Not Just Carroll Gardens - Privatization Vote In Mitchell-Lama Buildings Rends Community

The board members of the Southbridge Towers, on the other side of the Brooklyn Bridge in downtown Manhattan, have voted to leave the program.  From the Times:

In a neighborhood like the financial district, where the average sales price is $1.1 million, according to CityRealty, the temptation to cash in is hard to resist. With so much money at stake, tensions flare. The Southbridge offering plan anticipates that a shareholder selling a one-bedroom apartment for $550,000 could walk away with $325,000 cash after paying substantial fees and taxes. The largest unit, a three-bedroom with a terrace, could sell for nearly $1 million.

“It’s really torn the community up,” said Charles Chawalko, 26, who moved to Southbridge as a child. “People think that you’re taking money out of their pockets if you want to support Mitchell-Lama.”

“If you saw what’s been going on here, the acrimony, this place will never be the same,” said Paul Hovitz, 68, a retired special education teacher who has lived in Southbridge for 30 years with his wife, Denise, 61.

Privatizing assumes financial risk, particularly for the type of tenant the program was designed to serve — someone who can barely afford the current costs. No longer eligible for tax abatements, Southbridge would have to pay at least $8.1 million a year in real estate taxes, significantly more than the $1.64 million it now pays. The development could also be on the hook for a $27.77 million transfer tax if the New York State Court of Appeals rules in favor of the city in an ongoing case involving a former Mitchell-Lama development in Coney Island that privatized in 2007.

The resource curse strikes again.