Proposed Rent Hike Could Price 'Burg Tenants Out of Mitchell-Lama Development

Management at a Williamsburg Mitchell-Lama development is looking to increase rents by up to 80 percent, drawing fierce criticism from tenants and local leaders who say the hike would leave residents unable to pay and at risk of homelessness.

The Kraus Organization, which manages Bedford Gardens, applied for the increase last October. If approved by both the city’s Department of Housing Preservation and Development and the federal department of Housing and Urban Development, the first hike would come immediately — raising rents by 25 percent in 2023, then again in 2024, with a 15 percent increase in 2025, according to the city comptroller’s office.

Bedford Gardens is eligible to leave the program entirely in 2026, raising further concerns for current and future tenants.

Located at 70 to 104 Ross Street and at 555 Wythe Avenue between the BQE and the Brooklyn Navy Yard, the complex was developed in the 1950s under the Mitchell-Lama program, which endeavors to create and maintain housing for low- and middle-income residents.

Since then, rents in Williamsburg have skyrocketed as the nabe has become ever more desirable.

‘To the extent that the old Williamsburg remains, it is in places like this, like Bedford Gardens,” said Adam Meyers, director of litigation with Communities Resist, at a January 20 rally. “These folks have been here for 40 years, have called this place home and have built this neighborhood … if they were not here, where would they be? Where would they go?”

Rents at Mitchell-Lama developments are tied to each tenant’s income, and incomes are capped depending on the size of the family. At a federally assisted Mitchell-Lama development like Bedford Gardens, a family of four must earn less than $106,720 to qualify to live there.

Tenant Zoradio Olivo and her husband, Luis, have lived at Bedford Gardens since 1988, and currently pay $1,982 per month — including a surcharge because they now collectively earn more than the income cap. If the increase were approved, their rent would be more than $3,000 per month.

“It’s going to be tight, we probably are going to have to leave,” Zoradio said. “That’s what I pay for my daughter for school, we don’t qualify for financial aid either — we file our taxes together.”

Their older son has been apartment searching in the area, hoping to stay in the nabe he grew up in, she said. He went to an open house on South 1st Street a few weeks ago for a studio priced at $1,975 — with a long line of people waiting to get their names on the list.

Outside of Bedford Gardens, Williamsburg has become totally unaffordable for Zoradio — who works at a Department of Education-subsidized child care program — and her husband, a sales supervisor.

About half of the residents at the 647-unit development have Section 8 vouchers and would not be affected by the rent hikes, though that’s of little comfort to those who would be.

Kraus defends their proposal

At a public hearing immediately after the January 20 rally, Kraus CFO William Notley defended the proposal, saying it was necessary to pay for “three specific financial issues”: the current and projected operating deficit, capital improvements and rehabilitation of the buildings, and “existing arrears.”

Rent at Bedford Gardens has not increased since 2014. Kraus’s projected baseline operating budget for 2023 is $2 million, including utilities, taxes, on-site staff payroll, and operating expenses.

As for the arrears, expenses due to the city have piled up over the last few years, affected by the increased costs of utilities, water and sewer, and staffing, Notley said, and Bedford Gardens has been operating at a deficit for that time.

“It is critical to address these items to prevent any impact on providing essential services to the residents,” Notley said.

Opponents questioned Kraus’s math.

“I appreciate that there are substantial costs associated with operating and maintaining a 650-unit development, but Kraus’s own application does not demonstrate a need for the additional revenue these rent increases would generate,” said Council Member Lincoln Restler, who represents the development in his district.

The increases would generate about $16.3 million in additional revenue between 2023 and 2025, Restler said, while the application itself claims that Kraus’s full capital need is only about $9 million.

“Further, there is some cause to question that $9.2 million figure,” the coucilman said. “Kraus’s own physical needs assessment clarifies that the development underwent extensive rehab about seven years ago, and the majority of its boilers and critical infrastructure was recently replaced.”

