Good afternoon.

Welcome to the Committee on Finance and Housing joint with excuse me, welcome to the Committee on Finance, joint with housing and building.

At this time, we ask that you please silence all electronics and at no point.

Please do not approach today's chair.

You may begin.

Great, thank you.

To technically do that.

Um, good afternoon.

I'm Councilmember Linda Lee, Chair of the Finance Committee, and welcome to today's hearing, um, oversight hearing concerning financial tools for maintaining the affordability of Michelama Housing.

I'm pleased to be joined.

Uh, I know the speaker is going to be joining us soon, um, and my colleague chair of the committee on housing and buildings, Councilmember Pirina Sanchez.

And we've also been joined by Councilmember Narcis, Councilmember Maloney, Councilmember Aldabal, Councilmember Dinowitz, and I believe Councilmember Joseph is on Zoom.

Um, welcome also to our partners from the Department of Housing Preservation and Development and the Department of Finance.

Um, thank you all for joining us today to answer our questions.

And before I go any further, oh wait, no, we're gonna have her do her statements later.

Um we are here today as the housing affordability crisis continues to challenge New York City, even as we in city government continue to work to ease the burden of New Yorkers.

The hearing is not intended to litigate the value of the Michelama program.

Um, this council has long supported and continues to support the feasibility and longevity of the program.

Um, as was highlighted during our last oversight hearing on Michelama affordability last October, the City Council has taken multiple steps to preserve Michelama housing, extending property tax exemptions for developments that had paid off their mortgages, incentivizing them to remain in the program, enacting laws expanding benefits previously unavailable if improvements were financed through government loans or grants to Michelama buildings that commit to stay in the program.

Further, uh the fiscal year 2025 New York State budget, with support from Governor Hokel and the state legislature, uh further reduced the local tax burden on these developments through the New York shelter rent tax law.

This law caps local and school taxes at 5% of a development's annual shelter rent down from the previous minimum of 10%.

Some properties may qualify for greater exemptions depending on prior board of estimate resolutions.

Even with these actions, it is essential that this oversight continues with our agencies and the administration as we look forward to exploring existing and potential new tools to support the long-term viability of Michelama developments from our counterparts at the Development of Housing, Department of Housing, Preservation and Development, and the Department of Finance, and not passing the burden to tenants in Mitchell Lama Developments, rentals and co-ops.

Um I now want to turn it over to my co-chair for this hearing, Councilmember uh and Chair Uh Sanchez for her opening statement.

All right, thank you so much, Chair Lee, and good afternoon, everyone.

I'm Councilmember Pierina Sanchez, Chair of the Committee on Housing and Buildings, and I'm pleased to co-chair today's joint oversight hearing with Councilmember Lee, as well as I'm calling him the honorary co-chair uh Councilmember Dinowitz, uh, who brought us together regarding Tracy Towers.

For more than 70 years, the Michelama program has provided an essential source of stable, affordable housing for middle and moderate income New Yorkers.

But today, that promise seems to be in jeopardy.

Too many Michelama developments uh are deteriorating physically, financially, or both.

Residents are living with hazardous conditions, deteriorating building systems, rising rents and carrying charges, and growing uncertainty about whether they will be able to remain in their homes.

This is not a minor problem at a handful of isolated buildings.

It is a deeply troubling trend across a critical affordable housing portfolio.

And it demands more than just descriptions that our buildings are aging, costs are increasing.

We need our agencies, we need HPD to come to the table with solutions that stabilize developments that are already in distress, protect residents from displacement, and fundamentally strengthen the city's oversight so that we prevent the next crisis instead of merely reacting after a development has reached a breaking point.

Creating it created in 1955, Michelama encouraged private developers to build rental and cooperative housing by offering low interest mortgages and property tax exemptions.

In exchange, owners accepted limits on their profits, resident income, uh resident incomes, rent levels, purchasing prices, and carrying charges.

Since the program began, 269 developments containing more than 105,000 apartments have been built statewide.

An estimated 170 of those are in New York City, and about 60% of those are supervised by HPD.

These developments were made possible through public subsidies, and public oversight was intended to preserve their affordability, financial stability, and physical condition.

For city supervised developments, HPD approves budgets and rent or carrying charge increases, monitors finances, oversees tenant eligibility and waiting lists, and conducts inspections.

The city and state have also invested significant public resources in preservation.

HPD testified just earlier this year that its 10-year capital plan includes 1.1 billion dollars for Michelama housing, some of which was secured through this council through the City of Yes negotiations.

While the state's fiscal year 2027 budget, as Chair Lee mentioned, includes 80 million in new appropriations accessible to developments in the city.

And yet, despite decades of public oversight and substantial public investment, too many Michelama residents are living with both deteriorating English, okay, deteriorating conditions and rapidly rising housing costs.

At least 10% is our understanding of the city's remaining Michelamas are exp experiencing financial distress.

And in 2025 alone, 30 to 37 developments received rent increases averaging approximately 29%.

Compare that to this year's 0% increase for rent stabilized apartments.

A March 2026 audit by the state controller found hazardous or unsafe conditions, as well as structural issues at 12 of 15 developments examined statewide, including every single one of the 10 New York City developments that were sampled.

The audit also identified approximately 2.3 million dollars in misspent or inadequately documented funds.

Those findings should set off alarm bells.

They demand basic and urgent questions like how can housing that has been continuously supervised by the government fall into such severe financial and physical distress.

Wasn't this oversight intended to prevent precisely this outcome?

And if HPD has been monitored monitoring these developments all along, when did it first see warning signs?

What did it do in response?

Were inadequate reserves, mounting debt, deferred maintenance, and deteriorating building systems allowed to reach crisis levels, and most importantly, what is HPD going to do differently moving forward?

In addition to the situation at Tracy Towers, which we'll talk about at length, I highlight Kingsbridge Arms in my neighborhood, 2865 Kingsbridge Terrace presents another deeply troubling example.

The development has over $1 million in debt.

Its physical and financial conditions have become so dire that management actually relies on additional debt to cover even basic operating expenses, including something as simple as trash bags for the garbage room, while major renovations and essential repairs remain unaddressed.

Residents call us, they email our offices, they stop at us, stop us at community events because they need help.

In closing, HPD oversight should mean more than simply monitoring a building's decline and then presenting residents with enormous rent or carrying charge increases as the only available solution.

It must mean proactive capital planning, maintaining adequate reserves, inform enforcing timely repairs, ensuring responsible management, requiring transparent accounting so that our affordable housing can remain as such in the long term.

It must mean detecting distress early and intervening decisively before residents and developments reach a breaking point.

We're looking forward to a productive and solutions-focused discussion because Michelamas were founded on a public promise that New Yorkers can have safe, stable, and affordable home even if they could not afford the private market.

Our responsibility is not simply to celebrate that promise, but to make certain our city is continuing to keep it.

With that, back to Chair Lee.

Thank you.

Thank you, Chair Sanchez.

Um, so before we get started, I'd like to think uh take a quick minute to thank the entire council uh finance division housing and buildings and land use staff for their efforts in preparing today's hearing.

Um I know that you guys did a lot behind the scenes, so I really appreciate that.

Um, and I'll now turn it over to committee council to swear in the witnesses for their testimony.

Sorry, really quickly.

We've also been joined by Councilmember Mealy as well as Council Member Hudson and Councilmember Riley and Councilmember Ressler.

Good afternoon.

Do you swear to tell the truth about the truth before this council and the committee members?

You may begin.

Great.

Can you all hear me?

Yes.

Okay.

Good afternoon, Chair Sanchez and Chair Lee.

Thank you for the opportunity to testify.

I'm Adam Phillips, the first deputy commissioner of HPD, and I'm pleased to be joined by my colleagues Alika Ampri Samuel, Deputy Commissioner of Asset Management and Property Management, and Julie Walpert, our assistant commissioner for housing supervision.

The Michelama program is a critical and unique part of our city's affordable housing stock.

The program was created by the state legislature in 1955 to serve middle class families, and since then it has provided opportunities for hundreds of thousands of New Yorkers.

Today, there are approximately 90,000 Michelama apartments in 134 developments spread across New York City.

Approximately half of these apartments are supervised by the city through HPD, and the other half are supervised by the state through HCR.

Within HPD's Michelama portfolio, two-thirds are co-ops and one third are rentals.

All Michelamas, whether they are co-ops or rentals, are privately owned and managed housing companies that are subject to oversight by HPD or HCR.

In a Michelama rental building, a private landlord is the owner and is responsible for maintenance and long-term capital planning.

Michelama co-ops are controlled by their residents who are shareholders.

Each year, the residents elect a volunteer board of directors that has the responsibility of overseeing operations and long-term capital planning for their co-op on behalf of the shareholders.

The responsibility to serve on a board of directors is great, and we thank all the residents who take on the task.

We have seen thousands of New Yorkers build their lives in these affordable co-ops and rentals.

Although the program was originally designed to house middle-income families, over time, Michelamas came to offer New Yorkers at a range of incomes a chance to find stability in neighborhoods they love, giving them an affordable place to pursue their ambitions, raise their families, and age in place successfully.

We are deeply committed to ensuring the affordability and physical condition of this stock for decades to come.

While the Michelama program has been incredibly successful at providing affordable housing to families across a broad range of incomes, it now sits at a crossroads.

The portfolio faces rising operating costs, significant capital improvement needs, and uneven rental or maintenance fee income streams.

We'll discuss each of these concerns in more detail and provide a path to stabilize the program for the years to come.

The Michelama portfolio has experienced massive increases in operating costs as seen across all types of affordable housing.

Insurance premiums have skyrocketed, utility costs are increasing, salaries for maintenance and building staff have increased significantly.

All these rising operating costs have made it more challenging than ever for Michelamas to maintain a balanced budget, let alone chart a sustainable path for major capital improvements.

Much of the Michelama housing stock was constructed between 50 to 70 years ago.

As a result, co-ops and rentals alike have major building systems nearing the end or surpassing their useful lives.

The age of the housing stock, deferred capital improvements, and compliance with decarbonization requirements has led to high estimated capital needs amounting to billions over the next decade.

In many cases, Michelamas experience inconsistent rent or maintenance fee increases.

This is a result of the unique regulatory structure of the program.

Whereas rent-stabilized buildings follow a framework for rent increases as advised by the Rent Guidelines Board, Mitchellamas follow a completely different process, determining their rent or maintenance fee increases based on the need to keep a balanced budget.

Per state law, HPD is legally required to approve rent and maintenance fee increases up to the amount necessary to cover a building's costs.

Failing to approve an increase could risk violating state law.

It is not HPD's statutory role to determine whether to increase rents.

The responsibility and decision making around the process is in the hands of the private housing companies.

When buildings finally do raise their rents or maintenance fees, it can sometimes be making up for many years all at once.

HPD understands that this practice can be painful for tenants and shareholders, and HPD assists developments with reviewing their income and expenses to maintain a balanced budget.

In 2025, 37 Michelama developments saw rent or maintenance fee increases.

These saw an average 29% increase over multiple years, comparable to the 30% comparable to the 30% at Tracy Towers.

In this context, it becomes clear that Tracy Towers is not entirely exceptional.

The financial challenges facing it are similar to those facing the portfolio as a whole.

We are committed to reducing the number of households impacted by helping them take advantage of SCREE and DRI and advocating for additional rental subsidies from the federal government.

We are also committed to reducing operating costs to minimize minimize the necessary increases across the portfolio.

In addition to the sometimes erratic frequency of rent or maintenance fee increases, statutorily, Michelamas cannot increase rents or maintenance fees for only those who can afford it.

Under the original bill text, higher income households cannot be charged a higher increase than their lower income neighbors.

This is a common practice used to equitably support the finances of mixed income buildings, but this is not an option available to Michelamas.

While there is a modest surcharge for over income households, it is capped by statute, meaning that we cannot use higher revenues from those who can afford it to cross-subsidize those who might not.

These challenges are not insurmountable.

Early on, this administration recognized the challenges facing the Michelama portfolio, and we took proactive steps to address them.

In the block by block housing plan, the administration laid out a plan to dedicate hundreds of millions of dollars across fiscal years 27 and 28 to specifically target capital improvements in city supervised Michelamas.

We are also committed to taking a holistic portfolio-wide approach to addressing the capital needs and broader challenges facing the city's Michelama portfolio.

Recognizing the importance of this housing stock and the challenges it faces, we committed to developing a comprehensive set of tools to put the Michelama portfolio on a more sustainable path.

To lessen the impact of rent and maintenance fee increases while ensuring a balanced budget, HPD commits to enrolling eligible households in SCREE and DRE.

Recently, the statewide income cap for households eligible for SCREE increased from $50,000 to $75,000.

With legislative action from the city council, we can begin enacting this change on the local level.

On the expense side, HPD's housing supervision team will continue to work with the private housing companies to contain operating costs.

We are also exploring new revenue models to enable capital improvements and reduce where possible future increases.

Some Michelamas are exploring the sale of their parking lots and other undeveloped land where new housing would be built.

This could provide millions of dollars to fund a trust that would offset increasing expenses, helping to minimize future rent or maintenance fee increases.

It could also pay for climate upgrades and major capital needs such as roof repairs, elevator replacements, and more.

In the process, it will also create more housing to help address our citywide housing shortage.

We believe that with responsible financial stewardship and new investment, the Michelama portfolio can serve New York or New Yorkers for decades to come, allowing more families to stay in their neighborhoods while paying affordable rents or maintenance fees, or to experience the stability of homeownership for the first time.

Thank you for sharing our concerns for the physical and financial future of these developments.

After 70 years, their needs are great, but so is their potential.

We will continue to work collaboratively with you all to protect these developments, maintaining their affordability and their physical upkeep for the next generation.

We're happy to answer any questions.

Okay, perfect.

Thank you.

Also want to recognize we've been joined by Jay Sanchez as well as Councilmember Brooks Powers on Zoom.

And I am actually gonna first turn it over to uh Chair Sanchez for her questions.

Thank you, Chair Lee, and good afternoon again.

Thank you.

Thank you so much for that context and testimony.

I my first question, I just want to start with uh something that you say in your testimony.

HPD is legally required to approve rent and maintenance fee increases up to the amount necessary to cover the building's uh costs, and failing to approve an increase would risk violating the the state law.

Um, I I highlight this this point in your testimony because it doesn't answer a question, a fundamental question that we here at the council have, which is what is HPD's asset management model?

Are you uh fundamentally being proactive or reactive?

Are you waiting for the buildings to come to you with an application for an increase, or are you monitoring as an agency the building's health and the financial health of the building so that you can smooth out over time the increases that are needed at the building?

So, our housing supervision team works with the housing companies to regularly review income and expense statements from each housing company and their annual financial audits.

So by reviewing the existing financials, we can work with the co-op boards or the private owners to come up with a plan to address any increases that could be coming up.

So then why is it that if you are regularly as an agency reviewing financials at a building, uh increases can be presented in a way that is making up for many years at a at a time?

So in some cases, we are planning for long-term capital improvements, and more often not, more often than not, Michelamas won't come to us for the increase until the pre-development process is completed to do the capital work.

So it becomes kind of one fell swoop of addressing any increases to meet operating needs and then support uh major capital improvements.

Okay.

Thank you.

I I still think that something is being missed here.

If you are having regular conversations, there should be gradual increases over time.

I think that's a direction the agency should try to move in to smooth things out for tenants and shareholders in these properties.

So stepping, stepping back at a programmatic level, how does HPD understand its asset management responsibility after the initial development and preservation of a deal of the financing of a deal closes?

Is the agency's model designed to prevent financial and physical distress or primarily to intervene once a project has become high risk?

So after a project closes on financing with HPD, during construction, we monitor construction along with the private lender, which is typically HDC.

So during construction, we're working monthly to ensure that requisitions are processed appropriately and that capital needs are being addressed.

And then after the construction period ends, our housing supervision team continues to work with the board or the owner of the housing company to monitor income expenses and then future capital needs.

Thank you.

What explains the five year increase in the mayor's management reports, high risk rental and cooperative indicators that are showing that we're moving in the wrong direction in terms of the physical stock in these properties.

Sorry, can you repeat the question?

Actually, so in the mayor's management report, there's a there's been a five-year increase uh with respect to HPD's management of high risk rentals and co-ops.

Uh what explains that?

Are these Michelamas specifically or rent stabilized?

No, it is broader than Michelamas, but includes Michelamas.

So for any distressed portfolio or any distress building, we will work with the owner to ensure that they can put together a loan application and enter our pipeline for preservation outcome.

Great.

Thank you.

I want to acknowledge that we were joined.

We are joined by Speaker Julie Menon, and I want to give her the floor.

Thank you so much.

Uh, and really I want to thank Chair Lee and Chair Sanchez for convening this very important hearing.

Uh so I've got an opening statement, and then I'm gonna go right into questions and apologize for my tardiness, but we actually have a hearing across the street that I will just say is quite crowded and a very hot topic.

Um first of all, for generations, New York City's uh Mitchellama program has provided, as we all know, affordable and stable homes for working class families, for older adults, and for middle income New Yorkers.

These residents keep our city literally running.

They are our teachers, postal workers, our caretakers, police officers, allowing them not only to stay here, but to thrive here is absolutely essential to their future and to our city's future as well.

So today's hearing comes at a pivotal moment.

On June 25th, 2026, I and other elected officials penned a letter to the mayoral administration seeking answers on how the administration plans to address a proposed cumulative 30% rent increase at Tracy Towers.

This rent increase has brought renewed attention to the financial challenges facing Michelama developments across the city, rentals and co-ops alike.

The president of the tenant association of Tracy Towers warned that if approved, some residents would be forced out of their units.

Tenants' jobs, families, and homes are at stake.

The tenants' lives literally dispens uh depend on this response.

While Tracy Towers is, of course, the immediate catalyst for this conversation and for this hearing, the issues before us extend beyond one single development.

They raise fundamental questions about whether New York City is doing everything within its power to preserve affordability while ensuring the long-term financial health of its Michelama portfolio.

No one disputes that these developments are facing real financial pressures.

Rising insurance premiums, labor costs, utility expenses, security costs, debt service, and decades of deferred maintenance have placed significant strain on so many buildings.

At the same time, residents are asking difficult but very reasonable questions.

