What's happening
This bill gives tenants or qualified entities the right of first refusal and opportunity to purchase affordable assisted rental housing before conversion or sale.
Why it matters
Strengthens tenant and community control. By giving tenants or their chosen organizations a structured right to buy their buildings, the bill can help keep affordable housing under local, resident, or nonprofit management, potentially reducing the risk of rapid displacement and loss of affordable units.
Creates transparency and advance warning. Owners must provide tenants with extensive, detailed notice at least 12 months before a planned sale or conversion, including financials, rent schedules, and inspection reports. This advanced notice empowers tenants and local governments with critical time to organize, seek financing, and prepare to exercise their rights—something often lacking in rapid conversions.
Stabilizes affordability and tenant protections. Any tenant or qualified entity that acquires a property under this law is obligated to maintain long-term affordability. Even if a conversion proceeds, current tenants are guaranteed the right to stay for at least six months—or until their lease ends—at the same rent, offering stability during uncertain transitions.
Limits speculative and predatory sales. The bill imposes significant penalties on owners who violate its provisions (up to $100,000 per unit), and excludes certain transfers like eminent domain or refinancing for affordability. These measures discourage owners from circumventing the law and help keep the focus on preserving affordable housing for low- and moderate-income households.
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Let Tenants Buy Buildings First
Plain English, a few words. Used as the page title.
Sponsors
History
- Referred to housing, construction and community development
- Referred to housing, construction and community development
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Let Tenants Buy First
In Assembly Committee · Housing · Sponsor Linda Rosenthal
Full text
9 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1922
2019-2020 Regular Sessions
IN SENATE
January 17, 2019
Introduced by Sens. KRUEGER, BAILEY, HOYLMAN, SERRANO, STAVISKY -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development
AN ACT to amend the private housing finance law, in relation to right of first refusal
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The private housing finance law is amended by adding a new article 2-A to read as follows:
ARTICLE II-A
RIGHT OF FIRST REFUSAL Section 38. Definitions.
38-a. Notification of impending conversion.
38-b. Notification of bona fide offer to purchase.
38-c. Appraisal determination.
38-d. Right of first refusal.
38-e. First opportunity to purchase.
38-f. Prior notification.
38-g. Long term affordability.
38-h. Right of transfer.
38-i. Conversion of property.
38-j. Penalty.
38-k. Exclusions.
38-l. Judicial review.
§ 38. Definitions. For the purposes of this article, the following definitions shall apply:
1. "Affordable" shall mean that rental expenses for dwelling units do not exceed thirty percent of the annual gross household income of the existing tenants, and/or where rental expenses do not exceed the rent levels allowable pursuant to the rent restrictions applicable to such dwelling units prior to conversion, provided however that dwelling units
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03990-01-9
S. 1922 2
which become vacant in assisted rental housing should not be rented to households whose income exceeds eighty percent of the New York metropolitan area median income as determined by the United States department of housing and urban development.
2. "Appraised value" shall mean the value as determined by a majority vote of an advisory panel of three appraisers who shall perform such appraisal in accordance with the American Arbitration Association's rules for the real estate industry.
3. "Assisted rental housing" shall mean a privately-owned multiple dwelling or group of multiple dwelling units managed together under the same ownership in which the majority of dwelling units therein are subject to federal, state or city income eligibility restrictions and in which rents for such dwelling units are controlled, regulated or assisted by a federal, state or city agency pursuant to a regulatory agreement or rental assistance agreement designed to make such dwelling units affordable on a project-based basis. Assisted rental housing programs shall include:
(a) any program created, administered, or supervised by a municipality or state under article two or article four of this chapter.
(b) any program providing project-based assistance under section eight of the United States housing act of 1937, as it may be amended from time to time; and
(c) housing programs governed by section 202, 207, 221, 232, 236, or 811 of the national housing act, (12 U.S.C. 1701 et seq.), as they may be amended from time to time.
4. "Bona fide purchaser" shall mean a person or entity that has tendered a bona fide offer to purchase the assisted rental housing.
5. "Bona fide offer to purchase" shall mean a good faith and without fraud offer, made in writing and approved by the division that is tendered by a bona fide purchaser no later than one hundred twenty days after an appraisal performed pursuant to section thirty-eight-c of this article, and that is non-binding on the owner with intent to convert.
