Overview

High-cost cities like New York face a structural housing shortage driven by decades of constrained supply, underinvestment in social and cooperative housing, speculative ownership, and large numbers of long-vacant units. Traditional tools such as rent freezes do little to address the underlying scarcity or bring rents down.

This memo outlines a federal housing agenda built around three pillars:

1. Support cooperative and limited-equity housing, including modernized Mitchell-Lama–style programs.

2. Limit harmful speculative private equity ownership of family-scale housing.

3. Bring long-vacant units back into use by cutting red tape and aligning incentives, especially in high-cost markets.

The goal is to make housing more abundant, more affordable, and more democratically controlled, while helping rents stabilize and ultimately decline over time.

Problem

• Chronic under-supply: Zoning, regulatory barriers, and political resistance have constrained new housing supply and rehabilitation, especially in Democratic-led high-cost cities.

• Weak support for resident-controlled housing: Cooperative and limited-equity models like Mitchell-Lama have demonstrated success, but federal tools do not adequately support their preservation or expansion.

• Institutional speculation: Private equity and large investment vehicles increasingly own housing originally intended for individuals and families, contributing to price pressures and reduced local control.

• Long-term vacancy: Tens of thousands of units in cities like New York remain vacant for a year or more due to regulatory and financial barriers to rehabilitation, even as homelessness and rent burdens rise.

Solution 1: Cooperative & Limited-Equity Housing

Objective: Expand resident-controlled, long-term affordable housing through federal support for cooperative conversions and modernized Mitchell-Lama–style programs.

Key Components

1. Cooperative Conversion Facilitation Program (CCFP)

   • Provide low-interest federal loans, guarantees, or credit enhancements (via HUD or a dedicated facility) for:

     • Tenant-led buyouts of rental buildings;

     • Nonprofit/municipal acquisition with a cooperative conversion plan.

   • Encourage mixed-tenure structures where:

     • Most units become limited-equity co-op units;

     • A share is held by a city or nonprofit sponsor as permanently affordable rentals.

   • Fund technical assistance for tenant organizing, legal support, and co-op governance training.

   • Tie certain federal tax or financing benefits to a right of first offer/refusal for tenants, nonprofits, or public entities when buildings are sold.

2. Modernizing Mitchell-Lama–Style Programs

   • Create a Mitchell-Lama Preservation Fund to help existing developments refinance, address capital needs, and remain in affordability regimes.

   • Support new limited-equity and moderate-income developments through federal-state-local partnerships with long-term affordability covenants.

   • Adapt LIHTC and other tax incentives to work better for co-ops and limited-equity models, not just traditional rental structures.

Solution 2: Limiting Private Equity Ownership in Family-Scale Housing

Objective: Curb speculative institutional ownership in housing types historically intended for individuals and families, and redirect these properties toward local and community ownership.

Key Components

1. Family-Scale Residential Property is defined as

   • 1–4 unit buildings and certain small multifamily properties historically owner-occupied or family-owned.

2. Ownership Limits for Covered Entities

   • Restrict or phase out ownership of family-scale properties by:

     • Private equity funds;

     • Large REITs above defined asset thresholds;

     • Similar investment vehicles.

3. Enhanced Taxation and Transparency

   • Apply higher transaction or holding taxes to covered entities retaining large portfolios of family-scale housing beyond a transition period.

   • Require robust beneficial ownership and concentration reporting.

4. Divestment Pathways

   • Incentivize sales of properties via Federal tax policy and housing subsidies to:

     • Individual owner-occupants;

     • Limited-equity co-ops;

     • Community land trusts;

     • Nonprofit housing organizations.

Solution 3: Vacant Unit Recovery & Reducing Homelessness

Objective: Return long-vacant units to active use, cut red tape that keeps habitable units offline, and connect these units to homelessness reduction strategies.

Key Components

1. Federal Vacant Unit Recovery Standard

   • Define “long-vacant” units as those empty for 12+ consecutive months and located in high-cost/high-need areas.

   • Establish a conditional federal standard that jurisdictions may not enforce rules that effectively prevent owners from renting long-vacant, code-compliant units.

   • Tie compliance to eligibility for certain HUD and community development funds (e.g., CDBG, select housing grants).

2. Rehabilitation Incentives

   • Offer federal grants or low-interest loans to small landlords, co-ops, nonprofits, and public entities to bring long-vacant units up to code, in exchange for:

     • Commitments to rent at reasonable/regulated levels; and/or

     • Set-asides for low-income tenants or people exiting homelessness.

3. Market Re-Entry for Some Units

   • Allow certain long-vacant units to re-enter the market at negotiated or market-rate rents where prior regulation has made rehab economically impossible, with conditions:

     • Proof of significant vacancy duration;

     • Compliance with habitability and tenant protection standards.

4. Integration with Homelessness Programs

   • Require jurisdictions receiving federal homelessness funds to:

     • Identify and track long-vacant units;

     • Incorporate them into housing-first and rapid rehousing strategies;

     • Use vouchers, master leasing, or service-linked contracts to house unhoused individuals and families.

Implementation & Funding

• Federal tools: Use HUD programs, GSEs, Treasury (including LIHTC reforms, CDFIs), and conditions on federal grants to drive adoption.

• Tax policy: Adjust tax incentives and penalties to favor cooperative and limited-equity models and disfavor speculative ownership in family-scale housing.

• Funding:

  • Redirect and expand existing HUD and community development funds;

  • Create targeted new appropriations for cooperative conversions, Mitchell-Lama–style developments, and vacant-unit rehab;

  • Use enhanced taxation of speculative holdings to help offset costs.

Metrics & Evaluation

Core metrics to track:

• Number of units converted to cooperative or limited-equity ownership.

• Number of Mitchell-Lama–style units preserved and created.

• Reduction in share of family-scale housing owned by large financial entities.

• Number and percentage of long-vacant units brought back into active use.

• Trends in median rent and rent-burden rates in high-cost jurisdictions.

• Homelessness and housing placement outcomes linked to reclaimed units.

Summary

• Move beyond symbolic rent freezes toward structural reforms that increase supply and bring rents down.

• Treat housing as a home first, financial asset second, by curbing speculative private equity ownership in family-scale housing.

• Empower residents through co-ops, limited-equity models, and modernized Mitchell-Lama-style programs.

• Cut red tape and unlock vacant units so they can house people instead of sitting empty and deteriorating.

• Use federal policy to align incentives toward abundant, stable, community-rooted housing, especially in high-cost cities like New York.