If tenants are being asked to absorb rent increase approaching or exceeding 30%, why do longstanding maintenance issues persist?

Why are buildings still grappling with aging elevators, deteriorating infrastructure, and other conditions that have gone unaddressed?

And are rent increases becoming the default solution before every available financial and preservation tool has first been exhausted.

Those questions have become even more pressing following the recent state controller audit, which identified chronic physical deterioration at many Michelama developments, as well as weaknesses in financial oversight and accountability.

The findings truly underscore that preserving these buildings requires more than just balancing operating budgets.

It requires strong stewardship, transparent management, and strategic public investment as well.

This hearing is not about questioning whether Michelama developments need financial support.

They do.

It's about examining how that support is delivered and whether the city is making full use of the tools at its disposal before asking these tenants to bear the cost.

We should be asking whether preservation financing, capital investments, operating subsidies, insurance reforms, refinancing opportunities, and stronger oversight of management practices can reduce the need for significant rent increases.

We should also examine whether HPD's oversight framework provides sufficient transparency and accountability, whether residents have meaningful opportunities to participate in decisions that are affecting their homes and their livelihoods, and whether existing affordability protections, including proactive scree enrollment required under local law 44 of 2024, are being fully implemented.

Ultimately, this hearing is about balancing two responsibilities that are not in conflict.

Preserving the financial viability of Michel Lama developments while preserving the affordability that defines the very program itself.

These goals must go hand in hand.

I look forward to today's hearing and working collaboratively to identify policies which ensure that balance is being maintained.

So I'm just gonna go jump right into my questions.

Um we sent a letter on June 25th.

Uh, and so I'd like to just get an update on some of the questions that we asked in that letter.

First and foremost to provide a comprehensive list of city-run Michel Lama developments and the rent increases they have incurred over the past 10 years and the proposed upcoming rent increases.

Do we have that on us for that?

So I think it it would be easiest for us to supply that information after the hearing.

It's a very long list with a long schedule of increases.

Um, no, that's the purpose of this hearing.

The purpose of the hearing is to go on the record and to talk about which buildings are getting a rent increase.

I mean, look, we know about Tracy Towers, but we're hearing from Michelama residents throughout the city who are saying they're getting a rent increase.

So that's the whole purpose of this hearing.

So we want that being discussed now.

Great.

If you can just give us a second to go through, sure, absolutely.

So we'll work on as the hearing's going on, if if you don't mind, we can work on putting the list together and then report back later in the hearing.

I mean, I do just want to say we never received a response to our letter, and this hearing is upcoming.

I we are not asking some surprise question.

This is literally something we asked on June 25th, and that you all should be prepared to be providing to us.

Understood.

Okay, that I'm gonna ask the second question then.

Um, has a comprehensive review of the financial condition of all city supervised Michelama developments, including which developments are currently experiencing financial distress uh financial stress or are projected to require the most significant rent increases within the next five years been conducted.

These are all from the letters.

So again, these are not new questions, either ones that would literally we've asked you all weeks ago, and we've received no response.

So we regularly work with the Michelama housing companies to review income and expenses, right?

So we regularly get income and expenses and audited financials and work with the companies to ensure that we don't that we can minimize uh rent or maintenance fee increases.

So has there been a comprehensive review of the financial condition of all of the city supervised Michelama developments?

We're we're regularly reviewing the financials of all Michelama city supervised Michelamas.

And okay, can you share the results with these two committees?

For every single Michelama and the case.

Yeah, I mean, and that's really what the that's the point of the hearing is to look at the financial oversight.

I mean, I I don't have that in front of me right now, unfortunately.

Okay, that is a basic information.

I mean, we asked about this in the I mean, I'm just surprised we sent this letter that the that the administration is not prepared to answer the questions that we asked about three weeks ago.

Yeah, unfortunately, I don't have that at my own.

Okay, so we would like to get that and yeah, we want that in the next in the coming days.

So that's a confirmation that these two committees will get that information.

We will work our best to supply you with that information.

Okay.

The fourth question we asked in the letter was to describe the oversight and accountability mechanisms that HPD utilizes to ensure management companies fulfill their fiduciary responsibilities.

So we work with the private housing companies, the private housing companies, it's their responsibility to hire a property manager, and then we oversee the private owners and the co-op boards to ensure that the property managers managers are fulfilling their requirements per the property management agreement.

What are the additional resources and strategies that HPD plans to deploy to prevent rent increases similar to those that are occurring at Tracy Towers?

So we have screen already at our disposal.

Um and we would request collaboration with the city council to on the local level increase the um income cap from $50,000 to $75,000.

So on the state level, that was legislated, but we still have to do something locally to ensure that the cap goes from 50,000 to 75,000.

Um we also would appreciate collaboration with the council to advocate for additional federal sources.

The biggest operating subsidy outside of screenjury that we could all advocate for is additional section eight.

That is a federal source that has been um neglected to put lightly for quite some time.

Um we're working as best as we can to advocate for additional section eight sources resources to help mitigate any maintenance or rent increase.

And how many city supervised developments have closed under the multifamily housing rehabilitation loan program or the Mitchellama reinvestment program?

Yes, just one second, we have that we have a black one.

We have a black one number.

So currently we have 12 um projects in our pipeline.

Um we're looking through, we're looking for the number.

I believe we have it with us for it for total projects that have ever closed on an HRP loan.

And and what developments have applied for this?

And has Tracy Towers applied for it?

Sorry, can you repeat that?

Well, which developments you mentioned 12.

Yeah.

Which which developments, and then is Tracy Towers one of them.

So Tracy Towers close is a two-phase closing.

So we closed on financing at the end of June 2026, and then we expect by the end of calendar year 2027 to close on the second phase of financing.

And sorry, just to jump back, we do we do have um the list of projects with these are the with the rent increases pending.

Okay.

Let's see.

Um it's a large list.

Um let me read it and then we can sure.

Um, and there are different stages of the So these are all the Mitchellama, just to be clear, I want to make these are all the Michelama developments across the city that are going to face rent rent increases, correct?

Yes.

Okay.

So um, well they're in different stages of the um increase.

And can you specify the amount of the increase at the same time?

So we I can specify the amount that they have requested, but we haven't done any of the reviews yet for for the list that I'm about to to um name.

Um and I think I'm not sure what the order is, so I'm just gonna go through what they sent me.

Uh Washington Square Southeast is a co-op, and they're looking at um uh three-stage increase of 15, 10, and five.

Um the next one is Sam Burt, which is also a co-op.

And um, and with both of those, those are just the applications were received.

And those that increase um is fifth that they requested is 15, 7, and 7.

And this again, this is the co-op board requesting this.

Um the next is Trinity House, which is a rental where the public hearing is scheduled.

Um, and that they're looking at uh three stages of seven, seven, and seven.

Um the next is first Atlantic Terminal, which is a co-op, and they are looking at uh two and a half and two and a half percent.

Um next is Jefferson Towers.

Um next is Jefferson Towers, and they are looking at uh 10 and a six, and the hearing is scheduled for there.

Um Tracy Towers, we all is um we recently held the hearing.

Um Mazrick Towers is um looking to increase um their um to 15 and five.

And um Luna, I'm sorry, um Rupert House, um the uh hearing was completed, and um they're looking at a 15, 10, and five.

Um Lincoln Amsterdam, the hearing was completed, and they're um looking at a 30 and a 10, but I just want to actually note on that one, they haven't had an increase in 25 years.

Um, and Jefferson also has not had an increase in many years.

They both have commercial space that supports the developments.

Um that's what we have.

Okay, and how is how is HPD going to help these tenants who are all gonna be facing very significant rent increases?

Yeah, so we do targeted outreach to enroll households um that are eligible unto Scree.

Um, and then I'll let my colleague Alika just talk a little bit about what our processes to do outreach to the households that are eligible for SCREE.

Good afternoon, everyone.

I just wanted to just give you some highlighted so it's like high-level numbers related to the question around the past 10 years and the proposed rent increases because we'll be able to we can give you these numbers and then follow up with what these numbers actually mean.

But I just wanted to get this on the record.

We've had 37 Michelama developments that saw rent and carrying charge increases in 2025.

So 37 Michelama developments saw increases in 2025.

These saw an average of 26% increase over multiple years.

And that was comparable to what Adam First Epic Commissioner was saying with the 28% at Tracy Towers.

But 15 were initiated in 2025, and the rest were initiated between 2022 and 2024.

25 of those involved, a 20% or greater increase over several years, and seven of those involved a 20% or greater increase in just 2025.

Five Michelama developments have filed for and received rate increases so far this year in 2026.

And the reason why I mentioned these numbers is because we we have like the the pattern and the trend, and we can provide you on an individual basis working directly with the members on the developments within their districts that have asked for the increases and what's going on because that's the work that our portfolio analysts actually do with the managing agents and with the shareholders.

They go through these numbers on a regular basis, and we can provide you with that information because our portfolio analysts are the asset managers in our housing supervision department, and so they have this information.

This is nothing that is all of a sudden happening.

It's um we've seen we you already stated it, we've seen increases recently that are drastic.

But our portfolio analysts are in these buildings every single day, and so we have the information for you, and we can sit with each member.

So does HPD require an owner to demonstrate that they have exhausted all HPD HDC refinancing options before HPD approves a rent or carrying charge increase to fund repairs?

And if not, why is that not a precondition?

No, we we absolutely do that.

When we when a rent increase comes in, we take a broader view of what is happening at the at the development.

We're analyzing the expenses, we're analyzing the income, we're taking a look at the existing debt and how we can refinance or restructure some of that existing debt.

So with the when the increase comes in, we're not just looking at only the expenses, we're looking holistically at the entire project to figure out what is going to be the best stabilization outcome for the development.

So for Tracy Towers specifically, what financial tools did HPD explore before determining this proposed approximately 30% rent increase?

So we uh there's existing debt on the project, and there's new HPD capital that went into the project, and we'll go in and two tranches.

And the increase that the residents are experiencing is not going to pay for any of the debt service that's related to the city capital that HPD is putting into the project.

So by ensuring that our debt isn't being paid at all by the by the residents, limits the amount of the increase.

Additionally, um the shelter rent tax was recently lowered from 10% to 5%, which I think we all know, which was really helpful to ensure that the increase wasn't as large as it would have been maybe a couple years ago without without the lower property tax amounts.

Okay, one last question before I pass it over to my colleagues.

So in the um fiscal 2027 executive budget, 100 million dollars was added to support a city backed insurance program.

Um will Mitchellamas be eligible for the city backed insurance program?

Yeah, absolutely.

Um and more broadly, we're hoping that the insurance plan will not only benefit the units or the owners that go into the program.

We're hoping that it'll move the needle on the entire market and lower premiums for everybody.

That is the intent is to lower insurance premiums for any project, not just the ones that enroll into the program.

Yeah, and I mean I would note we are about to pass in the city council our insurance accountability bill, which sets up a new first in the nation insurance accountability office to lower premiums.

So we look forward to working um with the administration on that.

Okay, let me pass it back over to I I do have a list of the Michelamas that closed on the HRP loans, the housing.

So if if you don't mind, I can't.

Yeah, if you could read that in.

Um River Bend, Ryerson Towers, Village East, Atlantic, second Atlantic Terminal, sorry, Crown Gardens, Kingsbury.

Kings Bay One.

What is this saying?

Kings Bay Two, Chatterton.

Bright House.

Brighton House, Dennis Lane, High Lawn Terrace, Arvern Preservation.

Oh, there's sorry, the trick the chicken scratch was a little hard to read.

The uh Bronxworth Tower, Bronxwood Tower, Maysark Tower, Mazarick Towers, uh, and Village East.

Sorry, one more Cedar Manual Mutual Housing Corp.

Okay, I'm gonna pass it over to Chair Sanchez.

Thank you.

Just um could you clarify the list you were reading out exactly?

What applies to those?

Oh, so these are all projects that have closed on HPD's multifamily housing uh rehabilitation loan program.

Sorry, I just want to quickly since 2021.

Okay.

Um we've been joined by council members Avilas, Banks, Morano, Feliz, Ferrias, uh, majority leader of Brayu.

Sorry, go ahead, Chair's.

Oh, and oh, Councilmember Wilson.

Oh, there we go.

Okay, thank you.

Wow, we have quorum.

We could we can do stated now, speaker.

Okay.

Um, so I'm just gonna ask uh a couple of questions, and then because we have so many colleagues here, just want to want to move things along and the chair chair will uh ask for questions and we'll go to colleagues.

Um so just getting a sense of the physical conditions of Michelama properties across the city, can you give us a sense of how often Michelamas are conducting a physical needs assessment per per property?

Yeah, so any project that's coming to HPD or HDC to get financing is required to complete what's called um an integrated physical needs assessment.

So the IPNA is used to assess the outstanding capital needs, short-term, medium-term, long-term, and it's also an energy audit and provides recommendations to do energy efficiency upgrades.

So every project that comes through our pipeline is required to come with an IPNA.

Um we are constantly seeing Mitchell Lamas come to us for an IPA or come to us with an IPNA to apply for city capital.

So of the 134 um properties in the city, how many of those have been have come to the agency in the last five years or whatever timeline you have the answer for?

How much we have 90 developments in our portfolio?

Okay, so we have we have 90, we have 90 developments in our portfolio.

We don't have the exact number that have gone through that have a current IPNA, but all of the projects that I listed previously that received a loan through HRP, they all had IPNAs.

And any project that's closed on financing with us recently would have completed an IPNA.

Thank you.

So Mitchellamas are not proactively conducting IPNAs, they are conducting them when they are about coming to HPD for financing.

I would say some are and some are not.

It it depends on the individual housing company.

It depends on the individual co-op.

Some are more proactive with diagnosing capital needs while others wait until the last minute.

And this is not unique to Michelamas.

We see this with the uh privately owned rent stabilized stock as well.

And high school students that leave their homework for the last minute.

Yeah, exactly.

Exactly.

Um, how does HPE I just add?

I'm not sure if um if we were talking about this number, but among the HPD supervised Mitchellamas, we've had 48 that have had IPNAs performed since 2020, and another six are currently in the process of obtaining NISERTA funded IPNA, which HPD helped to facilitate.

The rest of them are six are currently in the process.

And we helped them to facilitate that conversation with NICERTA.

So for the 48 IPNAs uh completed since 2020, do you have a roll-up number of the the cost of the capital need in these uh 48 developments?

We can get that to you.

Okay.

Thank you.

And then last question before going back to Chair Lee.

Um, how how does HPD monitor whether rent and carrying charge increases or the the work that you finance is translating into improvements in building conditions?

So the the capital work is overseen by the private lender and by HPD.

So monthly, when construction's happening, they have to requisition for construction loan funds, and the architect, the contractor, and a representative from the bank have to sign off that work was adequately done, and then the funds are released to to pay for that work.

So every month during construction, we have folks going out to ensure that the work is being done per the scope of work and and drawings.

I'm sorry, I uh I fibb one related last question is do you have a breakdown of HPD violations uh within the Michelama portfolio?

Not offhand, but we can we can provide that.

Yeah, that would be helpful.

Thank you.

Uh Chairley.

Okay, we've also been joined by council members Brewer and Epstein.

And uh really quickly, just wanted to go into Scree and Dree.

Um so I know that Department of Finance manages the main rent freeze programs, and as part of their work, um they use their data to estimate how many households are eligible for Screen and their most recent report from 2025 estimates that there's about 8,000 households in Michelama developments that are eligible.

So out of those 8,000, how many of the um housing units are currently enrolled in Scree rent freeze programs?

So Scree is administered in Michelamas by HPD by our housing supervision team.

And I think the data point of 8,000 or so households is is probably just looking at purely income, and it's not looking at whether or not they have an existing rental subsidy.

So if you have a housing choice voucher, which we call section eight, you're not eligible for SCREE, and vice versa.

You could only be you can only have one uh rental subsidy program.

Um we have in our Michelama portfolio on section eight, we have 5,500 vouchers, and we have about 6,000 households who are on SCREE.

Okay.

Um and what is the outreach like for it?

Is there any additional targeted outreach to residents um you know that are subject to significant rent increases?

And if so, what's uh such outreach conducted for residents of Tracy Towers as well?

Yeah, I I think I was alluding earlier that my colleague Lika.

Yes.

Now's your time.

So our within our housing supervision department, we have portfolio anal analysts who work with the managing agents and their shareholders related to like the finances, but we also have a team of constituent service coordinators, and those are the individuals who go into the building and work directly with the tenants.

They're doing outreach and engagement.

Thank you to some of the council members who work with our constituent services team to do workshops.

Some of the council members have done workshops in their offices to assist, and so that team do the direct engagement, and it's almost like case management services where um individuals who are not able to complete the applications or have the information, they hold their hands and go through every single detail and then also look for as benefit specialists.

What else are the tenants um eligible for, even down to looking working with HRA to see if there are any any rental arrears?

And so it's a whole process conducted by our constituent services coordinators.

Okay, and of course, the sorry, excuse me, the the pre-filled SCREE applications, Councilmember Dinowitz.

That's really really helpful.

Um we want to reduce the burden on the tenant to ensure that they can stay stably housed, and that was a big help.

Perfect, thank you.

And then um tenants associations, also nonprofits.

Do you partner with any of those?

Because when I was on the nonprofit side for many years, I know that we helped a lot of our um residents and constituents and you know, do the casework like you're saying.

So are there partnerships like that?

And also how many different languages are you assisting them in?

We are always looking for partners.

This is a collaborative effort.

And um, and so yes, we do.

And as far as languages, we actually have a language, um, a language line that assists us with outside.

The city language line.

Okay.

Because sometimes that's questionable, I'm not gonna lie.

But yes, okay.

I mean, I will admit it is better to have some sort of assistance than none, but um I would really encourage, especially there's a lot of culturally competent um language uh proficient nonprofits out there as well.

So I know that they are doing this work on the ground, and so it would be great to see the partnerships there.

Um and what's the main uh eligible uh what's the primary reason um that eligible house loads households, sorry, oh English, do not enroll from your from what you're sort of hearing back when you do the outreach there are just it it just it runs the gamut.

It could be anything from um they may not enroll because of their income of the people in the household, um, and what we've seen also is just um continuous engagement, reaching out to people, um, ensuring them that they should complete the forms.

