Mitchell-Lama Rule Amendments
Proposed Rules: Closed to Comments (View Public Comments Received:1)
The Mitchell-Lama Law (Article II of the Private Housing Finance Law) was enacted to address the “seriously inadequate” supply of “safe and sanitary” housing for families of low and moderate income. 41 N.Y. Priv. Hous. Fin. Law § 11 (McKinney’s 2002). Realizing that the necessary housing could not “readily be provided by the ordinary unaided operation of private enterprise,” the law provides incentives to encourage development of such income housing. Id. Specifically, housing companies are provided with low-interest mortgage funding for construction and real estate tax exemptions. 41 N.Y. Priv. Hous. Fin. Law §§ 22-23. In exchange for these benefits, housing companies are subject to numerous statutory restrictions, as well as to extensive regulatory and supervisory oversight and control, including regulations concerning rent, profits, disposition, and tenant selection. See, e.g., 41 N.Y. Priv. Hous. Fin. Law §§ 27, 31, 32, 32-a. HPD is the supervising agency for New York City’s municipally-aided Mitchell-Lama program.
Summary of Proposed Rule and Bases for Proposed Changes
• The Mitchell-Lama rule amendments that became effective on December 25, 2014, prohibit application transfers except between spouses and children of at least 18 years of age who were on the applicant’s original application. The ability to transfer an application to a sibling was inadvertently omitted. Siblings often enter lotteries for Mitchell-Lama apartments together, but only one can be entered as the potential head of household. Since waiting times for these apartments are extensive, the housing needs of such siblings are bound to change over time. The proposed rule amendment would allow siblings to transfer applications as long as they both were included on the original application and at least 18 years of age at the time of such original application, thereby correcting this omission.
• The proposed amendment to the definition of “probable aggregate annual income” is for clarification purposes to better reflect HPD’s current policy of excluding up to $20,000 of each secondary wage earner’s income.
• The Mitchell-Lama rule amendments that became effective on December 25, 2014, also prohibited a housing company from adding a family member to the stock certificate for a mutual redevelopment company unless such family member was approved for succession. Previously, family members could be added to stock certificates even if they had not been approved for succession, but co-ownership of shares indicated a financial interest only and did not guarantee succession. Thus, family members that had been added to the stock certificates prior to the rule change were required to independently meet succession requirements if and when the shareholder of record permanently vacated the apartment.
The December 25, 2014, rule amendment inadvertently failed to address family members who had previously been added to stock certificates before the establishment of succession rights was a prerequisite to such additions. The proposed rule change addresses that omission and reiterates the requirement that such family members would need to meet the succession requirements in order to establish occupancy rights.