6. "Conversion" or "convert" shall mean the transfer of title, leasing, intention to sell or lease, mortgage pre-payment, withdrawal from an assisted housing program, decision not to extend or renew participation in the program or any other action taken by the owner that would result in the termination of participation by the owner in the assisted rental housing program.
7. "Household" shall mean all lawful occupants of any dwelling unit.
8. "Household income" shall mean, for any household, the sum of the amount reported separately in the most recent individual or joint tax return for wage or salary income, net self-employed income, interest, dividends, rent received, royalties, social security or railroad retirement benefits or disability benefits and all other income for each member of the household reported on a tax return.
9. "Division" shall mean the division of housing and community renewal or successor agency.
10. "Financial assistance" shall mean any benefits received as a result of an assisted rental housing program that act to maintain affordable rents in the assisted rental housing.
11. "First opportunity to purchase" shall mean the opportunity by a tenant association, or if applicable, a qualified entity, to purchase in good faith and without fraud the assisted rental housing at or below its appraised value before such assisted rental housing becomes subject to conversion.
S. 1922 3
12. "Notice" shall mean a written communication addressed to a tenant association, or if no tenant association exists, to each tenant, or if applicable, to a qualified entity, by means of first class and registered mail, or personal delivery upon a tenant association, or if no tenant association exists, upon each tenant, or if applicable, a qualified entity. Each such notice shall be deemed to have been given upon the deposit of such first class and registered mail in the custody of the United States postal service or upon receipt of personal delivery, and by posting of such notice in the common areas of the assisted rental housing.
13. "Owner" shall mean any person or entity, or combination of such persons or entities, or any agent of such persons or entities, that has a controlling interest in assisted rental housing that is subject to conversion.
14. "Qualified entity" shall mean any individual, partnership, limited liability partnership, limited liability corporation, not-for-profit corporation or business corporation, or other entity authorized to do business in New York state and experienced in the management of affordable housing, designated by the tenants residing in at least sixty percent of the occupied dwelling units within the same assisted rental housing to act on its behalf pursuant to section thirty-eight-h of this article and approved in writing by the division and which obligates itself and any successors in interest to assume the ongoing responsibility of continuing maintenance and operation of the assisted rental housing as affordable for the duration of the housing's useful life and in accordance with the purposes of this article.
15. "Right of first refusal" shall mean the right of a tenant association, or if applicable, a qualified entity, to submit a good faith and without fraud offer, in writing to the owner to purchase the higher of the assisted rental housing's appraised value or the identical price, terms and conditions offered by a bona fide purchaser as approved by the division.
16. "Tenant" shall mean a lawful occupant who resides within a dwelling unit within such assisted rental housing pursuant to law or a lease recognized by either the owner of such assisted rental housing, the division or a court of competent jurisdiction.
17. "Tenant association" shall mean an association, whether incorporated or not, for which written consent to forming a tenant association has been given by tenants representing at least sixty percent of the occupied dwelling units within the same assisted rental housing, and which association notifies or has notified the owner of the assisted rental housing and the division of its existence or establishment and has provided to such owner and the division the names and addresses of at least two of the officers or representatives of such association. Where more than one group of tenants in the same assisted rental housing claims to be the tenant association for such assisted rental housing, the division shall determine which group, if any, is the tenant association for the purposes of this article in the same manner as the division certifies a tenant association for the purposes of article two of this chapter.
§ 38-a. Notification of impending conversion. 1. Notice shall be provided by the owner to the tenant association, or if no tenant association exists, to each tenant, and to the division of the intention of the owner to take any action that will result in the conversion of the assisted rental housing.