Um it's just so many different issues.

Yeah, which is why the pre-field forms are hopefully gonna help.

Um, and then also just considering uh, because I know that sometimes agencies work in silos and not with all best intentions, I know they try to coordinate and work together, but how has that been with um partnering with Department of Finance?

Because I know that there probably needs to be a lot of coordination there.

So, how has that looked?

So we we fully um enroll and run the scree program for Mitchell Lamas, so the the overlap with us in DOF is very minimal and not really necessary.

Okay.

Um, but the Dree um applications are um completed by Department of Finance, but when we go out to do a workshop, we'll bring three applications along with us so that we can we do coordinate with them.

Okay, perfect.

Um, and then in terms of the tax exemption and tax liability, um in 2025, the state imposed a cap um, as we heard before.

Um, and the cap for each development is either 5% if it's shelter rent or carrying charges.

Presumably some developments will not reach the cap because the value of their tax exemption entitles them to a lower tax liability.

So, how many Michelama developments in the city will reach the CAP this year, and how many will have a local tax liability less than the cap?

Yeah.

So every Michelama development has already moved from the 10% shelter rent tax down to the 5% shelter rent tax.

We're also excited for J51 to be reauthorized because that is another tool in our toolbox if there's capital work happening to be able to lower their property tax liability.

So if we can layer in, you know, the lower 5% shelter rent tax with J51 as we're doing capital work, that's another tool that we could use to minimize the increases.

Okay.

Um and how many Mitchellama developments are delinquent by more than a quarter on their shelter rent tax water bills, what's the total arrears?

Um I I think we just checked this.

Uh it's about 47 and a half million in arrears for property tax and charges that DOF administers.

I don't have the number for water because we don't we don't bill those.

Okay.

Um has HPD engaged with DEP on solutions for resolving because I know that that those costs have also increased.

Um so have there's has there been any engagement in terms of how to bring relief for that as well?

We're looking at options internally to figure out a way to lower water costs for for Michelamas.

Okay.

Um considering the delinquencies are a red flag for the financial distress, um, how does HPD monitor these delinquencies and what um do you do when they see when you see the the properties delinquent?

Delinquent in uh for municipal like property taxes?

Yeah.

So when we when we review the income and expense statements and the audits, we'll immediately see if there's property tax arrears or any other kind of municipal arrears, and that's we'll continue to engage with the housing company to ensure that they're going to put together a balanced budget and then start talking about what the increase would look like to satisfy the arrears.

And we also use that as a jumping off point to figure out what kind of capital work can we uh address at the same time.

Okay.

Sorry, and just to follow up to the previous uh question.

So are you saying that uh no building will be charged less than five percent of the shelter rent or carrying charge every yeah?

Can you can you phrase that again?

I'm sorry.

Um so are you saying that no building will be charged less than 5% of their shelter rent or were did you mean the carrying charge?

The shel shelter rent.

So everybody, every Michelama is now paying a 5% shelter rent tax.

Okay.

And have you compared the value of each development exemption against the cap to determine which is lower?

I don't have that information on us, but I I think the the larger benefit is the 5% of the shelter rent tax.

Okay, perfect.

Um also just a side question, because this is um a bill that we are looking at as well.

But for um Mitchellamas, are you exempt or are there any exemptions for local law 97 in terms of the future penalties that are coming up?

Because I know those charges are gonna be quite a bit.

Yeah, so they're they're exempt through 2035 or until 2035.

And then after 2035, because I know that it's increments of the increases, how much um is it gonna be increased too?

Is it at a lower percentage than some of the other co-ops and residents?

I'm not I don't have that off the top of my head, but we can we can supply that.

Okay, only because I know with insurance costs and everything else going up, that could be a potential cost in the near future that would be big.

But hopefully the J51s and everything else will help as well.

Okay, um, and then just last couple of questions on the capital funding.

Um, do you provide expense funding to Michelamas either for non-capital, non-capitally eligible repairs or for general operating support?

No, we we don't provide um tax levy or expense funds for Michelamas.

We only provide like any other um affordable housing project, we can only provide city capital to pay for capitally eligible rehab items.

Okay.

Um again, the the the biggest benefit or one of the largest benefits that we could get is additional section eight to mitigate the the rent increases, which I think we all know is an uphill battle.

Yes, definitely.

Okay, um and during the FY27 preliminary budget hearing, um you had uh uh HPD had testified that the agency has um, as the speaker mentioned, spent 1.1 billion for Mitchellamas over the past 10 years.

And has the amount of capital spending changed since the preliminary budget, and how much capital funding has been utilized for Michelama preservation in FY25 and 26?

So the total preservation budget for fiscal year 27 is 1.2.32 billion dollars.

And of that, Mitchell Lama developments will will benefit and will receive some of that.

Okay, do you know how much?

Um we have yeah, so we're expected to preserve in fiscal years 27 to 28 about 2800 units plus or minus.

It'll it'll depend on you know the overall capital needs and the and the overall construction costs as we get closer to closing.

Okay.

Um have the capital commitment rates changed significantly over the past 10 years?

Like the amount that we're lending to Michelamas?

Yeah, I mean, I think the it's gone up over the past 10 years.

We've been committing more city capital than we previously had.

Um and in the housing plan, you know, there's there's a lot, there was specifically hundreds of millions set aside and called out just for Michelamas, which I'm pretty sure is has not been has not happened in the past.

Okay.

Um and also moving to the exact plan for FY27.

Uh we saw a total capital commitment of 4.9 billion um for preservation for the five-year capital plan as well as a $500 million total increase in FY31.

Um, so how much of the five-year capital commitment plan is budgeted for Mitchell Lama preservation?

So we don't break out specifically for Michelamas versus other rent stabilized stock that's coming through our preservation pipelines.

Um, but we have more capital than we have in the past, and we know that the needs are pretty significant in Mitchell Lamas, and as they work through our pipeline and they're prepared for construction loan closing, we'll deploy capital as as needed.

Okay.

Um, and then just in terms of how you're determining how many units, since you don't separate it out, um is it are you seeing year over year though, that percentage-wise it's pretty similar year over year, or have you seen significant increases, decreases, and what has caused that?

Right.

Yeah.

I think we've seen increases in the amount of michellamas that are coming to us.

Um I think there's probably two reasons.

I think one is just the age of the housing stock.

Some folks, and it's not unique to Michelamas, can put their heads in the sand and hope that the that they don't have to do their capital needs and then they wake up and and it's time.

Um I think in other cases, when our housing supervision team is working with the Mitchell Lamas, um, you know, we want to make sure we're addressing capital needs, and I think we've been a little bit more forceful with saying it's time to we we really need to do a preservation outcome here.

Okay, perfect.

Um, I just want to recognize we've also been joined by council member Wong and anyone else that I missed.

Okay.

Um we're gonna move into questions and uh of our council members and colleagues.

And so I want to start with Chair Jinowitz, followed by uh council member Hudson.

It's just oh right, you're de facto chair.

Okay.

Thank you, actual Chair Lee.

Um, and I want to thank Chair Sanchez and Speaker Menon for um for their support in this, not just for the residents of Tracy Towers, who some of whom are here, but for residents of Michelama throughout the city, and thank you for signing uh the letter.

This is really critical.

And and and I want to thank you, HPD for coming to Tracy Towers.

And I think you know Michelamas were designed for working class and middle class families, and you saw and you know the promise of Michelama, and you saw firsthand what happens when we disinvest from our Michelama housing stock that the residents of Tracy and residents throughout the city are not only being hit with a 31% rent increase, but living with rats, living with mold, le living with leaky roofs, leaving with unrepaired elevators, even though the money was put in for all that.

Um I think the amount of time we're spending on SCREE is uh a little ridiculous.

It is a band-aid to the structural problems.

Nevertheless, it is a solution to some of them.

Um I do want to ask quickly are you in compliance with local law 44 of 24, my bill to provide pre-filled scree applications uh to residents of Mitch City run Michelama housing?

Yes, we're fully in compliance.

I have had numerous people come to my office eligible for SCREE, and we have had to assist them in filling out these scree applications.

It is my belief that you are not fully in compliance given that we've had to fill out so many applications.

Can you uh tell me how many applications, pre-filled applications have you sent out to residents of Michelamas?

We have increases in place.

So Julie just mentioned a good point.

The the increase hasn't gone into effect yet.

So the applications aren't pre-filled until the until the increase actually happens.

So no no increases have happened at Tracy Towers yet.

They're planned.

There were still, well, there were still people at Tracy, and I think last year testified uh the previous commissioner testified he was fully in compliance.

Nevertheless, still this year we are filling out scree applications.

So it should have been the case even last year that they would have filled out those applications because you would have received their income affidavit uh at that point.

Uh I want to move on from that because um we have you could see tons of people here, all of whom uh their Michelamas facing upwards of 20%, 30% rent rent increases.

Uh uh Deputy Commissioner Phillips, you testified HPD is legally required to approve rent um and maintenance increases, increase fee increases up to the amount necessary.

I want to understand this a bit.

Had there has there ever been a time that you have rejected a proposed rent increase from someone seeking a rent increase?

I don't have that knowledge off the top of my head, but um to ensure that the building is operating appropriately, we want to make sure that the income can cover the expenses.

I understand what the what the what the purpose of the rent increase is, which again 31% is outlandish.

And I do have to say, for the residents of Michelamas, for the residents of Tracy, Cannon, Kingsbridge Arms, uh, all in my uh some in my district or near my district, um, you know, 31%, 40%, 50%, I think anywhere is a big increase.

But it is not only big, it is in the face of an administration who's made affordability a centerpiece of their campaign, and who campaigned on zero percent rent increases.

So it isn't just about saying the rent increases too much, it is about what it feels unfair to see that disparity.

But my question still is has HPD ever rejected or modified a proposed rent increase, or has it served as a rubber stamp for the the the company seeking the rent increase?

No, we've we've modified in the past, and the way we'd be able to modify an increase is if we can find a way to lower expenses, right?

So when the rent increase comes in, it has to cover operating expenses.

We know operating expenses are wildly out of control every year.

I want to talk about one of those operating expenses.

Sure, right?

Because I for Tracy Towers, uh, in their financials for fiscal year 25, security costs total about 1.8 million dollars in the fiscal year end in 25.

In FY27, they jumped to 2.8 million dollars.

That's nearly a 50% increase in that two-year period.

That's 267 dollars a month per unit in security costs.

Now, as you you say you go over these financials, does that seem like a reasonable amount for security costs to increase?

I mean, that's quite a large increase.

So I'm not gonna say it's not.

Um we are bringing in the property management firm to meet with HPD to go into even more detail than we already have in the past to get the remote.

But I'm sorry, but you're doing this after the rent increase was already proposed.

So help me understand what work HPD does before they even propose an outlandish 31% rent increase on these hardworking tenants.

And we have one example here of a 50% increase in secure security costs alone.

Help me understand what work you're doing beforehand.

So the rent increase has not gotten to effect yet.

It is not gone into effect.

We do I think.

It's been proposed.

Absolutely.

It's been proposed and it's a requirement so we can close on the capital financing to start addressing some of the urgent physical conditions.

Now that we've closed on financing, the increase has not gone into effect yet.

We still have a chance to work with the property management firm to take an even deeper look at the operating costs.

We're not stopping just because the increase has been approved.

I will note that your hearing was at four o'clock.

And to the many tenants at Tracy Towers who have jobs made it impossible for them to attend in the community room or to testify online.

Uh and I would urge you in the future, knowing that middle class, so many middle class and working class New Yorkers live in these Michelama developments to have these hearings at a time that actually meets the needs of the residents who who live there.

Uh I want to talk uh about the fiscal.

So it's unclear.

So you do you approve you have to submit.

I want to get this right.

You have to submit whatever uh the the management company says they need the increase to be publicly, and then you go over what it should be.

We do an additional review.

I mean it's a good thing.

So you review beforehand before they propose it, you then present it at a public hearing, and then you do an additional review.

But it uh I just want a clarity.

Did you before, before the public hearing, did you review the financials?

Of course.

We're constantly reviewing the financials of every Michelama development.

I don't want to harp on the security costs, but it doesn't look to me like you went over the financials beforehand.

I mean, that is a huge red flag, an increase of 50% for the security costs alone.

Yeah, and it is it is a large increase, but we are going over the expenses, and we're going to continue to go over the expenses to see where we can cut.

Okay.

And I want to talk about capital needs.

I mean, I I brief history of Tracy Towers.

Tell me if any of this is off base.

All right, this is according to financial documents uh for Tracy Towers.

Uh in 19 uh it was uh 1971.

It was built with a 40.7 million dollar loan, the low interest, no interest loan that was part of the Michelama program.

Uh and by 2012, Tracy owed the principal and an additional 106.2 million dollars in interest.

Does that sound accurate?

I mean, I'll have to look more deeply into the existing debt on Tracy Towers.

Um deferring and recruiting.

Okay, now it's 236.

There's supposed to be 236.

It was withdrawn before now.

Do you want to mention that?

Yeah.

So when the development was first being, you know, um developed, the uh there was supposed to be a federal subsidy that would bring down the interest rate.

And prior to um occupancy, that subsidy was withdrawn.

So, you know, again, that predates me.

I've been here forever, but it's that's still predates me.

I guess not forever.

But but the question is still, it was started with a 40.7 million dollar loan, and by 2012 there was 106 million 0.7 million.2 million, I'm sorry.

By 2012, there was 106.2 million dollars interest on that loan plus the principal.

Right, because it wasn't being subsidized.

Right.

Yeah.

So the the program that Julie was referring to um subsidised the interest rate or the interest rate payments, is that right?

Um and without that subsidy, that is the result.

Over the course, so it sounds like over the course of 50 years, HPD did nothing to try to lower those interest payments, didn't do anything to pay off the principal, and now residents today are paying the price.

I mean, I I wouldn't agree with that statement, Julie.

Do you think that's that's why I'm asking you to please clarify the history?

And this is gonna be my last because I'll come back for a second round if that's okay because I know there's a ton of other people.

If we had um addressed those arrears, the it would have been on the tenants to address those arrears.

But it was actually um done that way to protect the tenants so that they wouldn't have rent increases to pay the rent to pay the debt service.

Okay, I'm gonna follow up on this later, but we have a ton of other people.

Thank you so much, Chairs, for the opportunity.

Thank you.

Okay, we have Councilmember Hudson followed by Councilmember Riley.

Thank you so much, Chair.

Um, just a couple of quick questions.

What accountability measures are in place to ensure that loans and grants awarded for Mitchell Lama capital improvements are used effectively, completed on schedule and produce measurable improvements for residents?

So during cons well, prior to construction, we require, like I mentioned before, the IPA, which outlines the potential scope of work.

Then we have an architect work to develop the scope of work and a contractor that completes the scope of work.

During construction, HPD and the private lender monthly go to the building to ensure that work is completed, and then after that work is completed, payment is released to the contractor.

So every month there's uh the lender and HPD, if we have if we have city capital in the project, monitoring construction to ensure that the capital is spent correctly and in accordance with the scope of work.

And so that would um obviously be the case at Tivley Towers.

That should any any project that HPD lends on and any private lender.

Yeah, so HDC as the private lender would would do monthly walkthroughs for the construction period.

Okay, it would be great.

I'll I'll my office will follow up with you directly on that because um Tivley Towers has had ongoing construction for years and continues to find new issues and concerns.

And so um I'll follow up on that one.

Um for Mitchellama households that do not qualify for screen dry but still cannot afford rent increases.

What additional assistance or policy options is HPC, HPD, excuse me, considering to help prevent displacement?

So ideally we would be able to offer Section 8 vouchers to those households.

Unfortunately, we're in shortfall, so we don't have that ability at the moment.

Um it's I would say the best thing we can do is advocate for additional federal resources so we have more Section A to offer tenants.

Okay.

Uh thank you.

That's it.

Thank you.

Okay, Councilmember Riley, followed by Banks.

Thank you, Chair.

Um, good afternoon, everyone.

Thank you for being here today.

Uh, just want to share the same sentiments as Councilmember Dinowitz.

Um, I think Tracy Towers, a lot of residents are truly uh afraid right now, they don't know what's going to happen with these increases.

So I think that's what you hear the passion, and you see a lot of the residents that are here today.

Um the administration has committed hundreds of millions of dollars in FY27 and FY28 for capital improvements.

How much money is specifically dedicated uh to city supervised Mitchellamas and how are those developments selected and how much will that investment reduce projected residence increases?

So we don't break out our total preservation budget by the Mitchellama stock versus other other types of affordable housing stock that come through our pipeline.

Um whenever there's a there's a Mitchellama development in our development pipeline, we work as quickly as possible to close on financing.

Sometimes it can take some some quite some time because of the pre-development activities that are required to get ready for the loan closing.

Doing the IPA for a large development usually takes quite some time.

Then you have to hire design team to be able to uh put together the scope of work and drawings, then we have to get approvals from DOB.

Um, the project has to be competitively bid to a contractor, and then um, as you can imagine, we have a lot of due diligence that we put people through to get through a loan closing.

Um so all of that can stretch out the the development timeline for some folks, but we work in tandem and closely with the housing companies to get them through that development process as quickly as possible.

Can HPD commit to providing the council with a development by development capital needs assessment for all city supervised Mitchell Lamas?

We have, and I think my colleague Alika said before the total number of Mitchellamas where we have existing IPNAs.

Um so we can take a look.

Um yeah, if you want to we can provide you with the list that we have and work with your offices on the costs associated with the IP and A's.

That would be a great collaboration.

Um your testimony discusses selling parking lots of undeveloped land uh to generate revenue.

What protections will be placed to ensure residents are meaningfully involved before land connected to their development is sold or developed on.

Yeah, so we want to make sure that um it I think it would be a little bit different for the co-ops versus the rentals.

So for the co-ops, they would be completely driving that process, right?

The board of directors has a fiduciary responsibility to ensure that they're doing capital planning and reporting back to the shareholders.

So that would be more of a collaboration directly with the shareholders and more up to the shareholders to see what they want done with their land if they have the space to develop.

With um the private rentals, I think the situation would be a little bit different.

And we would make sure we would we do outreach to work with the housing companies and engage the tenants.

So any undeveloped land is benefiting the existing residents in the development.

