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.