Restler, who hosted a development-wide canvass last month to warn residents about the hike and encourage them to prepare for the hearing, urged HPD to conduct their own investigation of Kraus’s financial needs and requests.

Dozens of tenants objected to the increases at Thursday’s hearing — citing fixed incomes and an inability to pay higher rents and poor conditions at Bedford Gardens.

Milagros Perez, a resident of nearly 30 years, said the increase would “completely destroy me.”

She already pays 51 percent of her income on rent, more than she should, given the parameters of Mitchell-Lama, she said, but despite her efforts — reaching out to lawyers, elected officials, and Kraus – it hasn’t been fixed.

“Right now I have to make a choice between paying rent and getting medical bills paid or cutting my pills in half to make them last an extra month because I simply can’t afford it,” she said. “By the second week of the month, I’m at a negative in my bank account.”

Many tenants use space heaters to stay warm, Perez said, and the water coming out of her faucets frequently has an odd taste and smell.

“I’m on a fixed income, I can’t afford to pay what I’m paying now, which is $1,159,” said resident Sharon Mills, a retired NYPD employee. “I lost my Section 8 in 2008.”

On very cold days, the heat at Bedford Gardens is frequently out, she said. The elevators go down regularly, requiring the FDNY to help people escape, and she struggles to climb the stairs to her apartment because of arthritis in her legs.

Zoradio told Brooklyn Paper that conditions in the building have become significantly worse in the last few years, and that the repairs management does complete are often delayed and poorly done.

“If we ask them to paint, it’s such a sloppy job that I’d rather pay someone to do it for us,” she said. “When we get maintenance to come over, they say, ‘Kraus doesn’t pay us much.’ What can you do, if they don’t pay them?”

The Kraus Organization does more than just manage the development – it staffs the maintenance and security crews on premises through its own subsidiaries. Tenant issues with Kraus go back decades — a 1998 New York Times piece notes that then-owner Herman Kraus frequently complained that bills were too high, even though those bills were being charged by companies he owned.

HPD records show dozens of open violations at Bedford Gardens: hot water outages, mold, a missing carbon monoxide detector. Additional violations recorded by Department of Administrative Trials and Hearings include broken elevators and a broken, unsafe boiler.

Even so, thousands of people are on the waitlist for apartments at Bedford Gardens. Median gross rents in Greenpoint and Williamsburg increased from $1,090 in 2006 to $2,120 in 2019, according to the Furman Center at NYU. Relatively few rental units are affordable to low- and middle-income families, per city data, and nearly half of tenants in Brooklyn Community District 1 are paying 30 percent or more of their household income in rent.

Bedford Gardens awaits a decision

Both HPD and HUD will have to approve the increase before it can be implemented.

“We want to thank all the Bedford Gardens tenants and interested parties who testified at a hearing about the rent increases proposed by the property’s management. As part of our standard process, HPD listens to all testimony before beginning to review the application,” an HPD spokesperson said. “Our number one priority is ensuring New Yorkers have safe, high quality, affordable housing, and we will work to deliver that for Bedford Gardens residents as well.”

If an increase is approved, the city will work to ensure tenants are protected as much as they can be, according to the department, including possibly setting up a Senior Citizen Rent Increase Exemption workshop to inform older tenants about the program, which would exempt them from future rent hikes.

Tenants were hopeful that even if HPD approves the hike, HUD could be convinced otherwise, thanks to the work of Congress Member Nydia Velázquez, who was at both the rally and the hearing last week.

“Such a significant increase could force some tenants to consider moving away from this neighborhood and the place they call home,” Velázquez said at the hearing. “As the most senior member from New York City on the House Financial Services Committee — which has jurisdiction over HUD and all affordable housing issues — I am here to reaffirm that I am prepared to prevent that from happening.”

Editor’s note: A version of this story originally ran in Brooklyn Paper. Click here to see the original story.

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