I just want to actually add the fact that we're sitting here talking about the operating costs and some of the subsidies that we don't have access to right now, like the Section 8 vouchers.

And so we need to be creative on ways to be able to get more resources into these buildings.

And so if we're talking about the opportunity to develop on land, we need to really have those conversations in a thoughtful way.

And so I just wanted to lift that up because if we don't have tools, this could be one of them.

And we've seen this play out in other housing portfolios.

I think the council is ready to work with you guys on being innovative and coming up with those creative ways.

My last question is you stated that Tracy Towers is not exceptional to this, but respectfully, isn't that the problem?

Because if 30% increase are becoming a common across portfolios, that demonstrates the systematic failure that we have within our system.

So I think there are creative ways that we could think about improving this down the line, because I do think we no one here believes that 30% increase in anything is something that's substantial.

Yeah, and and we're we're happy to work together with folks to take a look at more creative ways to reduce operating expenses, right?

Like the reauthorization of J51 is a really good tool that we could use to layer into the 5% shelter rent tax to lower expenses.

So more collaboration on things like that would be would be great.

Thank you, Deputy Commissioner.

Thank you, Chair.

Thank you.

Banks, followed by Jay Sanchez.

Thank you, Chair.

Uh, first of all, um, I want to thank the speaker and the entire leadership uh and bringing this hearing together on capital investment and preservation of uh Michelamas.

Recent recently, uh there was an audit by the uh state comp controller, Tom Dinapoli, which identified persistent unresolved issues across Mitchellama developments, including mold, uh, pest infestation, infrastructure deficiencies, and other hazardous conditions that directly impact residents' quality of life.

Uh, given the uh significant capital needs facing many Michelama properties, what specific investments has the city made to preserve and rehabilitate this housing stock, particularly the uh particularly city uh supervised developments, and additionally, how has HPD uh measured the effectiveness of those investments?

And can the agency provide examples or where capital funding has resulted in measurable improvements uh for residents?

Yeah, so I mean we're we're happy to work with every development that's in our pipeline and is willing to come into our pipeline um to do a major capital improvement project.

Um when we do a major capital improvement project, the goal is to cure underlying conditions, right?

So we want to make sure that we're addressing the most hazardous and urgent conditions first, and then um ensuring that we get to the rest of the work that's outlined in the IPA and the scope of work.

And then any examples that you can give us of a successful loan closing and improved conditions?

I I think we'll be able to.

I mean, I don't have one off the top of my head unless Julie, you do.

Okay, you can provide samples.

You can give that to the committee later, pass it down.

Thank you.

All right, thank you.

When it comes to accountability, uh the ad Mayor Mandami campaign on both affordability and accountability, particularly as it relates to housing.

Uh, when serious deficiencies are identified in Mitchellama developments and remain unresolved for years, who ultimately bears responsibility?

Uh is it the building management, uh, the corporate uh the uh cooperative boards, the contractors, or the oversight agency themselves?

And more importantly, what concrete accountability measures has the administration implemented to ensure all parties are meeting their obligations and that both taxpayers and the residents are seeing tangible results uh for every public dollar invested.

So we we have a we have a authority to oversee the Mitchellama developments, and part of that authority is to review the financials and ensure that the project is being managed appropriately.

But obviously we want to provide as much support and technical assistance as we have available to ensure that these developments don't get into this situation in the first place.

And when it comes to five financial stability, a recent City Limits article highlighted a Mitchellama development in the East Village that is considering selling uh a parking lot to generate revenue for capital improvements and raising operating costs.

This HPD uh view these type of uh asset sales uh as innovative uh preservation tools or as a warning uh sign of deeper financial distress uh within the Mitchellama portfolio.

I'm a glass half full kind of guy, so I'm gonna say that it's an opportunity, it's a massive opportunity for the Mitchellamas to be able to use undeveloped land and come up with a completely different source of funding that we don't have available to us right now.

Um it's I would say it's incredibly innovative.

Um, and it's something that we would want to work with co-ops and private rental companies with, and in conjunction with the conjunct in conjunction with the city council to ensure that it's equitable development.

Can I just add one thing?

I know the just because your colleague just walked in and we had and I wanted to say again, you'll hear me say this over and over.

This is a collaborative effort.

We have to do this together.

And thank you, council member um for having the conversation with our team about the development in your district and I get it, it is in my good friend's uh district, but there's obviously opposition to it as well.

And um that's obviously been pointed out in the article, but nevertheless, I guess the conversation needs to be had because uh, you know, obviously parking is a large need in throughout the city, and um this obviously we you know we should definitely be what should be part of the conversation is continue to take the pressure off the need for parking.

And my last question, and our hopefully they did the uh chair will indulge me, uh Lyndon Plaza, which is in my district, which is a city supervised Mitchellama.

I would like to uh uh which is a Michelama development in my district and which currently is undergoing major rehabilitation prior to these investments, residential door did endured deteriorating conditions for many a year as someone who regularly visited this development, knocked on many a doors.

I personally observed the deterioration uh that was taking place in Mitchellama and the concerns that existed.

Uh going back to oversight, uh uh what oversight responsibilities did HPD uh have before uh this rehabilitation effort began, and how were these conditions allowed to deteriorate uh to such an extent before meaningful intervent intervention had occurred?

Yeah, so so our oversight authority, like I mentioned, is you know, review reviewing financials and providing um some sort of technical assistance and advice to the to the owners and to the management companies and to the shareholders.

Um I think the outcome of Linden Plaza is actually a really positive one from from what I've seen so far.

Maybe maybe maybe I'm talking out of out of line here, but I I think where where Linden Plaza got you today is a really good place compared to the.

And I would agree, it's it's definitely uh made a lot of progress in London Plaza.

Um, but also to uh the question of accountability, because the management company that ran Linden Plaza into the ground, we need to hold them accountable.

And that's the reason why I'm bringing that up.

There has to be some type of uh justice still uh exacted on those folks who uh put them in that condition by doing uh refinancing the property and not investing it into the development.

Thank you, madam chair, for your indulgence.

Thank you.

Can I just say one quick thing?

I just want to I just want to highlight that when the team at HPD and others visited Tracy Towers, um, we went intentionally, we left Tracy Towers and we went to Linden Plaza to look at um like just some lessons learned and best practices, and that was intentional that day.

So I just wanted to actually highlight that.

Thank you.

Uh Jay Sanchez, followed by Councilmember Fadias.

Uh thank you, Chair Lee.

Um, and thank you, Chair P.

Sanchez, uh, for helping to put everything together today.

Um, howdy, everyone.

Um, so a few questions.

So two Mitchell Lama developments in the South Bronx, uh, men's plaza and uh OUB houses have numerous uh really hazardous violations uh that and they're both run by the same management company.

So when a single manager across uh shows a pattern of neglect across multiple of their portfolio projects, um uh what tools does HBD have uh to intervene at the management level rather than building by building.

So at a minimum, um we would uh bring in the property management firm to talk about the conditions, right?

Like I mentioned for Tracy Towers, we're bringing the property management management firm in to discuss um what exactly has happened in Tracy Towers and is it indicative across their entire portfolio?

The we would be happy to call in the same property manager or whatever the property managers at these two developments and have a conversation with them to do a much deeper dive than we have in the past.

Is there so there's no uh automatic trigger or alert or notice that you get once an um a developer or a property owner receives a certain number of violations across a number of their portfolio projects?

So we have um HPD's code enforcement team has you know, there's the AEP program, there's 7A, um, underlying conditions program.

Mitchellamas are not exempt from those programs.

Okay.

Um similarly, does HBD have the authority to remove or disqualify a managing agent from Michelama developments?

If so, is there a threshold there that would trigger that?

So we we do have the authority.

Um I don't believe that there's a specific threshold.

Um, but we are able to work with the housing company to find a new property management firm if if that's if that's the what the residents want and what the shareholders want.

Has there been uh what is the the history of that?

Is has there what was the latest one, you know, how frequent or unfrequent does this happen?

Yeah.

I I actually just wanted to lift up that we're seeing um just challenges with property management companies and managing agents across every housing portfolio that you can imagine.

And so, whereas in the past we would deal with building specific issues, we are, as the first deputy commissioner mentioned, really working with the entire portfolio of the manage of the managing agent.

Um, but I also want to say that we are seeing more um management companies leave out of the portfolio, and there is a conversation of how do we get more property management companies to be interested in working with our um portfolios?

And again, this is not just specific to Michelama, is it's the entire, like what we're seeing across the housing industry when it comes to property management.

Uh and can you talk to any uh relationships that you have with these uh agents?

I mean, a lot of the times they hide behind um a lot of not particularly Michelama, just hide behind um these pseudo corporations that you can't get in touch with people, um, and then you have to work with them.

How has your experience been with these managing agents and being able to actually get uh responsiveness, delivery for residents, delivery for tenants, and ability for uh council members to then work with you and work with the managing companies to really get I think the majority of property management firms and not just the Mitchell Lama stock, but the broader affordable housing stock, if we call them, they will come in to meet with us.

Um and um how frequently um does HBD audit the books of the city's Mitchell Lama developments?

See, we we require annual financial statements and annual audits, and then our housing supervision team reviews the annual uh financials that are submitted.

Uh and finally, research, if I may, um research uh on my district shows uh I have a development that has over a million dollars uh in shareholder arrears.

Uh when arrears signal that the current changes are unaffordable, how does HBD couch for the rent increases, such as those at Tracy Towers, uh, with the program's purpose of affordability?

Is the agency identifying a point on which rent increases become almost self-defeating?

So the the biggest operating subsidy source that we have, like I've said before, is Section 8, which is a federal source that we need to advocate together to get more of.

Um that is our main, besides that, there's scree injury.

Those are like the three main sources um for operating subsidies.

We we don't have our city capital cannot be used as an operating source.

It's only for construction.

Thank you so much.

Thank you.

Okay, Councilmember Ferrias, followed by Eldle.

Thank you so much, Chair Lee and Chair Sanchez.

Um, I I really want to begin by being as clear as possible.

Michelama residents have waited far too long for meaningful accountability.

State audits have repeatedly documented unsafe living conditions, financial mismanagement, and failures in oversight, while too many residents continue to struggle with unresolved complaints, deteriorating buildings, and significant carrying charge increases.

It's why I'm also the prime sponsor of a resolution being heard today, Reso 83, urging the state to establish stronger protections and independent oversight for Michelama residents, but today is really about the city's role.

But today is really about the city's role.

We have an obligation to examine whether our own agencies are exercising the level of oversight and enforcement that residents deserve.

And while and why these conditions have been allowed to persist despite years of documented warning signs.

These failures are not abstract.

They have real consequences for New Yorkers, as we've already heard from my colleagues, and in fact feel systemic.

When Michelama developments fall into financial distress because of poor management, inadequate oversight, or years of delayed adjustments to carrying charges, residents are ultimately the ones who are paying the price.

Buildings deteriorate, essential repairs are deferred, and when the financial reality can no longer be ignored, residents are often confronted with steep and sudden increases that many, particularly our seniors and those living on fixed incomes simply cannot afford.

We saw this firsthand at Jamie Towers in my district where proposed increases threaten to displace long-term residents from the homes they had counted on remaining affordable.

That experience underscored for me that we cannot continue responding only after a crisis has developed.

We need stronger oversight, earlier intervention, and greater accountability to protect both the financial health of these developments and the residents who call them home.

I'm now gonna turn to my line of questioning chair.

Has the administration put into inception or at least plan to provide new safeguards such as reporting and monitoring to ensure that the example I gave at Jamie Towers does not occur and maintenance charges can keep up with the requirements?

So, like I said before, we we continuously um review every development's financials.

And as we we're still looking for more tools in the operating expense toolbox, right?

J51 paired with capital improvements, uh the J51 benefit could really go a long way to help mitigate the increase of rent or maintenance fees.

So that's where we want to continue to look for more resources and to try to get a little bit more innovative.

On the income side, screen injury are tools that we already have.

The increase at the state level for SCREE from $50,000 to a $75,000 limit.

Once that's enacted on the local level, that should be able to help some of the seniors who are on fixed incomes.

They might not have been eligible for before, but they will be eligible going forward as long as they earn less than 75,000.

And then lastly, again, it's it's the it's the question of the operating subsidy, right?

Like if we can advocate for more Section 8, that can ensure that households are better able to absorb the increases.

But I don't think this is only about those cases that you mentioned.

There's what we're seeing happen across the board, and I I know you folks are familiar with this, a 50% increase in in one fiscal year or really overnight for people, the same as what I'm seeing on my side of town with the financial the lending capacity being extremely limited because of 20 or 25 years of a management company that is supposed to have the oversight of city agencies that are supposed to catch early on that boards are not approving a 2% increase into coffers to ensure that in 10 years or 15 years when we need elevator replacement, roof replacement, modernization, uh local laws that come into play that have to be you know implemented by the boards and and by the Michelama uh campuses themselves, there's money there to do that.

We're now doing increases where we're asking people overnight to catch up on 20 years of poor management from the city and the state, and also you know, no increases that they have enough coffers or have enough lending capacity to make the repairs or to implement the local laws that we're putting into play.

What are you folks doing to look at how do we not do a 50% increase overnight and to provide some stability or some flexibility to allow uh a long run of transition to get them to a place where they financially have capacity to stay in their homes and also make the repairs that are necessary?

Yeah, so so typically when we do um increases with the city supervised Michelamas, and I I think the Michelama you might be referring to as a state, state supervisor.

I have both city and state and you know, similar similar conditions across both, right?

Different different oversight, different different authorities.

Um we try to stagger the increases as best we can, right?

We take a look at the operating expenses, we take a look at the new debt that is um taking care of the capital improvements.

We take a look at the new debt that is taking care of the capital improvements.

We try to stagger the increases as best we can.

So it's a bit more manageable for households over a longer term.

And so it's not just overnight.

Okay.

So what happens in the case of Councilmember Eric Dinowitz's district where there's a 50% increase at Tracy?

That's not overnight.

How many meetings did you folks have to have that increase roll into play?

Like when when did they find out and how how much did they know ahead of time that they were getting a 50% increase?

That's what it's out in place yet.

So we have to do that.

Oh, yeah, it's sorry, it's the increase isn't in place yet.

I heard that earlier.

I'm asking leading up to it.

How much time was given to the families in Tracy Towers that they were going to get?

I mean, at a minimum, we have as obviously like I'm being a a bit facetious with overnight, right?

But like what's the time frame?

We don't need to do that.

Right.

So there was the 30-day notice, which is a good idea.

So not overnight, but just in one month.

Okay.

Um the increase hasn't gone into effect yet.

I understand that.

But still, right?

When we have inflation, when we have an affordability crisis, even 30 days or three months is not going to be sufficient amount of time for families.

People, you're asking people to find completely different careers or get promotions in a short amount of time.

And if they're retired or on a fixed income, yeah, I'm I'm preaching to the choir on this dais, and I'm sure it's the crowd, but it's still not a manageable amount of time for such an increase.

And I think we all can agree on that.

Um a few more questions, if I may, chairs.

Thank you.

Um HPD required to help close out projects at Michelama housing developments that are unable to do so due to lack of resources and personnel.

Often in my district, members designate capital dollars, but their projects are stuck on hold, waiting for a project manager from HPD in light of this and with some of the projects stuck for multiple years.

Um, will the administration be working closely to close those projects for our Michelamas and by what means and methods?

So by close out, I'm taking that to understand to close on construction financing, right?

Yes.

Okay.

Um so as part of the housing plan and we we've been able to staff up our preservation finance team with a lot more staff, right?

So if we have more, if we have more staff in our preservation finance team, we're able to assign more projects to them and work through the pipeline more quickly.

So with that additional staff and with additional capital resources, we should be able to move more Mitchellamas through the development pipeline more quickly.

Have you guys projected how many projects you have outstanding and if the personnel is going to be able to assist with getting those done and what and what's the timeline fashion?

So we have um, I believe it's 12 Michelamas in our pipeline right now, which means they're they're gearing up and and getting close to closing.

Every Michelama and every, you know, regardless if it's a Michelama or not, every project has its own unique development timeline based on the capital needs, the scope of work, um, and the development team that's working together to get to the construction loan closing.

So depending on the capacity of the board or of the uh of the owner of the Michelama, that can play a little bit into the timeline.

Um does HPD have a central tracker of all their projects that are in the works and that could um have that are publicly funded in this way?

We have an internal tracker of of projects that are in our pipeline, and then we report out on projects once construction closing has happened.

And does the prioritization of HPD closings how does that include Mitchell's?

Does it just come down to the management, the timeline of the project, if it's fully financed?

Yeah, it comes down to like whether or not the project is ready, and our project managers work with the development team and the owner to get them as ready as possible as as quickly as possible.

I only ask because and granted, Jamie Towers is a state Mitchell, but HPD is the one that from the money that I allocate through my capital budget to Jamie Towers, they're dependent on HPD's assigning them a project manager in order to move the process along.

And overall, in my district, I've dedicated nearly 12 million dollars in in capital dollars to modernization and repairs on Michelama campuses, but I've given Jamie Towers four over my first term and my assembly member um recently allocated another four to them, um, but they have not been able to move any of that money over the last three budget cycles because HPD has not assigned them a project manager.

Um, and so I'm you know, for me that's a hindrance to how the progress of that project can move and whether or not people can move freely within the campus themselves.

And I'm just interested in understanding if the money is all there, their financing is in place, but we've gone three closing cycles without getting them a project manager and on the closing list.

What more does a campus like Jamie Towers need to prove that they need their project to be completed and started?

Yeah, and we thank you for the support with the resoe funds and every council member I think does their best to put as much towards the Michelamas as possible, and we're very grateful for that.

Um we can we can look more into the to the timeline for a project manager being assigned, but like I said, we're in the process of of staffing up.

We were able to get a lot a lot of new hires and we're working as quickly as we can to get them on board, and then once they're on the board once they're on board to ensure the project is actually ready to close.

If resoe is assigned to a project, it does not necessarily mean that everything is in place for a construction loan closing.

There could be reso A available and a project manager unassigned.

Not great, but on at on the development team side, the ownership side, they might not have done any of their due diligence or prepare for a closing as well.

