BILL NUMBER: S8132

SPONSOR: KAVANAGH
 
TITLE OF BILL:

An act to amend the private housing finance law, in relation to direct-
ing the department of housing preservation and development of the city
of New York to promulgate rules and regulations regarding mutual housing
companies considering dissolution and/or reconstitution

 
PURPOSE:

This bill amends the private housing finance law by adding a new
section, 35-a. This section requires that any vote of dissolution by a
mutual housing company receive approval from at least eighty percent of
all occupied and unoccupied units.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section one of the bill amends the private housing finance law by adding
a new section, 35-a. This section requires HPD to promulgate rules and
              

regulations regarding the dissolution and/or reconstruction of mutual
housing companies.

Subdivisions 1-3 of the new section 35-a dictate that the rules promul-
gated by HPD must include, at a minimum, the following:

* that any vote for a feasibility study, preliminary offering plan,
final offering plan, proxy statement, dissolution, or notice of intent
to dissolve must receive the approval of at least eighty percent of all
occupied and unoccupied units;

* that no funds from the operating budget be used for the preparation or
distribution of any plans, studies, services, or for the execution of
dissolution and/or reconstitution pursuant to section 35, including but
not limited to legal services; and

* that no vote covered by subdivision one of this section shall occur
within five years following any previous failed vote under subdivision
one.

Section two of the bill sets forth the effective date.

 
JUSTIFICATION:

Nearly 65 years ago, State Senator MacNeil Mitchell and Assemblymember
Alfred Lama passed landmark legislation to provide private developers
with incentives to invest in affordable housing. Today, these units,
aptly named Mitchell-Lama apartments, have accumulated waitlists that
can last up to a decade.  Recently, as more developers voluntarily
privatize their buildings and bring those units to market rate, this
program-designed to help end the housing crisis-is now being utilized in
a way that exacerbates the city's affordable housing problems. This bill
seeks to correct this unfortunate trend.

When a Mitchell-Lama building is privatized, it loses all tax abatements
and the owners must refinance under current market rates.  While there
are tenants who may want the potential profit offered by privatization,
for those tenants who want to remain in their homes, going private means
substantial increases in both maintenance costs and interest rates.
Additionally, as more and more units are sold off at market rate, fewer
affordable housing options exist in the city.  By subjecting dissolution
or reconstitution actions to an 80% approval threshold, this bill would
prevent the unwanted privatization of Mitchel-Lama buildings across the
city, placing more power in the hands of residents to decide what works
best for themselves and their families.

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

Undetermined.

 
EFFECTIVE DATE:
This act shall take effect immediately and shall be applicable to all
votes and activities pursuant to section 35-a of the private housing
finance law that take place on or after such date on which it shall have
become a law.