Rosa Perez, 61, a retired social worker, has called Park Reservoir Houses (PRH) home for the last 30 years calling it a “hidden gem of the city.” Like all cooperators, she pays her monthly maintenance fees for the state-funded Mitchell-Lama complex in Van Cortlandt Village.

But those fees could skyrocket by 100 percent if the state Department of Housing and Community Renewal (DHCR), which regulates Mitchell-Lama buildings, gets its way.

“Many have spoken to me indicating that they will need financial support from their family and friends to make up the difference of the proposed increases because of DHCR delays,” said Perez, in an email to the Norwood News. “Many have spoken about having to move and/or request transfers to smaller apartments.”

The increase stems from a $15 million loan the cooperative’s board of directors approved to secure and earmark for a massive top-down renovation of the near 60-year residence. As part of the state-backed Mitchell-Lama program, PRH offers affordably priced rentals and co-ops to middle-income New Yorkers. As a board, the body can dictate how it finances its projects.

But just what type of loan both sides want is where the wrench has been thrown. 

Interest Rates
Andrew Kimerling, the board’s president, ran the numbers. As an accountant, Kimerling suggested that a so-called 10/30 loan at a 30-year amortization rate of four percent would be the best cost-saving measure for cooperators. That loan would set up a balloon payment to be satisfied 10 years from the time the loan is secured, meaning cooperators will pay a small upfront charge, which Kimerling calculated at $20 per room. The current rate is $15 per room. The board approved for the loan application, despite DHCR believing it’s too risky.

Still, the board took their proposal and was met with resistance by DHCR Commissioner RuthAnne Visnauskas, suggesting a 30/30 loan with a $1 million subsidy loan attached instead.

The catch? The board would have to give up its right to determine whether to stay in the Mitchell-Lama program. Boards of directors usually reserve that right should they want to privatize.

“The board determined that it alone should not make a decision that would have such a substantial and long-term effect on future generations of Park Reservoir cooperators,” wrote Kimerling in a letter to cooperators. 

As the months go on, so does the increase in the four percent interest rate. “Unfortunately, until the state has its conference with the cooperators and then approves the loan, we cannot lock in our rate,” wrote Kimerling in his letter.

It’s unclear what prompted Visnauskas to attach these conditions.

By opting out of the program, cooperators in Mitchell-Lama residences can sell their apartments at a market rate price should they have satisfied the mortgage. Gary Axelbank, vice president of the board, emphasized that the board’s decision to opt out has nothing to do with the option of selling at market rate.

Politics in Play?
Kimerling suspects political forces at play. Visnauskas is an appointee of Governor Andrew Cuomo, who is in the middle of running for re-election. With the preservation of affordable housing championed by New Yorkers given the state of affordable housing across the city, preserving the stock of Mitchell-Lama housing is politically tactful, whether PRH likes it or not.

“Governor Cuomo is trying to lock in all Mitchell-Lamas into staying under state supervision so he can claim just how much he has done to maintain affordable housing throughout New York State. Until his new DHCR commissioner came aboard last fall, DHCR had no problem approving 10/30 loans.  The playing field has now been artificially changed. And the state is offering subsidy loans as the hook to keep Mitchell-Lamas in the system for another 20 to 30 years,” Kimerling told the Norwood News.

Sally Dunford, executive director of West Bronx Housing, which advocates for fair housing, said DHCR’s headstrong position is politically motivated, but doesn’t “mean that it’s not a good policy.” “Mitchell-Lama has proven itself to be a really good program and a great place where middle class and working class people can live and develop communities,” said Dunford. “The communities we’ve seen in the Bronx–where you look at Park Reservoir, for example, or look at Concourse Village–and you can see it’s fairly decent housing at a decent price and [that’s] something that the Bronx increasingly needs.”

Cuomo has favored Mitchell-Lama preservation, setting aside $30 million in 2017 for the program. Monies were earmarked for loans to Mitchell-Lama residences. Even if the board accepted the terms, the upfront fees that would cover the loan repayment would be too much for cooperators. Instead of the $20 fee per room, cooperators would be expected to pay $30 per room, according to Kimerling’s estimates.

“While I understand why the folks at Park Reservoir are uneasy about this, I do think it’s part of something that is part of the greater good of the community,” said Dunford. “So I understand why the state’s doing it.”

A DHCR spokesperson said in a statement that the agency’s “mission is to ensure the long-term financial viability and affordability of Mitchell-Lama developments. That hasn’t changed and will not change.”