So it's a little bit of a give and take of ensuring we're getting somebody assigned and helping the the owner of the co-op board drive the project to a construction loan closing.

Well, I'd love to continue that conversation offline now with this campus itself having eight million dollars from the state and the city.

I hope we're in a better place to move that along.

Um I will follow up with the additional questions I have because I've gone over my time, but thank you to both of the chairs and thank you, folks.

Thank you.

Um just as a reminder for folks that are here from the public, if you haven't signed up to testify, if you could sign up with one of the sergeants in the back, that'd be great.

Um, so we have Councilmember Eldable followed by Brewer.

Good afternoon.

Thank you for testifying today.

Um 1950 Hutchinson Parkway apartments, it's uh co-op, uh, Michelle Lama co-op in uh my district in the East Bronx.

Uh in uh the FY27 budget, I work to secure funding to cover one of the major capital projects uh of the apartment complex.

And uh by taking that large maintenance cost off that capital cost off the books of the property.

Um, you know, the goal uh is to decrease the need for major uh maintenance increases.

Um my question is kind of in line with uh council member Farilla's.

Um, you know, what accountability measures does HPD have in place as part of your oversight to ensure that these savings are passed on to residents?

And you know, the controller's report included findings about financial oversight failures across uh New York City and New York State managed Michelama properties.

Uh city council report also cited returned funding from past fiscal years due to mismanagement and you know money not used despite the obvious need for capital improvements.

Uh, what oversight measures does HPD have to ensure that money allocated to our specific projects are used appropriately?

And how can we move these projects through the pipeline faster?

Uh because you know, we can allocate money, but if it takes years for these projects to happen, the costs just go up, and then we never it feels like this cycle uh that we never can get over.

Uh so just if you have any ideas of how to move that, you know, time is money also.

So uh so how you know what ideas uh do you have to get these projects moved uh more uh timely so that the costs don't keep escalating over time.

So thankfully your that project that you that you reference is in the pipeline.

Um the additional project managers that we have at HPD and that are currently being hired and onboarded will do a lot to move through the development pipeline.

Like I said, it's not just Michelamas that will benefit, it's going to benefit all of the affordable stock that's coming through the preservation pipeline.

Um the amount of capital that we put into a project, obviously it's going to it's going to improve the conditions of the building, and it'll probably lead to reduce uh repairs and maintenance expenses in the short to medium term, which could help mitigate the increase that the residents will have to pay.

Um the the other tools that we have available to us are trying to get more creative on the operating expense side.

The amount of capital that we put into a project, obviously it's going to um it's going to improve the conditions of the building and it'll probably lead to reduce uh repairs and maintenance expenses in the short to medium term which could help mitigate the increase um that the residents will have to pay um the the other tools that we have available to us are trying to get more creative on the operating expense side so like I said about the J51 reauthorization that could be that that that will be really helpful to pair with capital improvements to ensure that the that the increases are not as high as they would have been without J51 I my other question is is really about getting um you know uh getting people who are eligible for scree or any other benefits um have you worked with other agencies uh I know that in the Michelama uh you know uh developments in in my district they have become you know naturally occurring retirement communities we have a lot of seniors who live in uh in michelama and um you know are you working with the department for the aging are you working with other uh organizations that uh you know uh work with our seniors to make sure that they're getting all the financial assistance that they need to stay uh in place so we we are working with um outside stakeholders um community based organizations when we can um and I said earlier I'm so thankful to the council members who have reached out and work with us to do workshops and some of them have done um office hours and our teams have worked with the council members to actually go through applications with their constituents um and I will also say that over the past year we have done 25 SCREE um outreach workshops just over the past year and so we're always willing to partner with community based organizations that that makes sense do you have a sense of how many uh people are uh maybe eligible for scree and have not applied and if the threshold the income threshold is increased to 75,000 uh how how many more could that uh represent I don't think we have that um projection available right now um but when an increase is going to be scheduled um like my colleague Alika had mentioned we will do everything we can to do outreach and to engage seniors to ensure that they understand the eligibility requirements again the pre-filled applications are very helpful um and we'll work as best as we can to get households signed up and I mean rather than have you know smaller percentage increases over time I mean one of the it's not it's not new New York City but we have a uh Michelama co-op that just got a uh in a tremendously huge increase after 10 years of not having increases you know and their you know their response to me was well we we've had to do all these capital improvements and we have but you know it's like why did we get to this point where now they're scrambling to do all these capital improvements and they obviously have to balance their books and instead of doing it on a year you know balancing their books on a yearly basis and having a more you know regular schedule regular schedule of of you know uh maintenance and you know and capital improvements or whatever needs to happen in that building like you know I've been in Tracy Towers many times I used to represent the workers there.

Yeah I think that's a change but you know there's like you know there are you know wage increases and benefit increase for for for for the staff uh you know for the workers there we're not gonna like not raise wages and and benefits uh over time we're not gonna wait 10 years for people to get a wage increase I mean that has been happening uh you know over time and and the needs and and and the recurring maintenance needs um you know happen over time and waiting 10 years uh to fix the problem yeah um on the backs of tenants is you know really unacceptable yeah I mean I I would say as like a former underwriter for affordable housing like we we would we would welcome regular increases at Michelamas if they came to us with the with the request right to have a little bit of a a little bit of a stable instead of waiting until um we're not meeting our expenses the capital needs are out of control and we're in a crisis moment yeah thank you thank you council member brewer sorry council member brewer just before uh you asked your questions I just wanted to address council member albable that citywide uh not not with respect just to folks living in Michelama but we have 1582 households that are eligible for screar jury but only 67132 households receive the benefit in 2023 so council member dinowitz passed a great bill to try to uh bridge that gap but it's uh it's a really you know big gap in in service for people thank you council member brew thank you thank you Julie Walper for 30 years of help or 40 years I lost track um I don't know you're

I just wanted to address Councilmember Aldible that citywide, uh not not with respect to just to folks living in Michelama, but we have 158,214 households that are eligible for screer degree, but only 67,132 households receive the benefit in 2023.

So council member Dinowitz passed a great bill to try to uh bridge that gap.

But it's uh it's a really you know big gap in in service for people.

Thank you.

Councilmember Bruin.

Thank you.

Thank you, Julie Walper for 30 years of help or 40 years.

I lost track.

Um I don't know y'all, I don't know anybody else, but I do appreciate all Julie's work and also you know, Jackie and Katie and Dick Hyler and everybody who've been doing this, Bob Woolis may rest in peace.

Um my question is twofold.

First of all, I was not a big supporter of Cadman Towers going from Michelama to HDFC.

So I hope that's not gonna happen in the future.

Can you update me?

We don't have any Mitchell members today, too.

It's yeah, we we don't have any Mitchellamas at the moment that are.

I know, but I want the policy to go over two to eleven.

We don't have any that are trying to go from two to eleven.

But you are you interested in getting rid of the policy altogether?

So because this is supposed to be about affordability.

So maybe we should be talking about that or not.

Yeah, so I mean, I would just actually say that I don't think we are in a position to say that policy should go away because I would always put it back on the residents and the shareholders and what the people actually want in their buildings.

And when you speak to some people there, they feel that it was uh I know, but I'm just saying we also I'll uh say that.

Okay.

I don't agree with it.

We have to be, you know, think bigger because people are wanna make money, and I understand that, but I still think it should return so I want that.

Maybe we'll put it in writing and try to have pass a law because we don't want any more conversions like that.

Number two changes in 2021 have have slowed down the con the amount of conversions.

Okay.

I I still worry about the future.

Um the lots of same situations.

I've got um uh let's see, I certainly got Trinity House, and they want to postpone their July 29th because they have such a large increase being projected.

Same problem.

So I'll contact you, but I want to have more discussion about these things because it's huge, even though they haven't had it in a while and it's not a bad owner, it still needs to be postponed.

So we need to do that.

Um Clinton Towers, a mess.

So that's the same issue.

Who's overseeing the construction every single day?

I get calls from the residents.

Um, how does that pan out?

Why is it?

I think we need, and I suggest this to the chairs also.

We need like a round table.

Everybody's sitting in the room, state, city, those of us who have Michelamas.

I've been doing this work in 1978.

That's how long I've been doing Michelamas.

And it has to be a discussion.

We want Michelama 2.0, but we can't figure out 1.0 yet.

So I would love to see this round table take place.

But meanwhile, Clinton Towers is a mess.

The board is a mess.

The management is a mess.

All my friends, I know them all, but it's not working.

So how do we how do we handle something like that?

The balconies, the lobby, the money, the everything.

The con ed bill.

I spent hours on the con ed bill.

Yeah, can I ask a question about the 19 the has there been a round table since 1978?

No.

I mean, we're we're happy to do that.

Not since Bob Willis was alive, to be honest with you.

Okay.

Okay.

It's good to know.

Yep.

So anyway, um, Clinton Towers.

What are we gonna?

What's an example of how do we get that so that the construction is taking place on this less angst?

Any suggestions?

Yeah, I mean, so we currently do, yeah.

So we we have current weekly calls because it's in our pipeline, correct?

Um we have weekly calls to prepare for the for a closing.

So we have a project manager that's working with the development team to get to a a construction loan closing as quickly as possible.

Okay, we can have further discussions.

It's it's very very challenging.

Uh 110 West End Avenue, also with a huge increase as a Michelama co-op in this case.

So is that something that you're working on?

How would I be helpful or how could I be helpful?

So it's not such a huge increase.

Yeah.

So Lincoln Amsterdam, the um they haven't had a uh maintenance increase in 25 years.

Yeah, and the maintenance is um affordable to below 30% of area median income, and with the increase, it will continue to be affordable to 30% area median income.

Um, so and they can't pay their bills.

So it's not a construction issue, it's not they don't need capital, it's just they need expense money to pay their bills.

Okay, so you're thinking that it's an okay increase at this point.

30% is large, it doesn't matter like for anyone, it's you know, it's a large increase, but they need to do they the board actually it's a co-op and the board came forward with asking for this because they they but they're still angst in the building, as you know, every single co-op has a co-op board, and then they have the shareholders, and they don't always get along, right?

Um you know that.

So you can say about the board, and maybe I know that board very well, but that's something to always be aware of, are the shareholders versus the board.

Right, but they're doing their fine their fiduciary responsibility.

All right.

Um and then the report that uh the state controller, which was mentioned earlier, Clinton Towers is one of the disasters on that.

How are you addressing that report that this controller came up with?

So we we put together responses for the Comptroller report.

Um we actually had a follow-up meeting this morning on one of the audits with the state compontler.

All right, so you're gonna share that with us, particularly if it's has to do with our buildings.

Yeah, I think our our response is foilable.

Okay.

And then finally, round table, you'll host it, you'll invite the state and we'll all be there.

I'd love to.

I'll pay for coffee.

Thank you.

Holding you to that.

Nice.

Councilmember Wilson, followed by Epstein.

Thank you, Chairs.

Uh so I appreciate the commitment to and uh attention to to Michelamas, particularly as outlined the block by block plan and the millions of capital dollars commit committed.

Uh I do have a question about uh Article Five co-ops.

So that I have uh in my district Penn South, which is nearly three thousand units of of the housing.

It's often mistaken for a Michelama, but it's actually not.

It's uh but govern governed in a very similar way.

But uh the way the provision is are written right now, they're the they're they don't have access to the the capital funds.

So I'm curious how do Article Five redevelopment co-ops fit into the plan for um Yeah.

So they can they can apply through our HPT's preservation pipeline like any other affordable housing development, regardless of you know, incorporated under Article 2, Article 11, Article 5, they're eligible for city capital funds.

So we would urge the development to put together a loan application with an IPNA to work through our pipeline.

So they're not excluded.

Not to my not to my knowledge, no.

Okay.

That's good news.

They thought they were.

There's a win.

That's it.

I just had one question.

Thank you.

Great.

Councilmember Stein?

Yeah, I I want to just go back to what you said earlier about waiting to hear from Mitchellamas who are having done an increase in 20 or 30 years.

I'm wondering why wait, instead of just reach out to them every year saying, hey, you know, we advise you to do at least a two percent increase, so ways you can do it over time instead of having to see like Councilmember Dinowitz saw uh, you know, a 30 or 50 percent increase.

I have a Michelama that had a 10, 15, 20 percent increase for year after year after year, and that it's impossible for the residents to manage.

Why not take an affirmative position to try to get them to apply for those increases and make a constant like a 2% every year?

So we do make recommendations, right, to folks when once we get the financials and we do a review, we make a recommendation about whether or not they should increase their rents or maintenance fees.

As somebody who worked with HDFC co-ops for nearly eight years, it is sometimes very hard to get a co-op board to raise their own maintenance fees to cover expenses and and cover capital needs.

Um I leave it there.

I represent hundreds of HDFC co-ops.

I represent four Mitchellamas.

I've never heard from HPD saying, hey, we'd really recommending this Michelama do an increase.

Can you help us set up a meeting with them?

Can you encourage the board to propose an increase?

Why not collaborate with your partners in government to make sure that happens?

I mean, we we would be happy to collaborate with anybody.

I would love that because you know we we know our Michelamas, we talk to them regularly.

We don't see their finances, so we don't know what they're doing.

The only time we hear about it is when there's a proposed increase and they're asking for 20%, and everyone's oh my god, this is crazy.

We would rather see a two percent increase every year to ease it out over time.

That's easier for folks.

Yeah, and I think under this administration, we'd be happy to to reach out a little bit more proactively.

Great.

It sounds like with the Gail Brewer's round table, we can talk about all these amazing issues.

Dying for a round table.

I'm looking forward to it.

I want to be there, so please invite me to it.

Um can you ever uh uh these Michelamas get to zero percent tax?

I know we talked about you know, I'll take the win on the reduction the from 10% to 5% of the shelter rent tax because we did that last year in Albany.

We wanted to get to zero, but you know, we'd love to see the administration support that next year to go to zero.

I hope HPD will be on board.

But there are other ways to get to zero through J 51.

Yeah, so I you took the words right out of my mouth.

We can't get quite to zero with J51, but we can get as close as possible, depending on the capital work.

Yeah, any other available options for you to get closer to zero.

Not I I don't think, but besides J 51, I think that's the biggest tool in our toolkit at the moment to get to as close to zero.

And is there a reason we can't get other tools for in your toolkit to help you get to zero besides making them put lots of money into capital improvements to get it to zero?

This could be a topic for the round table.

I love this.

Okay, I'm gonna I'm gonna keep going if I can.

Just a couple more.

Okay, sorry about that.

Um so why not put capital dollars on the table?

You're asking us to use our research money.

Why not have HPD matches?

We put a million, you put a million, and we all walk away happy.

Why not do that?

We do that for NYCHA, we do that government money comes in for NYCHA, we're put money in for NYCHA.

Why not like meeters halfway and do some free money for Michelamas too?

Yeah, so we we usually do far more than a couple million dollars, right?

When we when we do a when we do a preservation outcome or a larger recapitalization, we're usually putting in a lot of city capital.

But this is loans, not grants.

They're they're loans, but they're structured on what the project is able to pay.

So I think in the case of of Tracy Towers, we're not requiring any payments on the HPD debt.

It'll defer and accrue.

So you you're willing to give forgivable loans in these situations?

They're they're not forgivable.

They'll balloon at the end, but there's no um principal and interest payments due.

And why not do forgivable loans?

I don't think that's within our authority to do.

I mean, that's a larger question that I don't know if I'm fully able to answer at that point.

Another round table conversation.

I love this.

Roundable two.

More opportunities.

I I'd love to see the city give give more money to help Michelamas.

We we know they need the money.

We want to help them as much as possible.

I'm just a little concerned that we're not using all the tools in our tool belt.

Um did you say you got a we'll help uh advocate next year to reduce a shelter rent tax to zero?

I didn't know if you sent that response.

I don't think I said that.

Okay.

Can you say that?

I don't think I said that.

Will you say that?

J51 is a really good tool to pair with capital improvements.

It sounds like another conversation to have.

Uh and I wanted the last question.

I know council member banks flagged the issue of uh potential development projects on um our Michelama land.

I'm wondering how you balance the issues of needing more affordable housing versus you know the the potential value of that land.

And so how do you make that determination about like the need for the affordability?

Because we need more affordable housing and the need for making sure the Michelamas stay whole.

Like kind of what is that decision process internally?

Yeah, I mean, I think it's going to have to be a case by case basis.

It's you know, we have to look at the available land in each Michelama, like not every Michelama is gonna have a ton of development space available.

So I I think looking at the capital needs, the available land that we could develop on.

I think there's a I think everyone might have to be its own unique snowflake.

Um, but in collaboration with the city council and with the if it's co-op with the board, I think we can get to a really good place to ensure that there's additional funds going to mitigate increases and pay for capital improvements outside of the city budget.

Well, thank you, and I appreciate the chair's indulgence on it.

Looking forward to this exciting round table.

All right.

Uh are you bringing snacks?

Always snacks.

Okay.

They're gonna be vegan.

You okay with that, right?

That's uh as long as it's free.

Um thank you for hanging in there with us.

Um that that concludes our first round of of questions.

We'll we'll have a second round.

Um, so I just want to wrap up a couple of questions more questions that I had.

Um, and just to kind of recap, right?

Every I feel like every single council member has said the version of the same thing.

Uh maintenance increases should be gradual.

We we want to be a partner, we want to help uh so that we're not seeing dramatic increases that are making up for multiple years at a time.

Um so more to more to come at the round table, but you know, certainly want to be a partner on that.

Um, and just a follow-up, you said so HPD is receiving annual financial statements.

Is there any are there other indicators that HPD is receiving regularly from Michelama properties?

Um, and and how are you uh taking that information into account in terms of uh assessing risk?

Yeah, so the the financials are the are the key indicator of the financial health and sometimes the physical health of the building.

Um we also get uh vacancy report, um outstanding payables.

Um we can also see online, you know, what the violation profile looks like and on the topic that's perfect uh Sideway to my next question is outstanding payables.

Uh one of the things that we hear about a lot um in Kingsbridge Arms, for example, is that there's a a lot of shareholders that are behind on their maintenance fees.

It's it's an issue on each at HDFCs and just so many co-ops.

What what does HPD have to offer these co-ops that are having these governance challenges um and working with their shareholders?

