State Shouldn’t Make a Whole New Ball Game of Mitchell-Lama

blitt bob knakal 8 State Shouldn’t Make a Whole New Ball Game of Mitchell LamaIt is the top of the ninth inning in Game 6 of this year’s World Series. The Yankees are playing the Philadelphia Phillies in the new Yankee Stadium. The Yankees have had another great year and are ahead in the series, three games to two. They are in search of a record 27th World Championship. Mariano Rivera, the greatest closer in the history of baseball, is on the mound for the Yankees, facing Shane Victorino. The count is one ball and two strikes. The crowd is sensing victory. Rivera throws his cut fastball inside on Victorino’s hands. He hits a weak ground ball to Robinson Cano at second base. The fans start to go wild in anticipation of yet another championship for my beloved Yankees (sorry, Met fans-I did root for you in 1969, 1973 and 1986, but, of course, did not in 2000). Cano fields the grounder and is about to throw the ball to Mark Teixeira at first base to end the game and the series for the Yankees.

Suddenly, Baseball Commissioner Bug Selig emerges from the stands waving his arms in the air. He has a microphone in his hand and stops the game to make an announcement. “Major League Baseball needs to make up a revenue shortfall with additional World Series games,” Mr. Selig bellows into the microphone, “so this year we will be playing a best-of-13-games series; therefore, a team must win seven games in order to be champs.” The fans and Yankee players are stunned. No one can believe that just as the game and the series was about to end, the rules have been changed.

This is, essentially, what far too many public officials are trying to do to residential multifamily building owners who participate in the Mitchell-Lama program. These owners have had the ability to “buy out” of the program virtually since the program began in the 1950s, and legislators are constantly trying to take this right away from them.

The disservice this does to owners of these properties is far more unfair than the above baseball analogy presents. The Yankees did, indeed, go into the 2009 season knowing that they would have to win two rounds of playoffs and then four World Series games in order to be champions. However, the players still would have played even if they knew the final series would be a best of 13 rather than a best of seven. They would have participated anyway, although players generally want to know the rules before the game begins.

Owners and developers of Mitchell-Lama properties were induced, perhaps seduced, into providing affordable housing based upon a contract that, very clearly, stated that after participating in the program for a period of time, they could opt out of the very cumbersome program. Not allowing owners the ability to exercise their contractual rights to buy out of their obligations is, to go back to a baseball analogy, tantamount to not paying the players after they have provided the services they agreed to provide at the beginning of the season.

In the early 1950s, the Joint Legislative Committee on Housing and Multiple Dwellings (the JLC), under the chairmanship of Senator MacNeil Mitchell, became concerned about the lack of affordable housing for middle-income families in New York State. These were people who earned too much money to qualify for public housing but made too little to afford the rents in new housing being produced. In 1955, with the flight to the suburbs going full blast and many city neighborhoods deteriorating from lack of money and municipal attention, the Mitchell-Lama bill was signed into law after its drafting by Senator Mitchell, along with New York Assemblyman Alfred Lama.

The purpose of the program was to encourage the building of moderate-income housing, to keep more middle-class families within the state’s cities, and to help stabilize city neighborhoods. The law provided for the making of advantageous loans by the state, or by a city, to special statutory corporations, known as “limited-profit housing companies,” for the construction (and later rehabilitation) of housing developments for families and people whose housing needs could not readily be met by the ordinary unaided marketplace. Rents in Mitchell-Lama buildings are set according to the development’s expenses, and owners receive tax abetments for the life of their mortgages, resulting in low, affordable rent levels. Significantly, the “Policy and Purposes” section of the new law declared that, given the existing emergency conditions, a provision be made by which the private sector would be encouraged to invest in this type of housing.