S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6412
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                              April 27, 2021
                                ___________
 
 Introduced  by Sen. KAVANAGH -- 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 voting,
   election and referendum procedures; to requirements  regarding  mutual
   housing  companies  considering  dissolution and/or reconstitution; to
   certain duties of a board of directors  of  a  limited-profit  housing
   company;  and  to prohibiting certain limited-profit housing companies
   from  voluntarily  dissolving  during  the  state  disaster  emergency
   declared in response to the outbreak of COVID-19
 
   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 13-c to read as follows:
   § 13-C. VOTING, ELECTION AND REFERENDUM PROCEDURES. 1. ANY SHAREHOLDER
 VOTE  SHALL  BE  CONDUCTED USING SECRET BALLOTS.   SUCH BALLOTS SHALL BE
 CAST IN-PERSON BY TENANTS ENTITLED TO OCCUPANCY IN THE  PROJECT;  UNLESS
 SUCH  TENANT  CASTS SUCH BALLOT USING AN ABSENTEE BALLOT ISSUED PURSUANT
 TO SUBDIVISION TWO OF THIS SECTION.
   2. A SHAREHOLDER ENTITLED TO OCCUPANCY IN THE PROJECT SHALL  BE  ENTI-
 TLED  TO  REQUEST AN ABSENTEE BALLOT TO CAST A BALLOT IN ANY SHAREHOLDER
 VOTE. SUCH ABSENTEE BALLOT SHALL BE DELIVERED  OR  MAILED  ONLY  TO  THE
 PRIMARY  RESIDENCE ADDRESS OF A SHAREHOLDER ENTITLED TO OCCUPANCY IN THE
 PROJECT. AN ABSENTEE BALLOT CAST PURSUANT TO THIS SUBDIVISION  SHALL  BE
 SEALED  WITHIN  TWO ENVELOPES, SHALL CONTAIN THE SIGNATURE OF THE SHARE-
 HOLDER CASTING THE VOTE, AND SHALL BE MAILED TO A  NEUTRAL  THIRD  PARTY
 NOT RUNNING FOR A POSITION ON THE BOARD OF DIRECTORS.
   3.  PROXY  VOTING SHALL NOT BE PERMITTED IN AN ELECTION FOR A POSITION
 ON A BOARD OF DIRECTORS, FOR DISSOLUTION OF THE COMPANY, FOR THE AUTHOR-
 IZATION OF A FEASIBILITY STUDY, FOR AN OFFERING  PLAN  INCLUDING  A  RED
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10975-02-1
              

