Relates to mutual companies in N.Y. city

BILL NUMBER:S3861A

Title of bill

An act to amend the private housing finance law, in relation to mutual companies in a city with a population of one million or more

Purpose or general idea of bill

The purpose of this bill is to allow cooperatives to leave the Mitchell-Lama program without causing immediate harm to the tenants who rely on them. The tenants will be given proper and timely notice of the cooperatives' plans and also an offer to sell their shares back to the housing company. Otherwise, they will be given one- or two-year leases during which time they should be able to find appropriate housing alternatives. This way, both the cooperatives and the tenants should be able to proceed in a way that will prevent negative outcomes for everyone involved.

Summary of specific provisions

This bill would require a Mitchell-Lama cooperative operating a project in a city with a population of one million or more that is seeking to dissolve to offer cooperators at least ninety days before the dissolution date an opportunity to sell their shares back to the housing company. After the sale, these cooperators would become rent stabilized tenants with one or two year leases and their units would be decontrolled upon vacancy. After dissolution, the initial legal regulated rent for such units would be the last carrying charges authorized prior to the dissolution, including any surcharges, but excluding any rent increases due to unique and peculiar circumstances.

Justification

This bill would require a Mitchell-Lama cooperative seeking to dissolve to offer cooperators who many not be able to afford the increased carrying charges resulting from privatization including, but not limited to, the increased taxes due to termination of the Mitchell-Lama tax exemption the opportunity to sell their shares back to the housing company for an amount equal to their equity_ These former cooperators would be offered a one or two year lease and their dwelling units would rent stabilized. The initial legal regulated rent for such units would be the last carrying charges authorized for such unit prior to the dissolution, including any surcharges, but excluding any unique and peculiar rent increases. Such units would also be fully subject to decontrol upon vacancy.

By enabling cooperators to sell their shares back to the housing company, this bill would prevent displacement of Mitchell-Lama cooperators who cannot afford the higher carrying charges resulting from a dissolution. Furthermore, since such units can be decontrolled upon vacancy, the housing company will be able to recoup any losses thereafter selling such units at market price.

Prior legislative history

2008: A.10596/S.7487 Referred to Housing

Fiscal implications

None.

Effective date

This act shall take effect immediately.