Mitchell-Lama Housing Program
About the Mitchell-Lama Housing Program
The Limited Profit Housing Companies Act was created in 1955 for the purpose of building affordable housing for middle-income residents. The housing developed under this program is more commonly known as Mitchell-Lama housing, derived from the last names of former Manhattan State Senator MacNeil Mitchell and former Brooklyn Assemblyman Alfred Lama, who sponsored the legislation. It is officially embodied in the Private Housing Finance Law and is designed to accommodate the housing needs of moderate income families.
A total of 269 State-supervised Mitchell-Lama developments with over 105,000 apartments were built under the program. After twenty years from initial occupancy, housing companies are statutorily permitted to voluntarily dissolve (buyout) and leave the program. To date, 93 Mitchell-Lama developments (approximately 31,700) have voluntarily dissolved. In addition, 22 middle-income developments with over 10,000 apartments were built under the Limited-Dividend program, a precursor of the Mitchell-Lama program.
In exchange for low-interest mortgage loans and real property tax exemptions, the M-L Law required limitation on profits, income limits on tenants and supervision by DHCR. Developments are eligible to withdraw from the Mitchell-Lama program, or buyout, after 20 years upon prepayment of the mortgage (or after 35 years in the case of developments aided by loans prior to May 1, 1959). When developments buy out, they are no longer subject to DHCR regulation, and apartments need not be kept affordable for moderate income families.
Because an increasing number of Mitchell-Lama developments were becoming eligible for buyout in the early l990’s, in 1991 DHCR issued regulations to clarify the buyout process and ensure a smooth transition to non-Mitchell-Lama status. The regulations stipulated that in areas subject to the Rent Stabilization Law or the Emergency Tenant Protection Act, developments that buy out are covered by rent stabilization. In areas not subject to either the RSL or ETPA, the buildings are no longer subject to regulation.
The Empire Housing Fund Program (EHF) in an interest-free loan to Mitchell-Lama housing companies or cooperatives that is payable (or which may be refinanced) at the end of the mortgage. The funding for this program is provided by HFA and was generated by bond financing. The program was initiated to provide funding for capital improvements to the Mitchell-Lama housing portfolio.
In 1993, another program to fund structural repairs and capital improvements in the Urban Development Corporation portfolio was initiated. The Project Improvement Program was funded by the Housing Finance Agency’s refinancing of Urban Development Corporation bonds resulting in $75 million for no-interest loans to housing developments originally financed by the Urban Development Corporation.
Under the current Administration, the preservation of affordable housing resources has become a major priority for the State’s housing agencies. The Housing Finance Agency, Empire State Development Corporation and DHCR have collaborated to identify Mitchell-Lama housing companies to participate in mortgage refinancings which generate funds for capital improvements and property upgrades. Since 2007, 14 rental housing companies (3,666 units) have refinanced and committed to remain in the Mitchell-Lama program.