Brooklyn Mitchell-Lama Tenants Face Eviction Threat
By James Kemp

There is little joy—and scant hope—among the tenants of 20 Henry St. these days. Since last September, the threat of being evicted from this converted factory on the edge of Brooklyn Heights has hung over the 40 families who live there.

Saved from the wrecking ball over 25 years ago by a coalition of visionary politicians, architects, and community activists, 20 Henry St. became the first building in Brooklyn—and one of the few in the city—to offer affordable, government-subsidized housing for working artists and middle-income families. Mitchell-Lama funding and other taxpayer subsidies allowed city planners to lure potential developers with fire-sale prices (a $5,500 down payment for a property worth at least $10 million in today’s market) and the added incentive of generous tax breaks.

Now, because of loopholes in rent-stabilization regulations and amendments to the original Mitchell-Lama law, the building’s residents face almost certain eviction if their landlord has his way with Mayor Giuliani’s appointees to the Department of Housing Preser- vation and Development.

From the late 1950s to the mid-1970s, Mitchell-Lama funding created more affordable middle-income housing than any other program before or since. As originally conceived, it mandated subsidized housing without time limits, But in the 1960s, the real-estate lobby in Albany got the law amended so that developers could buy out of the program after 20 years. Once rent-stabilization was denied to buildings occupied after January 1974, this buyout clause became a time-released eviction clause. With no regulations to protect them from the naked reality of market-driven rents, tens of thousands of Mitchell-Lama tenants now face de facto eviction as their landlords move in for the kill.

20 Henry St. demonstrates how years of negligent oversight and anti- tenant legislation can turn what was once a socially progressive project into a pork-barrel payoff for landlords and developers. In 1959, city planners and politicians envisioned the possibility of transforming an abandoned factory located in an area designated for “slum clearance” into a vibrant complex of living and work spaces for artists at affordable rents. After years of planning and Byzantine negotiations, the Candy Factory at 20 Henry St. opened its doors to working artists in 1975.

Many of those original tenants remain, and at least a third of the building’s occupants are still artists. Gradually, the other blighted and abandoned buildings around the Candy Factory underwent renovation and ultimately full-scale gentrification, as the glamour of “the Heights” spread to what had been a down-at-the-heels frontier. Property values—and market rents—rose at alarming rates.

But things began to go wrong for the Candy Factory long before gentrification took hold. The landlord soon stopped giving tenancy priority to artists. And the owners never offered 20% of the apartments to low-income tenants, as mandated by their contract with the city. During the fiscal crises of the late 1970s, HPD easily overlooked such “indiscretions,” as long as building owners did not default on their mortgages. At 20 Henry St., the tenants struggled to maintain the original commitment to cultural diversity and support for artistic creativity, in spite of the landlord’s abandonment of any such vision.

The, last September, the really bad news hit. The management/owner, Penson Corporation, notified tenants of its intention to buy out of the Mitchell-Lama program by Dec. 15. If leases were renewed at all, they would be for “market rents.” Current rents of between $600 and $1,300 a month for basic studio apartments (spaces ranging from 350 to 600 square feet) could be doubled, tripled, or more with just 30 days notice. Senior citizens, the ill and disabled, students, working mothers, and all other “financially marginal” tenants would in effect be forced to move once the landlord received approval for the buyout.

While most local politicians contacted by tenant representatives chose to keep their distance from this “hopeless” situation, Frank Pannizzo, an attorney with Brooklyn Borough President Howard Golden’s office, did come to the tenants’ aid. Along with volunteer tenant researchers, Pannizzo found covenants in the landlord’s deed and contract with the city prohibiting a buyout until June 26, 2002. A 1992 decision by the Court of Appeals, the state’s highest court, clearly states that in such circumstances, restrictive covenants take priority over 20-year buyout provisions.

HPD has ignored such precedents, claiming that in the current Cooper-Gramercy buyout case, for instance, that the 20-year clause overrides any and all other covenants in deeds or contracts. However, they have refused to make a finding concerning the covenants in the 20 Henry St. case, deferring instead to Corporation Counsel Michael Hess.

Meanwhile, the building’s tenant leaders, Anita Karl and Dorothy Barnhouse, hope to meet with HPD officials, Pannizzo, and Mitchell-Lama tenant advocate Bob Woolis, before Hess hands down an opinion on whether the buyout clause can trump the restrictive covenants.

In a letter to HPD, Carol Ule, the tenants’ consulting lawyer, contended that if it is determined that the landlord has never honored the covenants, then it should be required to do so for the full 40 years of the original mortgage agreement, “thereby giving the people of the state and city of New York the benefit to which they are entitled.

In a just world, Ule’s plea would guarantee the tenants’ rights to their homes. But in the harsh reality of present-day New York politics, the odds are heavily against them as they fight to stay in the community they helped create.

For more information or to offer support, contact Anita Karl, (718) 834-1283, or Dorothy Barnhouse, (718) 643-5458.