Affordable housing programs controlled by federal and state law. After multiple hearings on the declining number of affordable housing units, the City Council passed Local Law 79 of 2005 over a mayoral veto. The law gave tenants the right of first refusal to purchase their buildings when the owners sought to remove the properties from certain assisted rental housing programs. The law also allowed tenants who did not purchase their building to stay in their units at existing rent levels after their buildings left the programs. The law covered Mitchell- Lama developments, project-based Section 8 developments, and other developments receiving government subsidies or assistance.

The Real Estate Board of New York sued, arguing that the law was invalid since the City did not have the authority to legislate in an area dominated by state and federal law.

Justice Marilyn Shafer agreed with REBNY and overturned the local law, finding that the City did not have the authority to legislate in this area because the state and federal governments preempted City action. With regard to Mitchell- Lama, state law granted owners a right to withdraw from the program and the City could not impose additional restrictions that would burden that right. Justice Shafer found that the federal laws in the area similarly preempted any action by the City.

Real Estate Board v. City Council, 2007 N.Y. Slip Op. 27210 (N.Y. Cty.Sup.Ct. Apr. 11, 2007) (Shafer, J.).

CITYLANDComment: On April 17, 2007, Mayor Bloomberg signed two bills passed by the City Council earlier in the year which aim to encourage owners of Mitchell-Lama housing to keep their buildings in the program by providing new tax incentives. The bills extended the J- 51 tax program to Mitchell-Lama buildings that finance renovations with public monies and eliminated a reference that prohibited abatements for units assessed at over $40,000. The J-51 tax program provides real property tax abatements for major building-wide rehabilitation or replacement systems such as boilers, roofs, or elevators