Joint Oversight Hearing on Mitchell-Lama Housing Affordability – July 15, 2026

On July 15, 2026, the New York City Council Committees on Housing and Buildings and Finance held a joint oversight hearing to examine financial tools for maintaining the affordability of Mitchell-Lama housing. The hearing was co-chaired by Councilmember Linda Lee (Finance) and Councilmember Pierina Ana Sanchez (Housing and Buildings), with opening statements from both chairs and from Speaker Julie Menon. The meeting focused on the rising financial distress, deferred maintenance, and steep rent increases across the city's 90 HPD-supervised Mitchell-Lama developments, using Tracy Towers and Kingsbridge Arms as case studies. The hearing featured testimony from HPD First Deputy Commissioner Adam Phillips, who described the portfolio's challenges, and a lengthy question-and-answer session with council members. The public testimony session included residents and advocates who described hazardous conditions, inadequate oversight, and the burden of sudden large increases. No votes were taken; the oversight was filed and Resolution 0083-2026 was laid over.

Public Comments & Testimony

• Jean Hill, President, Tracy Towers Tenant Organization: Described severe conditions: elevators constantly breaking down, leaking roofs, substandard work, and a 40-year history of unfulfilled promises. Stated that 60% of residents would not qualify for subsidies and that the proposed 30% rent increase would force displacement.
• Ed Yaker, Chair, Coordinating Council of Cooperatives: Urged including all limited-equity housing (not just Mitchell-Lama) in the discussion. Noted that city mandates (e.g., insurance, local laws) drive up costs without proportional safety benefit.
• Sally Strowman: Highlighted insufficient oversight, maintenance backlog, financial mismanagement, and a problematic bidding process with frequent change orders. Called for a tenant committee to address issues.
• Eric Furman, Director of Housing Policy, AFL‑CIO Housing Investment Trust: Stated that his fund has invested $569 million in Mitchell-Lama and affordable co-ops. Emphasized need for larger public investment and urged creation of good union jobs.
• Janice Brody, Board Member, Clayton Apartments (Harlem): Reported a $15,000/month deficit, a $25–30 million capital need, and insurance costs of $700,000/year. Argued that city capital should be treated as investment, not debt, and that local laws place an unfair burden on co-ops.
• Ryan Schollenberger, Vice President, Clayton Apartments Board: Detailed that a 15% increase approved by HPD only covers a loan conversion. Noted a $250,000 cost for Legionella remediation and a 62-year-old pipe system. Called for opening up the management company list, as many approved firms are ineffective.
• Susan Peters, American Monetary Institute: Discussed the monetary system’s role in creating debt, arguing that bank lending creates money and that this should inform city financial policy.
• Richard Heitler, Treasurer, Village East Towers (Lower East Side): Proposed scrapping the three-year rent‑increase system in favor of annual, simpler increases with a 90‑120 day approval timeline. Reported that a three-year loan process delay cost his co-op over $500,000. Called for a small loan program for vacant apartments, mortgages for new buyers, and an end to 2‑11 conversions.
• Faisel Yousafu (in person): Represents Tracy Towers. Stated that the offered SNAP program is not a solution because his wife’s income makes him ineligible, and he cannot afford the increase as a disabled retiree.
• Sam Moskowitz, Board President, Gouverneur Gardens (Zoom): Reported insurance costs of $1,800/unit (doubled) and a $54 million capital project. Recommended requiring multi-year budget projections, standardized reporting, simplified HPD processes, and tracking of vacancies/arrears as early distress indicators.
• Gene Hall, Board President, Rochdale Village (Zoom): A state-supervised Mitchell-Lama in Queens facing a 31.2% carrying charge increase. Urged creation of a dedicated city capital fund for Mitchell-Lamas and expanded city programs.

