In 1963 a co-op tower went up on St. James Place in Brooklyn under a relatively new affordable-housing program, known as Mitchell-Lama, that was created to give New Yorkers of limited means and little access to financing the opportunity to own a home. Shareholders were told they could eventually cash in on their asset’s appreciation by selling their apartments on the open market if several conditions were met: They would have to wait at least 20 years, pay off the building’s underlying mortgage and then go through an obscure process involving shareholder referendums.
For the St. James residents, it took 50 years before the mortgage was paid off. Last week a vote was held to decide whether to craft an offering plan that would preserve the option to go private but not commit to it.
But some public officials felt it was their job to pressure owners of the 326 units to remain in Mitchell-Lama.
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That would mean owners could sell their stakes only for five-figure sums, rather than the hundreds of thousands of dollars that apartments in their Clinton Hill neighborhood fetch these days. A day before ballots were cast, Public Advocate Letitia James, state Sen. Velmanette Montgomery, Assemblyman Walter Mosley and Councilwoman Laurie Cumbo told the residents it was their duty to keep their building affordable. James even pandered to residents on race, imploring them to protect the “culture” of the area from gentrification, by which she meant not selling at market rates to buyers who likely would be white. “What about the impact on diversity?” James demanded. “Do any of you care?”
Laying a guilt trip on the owners was unconscionable on many levels. To begin with, the decision was theirs alone. For some it was a wrenching choice, and the last thing they needed was bullying by outsiders who don’t know their personal circumstances. Some residents who endured Clinton Hill’s more dangerous years—when they brought in guards and attack dogs to patrol the building—wanted to reap the rewards of the neighborhood’s turnaround. Others sought to bequeath their now-coveted units to their children, not a stranger who wins a housing lottery. “In 1963 I took a chance, investing my meager resources in 21 St. James Place,” owner Lawrence Whiteside wrote. “Now, after more than 50 years of shareholder investment … I’m told it would be unfair to others if I cash in my winning ticket. Are you kidding?”
He won’t get the chance: His side lost the vote. The politicians cheered. But they were out of line to get involved in the first place. If they want to make personal sacrifices to slow gentrification, they are welcome to. James bought a nearby multiunit brownstone for $550,000 in 2001 that would fetch several times that amount today. Will she hold a lottery for a lucky winner to buy it for a fraction of its value? Don’t count on it. — THE EDITORS
In 1963 a co-op tower went up on St. James Place in Brooklyn under a relatively new affordable-housing program, known as Mitchell-Lama, that was created to give New Yorkers of limited means and little access to financing the opportunity to own a home. Shareholders were told they could eventually cash in on their asset’s appreciation by selling their apartments on the open market if several conditions were met: They would have to wait at least 20 years, pay off the building’s underlying mortgage and then go through an obscure process involving shareholder referendums.
For the St. James residents, it took 50 years before the mortgage was paid off. Last week a vote was held to decide whether to craft an offering plan that would preserve the option to go private but not commit to it.
But some public officials felt it was their job to pressure owners of the 326 units to remain in Mitchell-Lama.
That would mean owners could sell their stakes only for five-figure sums, rather than the hundreds of thousands of dollars that apartments in their Clinton Hill neighborhood fetch these days. A day before ballots were cast, Public Advocate Letitia James, state Sen. Velmanette Montgomery, Assemblyman Walter Mosley and Councilwoman Laurie Cumbo told the residents it was their duty to keep their building affordable. James even pandered to residents on race, imploring them to protect the “culture” of the area from gentrification, by which she meant not selling at market rates to buyers who likely would be white. “What about the impact on diversity?” James demanded. “Do any of you care?”
Laying a guilt trip on the owners was unconscionable on many levels. To begin with, the decision was theirs alone. For some it was a wrenching choice, and the last thing they needed was bullying by outsiders who don’t know their personal circumstances. Some residents who endured Clinton Hill’s more dangerous years—when they brought in guards and attack dogs to patrol the building—wanted to reap the rewards of the neighborhood’s turnaround. Others sought to bequeath their now-coveted units to their children, not a stranger who wins a housing lottery. “In 1963 I took a chance, investing my meager resources in 21 St. James Place,” owner Lawrence Whiteside wrote. “Now, after more than 50 years of shareholder investment … I’m told it would be unfair to others if I cash in my winning ticket. Are you kidding?”
He won’t get the chance: His side lost the vote. The politicians cheered. But they were out of line to get involved in the first place. If they want to make personal sacrifices to slow gentrification, they are welcome to. James bought a nearby multiunit brownstone for $550,000 in 2001 that would fetch several times that amount today. Will she hold a lottery for a lucky winner to buy it for a fraction of its value? Don’t count on it. — THE EDITORS
A version of this article appears in the February 27, 2017, print issue of Crain’s New York Business.
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