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DiNapoli: Taxpayers Subsidizing Vacant Affordable Apartments

By DNAinfo Staff on December 3, 2009 6:37pm  | Updated on December 3, 2009 11:25pm

New York State Comptroller Thomas DiNapoli
New York State Comptroller Thomas DiNapoli
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Albany Colonie Regional Chamber/Flickr

By Suzanne Ma

DNAinfo Reporter/Producer

MANHATTAN —Three rental developments have deliberately kept affordable units vacant in order to later rent them at market prices, a state audit has discovered.

State Comptroller Thomas DiNapoli said New York taxpayers have been "subsidizing vacant apartments." His audit found more than 70 percent of empty affordable apartments in three large Manhattan developments were left unrented for long periods of time.

The audit, released Thursday, examined records at the six largest developments in Mitchell-Lama program between June 1, 2007 and Oct. 31, 2008. The developments included three cooperative buildings, Southbridge Towers, River View Towers, and Rivercross; and three rental developments, Lakeview Apartments, Island House and Westview.

Auditors found that the three cooperative developments resold their vacant units in a timely manner, but the three rental developments had vacancies for "excessive periods of time."

The three rental developments were planning to leave the Mitchell-Lama program, and therefore deliberately kept the units vacant in order to rent them at market prices after departing the program, auditors said.

"The shortage of affordable housing is forcing many New Yorkers to spend more of their shrinking paychecks on rent," DiNapoli said in a statement. "Mitchell-Lama is supposed provide access to affordable housing, and the key word is access. Taxpayer dollars are helping fund Mitchell Lama and those tax dollars shouldn’t be wasted, in effect subsidizing vacant apartments."

According to the audit, 97 of 137 rental units were vacant for more than 60 days. Of these, 20 rental apartments were left vacant for more than two years, and one three-bedroom unit in the Island House development was not rented to new tenants for nearly three years.

While regulations do not explicitly give a required time frame for filling vacancies, it is expected that developments make sufficient efforts to rent or sell vacant units within 60 days.

Auditors also discovered that one development, the 364-unit Rivercross co-op on Roosevelt Island, permitted owners to sublet units. This violates the affordable housing program’s requirement that units should be the principal residence of tenants and their families.

DiNapoli’s audit recommends that the developments establish a time frame for filling Mitchell-Lama vacancies, determine whether subletting should be permitted at the Rivercross development, and inform development owners that "warehousing" — the act of deliberating keeping units vacant in order to rent them at market prices after leaving the program — is not permitted.