S T A T E O F N E W Y O R K
________________________________________________________________________
940
2013-2014 Regular Sessions
I N A S S E M B L Y
(PREFILED)
January 9, 2013
___________
Introduced by M. of A. KELLNER -- read once and referred to the Commit-
tee on Housing
AN ACT to amend the private housing finance law and the state finance
law, in relation to providing for the automatic dissolution of Mitc-
hell-Lama cooperative housing
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The private housing finance law is amended by adding a new
section 35-a to read as follows:
S 35-A. DISSOLUTION OF A MUTUAL COMPANY. 1. A MUTUAL COMPANY SHALL
AUTOMATICALLY BE DISSOLVED, WITHOUT CONSENT OF THE COMMISSIONER OR OF
THE SUPERVISING AGENCY, AS THE CASE MAY BE, NOT LESS THAN THIRTY YEARS
AFTER THE OCCUPANCY DATE BUT WITHIN ONE YEAR FOLLOWING SUCH THIRTIETH
YEAR OR WITHIN ONE YEAR OF THE EFFECTIVE DATE OF THIS SECTION, WHICHEVER
IS LATER. SUCH MUTUAL COMPANY SHALL BE REQUIRED TO PAY ANY AND ALL
EXPENSES INCURRED IN EFFECTING SUCH DISSOLUTION.
2. NOTWITHSTANDING SUBDIVISION ONE OF THIS SECTION, NO SUCH DISSOL-
UTION SHALL OCCUR IF A MAJORITY OF THE OWNERS OF THE CAPITAL STOCK OF
THE COMPANY VOTE TO REMAIN SUBJECT TO THE PROVISIONS OF THIS ARTICLE.
3. UPON DISSOLUTION, SUCH MUTUAL COMPANY MAY ELECT TO (A) PAY IN FULL
THE REMAINING BALANCE OF PRINCIPAL AND INTEREST DUE AND UNPAID UPON THE
MORTGAGE OR MORTGAGES; OR (B) CONTINUE TO PAY THE REMAINING BALANCE OF
PRINCIPAL AND INTEREST DUE AND UNPAID UPON THE MORTGAGE OR MORTGAGES IN
ACCORDANCE WITH THE ORIGINAL TERMS OF SUCH MORTGAGE OR MORTGAGES,
NOTWITHSTANDING THE DISSOLUTION. IF THE TERMS OF A MORTGAGE, AND NOTE OR
BOND SECURED THEREBY, MADE PURSUANT TO THIS ARTICLE, SHALL REQUIRE
MODIFICATION IN ORDER TO COMPLY WITH THE PROVISIONS OF THIS SECTION, THE
MUTUAL COMPANY AND THE MORTGAGEE OR MORTGAGEES SHALL BE REQUIRED TO
RENEGOTIATE AND AGREE TO SUCH MODIFIED TERMS WITHIN ONE YEAR OF THE
EFFECTIVE DATE OF THE MUTUAL COMPANY'S DISSOLUTION PURSUANT TO SUBDIVI-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01897-01-3
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SION ONE OF THIS SECTION. IF THE PARTIES ARE UNABLE TO AGREE, THE MODI-
FIED TERMS SHALL BE DETERMINED BY BINDING ARBITRATION.
4. UPON SUCH DISSOLUTION, TITLE TO THE PROJECT MAY BE CONVEYED IN FEE
TO THE OWNER OR OWNERS OF ITS CAPITAL STOCK OR TO ANY CORPORATION DESIG-
NATED BY IT OR THEM FOR THE PURPOSE, OR THE COMPANY MAY BE RECONSTITUTED
PURSUANT TO APPROPRIATE LAWS RELATING TO THE FORMATION AND CONDUCT OF
CORPORATIONS, PROVIDED, HOWEVER, THAT PRIOR TO ANY SUCH DISSOLUTION AND
CONVEYANCE OR RECONSTITUTION, PAYMENT SHALL BE MADE OF ALL CURRENT OPER-
ATING EXPENSES, TAXES, INDEBTEDNESS AND ALL ACCRUED INTEREST THEREON AND
THE PAR VALUE OF AND ACCRUED DIVIDENDS ON THE OUTSTANDING STOCK OF SUCH
COMPANY.
5. CONVEYANCE OF SUCH LAND SHALL BE SUBJECT TO COVENANTS AND
RESTRICTIONS OF RECORD. IF THE COVENANTS OR RESTRICTIONS OF RECORD SHALL
REQUIRE MODIFICATION IN ORDER TO COMPLY WITH THE PROVISIONS OF THIS
SECTION, THE MUTUAL COMPANY AND ANY OTHER INTERESTED PARTY OR PARTIES
SHALL BE REQUIRED TO RENEGOTIATE AND AGREE TO SUCH MODIFIED TERMS WITHIN
ONE YEAR OF THE EFFECTIVE DATE OF THE MUTUAL COMPANY'S DISSOLUTION
PURSUANT TO SUBDIVISION ONE OF THIS SECTION. IF THE PARTIES ARE UNABLE
TO AGREE, THE MODIFIED TERMS SHALL BE DETERMINED BY BINDING ARBITRATION.