Discussion Items

• Opening Statements: Chair Lee and Chair Sanchez emphasized that the hearing is not about litigating the Mitchell-Lama program but about proactive oversight. Chair Sanchez highlighted that 10% of city-supervised Mitchell-Lamas experience financial distress, that 30–37 developments saw average 29% rent increases in 2025, and that a March 2026 state audit found hazardous conditions at 12 of 15 sampled developments, including $2.3 million in misspent funds. Speaker Menon stressed the need for transparency, accountability, and exhaustion of all preservation tools before imposing large rent increases.
• HPD Testimony: First Deputy Commissioner Adam Phillips stated that the Mitchell-Lama portfolio faces rising operating costs, significant capital needs, and uneven income streams. He noted that HPD is legally required to approve rent increases needed to cover costs, that increases often make up for many years of flat increases, and that Tracy Towers is not exceptional. He outlined tools: SCREE/DRI enrollment, advocacy for more Section 8 vouchers, reauthorization of J51, and exploring sale of undeveloped land. He committed to a comprehensive portfolio-wide approach.
• Question and Answer Session: Council members pressed HPD on several issues:
  • Proactive vs. Reactive Oversight: Chair Sanchez and others questioned why HPD does not smooth increases over time. HPD replied that it reviews financials regularly but many buildings delay increases until capital projects are ready.
  • Physical Needs Assessments (IPNAs): HPD revealed that 48 of 90 city-supervised developments have had IPNAs since 2020. Council members noted that buildings often only conduct IPNAs when seeking financing, not proactively.
  • SCREE Enrollment: Councilmember Dinowitz questioned HPD’s compliance with Local Law 44 (pre-filled applications). HPD claimed full compliance but acknowledged that increase-related applications are not pre-filled until the increase takes effect. Citywide, only 67,132 of 158,214 eligible households receive SCREE/DRI.
  • Capital Spending: HPD stated that its five-year preservation budget is $1.232 billion, but does not break out Mitchell-Lama specifically. In FY27–28, HPD expects to preserve about 2,800 Mitchell-Lama units.
  • Debt and Balloon Payments: Councilmember Dinowitz raised concerns about the ballooning debt at Tracy Towers (a 1971 loan of $40.7 million had amassed $106.2 million in interest by 2012). HPD explained that city capital is structured as deferred, accruing loans with a balloon at 30 years, which serves as a hook to keep buildings affordable.
  • Insurance and Operating Costs: Councilmember Dinowitz noted that Tracy Towers’ security costs jumped 50% in two years (from $1.8M to $2.8M) and that insurance costs per unit ($4,600) are far above the citywide affordable average ($1,770). HPD agreed to examine these costs.
  • Management Accountability: Councilmember Jay Sanchez asked about tools to address poor management across multiple buildings. HPD said it can bring in firms for deeper review, but there is no automatic trigger. Councilmember Banks raised the example of Linden Plaza, where a management company that refinanced without reinvesting was not held accountable.
  • Land Sales and Development: HPD views selling parking lots or undeveloped land as an innovative revenue source, but council members stressed the need for resident input and equitable outcomes.
  • Roundtable: Councilmember Brewer proposed a roundtable with city, state, and resident stakeholders. HPD agreed to host it.

Key Outcomes

• No votes were taken. The oversight hearing was filed by committee. Resolution 0083-2026 (urging state legislation to protect Mitchell-Lama residents) was heard and laid over; no action was taken.
• HPD committed to providing the following to the committees within “the coming days”:
  • A comprehensive list of city-supervised Mitchell-Lama developments, their rent increases over the past 10 years, and proposed upcoming increases.
  • A list of developments with rent increase applications currently pending.
  • A breakdown of debt composition (city vs. private capital) for Tracy Towers and other developments.
  • Documents from the 2016 loan at Tracy Towers (elevator/roof repairs) to verify work completion.
  • Data on the cost of capital needs from the 48 IPNAs completed since 2020.
  • Information on HPD violations within the Mitchell-Lama portfolio.
• HPD agreed to collaborate with the Council on a roundtable discussion involving city, state, residents, and management to address systemic issues.
• HPD committed to advocating for state-level changes including increasing the local SCREE income cap from $50,000 to $75,000 and reauthorizing J51.
• HPD will continue to explore innovative revenue models such as development of unused land, while ensuring resident engagement.
• The Council and HPD agreed to work together to reduce operating costs, including insurance, and to push for more federal Section 8 vouchers.
• No immediate policy changes were enacted. The hearing served as a fact-finding exercise, with follow-up actions expected from the roundtable and future legislative proposals.