senate Bill S1005

2011-2012 Legislative Session

Relates to limited-profit housing companies

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Senate Actions - UPPERCASE
Jan 04, 2012 referred to housing, construction and community development
Jan 05, 2011 referred to housing, construction and community development

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S1005 - Bill Details

See Assembly Version of this Bill:
A2595
Current Committee:
Law Section:
Private Housing Finance Law
Laws Affected:
Amd §28, add §35-a, Priv Hous Fin L
Versions Introduced in 2009-2010 Legislative Session:
S3688, A2933

S1005 - Bill Texts

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Relates to limited-profit housing companies; authorizes certain companies to pay dividends or interest in excess of six percent per annum; relates to the dissolution of certain rental housing companies.

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BILL NUMBER: S1005

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.

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.3688 of 2009
01/21/09 Referred to Housing
02/10/09 Reported Referred to Codes
02/11/09 Reported Referred to Ways and Means
04/06/09 Reported
04/09/09 Advanced to Third Reading Cal. 314
04/21/09 Passed Assembly
04/21/09 Delivered to Senate
04/21/09 Referred to Housing, Construction and Community Development
01/06/10 Died in Senate
01/06/10 Returned to Assembly
01/06/10 Ordered to Third Reading Cal. 244
04/12/10 Passed Assembly
04/12/10 Delivered to Senate
04/12/10 Referred to Housing, Construction and Community Develpment

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.
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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  1005

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sen. SAMPSON -- 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 limit-
  ed-profit housing companies in a city with a population of one million
  or more

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 28 of the private housing finance law is amended by
adding a new subdivision 4 to read as follows:
  4.  (A)  NOTWITHSTANDING ANY INCONSISTENT PROVISION OF THIS ARTICLE OR
OF ANY OTHER PROVISION OF GENERAL,  SPECIAL  OR  LOCAL  LAW,  A  COMPANY
(OTHER  THAN A MUTUAL COMPANY) THAT OPERATES A MUNICIPALLY-AIDED PROJECT
IN A CITY WITH A POPULATION OF ONE MILLION OR MORE AND THAT IS OTHERWISE
AUTHORIZED TO PAY DIVIDENDS UPON ITS SHARES OR INTEREST UPON ITS  INCOME
DEBENTURES  MAY,  WITH  THE APPROVAL OF THE SUPERVISING AGENCY, PAY SUCH
DIVIDENDS OR INTEREST IN EXCESS OF SIX PERCENT PER ANNUM.
  (B) ON AND AFTER THE DATE OF THE APPROVAL OF SUCH EXCESS  DIVIDEND  OR
INTEREST  BY  THE  SUPERVISING  AGENCY PURSUANT TO PARAGRAPH (A) OF THIS
SUBDIVISION, THE PROVISIONS OF SECTION THIRTY-ONE OF THIS ARTICLE RELAT-
ING TO THE VARIATION OF RENTAL RATES OF DWELLING UNITS IN  SUCH  MUNICI-
PALLY-AIDED  PROJECT  SHALL NOT APPLY AND RENTAL RATES OF DWELLING UNITS
MAY BE INCREASED ANNUALLY BY SUCH COMPANY,  WITHOUT  PUBLIC  HEARING  OR
FURTHER  APPROVAL BY THE SUPERVISING AGENCY, IN THE AMOUNT AUTHORIZED BY
THE RENT GUIDELINES BOARD ESTABLISHED PURSUANT TO THE RENT STABILIZATION
LAW OF NINETEEN HUNDRED SIXTY-NINE FOR RENT STABILIZED DWELLING UNITS.
  (C) THIS SUBDIVISION SHALL NOT APPLY TO A COMPANY WITH A MORTGAGE LOAN
INSURED OR HELD BY THE FEDERAL GOVERNMENT.
  S 2. The private housing finance  law  is  amended  by  adding  a  new
section 35-a to read as follows:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04993-01-1