6. AFTER SUCH DISSOLUTION AND CONVEYANCE, OR SUCH RECONSTITUTION, THE
PROVISIONS OF THIS ARTICLE SHALL BECOME AND BE INAPPLICABLE TO ANY SUCH
PROJECT AND ITS OWNER OR OWNERS AND ANY TAX EXEMPTION GRANTED WITH
RESPECT TO SUCH PROJECT PURSUANT TO SECTION THIRTY-THREE OF THIS ARTICLE
SHALL CEASE AND TERMINATE.
S 2. Subdivision 2 of section 35 of the private housing finance law,
as amended by chapter 229 of the laws of 1989, is amended to read as
follows:
2. [A] EXCEPT AS PROVIDED BY SECTION THIRTY-FIVE-A OF THIS ARTICLE, A
company aided by a loan made after May first, nineteen hundred fifty-
nine, may voluntarily be dissolved, without the consent of the commis-
sioner or of the supervising agency, as the case may be, not less than
twenty years after the occupancy date upon the payment in full of the
remaining balance of principal and interest due and unpaid upon the
mortgage or mortgages and of any and all expenses incurred in effecting
such voluntary dissolution.
S 3. Subdivision 6 of section 13 of the private housing finance law,
as amended by chapter 628 of the laws of 1962, is amended to read as
follows:
6. Its duration, which shall be: (a) not less than the period for
which the loans contracted for under this article and the interest ther-
eon remain unpaid in whole or in part; and (b) not less than the period
for which tax exemption is granted pursuant to section thirty-three of
this article; and (c) in any event not less than thirty-five years from
the date of occupancy of any project, except as may be provided in
[sections] SECTION thirty-five [and], THIRTY-FIVE-A OR thirty-six of
this article.
S 4. Subdivision 1 of section 36 of the private housing finance law,
as amended by chapter 428 of the laws of 1964, is amended to read as
follows:
1. Except as otherwise provided in this article and prior to the
expiration of thirty-five years from the date of occupancy, a project,
other than a project aided by a loan made after May first, nineteen
hundred fifty-nine, shall not be sold except to a company organized
pursuant to the provisions of this article; prior to the expiration of
twenty years from the date of occupancy, a project aided by a loan made
after May first, nineteen hundred fifty-nine, shall not be sold except
A. 940 3
to a company organized pursuant to the provisions of this article.
NOTWITHSTANDING THE FOREGOING, A MUTUAL COMPANY MAY NOT, PRIOR TO THE
EXPIRATION OF THIRTY YEARS FROM THE DATE OF OCCUPANCY, SELL A PROJECT
AIDED BY A LOAN MADE AFTER MAY FIRST, NINETEEN HUNDRED FIFTY-NINE EXCEPT
TO A COMPANY ORGANIZED PURSUANT TO THE PROVISIONS OF THIS ARTICLE. Such
successor company shall acquire such project subject to all the
provisions of the loan and mortgage contract and the provisions of this
article, and shall be entitled to all the benefits provided in such
contract or granted under this article, and a company so conveying all
its projects may be dissolved with the consent of the commissioner or
the supervising agency, as the case may be.
S 5. The private housing finance law is amended by adding a new
section 36-b to read as follows:
S 36-B. INITIAL SALE AFTER DISSOLUTION. 1. UPON THE INITIAL SALE OF A
PROPERTY OWNED BY A MUTUAL COMPANY WHICH DISSOLVES PURSUANT TO SECTION
THIRTY-FIVE-A OF THIS ARTICLE, TEN PERCENT OF THE NET SALE PRICE, AS
CALCULATED AFTER THE STOCKHOLDERS OF THE DISSOLVING COMPANY RECEIVE THE
PAR VALUE OF THEIR STOCK WITH ACCRUED AND UNPAID DIVIDENDS UPON SUCH
STOCK, SHALL BE PAID TO THE MIDDLE INCOME HOUSING FUND OF THE STATE, AS
DEFINED IN SECTION NINETY-THREE-A OF THE STATE FINANCE LAW.
