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FOR IMMEDIATE RELEASE: April 13, 2007

Schumer, McMahon Launch Drive To Save Middle-Class Mitchell-Lama At Castleton Park

Current bid to buy Castleton Park and remove it from Mitchell-Lama program puts tenants, Staten Island in danger of losing affordable, middle-class housing

Schumer, Chair of Senate Banking Sub-committee, today releases letter to HUD pressing agency to block sale of Castleton Park in light of Island housing crunch, proposed landlord's troubling record

Letter coincides with new

Today U.S. Senator Charles E. Schumer, standing with Councilman Michael McMahon and Assemblyman Matthew Titone, moved to block the sale of Castleton Park, a 454-unit complex in St. George that is one of only two Mitchell-Lama developments on Staten Island. The proposed buyout, and the landlord's stated intent to remove the development from the Mitchell-Lama program, leaves current tenants vulnerable to skyrocketing rents and would remove an important option for middle-class housing for future generations of Staten Island families. Schumer revealed today that HUD has the power to forbid the sale of this critically important middle-class housing because of the development's HUD-insured mortgage, and urged the agency to do so immediately. Schumer also announced a new push for state legislation that would protect the affordability of Mitchell-Lama apartments even after a buyout.

"Affordable, middle-class housing in this city is under attack, and it is high time for HUD and the New York State to put a stop to it. The people who built-up these neighborhoods do not deserve to be run out as owners chase the highest bidder. It is even more galling that, in this case, the developer wants the federal government to foot the bill for future profits without committing to protect affordability for current and future tenants," Schumer said. "I urge HUD to promptly reject the proposed sale of Castleton Park, and the sale of any other government-subsidized affordable housing developments where those developments are needed by hard-working, middle-class families to maintain their way of life."

"It is unconscionable that while the tenants at Castleton Park have helped build the community in St. George, they are now under threat of being priced out of their own homes because their neighborhood has become such a desirable place to live," Councilman McMahon said today. "I'm thrilled that my office has had the opportunity to work with the Castleton Parks Tenants Association since October with strategy and funding on this truly grass-roots effort, and look forward to preserving Castleton Park as affordable housing for hard-working Staten Islanders for generations to come."

"I'm proud to stand here as a united front with Senator Schumer and Councilman McMahon in our fight to save the fast disappearing availability of middle-class housing on Staten Island," Assemblyman Titone said today. "We all know that Staten Island is a wonderful place to live, and it's no wonder that we're the fastest growing borough in the City, but as we grow, we must also be sure to preserve the way of life of the residents and communities that make Staten Island as dynamic as it is."

Since it was constructed in 1974, Castleton Park has relied on a variety of Federal, State and City subsidies to ensure the development's affordability and upkeep, including Section 8 vouchers and Section 236 rent concessions which subject the development to restrictions on the rental prices of units and the income levels of tenants. Additionally, as a development with a HUD-insured mortgage, any prepayment of the mortgage must be approved by HUD. However, under Section 250 of the National Housing Act, HUD may only approve the prepayment if the agency determines that the housing is no longer needed as affordable in that community.

Schumer added: "The bottom line is that Castleton Park's success is owed in large part to the assistance it received over the years from the Federal, State and City governments. Whether it is the through Section 8 vouchers, this development's HUD-subsidized mortgage or a sizable interest rate subsidy, government at every level has been there for Castleton Park. As the chair of the Senate's Housing Subcommittee I will make this promise: we will not walk away in your time of need."

Despite the heavy government subsidies pouring into the development, the prospective landlord, Larry Gluck of Stellar Management, clearly stated his intent to remove the development from the Mitchell-Lama program by financing the sale through enhanced vouchers which would only apply if a buyout of the Mitchell-Lama program were to occur. In his recent acquisitions of Mitchell Lama buildings, Mr. Gluck has paid hundreds of thousands of dollars per unit. In light of this, there are serious questions as to whether Mr. Gluck's proposed purchase price can be supported by the restricted rents following any sale.

"Essentially this owner wants to strip tenants of vital protections, raise the rent and get federal taxpayers to subsidize it. No thanks," said Schumer.

Additionally, Mr. Gluck has served as the property manager for Castleton Park since July. In September, the building failed to pass its physical inspection for the first time in years. In surveys conducted by the tenant associations of a dozen other Mitchell-Lamas that Mr. Gluck recently bought out, tenants have alleged that rent billing and lease errors are common problems, many reported serious non-compliance with environmental safety regulations, and others reported that tenants are commonly threatened with charges for things that are the landlord's responsibility, such as stove and fridge replacement. Mr. Gluck is also reported to have numerous outstanding code violations on the Mitchell-Lama buildings that he has purchased in the last several years.

In an effort to ensure that Castleton Park remains affordable for the next generation of working families on Staten Island, and to make certain that the tenants will be protected by a suitable landlord in any buyout, Senator Charles E. Schumer today called for HUD to reject the sale of Castleton Park. In his letter to HUD Secretary Alphonso Jackson, Schumer pressed the Secretary to reject the proposed prepayment under Section 250 in light of the fact that Staten Island has a dearth of affordable, middle-class housing and in response to the revelations of Mr. Gluck's troubling history with other rent-stabilized properties.

Today Schumer also announced a new push for legislation in the State Assembly (A. 795) that would protect Mitchell Lama tenants subject to buyouts under the Emergency Tenant Protection Act (ETPA). ETPA, often known as the rent stabilization program, disallows owners from charging market rate rents by limiting rent increases to those mandated by the rent guidelines board. Tenants living in Mitchell-Lama units constructed before 1974 are eligible for ETPA upon buyout, unlike units that were built during or after 1974 such as Castleton. New York City's Department of Housing Preservation and Development estimates that under this bill as many as 19,000 tenants around the city living in post-1974 Mitchell Lamas could be eligible for rent protection if the owners chose to opt out of the Mitchell Lama program.

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