S. 1005                             2

  S  35-A.  DISSOLUTION  OF CERTAIN RENTAL HOUSING COMPANIES. 1. FOR THE
PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL  HAVE  THE  MEANINGS
SET FORTH BELOW:
  (A)  "AFFECTED  DEVELOPMENT"  SHALL  MEAN  HOUSING  ACCOMMODATIONS (I)
LOCATED IN A CITY WITH A POPULATION OF ONE  MILLION  OR  MORE,  (II)  IN
BUILDINGS  COMPLETED  OR BUILDINGS SUBSTANTIALLY REHABILITATED AS FAMILY
UNITS ON OR AFTER JANUARY  FIRST,  NINETEEN  HUNDRED  SEVENTY-FOUR,  AND
(III)  OPERATED  PRIOR  TO  THE DISSOLUTION DATE AS A RENTAL DEVELOPMENT
PURSUANT TO THIS ARTICLE.
  (B) "AFFECTED DWELLING UNIT" SHALL MEAN A DWELLING UNIT IN AN AFFECTED
DEVELOPMENT.
  (C) "AFFECTED HOUSING COMPANY" SHALL  MEAN  A  LIMITED-PROFIT  HOUSING
COMPANY WITH AN AFFECTED DEVELOPMENT.
  (D) "DISSOLUTION DATE" SHALL MEAN, WITH RESPECT TO ANY AFFECTED DEVEL-
OPMENT,  THE  DATE  OF THE DISSOLUTION OR RECONSTITUTION OF THE AFFECTED
HOUSING COMPANY WITH SUCH AFFECTED DEVELOPMENT PURSUANT TO SECTION THIR-
TY-FIVE OF THIS ARTICLE.
  (E) "VOUCHER RECIPIENT" SHALL MEAN A TENANT IN  AN  AFFECTED  DWELLING
UNIT  WHO  RECEIVES  ENHANCED VOUCHER ASSISTANCE PURSUANT TO THE VOUCHER
ACT FOR SUCH PERIOD AS SUCH TENANT RECEIVES SUCH ASSISTANCE.
  (F) "VOUCHER UNIT" SHALL MEAN AN AFFECTED DWELLING UNIT THAT IS AT ANY
TIME OCCUPIED BY A VOUCHER RECIPIENT, FOR SUCH PERIOD AS  SUCH  AFFECTED
DWELLING UNIT IS OCCUPIED BY A VOUCHER RECIPIENT.
  (G)  "MARKET  UNIT"  SHALL  MEAN  AN AFFECTED DWELLING UNIT THAT IS NO
LONGER SUBJECT TO THE RENT STABILIZATION LAW OF NINETEEN HUNDRED  SIXTY-
NINE  AND  THE  EMERGENCY TENANT PROTECTION ACT OF NINETEEN SEVENTY-FOUR
BECAUSE IT HAS BEEN DECONTROLLED PURSUANT TO THE TERMS OF APPLICABLE LAW
OR PURSUANT TO SUBDIVISION THREE OF THIS SECTION.
