Privately owned multifamily buildings in New York City, many built decades ago, are facing significant maintenance challenges as residents’ monthly payments are not enough to cover upkeep costs. While lawmakers have not provided much support for rent-stabilized buildings, another category—Mitchell-Lama co-ops—has received substantial government assistance.
Since Governor Kathy Hochul took office, Mitchell-Lama co-ops across New York State have received nearly $500 million in aid, averaging $4,762 per unit, with some units receiving much more. One agency alone provided $265 million to 24,000 Mitchell-Lama apartments, or more than $11,000 per unit. If similar support were extended to the city’s 966,000 rent-stabilized units, the total would reach approximately $4.6 billion.
Earlier this year, the state budget included a provision to cut taxes for Mitchell-Lama co-ops by half, saving them about $50 million annually. However, this tax relief did not apply to Penn South, an “Article V” co-op in Manhattan, where shareholders have kept maintenance fees low, resulting in deferred building maintenance. In response, the state is allowing the city to grant Penn South a $2 million annual property tax reduction.
Kenny Burgos, CEO of the New York Apartment Association, commented to The Real Deal, “I commend the governor for recognizing the sky-high costs to operate housing and her work to help Mitchell Lama buildings across the city from choosing between deferred maintenance or double-digit rate increases. I can only hope the same approach and attention is offered to the nearly 2 million residents living in rent-stabilized housing.”
Mitchell-Lama co-ops, established in 1955 to provide middle-class housing, were intended to be self-sustaining, but many have relied on government bailouts. Lawmakers have often framed these interventions as acts of public service, though critics argue they are necessary because shareholders have sometimes chosen to defer maintenance to save money.
The original legislation allowed these co-ops to eventually become market-rate, which would require them to cover their own expenses. However, many have opted to remain in the program with government support when offered.
On Tuesday, Governor Hochul held a press event at Penn South in Manhattan to sign a bill sponsored by Sen. Brad Hoylman-Sigal and Assembly member Tony Simone, enabling the city to reduce property taxes for the co-op. Hochul’s press release stated, “Penn South faces rising operational costs, which threaten to impact building quality and future affordability for its residents.”
The issue of rising operational costs also affects rent-stabilized buildings, but in those cases, the state expects landlords to absorb the costs. If they are unable to do so, foreclosure remains the only option.
