Senate Bill S3861

                                 BILL NUMBER:  S3861

 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.