S. 1922 4
2. Such notice shall be provided no less than twelve months prior to the taking of such action by the owner. Such notice shall include the following information:
(a) the name and address of each owner of the assisted rental housing. For any owner that is a corporation, the notice shall contain the names and addresses of the officers and directors of the corporation and of any person directly or indirectly holding more than ten percent of any class of the outstanding stock of the corporation. For any owner that is a partnership or joint venture, the notice shall contain the name and address of each individual who is a principal or exercises control of such entities;
(b) the address and/or addresses and the name and/or names of the assisted rental housing and the type of program or programs to which the assisted rental housing is subject;
(c) the nature of the action that the owner intends to take that will result in a conversion;
(d) the date on which such action resulting in the conversion is anticipated to take place;
(e) the provision of law, rule or regulation pursuant to which such action is authorized;
(f) the total number and type of dwelling units subject to a conversion;
(g) the current rent schedule for the dwelling units along with an estimation of the rent increases anticipated upon conversion;
(h) the income and expense report for the twelve-month period prior to the notice including capital improvements, real property taxes and other municipal charges;
(i) the amount of the outstanding mortgage as of the date of the notice;
(j) the two most recent inspection reports from the real estate assessment center of the United States department of housing and urban development, for the assisted rental housing or group of multiple dwelling units operated together under the same ownership for which such inspection reports are required, or, the reports of the two most recent comprehensive building-wide inspection reports that may have been conducted by the division;
(k) a statement of notice in a manner approved by the division which advises a tenant association, or if no tenant association exists, advises each tenant, of the first opportunity to purchase as required by section thirty-eight-e of this article, or of the right of first refusal, as required by section thirty-eight-d of this article; and
(l) such other information the division may require.
3. During the twelve-month notification period provided for in subdivision two of this section the owner may not sell or contract to sell the assisted rental housing, but may engage in such discussions with other interested parties.
4. Notice shall not be required of an owner who intends to maintain the property as assisted rental housing or intends to transfer, lease or refinance a mortgage in order to maintain the property as assisted rental housing.
5. Where an owner decides not to convert the assisted rental housing program, such owner may withdraw the notice of intention to convert the assisted rental housing program, subject to the terms of any accepted offer to purchase or executed purchase and sale agreement, and to existing statutory and common law remedies. In such event, the owner shall give notice to the tenant association, or if no tenant association
S. 1922 5
exists, to each tenant, or if applicable, to a qualified entity, and to the division. However, should the owner at any time decide to take an action that will result in conversion, the twelve-month notice period of this section as well as all other applicable requirements of this article shall be complied with.
6. Notwithstanding any other provisions of this section, if any applicable supervening statute or program has a notice requirement substantially similar to any notice requirement of this section, then the notice requirement under this section shall be that of the supervening statute or program.
7. Notwithstanding any other provisions of this section, if the notices required by this section require more information than is required by any applicable supervening city, state or federal statute or program, then such additional information shall be provided within the time period established by the supervening statute or program.
§ 38-b. Notification of bona fide offer to purchase. 1. If the owner receives a bona fide offer to purchase and intends to consider, or respond to such bona fide offer to purchase, then notice shall be provided by the owner to a tenant association, or if no tenant association exists, to each tenant, or if applicable, a qualified entity, and the division, no more than fifteen days from the date that such bona fide offer to purchase is delivered to the owner. Such notice shall contain the following information:
(a) the name and address of the proposed bona fide purchaser; and
(b) the price and terms and conditions of the offer.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the private housing finance law, in relation to right of first refusal
Purpose or general idea of bill
To protect the residents of all Mitchell-Lama, Limited Dividend and federally subsidized developments in the state that are being privatized by granting tenants the right to purchase their buildings at a fair market value.
Summary of specific provisions
The Private Housing Finance Law is amended by adding a new article 2-A, Section 38. Terms are defined including "right of first refusal" which means the right of a tenant association or a qualified entity to purchase a Mitchell-Lama, Limited Dividend or a federally subsidized property, such as a Project-based Section 8 building.
Read the full memo (1,150 words)
This measure would require all owners of Mitchell-Lama, Limited Dividend and federally subsidized housing developments who plan to privatize their buildings to provide advance notification to all tenants and the State Division of Housing and Community Renewal (DHCR). Such notice shall be made no less than twelve months prior to the owner taking any action, and contain specific information related to the property and its ownership.
The bill provides for the tenant or tenants' association to notify the owner in writing of their intent to exercise their right of first refusal within 60 days. In relation to value of the property, the DHCR shall convene an advisory panel to determine the appraised value of the housing, and promulgate rules for the timely determination of the appraised value.
This bill also requires that any owner who receives a bona-fide offer for a property to provide the terms and conditions of the offer to the tenants' association, or each individual tenant, within 15 days. In the event the prospective purchaser agrees to maintain the housing as affordable, the owner does not need to notify tenants.