Yeah, so we're do you want to so our um housing supervision team will provide actual um like training, technical assistance training, working directly with the boards on how to um govern their buildings and what to look for.

And so we do that in-person training, we do virtual training, we have online webinars available, and so we're constantly looking for other opportunities to partner with organizations to do that.

And I also, because we're sitting here, um, just want to lift up the fact that we have asked for resources and funding to be able to really get into like building the capacity of these boards um and work with our managing um partners.

So um we're doing all we can, but we would also like some resources to do more.

Okay, let us know how.

You know, you know, uh, you know the deal.

Uh we'll we're always here to advocate for for those funds.

Um I had a a specific case, it's not a Michelama, it is an HDFC.

Um, but I think the the issue carries over in terms of you know, the a building that's not able was not able to submit for whatever reason their property registration that has a lot of shareholders that are in arrears that has wanted to take folks to court and seek an eviction.

Um, Julie and I were speaking two days ago um with members of the team about this this very question.

Uh as in addition to technical assistance, is there legal support that HPD makes available?

Are there partners that offer that, or is this a gap um that our city has?

Yeah, so we don't offer those types of legal resources, but there are not-for-profit um legal resource providers out there that hopefully we can connect those folks to.

Any any you can name so I can go back and tell.

Uh I think we can share that after if that's okay, if if any come up in my memory.

Yeah, no problem.

We have a whole request.

And ask for it.

Perfect.

Perfect.

Um AEP and Michelamas.

Uh I want to make sure to get this on the record today.

Um, I I have I represent a Michelama that is in the alternative enforcement program, which makes absolutely no sense uh from the perspective of wanting to um preserve affordable housing, but then we're, you know, as a city giving all giving these buildings all these violations and and increasing their their debts to the city and their financial um responsibilities.

What is the position of the administration on Michelamas and affordable developments being in the uh AEP program?

Um I mean, so there's a when you look at the development side and the pipeline of projects coming through HPD and then and then the code enforcement side, there is, and I think there always has been kind of a pretty strong firewall to ensure that the housing maintenance code is being enforced appropriately.

Um AEP, when a building's in AEP, it's a really good indication that a larger preservation and stabilization outcome needs to happen, and we should be able to divert, not divert, but uh apply resources to those types of projects to get them out of AEP.

Great.

Thank you.

Um look forward to more conversation on that.

And then my final question um is coming from from some of our friends in advocacy is does HPD have an accounting for how much of carrying charges increases are due to capital expenditures versus um you know more more of the operating costs.

So you mentioned utilities, you mentioned insurance, but do you have a sense of the relative um reason for for the cost drivers?

So not off not off the top of my head, Julie.

Yeah, I was gonna say it's it's almost always just the operating expenses.

We have the ability to structure our debt in a way where the residents don't have to pay towards our debt service payments, right?

So we'll defer an accrue principal and interest, and there's a balloon at the end, and in that way it mitigates the increase um on maintenance and rents.

Yeah.

And one on one question what happens to the balloon at the end?

I mean, it gets rolled out.

Usually we refinance it.

In exchange for affordability restrictions for longer.

Yeah, that's exactly right.

Thank you.

Um Council Member Dinowitz.

Well, the uh I had similar questions um about the debt, but first I'm also excited for the round table.

I'll be relying on council members Epstein and Brewer for snacks.

Um I I would just also say that limited equity co-ops like the amalgamated cooperative uh should be included, not Michelama, but in the same sphere, right?

So that it functions similarly and they have some of the similar issues.

So I would I would uh say they should be part of this round table as well.

Um I'm I I need you to help ex uh explain how the debt works because as I was starting in my first round, um uh Tracy had a 40 million dollar loan, the interest was 106 million dollars, it was refinanced to about 147 million dollars.

I'm hearing you testify, well, we can't forgive the loan, but we just roll the loan over and it's no interest and we just it keeps growing.

That's what I'm hearing.

It keeps growing.

And at no point ever in the future do those payments ever have to be made.

Is that accurate?

So we use the if if principal and interest payments aren't being made on any portion of our existing debt, there's a balloon at the end of the loan term.

So after 30 years, our balloon is there, and as council member Sanchez so eloquently put, it's our hook, right?

So by by us having existing debt, and if it's a bal if it's a large balloon, then we're able to ensure that the project can st will stay within an affordable program for the longer term.

So none of the rent increases or maintenance increases are due to debt, uh the need to pay off any of these loans, any of this debt.

For for Tracy Towers, the the HPD debt that is in the project, none of the increase is going to pay towards the the new capital that HPD put into the project.

Okay, will be putting into the project.

I'm not talking about the new capital, I'm talking about like the old capital, right?

The all of that interest that accrued over the years, um, they don't I'm hearing different things.

They don't have to pay it back.

I'm just trying to understand if any of that does have to do with the rent increases for trade.

So dip different lenders, right?

HP HPD has its own city capital that's contributed to the project, and then there's an existing, there's a sorry, I I don't fully have the debt breakdown with me.

Um, but HDC has a first mortgage, and that one gets paid off.

So some of it when we when we structure our loans, there's usually a private lender, and that private lender will require principal and interest payments, and then HPD comes in with subsidy, and those subsidy payments uh or that that subsidy doesn't require principal and interest payments, and and the the loan defers and accrues, and there's a balloon at the end of the 30 years.

So the first the the debt that's in first position that requires debt service payments.

The city capital we put in does not require debt service payments.

All right, can you provide um a breakdown of the city capital uh versus the private capital uh for Tracy and all of the Michelamas because this is because we were told I think that the rent increases due in large part to the debt service, otherwise the building is underwater.

But my second uh this will that'll be for later.

This the second question is about other loans that have been taken out and HPD's oversight over those loans for capital improvements.

Uh in 2016, there was a 40 million dollar loan taken out for elevator repairs, elevator upgrades, um, boiler roof.

Um and I mean you were in Tracy Towers.

The elevators have clearly not been upgraded.

Um that was in 2016.

Um the roof is leaking, so it either wasn't done or wasn't done well.

Which so I'm asking about the the oversight.

What oversight does HPD actually conduct to ensure that the money that is being borrowed that eventually has to be paid back by the tenants, that that work is actually being done and being done at a quality that is not they're not paying for just a few years later with leaky roofs and broken elevators?

Yeah, so so monthly we monitor construction.

And and in this case, it sounds like there was a HTC was the private first lender, and they have they would go out and do monthly inspections to ensure that the work was completed.

And then once the construction monitor or excuse me, construction person from HDC uh and the architect sign off on the work that was completed, then the payment is made to the contractor.

So copies of those documents were every month, somebody is going out to the building, and then every month a requisition is submitted, and that's how the contractor gets paid for work that was completed.

Okay, are those documents public?

And please share those documents with our with us where HDC or the contractor said this work was completed.

You do have those documents available to you?

I mean, we're I I don't I don't know if we have them available at the moment.

HDC is a different agency than any other.

No, I understand, but you you work in collaboration for the purpose of supporting people at our Michelamas.

Yeah, I mean we could see what they have.

Okay.

Uh we we should see copies of those because it's the work wasn't done, right?

That we we have the documents that say the money was borrowed uh for um maintenance of sorry, it's rehabilitation.

There was 1.6 for an elevator upgrade, 2.4 for the boiler roof, 600,000 for elevator modernization.

And if you're testifying that someone has to sign off on that every month and the work wasn't done, that means someone did something wrong.

Um second I also want to know since since I am testifying, the the scope of work is very specific, right?

So an elevator repair upgrade is not an elevator replacement.

That scope of work, those are two very different things.

Roof repairs is very different than roof replacement.

But this goes those scope of work items are completely different.

But it I don't think any private homeowner would accept a job, would accept work where they completed repairs on the roof and that work and the roof the next year is leaking.

And we shouldn't accept that as a city either.

And that's why I'm interested in in getting these documents.

And if we're all working together for the betterment of the residents of our Michelama developments, uh we should be all beginning that document those documents.

And it's if happen if it's happening at Tracy, it's happening at all of the Michelamas or many of the Michelamas around our city where work is done and there's no oversight as to the quality of work.

Now there is a $36 million capital plan.

I believe the work was uh when you came to visit the work was supposed to start in June, is that correct?

The loan closing was in June.

Long closing, and when does the work begin?

Um probably in the next couple months, I would say for for any construction project, Michelama or not, after construction loan closing, there's a period where the construction crew and the contractor will continue to pull permits, continue to get all their paperwork in order, and then mobilize to be able to start construction work.

Okay, so that's typical across every project.

Given that this is under the uh city-run Michelama, uh, what can HPD do to expedite those permits to make sure that work is done in a more timely fashion than we typically see in our offices?

So sometimes um, and I'm not a hundred percent familiar with this project, but in some circumstances and in a lot of circumstances we require permits to be pulled prior to closing.

I don't know exactly which permits need to be pulled for this project, but we make every effort with all of our affordable housing projects to ensure we're communicating with DOB and that our projects are getting permits pulled quickly.

We see, and I'm I'm glad mm-hmm is here.

We see a lot of costs accruing because of delays of things like permits or in their cases DOB inspectors coming in.

And again, I understand it's not your agency, but you work in the same administration, you work in the same government, and so you should be doing everything for our affordable housing to expedite those processes.

Otherwise, my office tries to do it, uh, but we're a different branch of of government.

You are in the same branch of government as these other agencies.

And that is a way to make sure the residents of our of our Michelamas and our limited equity co-ops can get the housing they deserve and save money by not have in their case by not having those sheds up for months and months on end.

And that was the case at Tracy Towers, by the way, in the late two t uh 2010s when they had their sheds up for years.

It was years, and it wasn't until the controller called, made a call in, and it was gone, right?

Like these are just bureaucratic hurdles that cost residents money.

Yeah, um part of the speed report that was released tries to get to the root of some of those problems is to kind of get out of our own way to make sure we can do development much more quickly uh and much more transparently, transparently, excuse me.

So speed was was a big attempt at moving that forward.

I want to ask about the $36 million of Tracy.

It is for elevator replacements.

There were security um uh elements in there, I believe.

Um like the gate for the for the parking lot was one of those was cameras part of that the scope of work as well.

Security system from 2016.

I'm sorry, the the the 36 million dollar recent one, yes.

Okay, so yeah, so we HPD actually put in I believe around 40 million in city capital.

Um and and the scope is from broadly garage work, some plumbing repairs.

Oh, sorry, that's phase two.

Elevators, facade, plaza repairs, security upgrades, playground improvements.

Okay, I just want to be clear.

Tell me if I'm off base, but when you say HPD put in 40 million, what you mean is that the city council through its city of yes negotiations allocated more funding and secured more funding for city-run Michelamas and assembly Mazakaro secured 10 million dollars and the 40 million dollars is actually a loan, correct?

HPD lent 40 million dollars in city capital, like we would any other affordable housing project.

Right.

It's 40 million of of city capital was lent to the project with deferred uh sorry, no uh principal or interest pay payments due, fully deferring and accruing to the end of the loan term.

Right, but it is a I I just want to be clear, it's it's a loan.

So this isn't it, this isn't the city investing uh money to improve, it is the city investing a a loan that at some point has to be paid back.

I I right.

I mean, sure.

Yeah, okay.

I I you know loans have to be paid back.

I just want to make sure we're we're clear because um, you know, when when we fight for this this funding in the city government, or when our colleagues in government secure this funding, um and we and we celebrate because we're gonna see improvements to the building, and to find out later that this is just a loan, um it feels a little uh different than it should.

It's not it's a loan where no principal and interest payments are due.

Until it's due.

Until the balloon is due at the end of 30 years.

Right.

And then at 30 years, well, you know, I guess I guess their children will be dealing with it.

I don't I don't know.

Um the uh the have many more.

I have one more question.

Okay.

Um the same concerns about the elevators, the same concerns about the repairs, the loans that were taken out in 2016, uh, remain the same today.

Uh the residents at Tracy Tower say, well, 10 years ago, they told us they were fixing the elevators and they're still broken.

There isn't a day where all six elevators in either building are working.

Uh I think last we checked, you were there 40 times this year.

The fire department had to come for the elevators.

Those are not fixed elevators.

And so for the residents of Tracy Towers, what guarantees do they have that HPD is conducting the oversight to ensure that the money that our tax dollars are being invested in, that we are investing in our affordable housing with these loans, that there's oversight over that and the quality of the work, and that if we replace all the elevators that in two years they're not all gonna break down again, that if they replace the roof, it's not gonna start leaking in two years.

What mechanisms do you have to hold accountable the people who do the work?

So, like I mentioned before, we have monthly construction requisitions where the contractors only paid based on work that has been completed.

So there's someone from HPD because we have city capital, there's someone from HDC because they're the first mortgage lender.

Um not sure you I understood it.

Maybe I know I do about it.

I think trying that what we need to parse here is what is the actual scope of work?

Is it a repair or is it a complete replacement of the electricity?

Complete replacement of elevators, which I think was in the scope of work for this particular building.

But not, but not in 2016.

But not in 2016.

916.

So let's say 2026, we're looking forward.

Scope of work, brand new elevators, right?

You have uh let's just go with that one project.

You requisition the the work's being done, great.

After the work is completed and after the contractor has left.

Is HPD gonna stay and monitor it to make sure it's continuing to function?

Are they gonna stay to hold the contractor accountable if it breaks down, if in five years they still don't have working elevators?

Or is HPD's only job to make sure that the work is being done on a month-by-month basis?

We're our main goal is to make sure that the work is done correctly at the time it's being done, right?

So we're ensuring that the requisitions that are going through are being processed and paid correctly and the work is done as it should.

We can have oversight and we can work with the owner to make sure that they are holding the contractor's feet to the fire.

There is also typically a warranty period, right?

So if after a year there are problems with the elevator, it's incumbent upon the owner to ensure that they are going back to the manufacturer or the contractor and holding them to the warranty standards.

And that's standard across all affordable housing projects and co-ops or rentals.

Okay, it's just a little bit about housing supervision.

The portfolio analysts will still be there.

The constituent services coordinators will still be there, the technical services team will still be there.

The engineers that work at HPD will still be there.

So whenever there's an issue, we will still be able to call on folks within across the agency to come out.

And so it doesn't end when a project ends.

We're still there.

It sounds yeah, it sounds like there's room to go and to to grow in this regard, given the experience at Tracy.

I see amalgamated, nodding their heads at all of our Mitchellums.

It seems like there's room to grow.

Um, I don't know if the one-year warranty was a hypothetical or like uh was that what the warranty typically is one year?

It's a hypothetical.

Okay.

Every every contractor is responsible for completing the work to the owner.

Typically things that are installed have a warranty period, typically roofs have a warranty period, elevators, different mechanical equipment, it it varies based on what's installed.

All right, it sounds like there's room to grow in this area and work to be done together on this because the work done 10 years ago uh had a warranty and it wasn't fixed.

And we're concerned the work going forward at any of these Michelamas around the city that we make sure as a city we are holding accountable these contractors who are ostensibly doing the work, and then it falls on the tenants to pay for more repairs after the work's done.

And if and and we know things go slowly in government that a year or two years is gonna go by um before there's any oversight.

We we want to work together to make sure we're holding those accountable to keep costs down, to use all the tools in our toolbox.

Um and I just I again I want to thank you for your testimony.

There's lots of work to be done on this to keep these rents down to maintain that promise of affordability that was promised to us from this administration.

Uh I stand ready to work with all of you.

Uh the tenants and ready to work with you, uh, but they deserve dignity and affordability in their affordable housing developments.

Thank you, Chair.

We we don't clap in hearings, we only we do the silent approval gesture, but uh all right, thank you so much, Councilmember Dinowitz.

I just want to add a note on on his line of questioning around the scopes of work with uh you know uh finance through HPD funds, um, that this is something that we hear, and and I know I still think about you sometimes as council member Ampry Samuel, like I we hear this all the time about HPD finance work, you know, something that's financed five years ago is now starting to have leaks.

I you know, there was all of those there were all those articles about the South Bronx buildings, a luxury buildings um that receive some HPD financing, and so it's just uh it's an area that we want to make sure we have clarity on and we know how to follow up with you when there when there are problems.

Um I have a question from Ms.

Pam, who I don't know, uh who is uh came to us from council member banks.

So you're getting a question from Ms.

Pam via council member banks via me, um, which is what steps have the supervising agencies taken internally to make sure owners are not leaving apartments empty past the 90 day window.

The loss of rental income has a devastating impact on the financial health of those of these developments.

A recent Michelama meeting confirms this is a widespread problem for a number of Michelama rental and co-op developments.

And the second question is will the agencies implement a plan to conduct a needs assessment or audit after year one of a three-phase rent carrying charge increase to make sure that the second and third phase increases are necessary and then provide a detailed report of their findings to the residents of those individual developments.

So the review of the of the future rent increases.

I mean, we're looking at the income and expense statements and the audits and can clearly see whether or not the the increase is needed or not.

Um in terms of the of the vacant units, you know, we absolutely do not want vacant units in Michelamas, right?

We are in the midst of an affordable housing crisis.

We are trying to build our way out of it.

That is not the only strategy.

Um we we do want to ensure that any unit that is vacant is brought up to code and habitable and safe for a new family to occupy.

And when we're having trouble balancing the budgets, when we're having trouble just meeting expenses, it leaves very little left over to do those repairs and in in oh god, I keep doing that in individual apartments.

Umfortunately, sometimes we have to wait for the larger capital improvements um to to make those uh units of upgrades.

Right, got it.

Thank you.

Um, and so just with respect to the second question of you know, you said you can see you can see when what increases are needed.

Is there is there any circumstances in which a 10% increase this year means we don't need a five percent or whatever has been requested the following year?

I mean it's project by project.

We we have deferred in the past.

Um it is project by project, it is taking like a critical look at the existing expenses and projecting future expenses.

Um if we can pull any other levers on the expenses to lower certain expenses, then that will absolutely mitigate any potential increase.

So we'll keep we keep a close eye on those things as the phased increases happen.

Thank you.

Um and just another uh question, just piggybacking off, Councilmember Dinowitz um and the the balloon ballooning loans.

You know, yes, they are technically loans, but they are actually kind of grants so long as you stay in the program.

And so my last question is about who has stayed in the program.

So uh 269 Michelamas have been developed since 1955 uh statewide.