2. UPON THE INITIAL SALE OF A PROPERTY OWNED BY A MUTUAL COMPANY WHICH
DISSOLVED PURSUANT TO SECTION THIRTY-FIVE-A OF THIS ARTICLE, THE FULL
VALUE OF THE PROPERTY SHALL BE CONSIDERED FOR PURPOSES OF DETERMINING
REAL ESTATE TAX ASSESSMENT PURSUANT TO THE PROVISIONS OF SUBCHAPTER ONE
OF CHAPTER TWO OF TITLE ELEVEN OF THE ADMINISTRATIVE CODE OF THE CITY OF
NEW YORK. UPON FIRST PAYMENT OF TAXES BY THE PURCHASER, AN AMOUNT EQUAL
TO THE DIFFERENCE BETWEEN THE AMOUNT OF TAXES ASSESSED FOR THE YEAR
IMMEDIATELY PRIOR TO THE DISSOLUTION AND THE AMOUNT OF TAXES OWED AFTER
DISSOLUTION SHALL BE PAID BY THE NEW YORK CITY DEPARTMENT OF FINANCE TO
THE MIDDLE INCOME HOUSING FUND OF THE STATE, AS DEFINED IN SECTION NINE-
TY-THREE-A OF THE STATE FINANCE LAW.
3. UPON THE INITIAL SALE OF A PROPERTY OWNED BY A MUTUAL COMPANY WHICH
DISSOLVES PURSUANT TO SECTION THIRTY-FIVE-A OF THIS ARTICLE, THE SALE OF
THE STOCK OF THE STOCKHOLDERS OF THE DISSOLVING COMPANY SHALL BE SUBJECT
TO TAXATION PURSUANT TO ARTICLE TWELVE OF THE TAX LAW. ALL MONIES
COLLECTED BY THE DEPARTMENT OF TAXATION AND FINANCE PURSUANT TO THE
PROVISIONS OF THIS SUBDIVISION SHALL BE PAID BY THE COMMISSIONER OF
TAXATION AND FINANCE TO THE MIDDLE INCOME HOUSING FUND OF THE STATE, AS
DEFINED IN SECTION NINETY-THREE-A OF THE STATE FINANCE LAW.
S 6. The state finance law is amended by adding a new section 93-a to
read as follows:
S 93-A. MIDDLE INCOME HOUSING FUND. 1. THERE IS HEREBY ESTABLISHED IN
THE JOINT CUSTODY OF THE STATE COMPTROLLER AND THE COMMISSIONER OF TAXA-
TION AND FINANCE A SPECIAL FUND TO BE KNOWN AS THE "MIDDLE INCOME HOUS-
ING FUND".
2. SUCH FUND SHALL CONSIST OF ALL REVENUES RECEIVED PURSUANT TO AN
APPROPRIATION BY THE LEGISLATURE, THE MONEYS TRANSFERRED THERETO PURSU-
ANT TO SECTION THIRTY-SIX-B OF THE PRIVATE HOUSING FINANCE LAW AND ALL
OTHER MONEYS APPROPRIATED, CREDITED OR TRANSFERRED THERETO FROM ANY
OTHER FUND OR SOURCE PURSUANT TO LAW. NOTHING CONTAINED IN THIS SECTION
SHALL PREVENT THE STATE FROM RECEIVING GRANTS, GIFTS OR BEQUESTS FOR THE
PURPOSES OF THE FUND ACCORDING TO LAW.
3. EXPENDITURES PURSUANT TO APPROPRIATIONS MAY BE MADE FROM THE MIDDLE
INCOME HOUSING FUND FOR CONSTRUCTION, RECONSTRUCTION AND IMPROVEMENTS
FOR MIDDLE INCOME FAMILIES AND INDIVIDUALS, INCLUDING THE ACQUISITION OF
LAND, THE ACQUISITION OR REPLACEMENT OF EQUIPMENT, THE PREPARATION AND
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REVIEW OF PLANS AND SPECIFICATIONS INCLUDING ENGINEERING AND OTHER
SERVICES, FIELD SURVEYS AND SUB-SURFACE INVESTIGATIONS INCIDENTAL THERE-
TO, THE PAYMENT BY THE STATE, AS AN ADVANCE OF THE PART OR SHARE OF THE
COST OF ANY PROJECT, IMPROVEMENT OR WORK HERETOFORE OR HEREAFTER AUTHOR-
IZED BY AN APPROPRIATION ACT. THE COMPTROLLER IS HEREBY AUTHORIZED TO
ACCEPT AND RECEIVE AMOUNTS OF MONEY EQUAL TO THE AMOUNTS OF MONEY
EXPENDED BY THE STATE PURSUANT TO ANY SUCH ADVANCE FROM ANY OTHER CAPI-
TAL PROJECTS FUND APPROPRIATION AND TO DEPOSIT THE SAME TO THE CREDIT OF
THE MIDDLE INCOME HOUSING FUND OR, IN THE EVENT THE MIDDLE INCOME HOUS-
ING FUND EXPENDITURE HAS BEEN REIMBURSED FROM THE PROCEEDS OF THE SALE
OF STATE BONDS, TO THE CREDIT OF THE STATE FUND OR SUB-FUND.
S 7. This act shall take effect immediately and shall apply to mutual
companies in existence and which have not initiated voluntary dissol-
ution on or before such date.