  (H) "VACATED UNIT" SHALL MEAN AN AFFECTED DWELLING UNIT, OTHER THAN  A
VOUCHER  UNIT OR A MARKET UNIT, THAT IS NO LONGER OCCUPIED BY THE TENANT
WHO OCCUPIED SUCH UNIT ON THE DISSOLUTION DATE OR BY THE LAWFUL  SUCCES-
SORS IN INTEREST OF SUCH TENANT.
  (I)  "FULLY  TAXABLE  UNITS" SHALL MEAN, WITH RESPECT TO ANY TAX YEAR,
ALL AFFECTED UNITS THAT WERE VOUCHER  UNITS,  MARKET  UNITS  OR  VACATED
UNITS ON THE TAXABLE STATUS DATE OF SUCH TAX YEAR.
  (J)  "PARTIALLY  TAXABLE  UNITS"  SHALL  MEAN, WITH RESPECT TO ANY TAX
YEAR, ALL AFFECTED UNITS WHICH WERE NOT FULLY TAXABLE UNITS ON THE TAXA-
BLE STATUS DATE OF SUCH TAX YEAR.
  (K) "VOUCHER ACT" SHALL MEAN SECTION 8(T) OF THE UNITED STATES HOUSING
ACT OF NINETEEN THIRTY-SEVEN, AS AMENDED, OR ANY SUCCESSOR STATUTE,  AND
ANY REGULATIONS PROMULGATED THEREUNDER.
  2.  NOTWITHSTANDING  ANY  PROVISION  TO THE CONTRARY CONTAINED IN THIS
ARTICLE, AND NOTWITHSTANDING THE PROVISIONS OF ANY GENERAL,  SPECIAL  OR
LOCAL  LAW, AFTER THE DISSOLUTION DATE, AFFECTED DWELLING UNITS SHALL BE
FULLY SUBJECT TO THE PROVISIONS OF THE RENT STABILIZATION LAW  OF  NINE-
TEEN HUNDRED SIXTY-NINE AND THE EMERGENCY TENANT PROTECTION ACT OF NINE-
TEEN SEVENTY-FOUR.
  (A)  THE  INITIAL  LEGAL REGULATED RENT FOR ANY AFFECTED DWELLING UNIT
FOLLOWING THE DISSOLUTION DATE SHALL BE THE LAST RENT AUTHORIZED FOR THE
AFFECTED DWELLING UNIT BEFORE THE DISSOLUTION DATE, WHICH SHALL  NOT  BE
SUBJECT TO ADJUSTMENT PURSUANT TO SUBDIVISION A OF SECTION 26-513 OF THE
ADMINISTRATIVE CODE OF THE CITY OF NEW YORK.
  (B) NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO THE CONTRARY, THE
LEGAL  REGULATED  RENT  FOR A VOUCHER UNIT SHALL BE EQUAL TO THE MAXIMUM
RENT AUTHORIZED AND APPROVED IN CONNECTION WITH THE  FEDERAL  ASSISTANCE
PROVIDED  TO  THE  VOUCHER  RECIPIENT OCCUPYING SUCH VOUCHER UNIT. IF AN