If the tenants choose not to exercise their right of first refusal, they shall have the right to remain in their prospective dwelling units for six months from the date of the conversion or until their leases expire, whichever is longer. With the agreement of the tenant or tenants, the new owner may relocate tenant (s) to comparable units with comparable rents in accordance with procedures established by the DHCR.
An owner in violation of this article is liable for a civil penalty of five thousand dollars per month per dwelling with total civil penalties not to exceed $100,000 per dwelling unit. This legislation shall not affect existing agreements or the purchase by a governmental entity utilizing the powers of eminent domain, bankruptcy proceedings, or the judicially supervised sale or transfer of the property. Judicial review is available for persons aggrieved by an appraisal determination.
Justification
New York State is facing an affordable housing crisis that widespread and diverse. Few problems facing our state are critical than New York's severe shortage of safe, decent, affordable homes. During much of the last century, New York State a national leader in the creation of affordable housing and protection of tenants' rights.
is more and was the
In the 1950s, the state enacted the extremely successful Mitchell-Lama program which created more than 150,000 homes across New York that were affordable to middle income families. The Mitchell-Lama housing program was created in 1955, with new developments continuing to be built into the mid-1970's under a mix of state, local and federal funding. Low interest loans covering up to 95% of all development costs were made available to developers. The developments came with 20-, 30- or 40-year affordability requirements, after which these developments could be privatized. New York State also has a large number of federally subsi- dized developments which house hundreds of thousands of low-income, elderly, and disabled residents across the state. Mitchell-Lama, Limited Dividend and federally subsidized rental units are found throughout New York State, including in New York City, Buffalo, Albany, Rochester, Syracuse, Westchester and Nassau Counties.
In recent years, there has been a significant loss of Mitchell-Lama rental units. 65,000 units across the state have already been lost, and dozens of additional developments have already initiated the buyout process. New York City, in particular, is facing a particularly grave loss of rental units; more than 40% of its Mitchell-Lama rental units have been privatized since 1990. New York State has also already lost over 10,000 units of federally subsidized project based Section 8 homes.
Currently, tenants of Mitchell-Lama, Limited Dividend and federally subsidized rental buildings have few protections if an owner decides to opt out of the subsidy program. While many tenants living in a federally subsidized buildings that have privatized are eligible for enhanced Section 8 vouchers, these vouchers require a lengthy application process and are not guaranteed. Family size and housing quality standards can often make a tenant ineligible to remain in his or her home and, force the use of a standard voucher that has a reduced value when not used in the original building.
Faced with an increasing crisis of privatizations and opts-outs in most of its communities, New York City passed Local Law 79 in 2005, which granted Mitchell-Lama and Section 8 tenants a "right-of-first-refusal." However, it was struck down in April 2007 by the New York State Supreme Court. In the court's decision, the judge issued a clear directive to the State Legislature. The judge wrote that not only does the Legisla- ture have the authority to enact such a measure, it also has the duty to provide this protection to tenants. "Whether it be by creating a right of first refusal or by extending rent stabilization, the State Legisla- ture may well have the ability to protect low and middle-income resi- dents of Mitchell-Lama buildings, as it has done in the past. In failing to do so, or to permit the City of the New York to do so, the State Legislature has failed the residents of the City of New York. The recent sales and proposed sales of major assisted rental housing complexes in this City and the likely devastating impact of those sales on low and moderate-income residents of New York may and should function as a wake- up call for the need for immediate action by the State." By providing for a right of first refusal, New York State will have the necessary statutory framework needed to preserve affordable and subsidized hous- ing. Several other states, including Rhode Island, Maine, Texas and Illinois, have adopted right of first refusal and right to purchase laws. New York State should once again become a national leader, as it once was, in providing for progressive housing laws and tenant protections.
Legislative history
2017-18: S.5836/A.5006 - Rosenthal, L - Housing 2015-16: S.2779/A.1067 - Rosenthal, L - Housing 2013-14: S.3155/A.6583 - Rosenthal, L - Housing 2011-12: S.428/A.9974 - Rosenthal, L - Housing 2009-10: S.3852/A.9974 - Rosenthal, L - Housing 20017-08 S.5948/A.8820 - Rosenthal, L - Housing
Fiscal implications
None
Effective date
Immediately
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