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NEW YORK CITY-Local political figures voiced support of the first comprehensive reform of the state’s Mitchell-Lama housing subsidy regulations in more than 40 years, with Brooklyn Assemblyman Vito Lopez welcoming “any improvements that will help retain Mitchell-Lama developments and protect tenants from administrative hurdles.” The reforms, which took effect Tuesday, are intended to benefit from owners and tenants of Mitchell-Lama buildings.

A statement from Lopez says that the 54-year-old program is “an integral source of housing for working people” and that it “must be sustained.” State Sen. John Sampson (D-Queens), Senate majority conference leader, says in a statement that the newly announced Mitchell-Lama reforms “will ensure families struggling to make ends meet will still have affordable housing options and owners will have more incentive to remain in the program.”

Over the years, it’s been what Deborah VanAmerongen, commissioner of the state Division of Housing and Community Renewal, calls the “often burdensome” regulations in the Mitchell-Lama program that “helped to drive owners out of the program.” According to DHCR, the circa-1965 regulations, which are titled “Management Manual,” are “filled with detail on the minutiae of property management, unrelated and irrelevant to actual regulatory requirements of the Mitchell-Lama program.” They have not been reviewed since they were written, according to a release from Gov. David Paterson and the DHCR.

In a document summarizing the new reforms, the DHCR says “there are significant issues” facing the Mitchell-Lama housing portfolio, which dates largely from the 1960s and 1970s. “Market forces and overly burdensome regulatory requirements act as incentives to dissolution,” i.e. owners opting out of the program. “For those housing companies that remain in the portfolio, a significant infusion of capital is often necessary to upgrade aging building systems.”

However, even for owners that can obtain the financing, “the regulations can impede a major redevelopment plan,” according to the DHCR. “A typical plan requires the project to participate in multiple funding programs that must be administered in tandem by multiple agencies. Each of these programs has its own regulatory requirements which may duplicate or conflict with the extensive and detailed requirements of the Mitchell-Lama program.”

Moreover, according to the DHCR, the 1965-era laws were created at a time when Mitchell-Lama projects were more “homogeneous” and could be supervised in a uniform matter. “This is no longer the case,” as some projects require closer scrutiny, while others need only minimal supervision.

For owners, the amendments to the program are aimed at “eliminating unneeded and overly burdensome regulations and streamlining procedures” along with “encouraging preservation of the portfolio as affordable housing.” More than half of the 105,000-unit portfolio was built in New York City, although there are also thousands of Mitchell-Lama units in upstate cities.

Among other things, the amendments seek to eliminate “duplicative” supervisory functions by other agencies. They eliminate the circa-1965 construction and design standards, and also drop the use of the term “manual” to describe the regulations. The revisions reduce the number of required bids for purchase contracts while ensuring that minority- and women-owned businesses are included in the bidding process, and raise the minimum contract amount requiring prior DHCR approval from $15,000 or $30,0000 to $100,000.

Conversely, however, the regulations now require all “identity of interest” contracts for services and capital work to get prior approval from the DHCR. Over the years, IOI contracts have led to “instances of self-dealing by managing agents,” the DHCR says.

The revised regulations do remove the requirement that a managing agent be selected through competitive bidding if the selection is part of a housing company preservation plan, and allow managing agents to automatically renew their contracts without DHRC approval if certain performance guidelines have been met. Competitive bids will be required, though, on purchases and contracts for occasional repairs and plumbing that exceed $100,000 per year, “even if broken up into smaller contracts.”

In June, Paterson signed legislation allowing the owners of the largest Mitchell-Lama complex, Starrett City in Brooklyn, to refinance in exchange for keeping the 5,881-unit complex in the program for 30 more years. The law created a $40-million dedicated fund for capital improvements to the residential tower structures and to individual units, which comes out of the loan proceeds.

Through a spokeswoman, the Real Estate Board of New York declined to comment on the newly announced amendments to the Mitchell-Lama regulations. Attorney Adam Leitman Bailey, who represents the third largest Mitchell-Lama owner in the state, tells GlobeSt.com he’ll need to review the amendments before commenting on them.

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