Letter to The Honorable Alphonso Jackson, Secretary, United States Department of Housing and Urban Development

Letter to The Honorable Alphonso Jackson, Secretary, United States Department of Housing and Urban Development

February 9, 2007

The Honorable Alphonso Jackson
Secretary
United States Department of Housing and Urban Development
451 Seventh Street S.W.
Washington, D.C. 20410

Dear Mr. Secretary:

Spring Creek Towers, also known as Starrett City, is one of the largest federally subsidized housing developments in the country. With nearly 5,900 units, Starrett City provides affordable housing to over 14,000 seniors and working families.

Opened in 1975, Starrett City was created under New York State's Mitchell-Lama program and financed with a Section 236 mortgage loan, at one percent interest. In exchange for participating in Section 236, investors were required to make the units available to low- and moderate-income households throughout the term of the mortgage. Without question, this important government and private sector partnership has made it possible for thousands of New Yorkers to call Starrett City home.

However, the owners of the complex, Starrett City Associates, plan to sell ownership and management of the buildings to the highest bidder. It has come to our attention that the real estate company Clipper Equity holds the highest bid, at $1.3 billion. We believe it is critical that before a sale of the development is completed, the Department of Housing and Urban Development (HUD) must conduct a thorough assessment of how to maintain the long term affordability of Starrett City.

We are concerned that the extremely high sale price will force the new owners to make changes that prove to be onerous to current and future tenants of Starrett City. For example, the new owner could choose to opt-out of the Mitchell-Lama program or to prepay the Section 236 mortgage, leading to price-pressures which, over time, could reduce the overall affordability of the development. These are legitimate concerns, and our offices have heard directly from hundreds of residents who believe this transfer in ownership will result in significantly higher rents, a reduction of services, and undue pressure for tenants to relocate.

It is our understanding that HUD has a statutory responsibility to approve or disapprove any transfer of a property that has any type of federal funding or assistance. More specifically, we understand that you are charged with looking at a prospective buyer's portfolio of properties and consider the condition of those properties, the treatment of residents with regard to rent subsidies, claims of harassment, evictions, financial issues with local jurisdictions, among other issues. It is our hope that you will appropriately scrutinize the prospective buyer to ensure that they are capable of managing a development with such extensive federal subsidies.

Given your oversight of the sale and your mission to preserve affordable housing, we are hopeful that HUD will make the approval of this sale contingent upon the new owner's commitment to long term affordability. We urge you to take the necessary steps to ensure that this housing complex remains affordable and continues to be an important part of preserving the middle-class for New York City.

We are hopeful your department will act in the best interest of the more than 14,000 residents who are part of this economically and racially diverse success story. We look forward to working with you to honor the history of this important community, as well as our shared belief that all hard working families deserve an affordable place to live.

Sincerely yours,

Charles E. Schumer
Hillary Rodham Clinton

http://clinton.senate.gov/news/statements/details.cfm?id=269207&&