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History
- Referred to housing, construction and community development
- Referred to housing, construction and community development
Full text
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Sponsor's memo
BILL NUMBER:S137
Title of bill
An act to amend the private housing finance law, in relation to limited-profit housing 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 encourage housing companies to remain in the Mitchell-Lama housing program and protect those tenants in post-1974 Mitchell-Lama developments under rent stabilization if an owner buys out of the program.
Read the full memo (772 words)
Summary of specific provisions
This bill would: - authorize municipally-aided Mitchell-Lama developments to pay dividends in excess of 6% with the approval of the Department of Housing Preservation and Development (HPD); - authorize such developments to annually increase rents at a rate established by the New York City Rent Guidelines Board; and prohibit companies with a mortgage loan insured or held by the federal government from taking advantage of the above incentives. This bill would also: - provide that tenants in post-1974 Mitchell-Lama rental developments that voluntarily dissolve would be covered under rent stabilization; - provide that the initial legal regulated rent for units in post-1974 buildings following the dissolution date would be the last regulated rent before the dissolution date; provide that the regulated rent for Section 8 units would be equal to the maximum rent authorized under Section 8 guidelines; - provide that once a Section 8 unit ceases to be a Section 8 unit (i.e., due to vacancy or increase in tenant income) the initial regulated rent for such affected dwelling unit following such change in status would be equal to the sum of the last rent authorized before the housing company dissolved plus any adjustments to such rent authorized by law between the date the company dissolved and the date which the unit ceased being a Section 8 unit; - require the continuation of any partial tax exemption from real property tax granted to the housing development, but fully taxable units would be subject to full taxation; and - not apply to developments in which the owner and the tenants association enter into a written settlement agreement on or before the dissolution date and such settlement agreement specifies the respective rights and obligations of the tenants and owner subsequent to the dissolution date.
Effects of present law which this bill would alter
This bill would add a new subdivision four to the Section 28 of the Private Housing Finance Law.
Justification
Many housing companies are opting to buy-out of the Mitchell-Lama program in order to increase the return on their investment beyond the current Mitchell-Lama statutory limits. This bill is designed to encourage housing companies to remain in the Mitchell-Lama program by authorizing returns in excess of the current statutory limit. The bill is also intended to protect tenants of Mitchell-Lama developments that buyout of the program. There are currently two primary post-buyout protections for Mitchell-Lama tenants, but these protections are only available to some tenants. First, when Mitchell-Lama developments that were initially occupied before 1974 buyout of the program, the apartments are subject to rent stabilization. Second, when Mitchell-Lama developments that have federally assisted mortgages buyout of the program, eligible tenants (generally those with incomes up to $59,600 for a family of four) may receive special federal Section 8 rental subsidies, known as "sticky vouchers," that insulate the tenants from large rent increases. Under current law, approximately 32,000 tenants of post-1974 Mitchell-Lama developments would not be protected by rent stabilization upon buyout and would therefore be vulnerable to large rent increases and potential displacement unless they are eligible for sticky vouchers. Many of these tenants would be eligible for sticky vouchers, but those who live in developments that do not have federally assisted mortgages, or whose household income exceeds the federal guidelines for voucher eligibility, would have no protection at all. In all, an estimated 8,000 to 10,000 tenants of post-1974 Mitchell-Lama developments would be ineligible for sticky vouchers and would therefore have no protection against rent increases and displacement. The bill would give these tenants post-buyout rent stabilization protection. It would also protect them from potentially large rent increases based on "unique or peculiar circumstances" under current law. By providing incentives for owners to remain in the Mitchell-Lama program, and ensuring tenant protection upon buyout, this bill is essential to the preservation of affordable housing in New York City.
Prior legislative history
S.1005 of 2011 01/15/11 Referred to Housing, Construction and Community Development
Fiscal implications for state and local governments
Continued property tax exemptions.
Effective date
Immediately, provided, however, that section two of this act would apply to any development with a dissolution date on or after the effective date of this act.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.