucial to making New York more livable for our hard working families and more attractive to new businesses.” 

“I have always respected the fact that Independence Plaza is home to over 3,000 New Yorkers.  That is why I pledged to work with the tenants association and City officials to craft a fair and equitable plan with as little disruption as possible to IPN residents,” said Laurence Gluck, owner of Independence Plaza North.

“We were pleased to arrive at a settlement with Mr. Gluck; however, this is only the first step,” said Independence Plaza Tenants Association President Neil Fabricant. “We are absolutely determined to maintain the long term survival of the vouchers.”
 
Under the terms of the Mitchell-Lama statute, after 20 years owners may buy out of the program by paying off their government mortgages and increasing rents to market levels if there are no other protections in place.  In return, they must pay full real estate taxes.  The process of buying out is often mired in conflict as tenants face uncertain rent burdens, and owners are often embroiled in costly and time-consuming litigation before they can buy out of the program.

Terms of the Agreement:

Existing tenants will be protected from rising rents when the building leaves the Mitchell-Lama housing program: the agreement presumes that as many as two-thirds of the tenants in the 1,332-unit complex will be eligible – based on household income – for “enhanced” vouchers provided by the U.S. Department of Housing and Urban Development.  Many Mitchell-Lama developments, including IPN, currently receive federal assistance that make them eligible for special federal Section 8 Rental subsidies known as “enhanced vouchers.” These vouchers are made available to households earning up to 95% of area median income, which is $59,600 for a family of four, thus insulating those tenants from large rent increases.  Tenant share of the monthly rent for those tenants with “enhanced vouchers” is capped at 30% of income or their current rent whichever is greater, with the voucher paying the difference between that amount and the market rent as determined by an appraisal approved by HPD.

The agreement negotiated by the Independence Plaza North Tenants Association on behalf of all residents of Independence Plaza secures the right of the non-voucher tenants to remain at the development without having to pay market rents. For these tenants, many of whom have resided at Independence Plaza for more than two decades, their rent will increase as follows:

1. For the first nine years, rent will increase annually in accordance with the annual schedule established for rent increases by the City’s Rent Guidelines Board (RGB). Effectively, this gives the tenants the same rent increases as those apartments presently under the rent stabilization system. In the current year, the approved increase is 4.5% for one-year leases, and 7.5% for two-year leases.

2. In the tenth, eleventh and twelfth years of the agreement, the rent of the non-voucher tenants will be increased by the amount of the RGB schedule, plus an additional three and one-third percent (3-1/3%) each year.

3. In year thirteen and subsequent years, annual rents will increase as scheduled by the RGB, plus one percent.