As soon as Starrett City went on the auction block in December, the possible sale of the massive complex with nearly 6,000 apartments grabbed housing headlines. By February, a buyer had won the bidding with a $1.3 billion price. He said he would remove the east Brooklyn complex from the state's Mitchell-Lama program, which makes housing more affordable by subsidizing buildings and lowering the costs that landlords pass on to tenants.

Housing advocates and politicians swung into action mode to try to save the middle-income community. And they won a victory early this month, when federal Housing Secretary Alphonso Jackson announced the bid would not be accepted – because the would-be buyer, Clipper Equity LLC, had not shown a commitment to maintaining the complex's affordability.

But during December and January – while the spotlight shone bright on the potential loss of the 5,888 apartments at Starrett – 1,042 apartments in four buildings actually did leave the Mitchell-Lama program in New York City. Because of current laws and how the state and city interpret them, all of those apartments can go to unregulated rents. It remains to be seen whether current tenants will be able to afford them.

Owners of Mitchell-Lama developments have the right to exit the Mitchell-Lama program after a certain period, often 20 years. Over the past decade and particularly just in the last three years, a surge of owners has made those exits, lured by the higher rates they can charge outside the program. But a new chapter has opened in this years-in-the-making story: Tenant organizers, politicians and housing advocates are challenging the rapid conversion of Mitchell-Lama housing from publicly subsidized to private. Advocates are calling for an outright moratorium on owners' exits until the city and state can certify that no laws are being violated and until officials can offer a Mitchell-Lama preservation plan. In addition, an array of program-strengthening bills is pending in Albany.

The bulk of the city's Mitchell-Lama apartments are still in the program. There were roughly 140,000 apartments in about 270 developments built by 1978, according to figures from the city comptroller's office, and today there are roughly 111,000 remaining, according to calculations based on figures from the comptroller's office and the Community Service Society, an antipoverty group.

Housing losses have been notable for both co-ops and rental developments in the Mitchell-Lama program, but more dramatic for rentals. From 1990 to 2005, the stock of Mitchell-Lama rental housing in the city went from about 67,000 apartments to about 44,000 apartments, a loss of about 23,000 apartments, according to the Community Service Society.

Last year, the rental losses deepened, with another 3,691 apartments leaving Mitchell-Lama. Overall from 1990 to 2006, more than 60 rental developments have come out of the program, and the annual loss of rental units has topped 3,000 apartments every year from 2004 on.

"I think the state needs to recognize this is a housing emergency," said Ellen Davidson, a staff attorney at the Legal Aid Society who focuses on legal reform for Mitchell-Lama.

Tom Waters, a housing policy analyst with Community Service Society who closely tracks Mitchell-Lama housing, says he hasn't calculated the number of co-ops still in the Mitchell-Lama program, saying co-op owners typically keep their apartments after they leave the program. But some large co-ops are emerging from Mitchell-Lama – for example, East Midtown Plaza in Manhattan, with over 700 apartments, has taken steps toward exiting the program. While co-ops are more likely to remain affordable to existing residents, they could become unaffordable to families trying to buy in, as apartments get sold at market rates.

Walter Hauser, a resident of East Midtown Plaza who bought into the co-op more than 30 years ago, said Mitchell-Lama housing made it possible for him to remain in New York. "I could have never lived in the city without this," said Hauser, an actuary.

And Mitchell-Lama continues to be a low- and middle-income program. Waters says the middle 50% of Mitchell-Lama rental households make from $11,700 a year to $50,000 a year, according to 2005 statistics. The median income for all rental households is $22,500 a year. "People would be pretty hard-pressed" to find an affordable market-rate apartment on that income, he says.

The buyout buzzer goes off

There are two big reasons for the uptick in buildings leaving the program: Most of the Mitchell-Lama developments were built and first occupied decades ago, meaning that owners now have the legal right to exit the program because of the built-in expiration provision. And New York’s super-heated real estate market is making the buyout or purchase of a Mitchell-Lama building – and subsequent raising of rents to market rate or selling of co-ops at market rate – look like a great business deal.

“We’re in a real hot real estate market with no signs of slowing down,” says Scott Stringer, the Manhattan borough president and a Mitchell-Lama supporter. Such activity has been positive in some ways, but “it can’t be at the expense of” affordable housing, he says.

Stringer organized a half-day Mitchell-Lama conference on March 3, which attracted roughly 700 Mitchell-Lama advocates and residents plus a speakers list that looked like a roll call of New York politics. Stringer opened the conference, which included City Comptroller William C. Thompson Jr. The keynote speaker was Deborah VanAmerongen, the commissioner of the state Division of Housing and Community Renewal, which directs much of the Mitchell-Lama program. City Council Speaker Christine Quinn spoke briefly, as did U.S. Rep. Charles Rangel.

To some the high-powered political presence was a sign that Albany, with a new governor at the helm, and the city, with its own housing development plan, may be ready to stanch the loss of Mitchell-Lama buildings – by giving rent protections to all buildings leaving the program, for example.

That’s a key issue, because while some Mitchell-Lama buildings are shielded from market-rate rents post-buyout, others are not. And the reason some buildings may not go under rent stabilization, though the law says that they must, is that some Mitchell-Lama buyers use legal finagling to get out of rent stabilization, which caps the amount by which rent can increase each year.