Richard Heitler on loan delays costing Village East Towers over $500,000

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First of all, I do want to thank you for the opportunity to testify, also to attend the hearing.

I come into this hearing feeling that I am speaking to friends and supporters.

We appreciate what you have done to get more funding allocated into the budget, and we appreciate your support for Mitchell Llama Housing.

My name is Richard Heitler.

I have been a resident of Village East Towers on the Lower East Side since 1975.

I'm older than all of you.

And I've been on the board for 20 years, 18 of which is president.

I'm currently the treasurer.

I like to try to drive things to a number.

I'm also a founding member.

member of Cooperators United for Mitchell-Lama, as is Valerie, as is Sally, as is Sam Moskowitz.

We already have a roundtable.

It's called the Board Members Roundtable, and it's people who are pro-Mitchell-Lama, got themselves elected to the board, and we share information and we do peer consulting about how we can do a better and better job.

Now, as you can see, I have a six-page testimony.

I will not even attempt to summarize it in two minutes.

I will hopefully say enough to at least, I don't know, encourage you to read it.

But I've been listening to the discussion and the debate back and forth.

So I want to make some comments about testimony that I will have not submitted, but will submit within the next 72 hours.

We all recognize that rent increases are necessary.

We are all horrified when they are this extreme and this sudden.

And I want to say that I intend to, hi, HPD, I intend to take Adam's invitation.

He said, if anybody has a proposal for an annual rent increase, I would take a look at it.

I have it.

It's nine pages long.

I've spent...

The better part of eight months working on it and vetting it with various allies.

And I'll give you the

Briefest summary, you got to scrap the whole complicated, unwieldy, unreadable three-year rent increase system.

You ask for huge schedules that none of our shareholders can read.

And you produce an information when you finally get to the notice of approval, nobody understands what that means either.

Okay?

The system, I want to tell you what we're currently doing at Village East Towers and have for years, and the system that we propose.

One, it must be annual.

If you really are looking at our annual financials, you can see immediately if there's a gap.

It doesn't take a lot of math to fill it and figure out how much you need.

You look at the operating deficit and the unpaid bills, and you come up with a proposal.

And for this reason, I think scrap the three years.

It's too complicated.

It's too cumbersome.

Rent increases have to be annual because nobody can actually anticipate what's happening three years down the road.

Secondly, the system of review and approval has to take place in a period of between not more than 90 or 120 days.

At Village East Towers, we have information.

Well, first of all, I'm the treasurer.

I talk about finance.

At every open board meeting, and we have them monthly.

And when our, can you give me a moment?

Yes, finish, yes.

I will be as brief as I can, but I need you to reset the clock.

And it's the issue here is we have informational in-house meetings that are presided over by the board of directors and our accountant and our lawyer.

And we explain to every resident.

Exactly why the rent increases are needed and how much it's going to cost for their apartment.

None of which is included in the notification letter that they will later get from HPD.

And then we're done.

And then we have to wait for HPD approval.

We had a deadline.

We're in the middle.

We're in the second phase of a...

Of a rent increase of five and five and five.

And it's higher than I would like, but it was needed.

It is the third rent increase that I put through during my term on the board.

We knew that our previous three-year rent increase expired.

And we needed a new one by November 1st.

We tried our hardest to do everything right.

We got final HPD approval to put the next rent increase in effect on September 1st of the following year.

That gap blew it $200,000.

hole in our budget.

And so my, if I have a theme, it is delays cost money

and we have to come up, we have to look at our system, see what's really necessary and what's not, and figure out how we can do it faster.

Six page, the small one, testimony that you have in front of you has five points.

The first of which is faster processing for loans.

We have refinanced with HPD and HDC and we love you guys.

And the HPD people that I've worked with have been capable, dedicated, hardworking, and the system stinks.

We are one of those co-ops.

We're trying to figure out how you manage capital repairs.

But we did an IPNA way back when, before anybody asked for it.

We developed a scope of work, and we started working with HPD to develop a major capital improvements loan.

We have been working on that loan for three years, and we have not closed.

We have been told that we will close by the end of the month, and I hope that's real, because I've also calculated the cost of that delay.

Part of our IP&A included replacement of all the black pipe.

The old brass plumbing, fabulous.

But the drain pipes are cast iron and they leak.

And we have...

We have been trying to patch cast iron, and when they leak, they flood, and ceilings and walls are damaged.

We have, so the delay has cost us several hundred thousand dollars.

We knew from our IPNA that we had to replace the water tank.

It would not wait till loan closing.

We did it ourselves.

It was a hit on the operating budget.

It should have been a capital expense in excess of $100,000.

We got one of our local law 11 buildings done.

We have two more to go.

We cannot afford to do, because those two things totally devastated our reserves.

We have to wait until we close the loan until we can do the local law 11 work.

There's a kink in the code, although there is no danger of anything falling.

If you have a condition that an engineer says requires repairs and you don't repair it in a year, then the...

The sidewalk sheds have to go up.

Sidewalk sheds are costing us $25,000 a month.

The delay is going to...

You add all these three numbers together, and the failure...

We had a...

We did everything right.

We got an IPNA.

We had a scope of work.

We got the scope of work.

We got scope of work approved.

We got it bid out.

We had a successful bid in January of 2025.

And the fact that we have not been able to close on the loan has cost us more than half a million dollars.

The other pieces of my six-page thing are five other suggestions for how to keep Mitchell Lama affordable, and they're nerdy, and they're small bore.

And that should be easy.

We also, in addition to the great big loan programs, we need a little loan program to repair vacant apartments.

When an expensive piece of equipment goes down, it needs to be replaced.

We need a loan program that can close on a discrete scope for a small amount of money in 30 days or less.

That's my second point.

My third is we need mortgages for new purchases.

And if you want to speak, one of you guys talked about turnover and the questions of turnover takes a long time.

A lot of it is the buyer has trouble raising the money and he can't get a mortgage.

And Sony may.

Will not do mortgages for Mitchell Llamas or limited equity co-ops.

I got two more.

So if you could just quickly summarize.

One sentence each.

Yeah, quickly summarize, yes.

I'm with Gail Brewer.

You have to end 2 to 11 conversions.

They just make the co-op less affordable.

And I have my last one for my brothers and sisters in Mitchell Lama Rentals.

each and every one of them.

We're very pleased that everybody's interested in TOPA and COPA, and I hope it passes soon.

Don't forget the Mitchell Llamas.

Every Mitchell Llama rental should have the option to become a Mitchell Llama co-op and receive the technical support, legal support, training, and technical assistance needed to make a credible bid.

And thank you for your time.

And any of your staff members who want to talk to me about any of these things,

You got my number on the sign-up sheet.