Senate Bill S2871

                                 BILL NUMBER:  S2871A

 TITLE OF BILL :

An act to amend the real property actions and proceedings law, in
relation to new owners of buildings for which administrators have been
appointed; and to amend chapter 375 of the laws of 1999 amending the
real property actions and proceedings law relating to new owners of
buildings for which administrators have been appointed pursuant to
article 7-A of such law, in relation to the effectiveness thereof


 SUMMARY OF PROVISIONS :

Subdivision 10 of section 778 of the Real Property Actions and
Proceedings Law (the "RPAPL") grants the City of New York ("the City")
authority to "evaporate" (reduce to zero) liens on Article 7-A
properties for municipally financed repairs. This authority will
expire on June 30, 2009, unless it is extended by the provisions, of
this legislation. Furthermore, the City's deadline for submitting a
report to the Governor, the Senate and the Assembly, describing the
program activities carried out during the two prior calendar years
pursuant to subdivision 10, is also extended.

 REASONS FOR SUPPORT :

              

Pursuant to Article 7-A, the Civil Court of the City of New York
appoints administrators to operate privately owned buildings that have
been effectively abandoned by their owners and have created conditions
dangerous to the life, health and safety of tenants still living in
such buildings. Administrators act under court order to collect rents,
which are used for providing essential services to tenants and for
making necessary repairs. In many instances, City capital funds are
utilized to repair or replace major systems or to make other necessary
improvements.

All money expended by the City for such purposes becomes a lien on the
property. Subdivision 10 of Section 788 of the RPAPL provides that a
new owner of an Article 7-A property may take advantage of lien
evaporation only if he or she enters into a regulatory agreement with
the New York City Department of Housing Preservation and Development
("HPD"). This regulatory agreement requires that the Article 7-A
property be utilized for affordable housing and permits the lien to be
evaporated after a 15-year period of compliance with the agreement.
The regulatory agreement also requires that the new owner certify that
the prior owner of the property has no direct or indirect interest in
the property and that the prior owner has no direct or indirect
interest in the new owner.

Article 7-A has enabled the City to encourage not-for-profit and
for-profit entitles to purchase 7-A buildings, allowing such
properties to be developed into a source of permanent affordable
housing for families and individuals. The Article 7-A evaporation is
limited exclusively to the transfer of a building to a new owner who
has no business or other interests with the original owner. This will
prevent a prior owner of an Article 7-A administered building from
benefiting from lien evaporation. New owners must comply with all
provisions of the regulatory agreement entered into with HPD in order
for lien evaporation to be utilized.

This legislation will allow the City to continue to transform
effectively-abandoned buildings, often in dangerous disrepair, into a
source of permanent affordable housing.

Accordingly, the Mayor urges the earliest possible favorable
consideration of this proposal by the Legislature.