SUNSET PARK — Low-income tenants who receive federal subsidies for rent in Sunset Park may have that status threatened if the buildings’ owner opts out of the government program.
Twenty-four buildings totaling 270 units in Sunset Park receive financial support through a project-based program called Section 8, in which the federal government pays a share of the apartment rent.
But on July 1, residents living in the two-dozen Section 8 buildings, known as Neighborhood Stabilization Associates 1 L.P., received a warning notice informing them that property owner E&M Associates does “not intend to renew the current Section 8 contract when it expires.”
Residents, who pay roughly 30 percent of their adjusted monthly income toward rent under the program, rely on an agreement that has continued for more than two decades between the property owner and the U.S. Department of Urban Housing and Development to receive the subsidy, housing advocates said.
While the owner has a right to opt out of the program, it could cost tenants the valuable affordable housing that’s scattered throughout the neighborhood, said Marcela Mitaynes, a program coordinator at Neighbors Helping Neighbors, an advocacy group that’s assisting the Sunset Park tenants.
“Even though this process is legal,” Mitaynes said, “it doesn’t feel like it’s the right thing to do.”
Despite her concerns, federal officials expect the property owner to maintain its Section 8 status.
The Section 8 contracts for the buildings expire in June 2015, and under federal law the owner was obligated to send the July 1 notice if they did not wish to renew the contract.
A spokesman for HUD said it’s fairly common for property owners to send out warning notices prior to a contract’s expiration and still renew it before the deadline.
While the owner can still renew the contracts up to roughly four months before they expire, the notice has residents preparing for the worst.
If the owner were to opt out, the loss of low-income housing in Sunset Park could cause a “spiral affect” that would also eliminate smaller businesses from the neighborhood and replace them with expensive condos and corporate chains, said Walter Wolfe, 64, a tenant who has lived in the building for more than 30 years.
“Who can afford that?” he asked.
Three tenant leaders and longtime residents — Wolfe, Louis Arocho and Luis Ramos — recently sat down with Mitaynes at a Dunkin' Donuts in Sunset Park to go over a presentation on Section 8 set to be discussed with Community Board 7.
They fear the loss of Section 8 housing could make it become an unaffordable neighborhood, where many of them have lived for decades.
“In Park Slope, I’ve seen it,” said Arrocho, 59. “But not over here.”
E&M manager Joel Goldstein did not respond to requests for comment, and neither he nor other representatives from the company have met with residents or Mitaynes to discuss the contract.
HUD offers a “Mark-up-to-Market” program, which allows E&M to analyze comparable market-rate units in a neighborhood and negotiate a new rent for the Section 8 contract, spokesman Charles McNally said. In that case, HUD would cover any increases in costs while tenants would pay the same rent.
The one-year timeframe between the July 1 notice and when the contracts expire allows property owners like E&M time to opt out if problems arise during the Mark-up-to-Market application process, he added.
“There are not any anticipated problems at [Neighborhood Stabilization Associates 1], and HUD expects an eventual renewal of their participation under [Mark-up-to Market] rents,” McNally said in an email.
The owner has submitted the Mark-up-to-Market application to HUD and must wait on its approval before renewing the contract, he added.
E&M also represents the owner who has Section 8 contracts for a second group of properties, called Neighborhood Stabilization Associates II L.P., that are due to expire in December. However those tenants did not receive the opt-out notice so the contract must be renewed for a minimum of one year, McNally added.
In the meantime, Neighbors Helping Neighbors and the tenants are reviewing all of their options.
If E&M opts out of the program, tenants may be eligible for housing vouchers that can be used to rent the same apartment or another HUD-approved property if the tenant can cover the rent.
“We will honor your right as a tenant to remain at the property on this basis as long as it continues to be offered as rental housing, provided that there is no cause for eviction under federal law,” the July 1 notice read.
Families won’t be out on the street if the contracts expire, but receiving a voucher isn’t guaranteed. People can be disqualified for reasons such as having a criminal record or an illegal living situation, Mitaynes said.
“We fear that some families won’t get vouchers and they’ll end up being displaced,” she said.
Another possibility is finding a “preservation purchaser,” an entity that would buy the buildings from E&M but maintain the Section 8 status, if the company does decide to opt out. There is also the option of filing a lawsuit in that situation, Mitaynes added.
“I feel like this fight is going to have to come from everyone,” she said.