S. 1005                             3

AFFECTED DWELLING UNIT WHICH WAS A VOUCHER UNIT CEASES TO BE  A  VOUCHER
UNIT  AT  ANY TIME OR FOR ANY REASON, EXCEPT FOR THOSE REASONS SPECIFIED
IN SUBDIVISION THREE OF THIS SECTION, THE INITIAL LEGAL  REGULATED  RENT
FOR SUCH AFFECTED DWELLING UNIT FOLLOWING SUCH CHANGE IN STATUS SHALL BE
EQUAL  TO THE SUM OF (I) THE LAST RENT AUTHORIZED BEFORE THE DISSOLUTION
DATE, PLUS (II) ANY ADJUSTMENTS TO SUCH RENT AUTHORIZED BY  LAW  BETWEEN
THE  DISSOLUTION  DATE  AND THE DATE UPON WHICH SUCH UNIT CEASED TO BE A
VOUCHER UNIT.
  3. NOTWITHSTANDING ANY PROVISION OF  THIS  SECTION  TO  THE  CONTRARY,
WHERE  AN  AFFECTED  DEVELOPMENT  CONTAINS  DWELLING  UNITS WHICH MAY BE
ELIGIBLE FOR ENHANCED VOUCHER ASSISTANCE PURSUANT TO  THE  VOUCHER  ACT,
ANY  DWELLING  UNIT IN SUCH AFFECTED DEVELOPMENT SHALL BE DEEMED TO BE A
MARKET UNIT AND NOT SUBJECT TO THE RENT STABILIZATION  LAW  OF  NINETEEN
HUNDRED  SIXTY-NINE  AND THE EMERGENCY TENANT PROTECTION ACT OF NINETEEN
SEVENTY-FOUR FOR THE DURATION OF SUCH TENANCY IF: (A) THE TENANT  RESID-
ING IN SUCH DWELLING UNIT AS OF THE DISSOLUTION DATE FAILS TO SUBMIT ALL
OF  THE  REQUIRED DOCUMENTATION FOR THE INITIAL APPLICATION FOR ENHANCED
VOUCHER ASSISTANCE PURSUANT TO THE VOUCHER ACT, (B) A VOUCHER  RECIPIENT
RESIDING  IN  SUCH DWELLING UNIT FAILS TO SUBMIT THE REQUIRED DOCUMENTA-
TION FOR RECERTIFICATION FOR ENHANCED VOUCHER ASSISTANCE PURSUANT TO THE
VOUCHER ACT, OR (C) A VOUCHER RECIPIENT RESIDING IN SUCH  DWELLING  UNIT
VIOLATES,  THROUGH  ACTION  OR INACTION, THE REQUIREMENTS OF THE VOUCHER
ACT. UPON THE FIRST VACANCY OF AN AFFECTED DWELLING UNIT WHICH BECOMES A
MARKET RATE UNIT PURSUANT TO THIS SUBDIVISION,  SUCH  AFFECTED  DWELLING
UNIT  SHALL BE FULLY SUBJECT TO THE PROVISIONS OF THE RENT STABILIZATION
LAW OF NINETEEN HUNDRED SIXTY-NINE AND THE EMERGENCY  TENANT  PROTECTION
ACT  OF  NINETEEN SEVENTY-FOUR, AND THE INITIAL LEGAL REGULATED RENT FOR
SUCH AFFECTED DWELLING UNIT FOLLOWING SUCH CHANGE  IN  STATUS  SHALL  BE
EQUAL  TO THE SUM OF (I) THE LAST RENT AUTHORIZED BEFORE THE DISSOLUTION
DATE, PLUS (II) ANY ADJUSTMENTS TO SUCH RENT AUTHORIZED BY  LAW  BETWEEN
THE  DISSOLUTION  DATE  AND THE DATE UPON WHICH SUCH UNIT CEASES TO BE A
MARKET UNIT.
  4. NOTWITHSTANDING ANY PROVISION TO THE  CONTRARY  CONTAINED  IN  THIS
ARTICLE,  AND  NOTWITHSTANDING THE PROVISIONS OF ANY GENERAL, SPECIAL OR
LOCAL LAW, AFTER THE DISSOLUTION DATE, ANY PARTIAL EXEMPTION  FROM  REAL
PROPERTY  TAXATION  GRANTED TO THE REAL PROPERTY IN AN AFFECTED DEVELOP-
MENT PURSUANT TO SECTION THIRTY-THREE OF  THIS  ARTICLE  SHALL  CONTINUE
WITH RESPECT TO ANY PARTIALLY TAXABLE UNITS, BUT ANY FULLY TAXABLE UNITS
SHALL BE SUBJECT TO FULL REAL PROPERTY TAXATION.
  5. THIS SECTION SHALL NOT APPLY TO AN AFFECTED DEVELOPMENT IF: (A) THE
OWNER  AND  A  DULY  RECOGNIZED  TENANTS  ASSOCIATION  EXECUTE A WRITTEN
SETTLEMENT AGREEMENT ON OR BEFORE THE DISSOLUTION  DATE,  AND  (B)  SUCH
WRITTEN  SETTLEMENT  AGREEMENT SPECIFIES THE RESPECTIVE RIGHTS AND OBLI-
GATIONS OF THE TENANTS AND OWNER SUBSEQUENT TO THE DISSOLUTION DATE.
  S 3. If any clause, sentence, paragraph, section or part of  this  act
shall  be adjudged by any court of competent jurisdiction to be invalid,
such judgment shall not affect,  impair,  or  invalidate  the  remainder
thereof, but shall be confined in its operation to the clause, sentence,
paragraph,  section or part thereof directly involved in the controversy
in which judgment shall have been rendered.
  S 4. This act shall take effect immediately; provided,  however,  that
section  two  of this act shall apply to any affected development with a
dissolution date on or after the effective date of this act.

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