FOR IMMEDIATE RELEASE: December 20, 2007
Schumer Scores Victory in Bid to Save Middle-Class Housing at Castleton Park, Convinces HUD to Take First Steps to Ensure Affordability of Building
Following Numerous Letters, Calls and Meetings Between Schumer and HUD, HUD Agrees to Apply Section 250 of Housing Law to Castleton Park
Under Section 250, All Rent Changes Must Be Approved by HUD Within Affordability Guidelines, Ownerhsip Changes Must be Agreed to by HUD, and Owners Must Commit to Building Improvements
Schumer: This Marks a Big Win for Middle-Class Hou
Following a months-long fight to ensure middle-class housing affordability continues on Staten Island, U.S. Senator Charles E. Schumer today announced that he has convinced the U.S. Department of Housing and Urban Development (HUD) to apply Section 250 of the National Housing Act to Castleton Park, ensuring the continued affordability of the development. Castleton Park is a 454-unit complex in St. George and one of only two Mitchell-Lama developments on Staten Island. Under Section 250, the current owner must set aside funding for rehabilitation and repairs of the buildings, any rent increases must be approved by HUD within affordability guidelines and all potential buyers of the complex must be approved by HUD. HUD committed to applying the standard following a meeting with Schumer in October.
“This is a very positive development that will preserve affordability for the families and seniors in Castleton Park. HUD has been a welcome partner in protecting much of the vanishing middle-class housing in New York, and I am proud to announce that HUD has agreed to continue that work on Staten Island by applying tenant protections at Castleton Park,” Schumer said. “I will continue to work with HUD to ensure that Castleton Park remains affordable for the next generation of Staten Island’s hard-working, middle-class families to maintain their way of life.”
Since it was constructed in 1974, Castleton Park has relied on a variety of government subsidies to ensure the development’s affordability and upkeep, including a HUD-insured mortgage. Under Section 250 of the National Housing Act, HUD generally can only approve the prepayment of a HUD-insured mortgage if the agency determines that the housing is no longer needed as affordable in that community. However, HUD may also allow the prepayment of a mortgage if there is a need for capital rehabilitation at a complex.
Since Castleton Park is in need of repair and rehabilitation, HUD may approve a prepayment, but due to the application of Section 250, several tenant protections will also be applied. First, any rent increases must be approved by HUD and fall within affordability guidelines. Second, any potential buyer must be approved by HUD, allowing tenants and HUD the opportunity to examine the record of potential buyers and to determine if they have and will maintain the affordability and livability of the complex. Finally, any owner under Section 250 must either escrow or take out a line of credit for necessary repairs of rehabilitation of units. For Castleton Park, an owner would be required to put $15,000 per unit into repairs, or $6.8 million for the complex.
“Because of the impressive activism of Castleton Park residents, HUD has laid out a blanket of protections that will preserve affordability and provide much-needed peace of mind in this holiday season to all who live there,” said Schumer.
Under Section 250, any prepayment application will have to be considered for 150 days, giving Schumer and the tenants an opportunity to work with HUD to determine the affordability guidelines for any potential rent increases. While HUD maintains that rent increases could be approved at a monthly rate of 30% of 80% of area median income, Schumer will continue to push that standards be set at 30% of 60% of area median income.
Schumer will also use the time to work with HUD to determine the suitability of the proposed buyer, Larry Gluck of Stellar Management. While Mr. Gluck had already submitted papers for prepayment, Schumer and the tenants are concerned at his troubling record running other affordable housing buildings. During Mr. Gluck’s tenure as Castleton’s building manager since 2006, the building has failed its physical inspection for the first time in years, and just this month, tenants received a notice that the gas bill was not paid, a failure that creates needless dread during the winter season. 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.
Schumer has been a leader in the fight to save Castleton Park beginning in April when he joined tenants and activists to announce that he would be urging HUD to reject any buyouts that would threaten the affordability of Castleton Park. Since that time, Schumer has written numerous letters, met with senior HUD officials and spoken with HUD Secretary Alphonso Jackson to urge HUD to maintain the affordable units on Staten Island, which has suffered from a housing crunch due to the population boom and rising real estate prices.
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