Can you tell us how much we have lost, how many we've lost?

60.

60, yeah.

City supervised?

Yes.

Okay, 65 cities.

We've lost 65.

So these are folks, uh, Councilmember Dinowitz, to your point, that pay back their loans, right?

And that's the way that you exit the program.

Is that correct?

Yes.

Yeah.

So that's when the loan comes due, is when a Michelama wants to exit the program.

Got it.

Yeah.

Yeah.

Okay.

Great.

Well, with that, I I want to thank you so much for your testimony today for all of these hours of hanging out with us.

Um, but we really look do look forward to that round table and you know, to to make sure that Michelamas and our affordable developments are, you know, they remain front and center.

And I I say this to all the um agencies, but if there are folks that can stay and listen to the public testimony, I think that would be great to hear from some of the residents um firsthand.

Uh would be wonderful.

So thank you so much for all of your time today.

And with that, we are gonna move into public testimony.

Thank you.

Thank you.

Thank you.

Okay, so as they transition, um, I just I am now opening the floor to public testimony.

So before we begin, um, I remind members of the public that this is a formal government proceeding and that decorum shall be observed at all times, and as such, members of the public shall remain silent at all times.

The witness table uh is reserved for people who wish to testify.

No video recordings or photography is allowed from the witness table.

Further, further, members of the public may not present audio or video recordings as testimony, but may submit transcripts of such recordings to the sergeant at arms for inclusion in the hearing record.

If you wish uh if you wish to speak at today's hearing, please fill out an appearance card with the sergeant at arms and wait for your name to be called.

Once you have been recognized, you will have two minutes to speak on today's hearing.

If you have a written statement or additional written testimony you wish to submit for the record, please provide a copy of that testimony to the sergeant at arms.

And you may also email written testimony too.

Testimony at counsel.nyc.gov within 72 hours of this hearing.

Audio and video recordings will not be accepted.

So I just want to emphasize that our council staff literally read every single word of your testimonies, and we take that back into consideration and for feedback.

Um, so I just really encourage you all if you have other neighbors, friends that live in the residence that you really want to have uh to submit testimony.

Please make sure they do that.

They have up to 72 hours from today to submit it to the email address.

If you need it again, I can give it to you later.

Um you hear your name, please come up to the witness panel.

And okay.

Oh, you're good.

Okay, so our first panel, we have Jean Hill, Ed Yaker, and Sally Strowman.

And I apologize if I'm mispronouncing your names.

Um, so if you could please come to the front table, that would be great.

Are you ready?

Okay, great.

Um, so you can start in whichever order.

Okay.

My name is I think you just have to push the button.

Okay, my name is Jean Hill.

I'm the president of the Tracy Towers tenant organization.

I'm here representing Tracy Towers with a lot of my Tracy Towers residents here with me.

Um, we have I have been there since 1975.

I've listened to everything that's going on today.

I found some of it extremely interesting.

Um, I'll just give you a brief history of what's going on.

So we got 10 million dollars two years ago from the assembly office uh to do work on the elevators and pointing.

None of that work has ever gotten started.

I don't know why they're holding on to this money.

The elevators are constantly breaking down, people are constantly getting stuck in the elevators.

The building leaks like a sieve because the plumbing is 52 years old.

If they even touch it to go repair stuff, it breaks, it floods the building.

We've had apartments that have been totally flooded in certain lines.

One of the apartments, they had to run the holes from their outside hallway into the apartment because the whole apartment was flooded, and then back out to the terrace.

Okay, the people couldn't even close their door.

So they had to go three days with their door wide open while this water has been sucked out of the building.

We know that the leaks of one of the main problems.

We know the elevators are a main problem.

The fire department should have an apartment in the building that they're so constantly getting people out.

The 4th of July, the heat was on.

It was 96 degrees outside, and they had the heat going on.

This is just one of the many things that goes on in there.

We know all of these things have been happening.

We have pleaded, beg, control, and the other thing that pisses us off the most, and excuse me for that word.

You they come in and they do this work.

The work is substandard.

They came in in 2012.

They put in new cabinets, the cabinets all fall in apart.

They put in new windows.

We were still using fuses, and they came in and put in breaker switches in 2012.

That's how long it took us to get breaker switches in the apartments.

So most of the work that they do there is substandard.

They say they come back and they check.

I have never seen anybody in there checking.

Does the work stand up?

They did the roof some years ago.

They had a 20-year warranty on the roof.

The roof warranty has not even expired, and they're back asking for money to do the roof again.

We don't have cameras around the part of the building.

So in the end, everybody can wander in and out of there at will.

You know, they talk about they need all of this extra money for security.

We know the subsc the security is substandard.

Anybody could walk in, you could walk in there right now, nobody would stop you and ask you, what are you doing here?

You're going to see somebody.

We have a system of supposed to be you can ring the bell, but that doesn't work.

That hasn't worked since they put that in.

So everything that they put in is substandard work and it does not last.

But yet you keep coming back to the tenants asking for all of this money, and we're not getting service for the money.

And then you have all of these people who don't fall under any subsidy program.

At least 60% of the residents are not going to fall under subsidy, and what are they supposed to do?

Nobody's going to increase their salary because Tracy Towers wants more money.

Okay.

So where are they supposed to go find it?

I have in the past had to work two and three jobs to pay the money.

So I know what that's like, and raise the family at the same time.

And you have people in there with small children.

So we have a lot of issues in there that people really seriously need to pay attention to.

I know Julie Walpert for the last 40 years.

I don't know how long she's been there.

She says less than that, but I remember at least seeing her at least that long.

I know most of them from HPD.

It's not that we don't send in the 311 reports.

It's not that we don't make the complaints.

It's not that we don't film everything, but it's like I'm talking to myself and who's paying attention.

So we are so glad to be able to come down here today.

I know some of the council members.

I see them on occasions.

I'm also, you know, could work in the community.

So what we really need somebody to really be paying attention to what HPD is supposed to be doing.

It's what they say they do and what they actually do.

And we're not getting the actual work.

We're just getting a fantasy land.

And we're tired of the fantasy land when we got to put good money out for it.

Thank you.

Okay.

Go ahead.

Either one.

Yes, you can go ahead, sir.

Ed.

Okay.

Ed Yaker, chair of the coordinating council of cooperatives and amalgamated houses, as Eric knows.

I thank the council and the committees for holding this hearing.

It's an important topic.

I'll start with two key points.

The hearing specifies Mitchellama, but it's important to include all limited equity housing, limited dividend, redevelopment, as well as Michalama.

State supervised as well as city supervised.

We're all New Yorkers.

We're all part of this community.

Second, one of the financial burdens we have is compliance with city policies.

We can find ways to reduce the city's burden without diminishing our safety.

We know the difference between safety and overzealous rulemaking that simply adds to our cost and doesn't reduce our burden.

CCC are mostly large campus-style co-ops.

We provide more than just housing.

We provide community.

These developments all have income restrictions and were designed for people who could meet the maintenance charges.

But now we're facing costs for rebuilding infrastructure, insurance skyrocketing, and the array of city mandates.

So if we work together, we could reduce some of those costs.

And you have expertise.

We who actually live there have expertise to bring to the table.

Thank you.

Thank you.

Good afternoon.

I like to thank this council.

You are all spot on.

You left me a little bit to say, but I'm gonna say what I'm gonna say anyway.

First of all, the housing rate in New York City as of 2024 was 1.4%.

Obviously, they need more housing to be built.

That's a big question and a big job to do.

My second question is uh Mitchellamba programs are insufficient, oversight, maintenance, backlog, financial mismanagement, and instability.

The bidding process needs to be looked into as the same vendors work on developments over and over throughout the city.

Secondly, when contracts are signed, why are there so many change orders?

Every time there's a change order, for instance, if we sign a contract for plumbing, I'm just making up a number.

Let's say for a million dollars.

Why is there a change order that they didn't they miss something?

They didn't look at something, they found something.

That's a cost to the co-op.

My co-op is not in this in a particularly unique situation, but it's throughout the city of New York.

And I'm begging the council to come up with solution and work with all co-ops to have maybe a tenant um committee where we can all sit down and address our issues to you because we're the ones that's living in the conditions that I hear many of my sister co-ops, regardless if it's city or state.

Thank you very much.

Thank you so much.

Um do any of the council members have questions?

I just want to thank you so much for coming down.

I know it's a long way.

I think I saw you at the park the other day at uh Fort Independence Park, as Eric likes to joke.

I'm always in his district.

But thank you.

I know, I know, and then and then um Miss Gene Hill is yours and not mine.

That's okay.

But thank you for coming.

I hope that you know that we're we're gonna continue to follow up on this.

And uh, as you heard, there's going to be this round table uh that we're going to put together, and so we'll let you know about that.

And thank you, HPD, for still being here and hearing everything they have to say.

Yes.

Thank you.

Thank you.

Yes, so do I.

Nice.

Thank only one.

Okay, so next we have Eric Furman.

If you could come up.

You have a solo panel.

You by yourself.

Eric is a little bit of a St.

James Park, of course.

Should I begin?

All right.

Um, well, first I'd like to thank Chair Lee and Chair Sanchez and all members of the city council present for holding this important forum and also thank the representatives of HPD and other city officials for being here.

Uh it's a crucial meeting.

Uh, but most of all, I'd like to thank the many tenants in the audience for speaking up.

Um, it's difficult for working people to take time out of their day to engage in democracy, but it's critical.

Um, my name is Eric Foreman.

I'm director of housing policy for the AFL CIO housing investment trust.

Um, we are a social impact fund that invests union pension dollars in union-built affordable housing, new construction and preservation.

Um, HIT has invested uh over since 9-11 when HIT uh launched an initiative to help rebuild the city's economy.

We've invested 2.2 billion dollars in affordable housing development projects in New York City.

Um of that 569 million has been invested in Mitchell Llamas and Affordable Cooperative Housing organized under under other articles.

Um we want to applaud the city for um committing capital resources to the cooperatives and the rental Mitchell Lamas.

Um we work very closely with the cooperatives that we have helped finance and refinance uh in order to meet their needs to maintain keep the co-ops in a state of good repair while maintaining affordability.

Um we've tried, we also are a voice in Washington DC.

We're a national fund for augmenting uh the federal resources that our city is very dependent on for maintaining our affordable housing stock.

I think many great points have been made here.

I've offered more detail in the two-page written testimony I submitted.

But in the last 20 seconds, maybe just want to leave you with a couple points.

One is that from what we've seen, uh public investment is needed, probably beyond the scale that the has been committed in the capital budget to help stabilize the cooperatives.

That said, private capital investment from sources such as HIT is a great resource.

This is a moment where we all need to think big about how to preserve this resource.

And in the process, we should make sure that we create good union jobs for tenants uh who are also workers all across the city.

Thanks.

Great, thank you.

Thank you so much.

Oh, yeah.

Okay, next we have Ryan Schollenberger, Janice Brody, and Susan Peters.

No.

When you're ready, just press the button.

You want to go first?

Because the two of us are together.

Sure.

Okay.

Oh.

I'm a board member for um Clayton Apartments located in Harlem, Central Harlem on Western 35th Street.

Um currently, our co-op, we're right, we're running at a deficit.

Uh at least 15,000 a month.

We do have uh IPA in process, but it looks like it may we may need between like 25 million dollars or more to get our building up to standard.

Um we do have something in the process.

We need to get, I mean, we had a grant for like 150,000, but it turned out we can't get that unless we flip over another loan first.

So we gotta get into debt further just to get a six-figure that we want to use for our double breaks for the elevator.

We have to get that done by January 27th.

So we're constantly operating in a deficit.

And when I listened here earlier to we're talking about in 27 and 28, we're gonna have all this money and capital funding.

And you just kind of broke it down by saying it's gonna be a loan, it's not gonna be an investment.

We need investment.

I mean, I think you need to look at the Mitchellamas as being part of the city infrastructure.

We should be treated as we shouldn't be treated as um, I don't know, debt.

We're being treated as debt.

And basically, right now, as far as I mean, we went through a lot of numbers.

I'm just gonna throw a couple at you.

Our insurance, 700,000 a year.

We do have a lot of seniors.

The scree, that's that's a that's not even a band-aid.

I don't know what it's gonna cover.

But when we look at where we're located, there's gonna be one big project that's gonna have over a thousand apartments.

One, it's called one 145 on 140 Fifth Street in Linux.

You're giving them big tax breaks.

There's going to be another building, three buildings across the street from us, big tax breaks, but we got to go into debt.

So, what we're asking for, we're not asking for a loan.

We're asking you to come in, put us capital and help repair our building.

We don't need another loan, we don't need a balloon, come in, and we got balloons already.

I'm my building is 62 years old.

So we are ready, we've been turning over and turning over till we can't turn over no more.

We need we need we need help, and I'm trying to make sure I'm covering everything because I didn't know I had two minutes.

So, yeah, um, Miss Sanchez earlier mentioned the breaks that the renters are getting the tax breaks.

The co-ops are not getting any breaks.

And like I said, we got to repair the elevator by 2027.

All these local laws, um, Fairfield Avenue co-ops.

They said they was gonna put together a petition, and they send one to you.

We're gonna get a petition going too.

These local laws, y'all should be covering.

I'm sorry.

Our rent can only cover operating.

We can't cover the local laws.

It's it's just a little bit too much.

And um, I'm trying to go through all the figures of everything that we owe, but it's it's we need to be treated like we're infrastructure.

And when you say capital, say capital.

If it's a loan, then be true and say it's a loan.

Because I was like, oh, yeah, we're getting all this money 2728, and then he you broke it down, and it's really a loan.

We already in debt.

So this is another board member.

So I'm going to stop now and let him did I cover everything.

Okay.

Thank you.

Hey everybody.

My name is Ryan Scholenberg.

I'm the vice president of the board.

Um I'm gonna try to say these things as quickly as possible.

Um you mentioned um the loan conversion and how much of that uh how much of the increases go towards the loan conversion.

I can tell you that HPD approved for us for this year, 15% increase, and that's only to cover the loan conversion.

Okay.

And I'll be honest with you, that's nowhere, it's a drop in the bucket to get us up to speed.

So it's um, you know, this idea that we're never gonna pay the loans.

We we got approved.

I know Yusuf isn't here today, but Yusuf Salam, he got us 150,000 for this or for 2026 fiscal year.

We can't even get that until we pay to convert the loan.

So it's essentially we've got nothing.

Um Esplanade Gardens got a million dollars last year.

I didn't, I don't know if they had to do the same thing, but they got that money.

We got nothing.

And um, you know, Legionella's in the news right now.

I know you everyone's that's on everybody's.

I got you, don't worry.

I know that's on everybody's mind.

We had Legion L in our building for three years.

When it happened, we were told by the Department of Health that we had to immediately take care of it.

We got zero money.

We had to pay over 250,000 to date.

We're paying six to eight thousand dollars a month to run a monochloramine system that we don't even need anymore.

And we've had now three months of testing and been Legion L-free.

Now, why do we have that problem?

Because we got 62-year-old pipes, and the Legionella keeps coming back.

So if we don't get the money to replace the pipes, it's gonna keep coming again and again, and then we're being forced to pay for this.

Now, all these buildings in East Harlem right now are being cleaned out, they're getting the money ahead of time.

We've been told we can't get that money back now that we paid for it, and it's put us in a huge hole, quite frankly.

And that's the least of our problems.

25 to 30 million dollars to update the pipes, the windows, the other local laws.

I mean, um I just don't know where to begin.

Our insurance costs $697,000 a year.

I appreciate that that was addressed before that you guys are gonna do something about that.

But this is a systemic problem for Mitchell Lama, it's not just us.

And um, sorry.

I think that's uh I think that's pretty much it.

But uh we appreciate everything you guys are are trying to do and will continue to do for us.

Thank you.

And if you do think of something after today, make sure to send it in because we will review it.

I'm sorry, say that again.

If you no, I was saying if you do remember something after today, because you know, there may have been some things that you forgot to mention, definitely submit that to us.

Sure, got plenty to send you.

Thank you.

I appreciate that.

Thank you.

Sorry, go ahead.

Can you hear can you hear me?

Okay.

My name is Susan Peters, and I am a resident of the Upper West Side of Manhattan and a member of the American Monetary Institute, a 30-year-old 501c3 working for monetary education and reform.

I am here sharing with you an important piece of information relevant to your responsibility for the finances of our city and its effects on our citizens, such as this rising unaffordability crisis.

First, my background.

I had a 37-year career as a data processing professional.

The last 17 years was spent working for a Wall Street bank.

I was responsible for reporting the daily activity of the corporate checking account system.

Each night of the week, the system delivered a balance sheet, which recorded each night $2 trillion moving daily through the 40,000 accounts.

As the person responsible for the accounting application, I discovered to my surprise the special privilege given to private banks, but not taught in our schools.

Quote, every time a bank makes a loan, all it is doing is simply making a bookkeeping entry in the borrower's account for the full amount of the loan.

End quote.

Thus, the money supply is composed of debt to private banks and generates interest to those banks.

It's not taught in our schools or discussed in our public forums, but is significant to our understanding of our city's finances.

That's why I'm here.

And then here I have some of those resources from the Bank of England and from a credit manager from a Federal Reserve Bank supporting what I've said.

Thank you.

Great.

I think Councilmember Jennawitz, you had a question.

Yeah, Mr.

Schollenberger, you mentioned insurance costs.

That was I guess over the years, HPD has shared different reasons why rent is increased.

Um insurance costs are one of them.

They're going up everywhere.

Do you know how much you pay per unit for or uh uh for insurance?

If anybody's good at math, you can divide 697,000 by 162, and that'll give it to you.

I can't do that.

Janice's gonna do it.

Can I can I take this opportunity to actually 300 dollars?

It's this is uh I just want to I I please go ahead.

Go ahead.

Yeah, $4,300 per unit for insurance.

Um the at Tracy Towers, it is also similar.

It's 4,600 per unit for insurance.

Um 4600 per unit roughly for insurance.

Um ANHD says that for affordable units, it's throughout the city, it's roughly 17, 1,770 per unit for affordable unit uh and per unit for affordable housing.

And the rent guidelines boards documents that for uh rent stabilized units, it's less than $2,000 a unit for insurance.