 S. 6412                             2
 
 HERRING  OR  BLACK BOOK, OR ANY DOCUMENT OFFERED IN PLACE OF AN OFFERING
 PLAN AS PERMITTED BY THE ATTORNEY GENERAL.
   4. IN-PERSON BALLOTS SHALL PRODUCE A PAPER RECORD WHICH MAY BE AUDITED
 IN THE CASE OF A CONTESTED ELECTION RESULT.
   5. NO OTHERWISE-ELIGIBLE PERSON SHALL BE PREVENTED FROM BEING A CANDI-
 DATE  FOR,  BEING  ELECTED  TO, OR SERVING ON A BOARD OF DIRECTORS BASED
 SOLELY ON THAT PERSON OWING OR HAVING OWED ANY AMOUNT  OF  ANY  FORM  OF
 ARREARS  TO THE HOUSING COMPANY, UNLESS, AT THE TIME OF NOMINATION, THAT
 PERSON CURRENTLY OWES AN AMOUNT OF BONA FIDE ARREARS  GREATER  THAN  THE
 EQUIVALENT  OF TWO MONTHS OF THAT PERSON'S MONTHLY MAINTENANCE.  NOTHING
 IN THIS SUBDIVISION SHALL BE CONSTRUED TO REQUIRE OR MANDATE ANY HOUSING
 COMPANY TO ADOPT BYLAWS, RULES, POLICIES, OR PROCEDURES RESTRICTING  ANY
 PERSON'S  ELIGIBILITY  TO  BE NOMINATED, ELECTED, OR SERVE ON A BOARD OF
 DIRECTORS.  NOTHING CONTAINED IN THIS SUBDIVISION SHALL BE  A  BASIS  IN
 ITSELF TO DENY SUCH ELIGIBILITY TO ANY PERSON.
   6.  FOR ANY SHAREHOLDER VOTE REQUIRING A SPECIFIC PERCENTAGE OF DWELL-
 ING UNITS, THE TERM "DWELLING UNITS" SHALL MEAN ALL DWELLING  UNITS  FOR
 WHICH SHARES HAVE BEEN ISSUED, REGARDLESS OF WHETHER SUCH DWELLING UNITS
 ARE OCCUPIED OR VACANT.
   §  2.  The  private  housing  finance  law  is amended by adding a new
 section 35-a to read as follows:
   § 35-A. REQUIREMENTS REGARDING DISSOLUTION. MUTUAL  HOUSING  COMPANIES
 CONSIDERING  DISSOLUTION AND/OR RECONSTITUTION PURSUANT TO SECTION THIR-
 TY-FIVE OF THIS ARTICLE SHALL BE SUBJECT TO THE FOLLOWING REQUIREMENTS:
   1. ANY VOTE FOR DISSOLUTION OF THE COMPANY, OR TO AUTHORIZE  A  FEASI-
 BILITY  STUDY, A PRELIMINARY OFFERING PLAN WHICH MAY BE REFERRED TO AS A
 RED HERRING, A FINAL OFFERING PLAN WHICH MAY BE REFERRED TO AS  A  BLACK
 BOOK, OR A PROXY STATEMENT, OR TO SEND A NOTICE OF INTENT TO DISSOLVE TO
 THE  COMMISSIONER  OR  SUPERVISING  AGENCY SHALL REQUIRE THE APPROVAL OF
 EIGHTY PERCENT OF ALL DWELLING UNITS OWNED BY THE MUTUAL HOUSING  COMPA-
 NY.
   2.  NO  FUNDS  FROM THE OPERATING BUDGET OF THE MUTUAL HOUSING COMPANY
 SHALL BE USED FOR THE  PREPARATION  OR  DISTRIBUTION  OF  A  FEASIBILITY
 STUDY, A PRELIMINARY OFFERING PLAN OR RED HERRING, A FINAL OFFERING PLAN
 OR  BLACK BOOK, A PROXY STATEMENT, OR A NOTICE OF INTENT TO DISSOLVE, OR
 TO PAY FOR ANY SERVICES RELATED TO EVALUATION OF,  PREPARATION  FOR,  OR
 EXECUTION OF DISSOLUTION AND/OR RECONSTITUTION PURSUANT TO SECTION THIR-
 TY-FIVE OF THIS ARTICLE, INCLUDING BUT NOT LIMITED TO LEGAL SERVICES.
   3.  NO  VOTE UNDER SUBDIVISION ONE OF THIS SECTION, SHALL OCCUR WITHIN
 FIVE YEARS FOLLOWING A VOTE UNDER SUBDIVISION ONE OF THIS  SECTION  THAT
 FAILED.
   §  3.  Section  17  of  the  private housing finance law is amended by
 adding two new subdivisions 4 and 5 to read as follows:
   4. NOTWITHSTANDING THE PROVISIONS OF ANY LAW, GENERAL  OR  SPECIAL,  A
 BOARD  OF  DIRECTORS  OF A COMPANY CREATED PURSUANT TO THE PROVISIONS OF
 THIS ARTICLE SHALL:
   (A) HOLD AT LEAST SIX MEETINGS OF ITS MEMBERS ANNUALLY. SUCH  MEETINGS
 SHALL  BE  OPEN  TO THE SHAREHOLDERS AND RESIDENTS, EXCEPT THAT THEY MAY
 INCLUDE EXECUTIVE SESSIONS OPEN ONLY TO DIRECTORS FOR THE  SOLE  PURPOSE
 OF  DISCUSSING  CONFIDENTIAL  PERSONNEL ISSUES, LEGAL ADVICE AND COUNSEL
 FROM AN ATTORNEY TO WHOM THE HOUSING COMPANY IS A CLIENT,  OR  CONFIDEN-
 TIAL  ISSUES AFFECTING INDIVIDUAL SHAREHOLDERS OR RESIDENTS, OR CONTRACT
 NEGOTIATION.
   (B) FILE WITH THE COMMISSIONER OR THE SUPERVISING AGENCY, AS THE  CASE
 MAY  BE,  A  RECORD OF ANY VOTE ON A RESOLUTION OF SUCH BOARD, INCLUDING

