Starrett City Owners Move To Opt Out of Mitchell-Lama

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The New York Sun

The owners of Starrett City are starting a process to remove the 5,800-apartment low- and middle-income housing complex from the subsidized housing program Mitchell-Lama.

“We have filed a notice of intent to opt out of that program,” one of the owners, Carol Deane, wrote in a letter to tenants, dated yesterday. Ms. Deane’s company, Starrett City Associates, has not yet definitively decided to leave Mitchell-Lama, she wrote.

State and city officials greeted the move as something of a negotiating tactic, as the company is said to be in talks with the state about easing the Mitchell-Lama program’s restrictions on profit. Should Starrett City Associates leave Mitchell-Lama, the company would have an easier time selling the complex because a key affordability restriction would be lifted. Mitchell-Lama allows landlords who have been in the program for more than 20 years to opt out, and the boom in land values in recent years has propelled owners of thousands of units across the city to do so.

Ms. Deane’s letter comes just weeks after Starrett City Associates’ attempt to sell the complex to Clipper Equity for $1.3 billion was quashed amid concerns that the new owners would be forced to remove the apartments from the Mitchell-Lama program and raise rents to justify the high price tag.

Now it looks as if Starrett City Associates is threatening to do just that.

Senator Schumer called the move “an act of bad faith that will dim their effort to gain federal approval for any sale.” In a statement, he added that he would work with state leaders to create legislation to block the company from opting out of the Mitchell-Lama program.

Mr. Schumer, along with Attorney General Cuomo, the Bloomberg administration, and several local officials, vocally opposed the Clipper Equity deal, and the federal Department of Housing and Urban Development twice stepped in to block the sale before the contract between the two parties expired last month.

State officials and a housing advocacy group were quick to note that Starrett City Associates’ recent move could mean no more than what the company says: that it is keeping its options open.

“This is the first move on the chessboard,” a spokesman for the housing advocacy group Acorn, Jonathan Rosen, said. “This allows them to keep their options open, to explore both what the market and regulators will bear.” A joint statement by the state Division of Housing and Community Renewal and the Housing Finance agency said Starrett City Associates’ “choosing to exercise this option is in no way an end of the road for negotiations.”


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