New York State Legislature’s Onslaught of Co-op Proposals Solutions in Search of a Problem

The 2021 legislative session of the New York State Legislature has presented an unprecedented number of proposed bills seeking to reform the way housing cooperatives operate.  Many of these bills are ill-conceived in our view, and will serve no benefit to cooperative boards and their shareholders. In fact, many of these bills may in fact harm the housing cooperative community.  

Below are brief explanations of three of these bills now pending in the New York State legislature:  

The Good Cause Eviction Bill (S-3082/A-5573)

This bill, if passed, would present fundamental changes in the way a co-op would be able to operate. On its face, this bill clearly is designed to protect rental tenants from unscrupulous landlords, but unfortunately co-ops are swept into this legislation since the shareholder relationship with the cooperative corporation is technically that of a landlord-tenant relationship.  

This bill has been called ‘universal rent control,’ and essentially caps rent increases in New York State at 3% per year, regardless of any increase in operating costs for the building as a whole. Obviously, this bill flies in the face of fundamental best practice for a corporation to maintain a balanced budget. In addition, as stated above, a housing cooperative does not derive any profits and all excess monies are re-invested in the co-op’s coffers.  

Transparency in Cooperative Housing Corporations (S-4595)

Unlike the Good Cause Eviction Bill, this proposal is specifically drafted for cooperative corporations. While this legislation appears to be well-intended, it could result in major obstructions to the operations of a co-op. This legislation adds a new layer of statutory requirements - many of which most cooperatives already adhere to voluntarily.  

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5 Comments

  • My cooperative management has made no-bid, open ended agreements for major work on the exterior of our building, under advice of two management companies. The first was paid fully, and took our entire reserves: Three million. New Board, new management company. Again an exterior renovation, a no-bid, open ended contract, this time with an OSHA fined, violator company, whose published fines and censure ensured they never use their own major equipment. Their practices also were very expensive, and worker were under equipped and supervised. A Board that allows management to propose a no bid contractor need the discipline of New York State law, requiring multiple bidders and clear views of all dealings. As an old New Yorker, the word “kickback” loomed in my mind, vis a vis these very poor contractor choices. (Perhaps a deadline for any contracted work to be done would help as slow walking the work at the convenience of the contractor is another feature to eleminate.
  • Our Board had made two contracts to repair the exterior, under advice of two management companies. Our Board took the word of management company one: 3 million dollars. The expense was wounding. That Board was voted out. Our new Board hired another management company. That management co. recommended and proposed a single exterior repair vendor. The company had a published OSHA violation. They were fined and disallowed from supplying major equipment. Has to be rented. Their men were ill equipped, lacking hard hats, for instance. Point is, management companies may have some skin in the choice of a vendor and encourage no bidding. Solid Boards are not persuaded so easily. Shareholders pay, several ways; morally if a worker is hurt or killed due to a sloppy, “no choice” recommendation.
  • While I agree with you regarding the "reasons" bill, I disagree with you on certain other changes. In our small building, virtually everything was withheld from shareholders under the guidance of a president who just resigned. We were not allowed to attend any meetings, we did not receive minutes, and we were excluded from giving input on many major decisions (like aspects of a new elevator). They spent whatever they wanted. Under that president, the board actually had a secret meeting with new prospective shareholders since they wanted to make the decision without the shareholders. Note that we are less than 15 units, and for over 40 years ALWAYS had every shareholder attend meetings re new shareholders as well as board meetings. Since the BCL does not give many rights to shareholders, we would welcome some of the suggested changes (but certainly not all).
  • I think S-4595 would be great especially for co-ops where shareholders feel they are not included in discussions. There a lot boards that feel they can do whatever they want and they are not truly representing the shareholders the right way.
  • Chitra Karunakaran on Friday, June 11, 2021 9:38 AM
    The lawyer (co-op board President?) who presented this article needs to have his pro-business greedy lawyer, anti tenant/ shareholder views challenged. and rightly dismantled. Many co-op unit owners have long been oppressed by autocratic boards practicing a deplorable lack of transparency in their business operations, which also includes inadequate maintenance of bookkeeping and other records. In our small UWS co-op we have been hit with capricious unwarranted assessments. Transparency is key to undoing the actions of unscrupulous boards that seize co-op Board power without meetings and elections and control lawabidng lessees. We pay. Justice and require require that we must be properly represented and heard on issues everyday co-op life. If co-op Boards don’t want to serve, get out of the way and let others willingly serve a greater cooperative good with due diligence. I urge Cooperator to present an article from the viewpoint of persons who actually live in these co-ops and have suffered the indignities and economic consequences of arbitrary co-op board actions mainly resulting from Board lack of transparency. Co-op Boards are the last bastion of the plantation economy, speaking from a sociological science perspective, a perspective notably lacking in the attorney's concerns. Finally, Co-ops in many neighborhoods are a vehicle of school and housing segregation in ways that condos don't, because of restrictions in sublets and covert rejection of unwanted potential buyers who suffer discrimination is co-op ownership. NYSenate is correct to introduce legislation advocating transparency and equity in ALL Co-op operations. I urge commenters to contact legislators in NYC and NYS to work cooperatively to ensure passage of reform legislation tha has a direct impact on quality of life of co-op residential owners.