 S. 6412                             3
 
 SPECIFICATION OF HOW EACH DIRECTOR VOTED. SUCH RECORD SHALL BE A  MATTER
 OF PUBLIC RECORD.
   (C) PROMPTLY GIVE NOTICE OF AND MAKE AVAILABLE TO ALL SHAREHOLDERS ANY
 COMMUNICATION TO THE HOUSING COMPANY FROM THE COMMISSIONER OR THE SUPER-
 VISING  AGENCY, AS THE CASE MAY BE, OR THE OFFICE OF THE ATTORNEY GENER-
 AL, REGARDING REGULATIONS, CHANGES IN REGULATIONS,  TAXATION,  FINANCES,
 REFINANCING, OR, IN THE EVENT OF A PROPOSED DISSOLUTION AND REINCORPORA-
 TION, THE REVIEW OF ANY VERSION OF AN OFFERING PLAN.
   (D)  INVESTIGATE ANY SUBSTANTIVE ALLEGATION THAT A TENANT IS NOT OCCU-
 PYING HIS OR HER DWELLING UNIT AS HIS OR HER PRIMARY RESIDENCE.
   5. (A) NO HOUSING COMPANY SHALL INTERFERE WITH THE RIGHT OF  A  SHARE-
 HOLDER  OR  TENANT TO FORM, JOIN OR PARTICIPATE IN THE LAWFUL ACTIVITIES
 OF ANY GROUP, COMMITTEE OR OTHER  ORGANIZATION  FORMED  TO  PROTECT  THE
 RIGHTS  OF  SHAREHOLDERS  AND  TENANTS;  NOR  SHALL  ANY HOUSING COMPANY
 HARASS, PUNISH, PENALIZE, DIMINISH, OR WITHHOLD ANY  RIGHT,  BENEFIT  OR
 PRIVILEGE  OF  A  SHAREHOLDER OR TENANT UNDER THEIR PROPRIETARY LEASE OR
 TENANCY FOR EXERCISING SUCH RIGHT.
   (B) SHAREHOLDER AND/OR TENANTS' GROUPS, COMMITTEES OR OTHER SHAREHOLD-
 ER AND/OR TENANTS' ORGANIZATIONS SHALL HAVE THE RIGHT  TO  MEET  WITHOUT
 BEING  REQUIRED TO PAY A FEE IN ANY LOCATION ON THE PREMISES INCLUDING A
 COMMUNITY OR SOCIAL ROOM WHERE USE IS NORMALLY SUBJECT TO A FEE WHICH IS
 DEVOTED TO THE COMMON USE OF ALL SHAREHOLDERS AND/OR TENANTS IN A PEACE-
 FUL MANNER, AT REASONABLE HOURS AND WITHOUT OBSTRUCTING  ACCESS  TO  THE
 PREMISES OR FACILITIES. NO HOUSING COMPANY SHALL DENY SUCH RIGHT.
   (C)  THE  BOARD  OF DIRECTORS SHALL TAKE ALL NECESSARY AND APPROPRIATE
 ACTIONS TO ENSURE THAT  A  MANAGER  OR  AGENT  OF  THE  HOUSING  COMPANY
 COMPLIES WITH THE REQUIREMENTS IN THIS SUBDIVISION.
   §  4.  1.  Notwithstanding  any  provision  of law to the contrary, no
 company or urban rental company, as such terms are defined in section 12
 of the private housing finance law, shall be dissolved pursuant  to  the
 provisions of section 35 of such law or shall undergo semi-privatization
 pursuant  to  28  RCNY  3-14(i)(15),  or  shall  initiate any actions or
 proceedings related to dissolution or semi-privatization, including  but
 not  limited  to,  conducting  a  vote to authorize a feasibility study;
 submitting a preliminary offering  plan  to  the  attorney  general  for
 approval;  distributing  a  preliminary  offering  plan to shareholders;
 distributing a final offering plan or proxy statement  to  shareholders;
 submitting a notice of intent to dissolve to the commissioner of housing
 or  supervising agency; committing, promising, or expending funds in any
 way for the purposes of dissolution or  semi-privatization;  or  holding
 any  of the required notice meetings during the state disaster emergency
 declared pursuant to executive order 202 of 2020 in response   to    the
 outbreak of novel coronavirus, COVID-19.
   2. As used in this act, the term "semi-privatization" means dissolving
 as  a  mutual housing company and transferring the property to a housing
 development fund company organized pursuant to article XI of the private
 housing finance law.
   § 5. This  act  shall  take  effect  immediately;  provided,  however,
 sections one, two and three of this act shall take effect on the nineti-
 eth day after it shall have become a law.