Relates to funding of contracts of neighborhood preservation companies and not-for-profit corporations

BILL NUMBER:S7278A

Title of bill

An act to amend the private housing finance law, in relation to the funding for contracts of neighborhood preservation companies and not-for-profit corporations

Purpose

The purpose of this legislation is to allow Preservation Companies to merge and provide services to unserved and underserved areas of the State.

Summary of provisions

This bill would:

* Authorize two or more Neighborhood Preservation Companies (NPC) to formally merge with each other, as well as, two or more Rural Preservation Companies (RPC) to formally merge with each other.

* Define merged company and unmerged company.

* Eliminate the annual contract cap.

* Create funding modification tables for merged companies.

* Require that the Division of Housing and-Community Renewal establish a merged company savings fund; such funds would be used-for new contracts with neighborhood and rural preservation companies located in areas of the state that are currently unserved by an existing neighborhood or rural preservation company.

* Allow a merged companies' office facilities may be located outside such neighborhood or region if the office facilities are located in a municipality wholly contained within the merged companies' neighborhood or region.

Section 2 provides the effective date.

Justification

Neighborhood and Rural Preservation Companies (WPCs and RPCs) are community-based not-for-profit corporations that preserve and promote housing opportunities for low-and-moderate-income persons. Housing rehabilitation and development, tenant and homeowner assistance, and foreclosure prevention are a few vital activities performed by WPCs and RPCs.

Preservation companies have a designated geographic location that they serve, and unfortunately, because of the economic crisis, there are areas in the State that are not served by preservation companies. This legislation would allow preservation companies to merge formally and use their existing resources to greater effect.

A merged companies' office facilities may be located outside such neighborhood or region if the office facilities are located in a

municipality wholly contained within the merged companies' neighborhood or region.

If two or more companies merge, New York State Homes and Community Renewal (HCR) would apply an elevated funding modification. In existing law, HCR distributes funds to each company, Under this legislation, two companies that formally merge would receive twice as much as a company that does not merge or informally merges with another company, In subsequent years, the percentage of the allocation would be reduced until the merged entity would be receiving 150% of the funds distributed for two companies that formally merge; 200% of the funds distributed for three companies that formally merge; and 300% of the funds distributed for four or more companies that formally merge. Any savings that eventually come to the state under this model shall not be recaptured by the State; rather, HCR shall distribute such savings to the preservation coalitions to assist the preservation companies in efficiencies and mergers.

Legislative history

New bill.

Fiscal implications

None to the State.

Effective date

This act shall take effect immediately.