Ums costs are going up, but there is a real seems like a real critical discrepancy between the costs Michelama residents are paying for insurance and what other types of affordable housing developments and apartments are paying for insurance.

And this is one of the areas I believe HPD needs to use their, I guess, negotiating power representing 46,000 units to get better rates because they are not in line with other types of affordable housing, and and you all have to pay the price uh for those uh inflated insurance costs.

Thank you.

I appreciate you addressing that.

Uh could I have 10 seconds, two other quick things?

Okay.

So the one other thing that I wanted to get to was the management companies, which people have talked about a little bit.

There's a list of about 30 that are approved.

Most of them are terrible.

I'm just here to tell you.

We've looked into all of them, we've talked to boards from different co-ops.

They're very bad.

I feel like it would be a huge benefit, and we've talked to some private companies who are willing to go through all the hoops to get approved by HPD, but opening that up is gonna be helpful because I'll be honest with you, like we're we're trying.

We've had management steal from us.

We've had one of our managers is literally indicted by the DA.

I don't know if she's in prison now, but like that happened.

And like we've had shareholders that have had their um their monthly maintenance checks literally stolen multiple times.

And these are the companies we're forced to work with by HPD because they only approve a certain amount.

Not being critical of you all for that.

I'm just saying that's the that's you know, where it stands.

And the other thing, um, I promise I'll wrap it up, is uh oh, the ability to raise funds, right?

So some of the some of the Mitchellamas, the upper west side, they have commercial spaces underneath.

They can charge rent for that.

We have none of that.

We have no, you know, we don't have a big parking lot that we can sell, we don't have these like other creative opportunities, and there's so there's some differences between the Mishra Lama co-ops um, you know, that essentially allow other ones to raise funds.

And you know, we don't want to ask for handouts.

We would love to be able to handle this internally ourselves, but the reality is we don't have the the tools to do that.

I come back one quick that's that's it.

I'm gonna do that.

There's something that I do notice that when the when buildings do leave the program, if they don't have commercial space, they rebuild it.

They go in and they make adjustments, so in the future they're gonna bring themselves more money.

I think as far as also looking at ways to save money, we need to look at ways that we can actually put um commercial space in some of these buildings on the lower levels.

If there is there's a way to upgrade it, my mother's building left the program, and they redid, they took part of the the lobby, the sidewalk, and they put big three that the whole the whole avenue now is commercial space.

We need to be able to look and do different things like that, and like the gentleman mentioned earlier, when y'all do your round table, you need to have some of us sitting there too.

Thank you, Speaker.

Thank you.

Thank you so much.

Oh, and I just want to say um, I think oftentimes you hit the nail on the head that um because I'm a social worker and came from nonprofit, so I often had to comply with a lot of the policies that the council members put in place.

So we hear you when you say um that it's difficult to comply a lot of times, um, which is why I brought up the question about local law 97.

And I think that um, while well-intentioned, these are things that are gonna impact folks in co-ops and condos like yours.

Um and as someone who I I say this to all the residents here, right?

For I I have the most number of co-ops and condos in my district in Eastern Queens.

For I I have the most number of co-ops and condos in my district in Eastern Queens, they're not Michelamas, but they are housed with older adults, seniors on fixed incomes, union workers, teachers.

Um, and so we need to do more because the housing was meant when it was first built for post-war uh veterans and folks coming back, and we need to make sure that we're protecting that and not making you all have to pay uh on the backs on your backs to uh support a lot of the work that's going on.

So we appreciate you coming all the way to testify, and I appreciate everyone who's here.

I just wanted to say that for the record because you're taking time out of your days to be here.

So thank you.

Okay, next up, we have um Dominic.

Uh Dominic.

Oh, Dominic Pucumenta, Richard Heitler, and Valerie Brooks.

And please let her know she can still submit her testimony if she wants to.

Okay, great.

Press the button.

Um, first of all, I do want to thank you for the opportunity to testify also to attend the hearing.

Um I come into this hearing feeling that I am speaking to friends and supporters.

We appreciate what you have done to get at more funding allocated into the budget, and we appreciate your support for Mitchell Lama Housing.

My name is Richard Heitler.

I have been a resident of Village East Towers on the Lower East Side since 1975.

I'm older than all of you.

And um I've been on the board for 20 years, 18 of which is president.

I'm currently the treasurer.

I like to try to drive things to a number.

Um, I'm also a founding member of Cooperators United for Mitchell Lama, as is Valerie, as is Sally, as is Sam Moskowitz.

We already have a round table.

It's called the board members' round table, and it's people who are pro-Michel Lama, got themselves elected to the board, and we share information and we do peer consulting about how we can do a better and better job.

Now I as you can see I have uh a six-page testimony.

I will not even attempt to summarize it in two minutes.

I will hopefully say enough to uh at least um in I don't know, encourage you to read it.

But I've been listening to the discussion and the debate back and forth.

So I want to make some comments about testimony that I will have not submitted, but will submit within the next 72 hours.

Um we all recognize that rent increases are necessary.

We are all horrified when they are this extreme and this sudden.

And um, I want to say that I intend to, as hi HPD, I intend to take Adam's invitation.

Um he said if anybody has a proposal for an annual rent increase, I would take a look at it.

I have it.

It's nine pages long.

I spent uh the better part of eight months working on it and vetting it with various allies.

And I'll give you the briefest summary.

You got to scrap the whole complicated, unwieldy, unreadable three-year rent increase system.

You ask for huge schedules that none of our shareholders can read.

And you produce an information when when you when you finally get to the notice of approval, nobody understands what that means either.

Okay.

The system, I want to tell you what we're currently doing at Village East Towers and have for years, and the system that we propose.

One, it must be annual.

If you really are looking at our annual financials, you can see immediately if there's a gap.

It doesn't take a lot of math to fill it and figure out how much you need.

You look at the operating deficit and the unpaid bills, and you come up with a proposal.

And for this reason, I think scrap the three years.

It's too complicated, it's too cumbersome.

Rent increases have to be annual because nobody can actually anticipate what's happening three years down the road.

Secondly, the system of review and approval has to take place in a period of between not more than 90 or 120 days.

At Villages Towers.

I talk about finances at every open board meeting, and we have them monthly.

And when our can you give me a moment?

I will be as brief as I can, but I need the need you to reset the clock.

Um and it's the uh the the issue here is we have informational in-house meetings that are that are presided over by the board of directors and our accountant and our lawyer, and we explain to every resident exactly why the rent increases are needed and how much it's gonna cost for their apartment.

Info none of which is in is included in the in the notification letter that they will later get from HPD, and then we're done, and then we have to wait for HPD approval.

We had a deadline.

We have we we're in the middle, we're in the second phase of uh of uh of a rent increase of five and five and five.

And um, it's higher than I would like, but it was needed.

Um we it it is the third rent increase that I put through during my term as uh on the board.

Um we knew that our previous three-year rent increase expired, and we needed a new one by November 1st.

We tried our hardest to do everything right.

We got final HPD approval to put the next rent increase in effect on September 1st of the following year.

That gap blew a 200,000 hole in our budget.

And so my if I have a theme, it is delays cost money, and we have to come up, we have to look at our system, see what's really necessary and what's not, and uh and figure out how we can do it faster.

My um sixth page, the small one testimony that you have in front of you has five points.

The first of which is faster processing for loans.

We have refinanced with HPD and H DC, and we love you guys.

And the HPD people that I've worked with have been capable, dedicated, hardworking, and the system stinks.

Um we are one of those co-ops.

We're trying to figure out how you manage capital repairs, but we did an IPNA way back when, before anybody asked for it, and we developed the scope of work and we started working with HPD to develop a capital, major capital improvements loan.

We have been working on that loan for three years, and we have not closed.

We have been told that we will close by the end of the month, and I hope that's real, because I've also calculated the cost of that delay.

Part of our IPA included replacement of all the black type, black pipe.

The old brass plumbing, fabulous, but the drain pipes are cast iron and they leak.

And we have been trying to patch cast iron, and when they leak, they flood, and ceilings and walls are damaged.

We have so the delay has cost us several hundred thousand dollars.

We knew from our IPNA that we had to replace the water tank.

It would not wait till loan closing.

We did it ourselves.

It was a hit on the operating budget.

It should have been a capital expense in excess of 100,000.

We got one of our local law 11 buildings done.

We have two more to go.

We cannot afford to do because those two things totally devastated our reserves.

We are we have to wait until we close the loan until we can do the local law 11 work.

There's a kink in the code, although there is no danger of anything falling.

If you have a condition that an engineer says requires repairs and you don't repair it in a year, then the uh the sidewalk sheds have to go up.

Sidewalk sheds are costing us 25,000 a month.

The delay is gonna, you add all these three numbers together, and the failure.

We had a we did everything right.

We got an IPA, we had a scope of work, we got the scope of work, we got the scope of work approved, we got it bid out.

We had a uh a successful bid in January of 2025, and the fact that we have not been able to close on the loan has cost us more than half a million dollars.

The other pieces of my um of my six-page thing are five other suggestions for how to um keep Mitchell Llama affordable, and they're nerdy and they're smallbore, and that should be easy.

We also in addition to the great big loan programs, we need a little loan program to repair vacant apartments.

When an expensive piece of equipment goes down, it needs to be replaced.

We need a loan program that can close on a discrete scope for a small amount of money in 30 days or less.

That's my second point.

My third is we need mortgages for new purchases.

And if you want to speak, one of you guys talked about the one turnover and the questions of turnover takes a long time.

A lot of it is the buyer has you know has trouble raising the money, and he can't get a mortgage.

And Sony May will not do mortgages for Mitchell Lamas or limited equity co-ops.

I got two more.

So if you could just one sentence each.

Yeah, one summarize, yes.

I'm with Gail Brewer.

You have to end two to eleven conversions.

They just make the co-op less affordable.

And I have my last one from my brothers and sisters in Mitchell Lama Rentals.

Each and every one of them.

We're very pleased that everybody's interested in Topa and Copen.

I hope it passes soon.

Don't forget to Mitchell Llamas.

Every Mitchell Lama rental should have the option to become a Mitchell Lama co-op and receive the technical support, legal support, training, and technical assistance needed to make a credible bid.

And thank you for your time.

And any of your staff members who want to talk to me about any of these things, you got my number on the sign-up sheet.

Thank you.

Thank you so much.

These are very thoughtful suggestions, so we appreciate it.

Can I get one of your sheet?

Yes, you can put up there.

Okay, and next we have wait this one.

Okay.

Faisel Yousafu, uh Lami Yusuf, and Mamalo Yusufu.

If you guys are here.

Some of them left.

Some of them left.

Okay.

Anyone else?

Okay.

If anyone else is here that did not sign up, if you guys could raise your hands.

Okay.

So if there's no one else, we're gonna move over to our Zoom.

Uh there's a there's one or how many folks?

Two?

One.

Three questions.

Three.

Okay.

There's three folks on Zoom.

Question before you have to go.

Oh, you had to have to test up.

You have to sign up.

Oh, yeah.

You can let them go to the signal.

Okay, yeah.

If you want to come to the front, and then um we'll get your information afterwards.

Um if you could just state your name and uh where you're from for the name Steven Torre.

I live with Tracy Towers.

And as we we talked about before, RY management wrong in the city of New York.

Um, I told you what you call uh HPD.

HBD was trying to tell us that we could sign up with a SNAP program.

It doesn't feasible for me to sign for a SNAP program because my wife still works, but I'm retired.

I'm over that 70,000 budget.

When she files a tax return, I file away for her.

It's puts me in a hole.

I can't afford to go back to work.

I'm disabled.

I'm gonna lose my apartment because my wife can't make more money what she's making now.

So this band-aid that they offer us, I don't need it.

I don't want it.

Give it to somebody less fortunate, but help our building.

That's all I ask.

I'm not begging for a handout, I'm just saying work with us.

I remember when I was young, I worked with organizations to help bring back our community.

We I was known as a tenant organizer for Bronx Neighborhood Community Corporation, phase one of the Bronx system, two, three, and four.

We rebuilt old abandoned buildings.

We took unemployed workers from the street to rebuild these built-in buildings back in the 70s into the 80s.

Why can't we do that now?

We don't need HPD.

HPD is a band-aid, it's a systemic problem for our city, it should be taken out.

That's all I have to say.

Thank you.

Thank you.

Thank you so much.

Okay, so I don't know if there's anyone else uh seeing.

I think that's everyone who's here uh in person.

We're gonna move to uh wait, oh what is this?

Okay.

Oh, okay, okay, got it.

Um we're gonna move over to Zoom, and I believe we have uh Sam Moskowitz.

Oh, wait, hold on.

I'm so sorry.

There's something I'm supposed to read beforehand, my bad.

Um so thank you to all who came here to share your thoughts and experiences.

If there is oh, yeah, this one, anyone in the chamber, yeah.

In the hearing room who has not spoken but wishes to speak um and not have the opportunity to do so, please raise your hand, fill out the card as this gentleman did.

Um, and going over to Zoom.

If you're currently on Zoom and wish to speak, but have not yet had the opportunity to do so.

Oh, wait.

Uh, so we have one or two folks on.

And for folks that are on that maybe have not signed up, if you could just raise your hand as well, um, so we can make sure to capture you, that would be great.

Um, okay, so we're gonna start with Sam Moskowitz, and then I think there is someone, Gene Hall, I know was here in person, but I think there's someone else who may be using her account.

So we're we'll start with Sam Moskowitz, followed by Gene Hall.

Thank you.

Um, can you hear me okay?

Yes, we hear you.

Okay, I'm sorry I wasn't able to be there in person, but I've been listening to every word online from my office.

Uh my name's Sam Moskowitz.

I'm the board president of Gouverneur Gardens, which is a 60-year-old 782 unit Michelama co-op on the Lower East Side of Manhattan.

I really appreciate everyone who's still there and everyone who showed up today.

Um, I know preserving affordable housing for hundreds of thousands of New Yorkers is not as sexy as banning horses.

Um, so I truly appreciate you all being here.

I know for me personally, this is the most important hearing of the day, even though we won't be reading about it on the cover of the post tomorrow.

Um, so our community at Gouverneur Gardens represents both the profound success of Michelama, but also shows the urgent need for structural reform.

Over 70% of our residents are low income, many of whom are seniors, aging in place, and we're currently undergoing a $54 million capital improvement project to replace much of our aging infrastructure.

Um, after serving on the board for about 10 years and building relationships with other Michelamas, I'm very aware of the challenges we face.

And um, I'm not here to complain, but I just wanted to come and give a list of recommendations.

So, first I won't dwell on the skyrocketing insurance insurance costs because it's already been covered at length.

Um, I calculated our unit costs is about $1,800 per unit for insurance, which has doubled over the past few years.

And so I just urge you to do whatever you can to further subsidize these costs and help us out.

Um, so we don't have to further pass on these costs and burden our low-income residents.

Second, which has also been touched on a lot today, is we really need to stop sacrificing the long-term stability of this program with short-term affordability.

So, for too long, the pattern has been don't raise carrying charges and deferred maintenance.

Um, the financial crisis facing us is not just a product of this recent inflation.

It's a very sorry.

Um, well, I did submit a full written testimony, and I have a number of recommendations, including um requiring multi-year budget projections, standardizing the reporting for one, three, and five-year budgets to transition developments from reactive crisis management to proactive planning.

Um, like Dick said, adopt simplified zero fund but zero sum budgeting, simplifying the process with HPD to avoid these disruptive double digit spikes.

Um assisting us by allowing us to hire a owner's rep earlier in the contract process for capital improvement projects.

Not doing so is a huge missed opportunity and costs our residents um both financial resources and in their health.

And finally, mandate the tracking of key indicators that would indicate um financial distress, specifically vacancies and arrears.

We budget for five percent vacancy loss, um, but it should be lower.

But if there's co-ops that have higher losses, they need to be on some sort of corrective plan and helped by HPD in advance.

So I did submit a much longer written testimony.

Thank you all for your time, and um thanks again.

Great, thank you so much.

And next we have Gene Hall.

Good afternoon.

Trying to turn my camera on.

Good afternoon.

Uh thank you for the taking the time.

Uh Chair Lee and Chair Sanchez, uh count members of the Finance and Housing Building Committee.

Thank you for this opportunity.

My name is Gene Wall, and I am the board president of the Rochdale Village uh Rochdale Village, Inc., the state supervised Mitchellama cooperative, which is located in Southeast Queens.

Rochdale Village is home to over 25,000 New Yorkers, including seniors, working families, and individuals living on a fixed or modest income.

As one of the largest Mitchell Lama cooperatives in the city, our long-term affordability is not only essential to our residents, it is essential to New York City's water affordable housing landscape.

And although we are a state supervised housing company, the city requirements shape our financial reality every day, including local law 11, local law 97, DOV elevator and monetization requirements, city border and store rate structures, city property taxes, city capital and infrastructure program, the city administered affordability tools such as J51, and the City Council discretionary support for senior services and outdoors.

Like many aging Mitchell Lama cooperative, Rochdale Village has been funding aging infrastructure, escalating operation force, rising insurance premiums, elevated modernization needs, facade and roof repairs, utility and water course that outpace our revenue and growth.

Without modern financial tools, cooperatives like ours are forced to depend on maintenance create increases that strain the very resident Mitchellama was created to protect.

Our 31.2 carrying charge affected November 2025 has pushed our community to the brain.

Respectfully, I'd like to recommend and support two things.

Expand city capital programs to include Mitchellama and to create a dedicated Mitchell Lama Capital Fund where we could get city capital funds to help us address elevators group, facade repairs, energy efficient upgrade, safety and compliance.

Thank you so much.

We look forward to working with New York City.

Rochdale Village stands ready to work with the council, HPD, HCR, and all partners to secure the future of our community.

And we will submit a substantially written report, revised and instant count.

Thank you so much.

Thank you so much, Jean.

Okay, if there's anyone else on Zoom that would wish to testify and has not been called on, please use the raise hand function.

And if not, okay, seeing no hands, um, again, I'd like to note that everyone can submit written testimony to Testimony at Council.nyc.gov within 72 hours of this hearing.

And we thank the administration and the public for attending this hearing to share their thoughts on the oversight topic today.

And we look forward to following up on the issues.

And with that, uh, this hearing is now adjourned.

Thank you.