What's On Deck in Albany and City Hall Legislative Update

What's On Deck in Albany and City Hall

As the legislative session in Albany winds down for the year and the New York City Council continues to address legislation, as always, there are several measures in play with serious implications for the condo and co-op community.

So let’s take a look at some of the legislation that co-op and condo owners, board members and managers are following. Some bills have been around for years, introduced over and over again, while others are new. Some will never get out of committee, while others are serious “contenders.”

In Albany, some housing-related bills go through the Housing Committees in the Assembly and the Senate, but some also go through the Judiciary Committees. As with any important topic, from education to driver’s licenses, there are a bewildering number of bills introduced at any given time.

What’s On Deck

Melissa Mansfield, a spokesperson for the state Assembly, provided three entire pages of co-op and condo-related bills that were in various stages in the legislative process as of April 2009. These ranged from A00832, “which relates to voting rights in a cooperative apartments,” to A2444, “which relates to condo conversion and market tenant rates.” Bill A04946 would, “establish a residential condominium owner’s bill of rights,” while A01129 “relates to management of cooperative apartment buildings,” and A05610 “protects non-purchasing senior citizens threatened by eviction pursuant to a cooperative/condominium conversion plan.”

Some bills even overlap each other or address the same topics. For example, there are separate bills involving condo owners’ bills of rights—one only mentions condo owners, the other, both co-op and condo owners. Mary Ann Rothman, executive director of the Council of New York Cooperatives and Condominiums (CNYC), says the CNYC follows all relevant bills—including those that relate to rent-regulated housing, since many co-ops and condos have significant numbers of renters. Thanks to the recession, she says that in many cases, “the cooperative or condominium has become the owner of the rent-regulated units through sponsor default or other negotiations.”

Rothman also mentions bills to reinforce the requirement that co-ops distribute School Tax Relief (STAR) abatements among shareholders. According to the city’s website, these abatements are available to all condo and co-op owners, and have no age or income limit. “CNYC has tried hard to educate its members about distribution of tax abatements and exemptions to shareholders,” Rothman says, “but apparently not all cooperatives have been compliant—hence the introduction of this legislation.”

There are two types of STAR benefit: Basic STAR and Enhanced STAR. Basic STAR is available to all resident owners of 1-, 2-, and 3-family houses, condominiums, and cooperative apartments and has no income or age limit. In addition, owners of 4-, 5, and 6-family homes where the owner resides in the building may also be eligible for Basic STAR, with the exemption only applying to the portion of the building occupied by the owner. Seniors (age 65 or over as of December 31st of the exemption benefit year) with an annual adjusted gross income of $73,000 or less may be entitled to Enhanced STAR, which offers a higher tax reduction.

There is also a more generalized cooperative and condominium tax abatement, which seeks to equalize the tax disparity between co-ops and condos, on one hand, and one-, two- or three-family houses, on the other. “They never made it permanent,” says Mona Shyman, vice president of the Federation of New York Housing Cooperatives and Condominiums (FNYHC). “Every few years, we have to go to Albany and fight for them to give it back to us.”

Yet another current bill, A02564 (the same as S3176), sponsored by state Assemblywoman Deborah Glick, D-66, would provide that no senior 62 years old or older be denied residence in a “multiple dwelling” because he or she owns a pet. Some people are concerned about the bill because many co-op and condo buildings ban pets, especially dogs. (Others ban them “on the books” but allow them in fact, but that’s another story.)

As for housing-related City Council legislation, says Rothman, it almost always applies to co-ops and condos. Among the legislation currently being considered are various measures tightening energy conservation requirements (CNYC supports the idea, but wants lawmakers to take the costs of implementation into effect, and seeks “reasonable time frames” for implementing improvements). In 2007, CNYC also supported legislation by Councilman Daniel Garodnick, D-4, who represents Manhattan, mandating that the dates for compliance to the well-known Local Law 11 be spread out over time. The legislation proved unnecessary when the concept was incorporated in the city’s new Construction Code.

Other bills before the City Council deal with all sorts of housing-related topics, from water tank inspection to parking spaces for bicycles, from boiler modifications to pets (similar to the aforementioned state bill). These, of course, all affect co-ops and condos.

Organizations such as CNYC, FNYCHC, The Real Estate Board of New York (REBNY) and the New York Association of Realty Managers (NYARM), being membership organizations, all make their wishes known in Albany and in the New York City Council, though each group advocates in different ways.

“When we go before the Assembly,” says Shyman, “we advocate—we don’t lobby. We often go before committees and advocate positions that we think are for the good of the co-op or condo population, but we don’t contribute to any political party.”

Marolyn Davenport of REBNY says, “A primary task of our organization in representing our members and our industry is to provide information about how the various markets and business activities work and to explain the positive and negative impacts proposed legislation would have.”

All of these organizations point to cases in which they have been successful in shaping both legislation and regulations. Referring to a national issue, Shyman says, “Originally, [co-ops and condos] were taxed heavily on CD bank accounts. It took many years to fight the IRS, but through the intervention of the Federation and with help, we got the IRS to drop that tax.”

Davenport says that the organization has supported the effort of the national Multi-Housing Council to ensure competition and options for telecommunications in both office and apartment buildings, thus increasing competition available to unit owner and shareholders. In 2007, the FCC voted to ban cable companies from signing exclusive contracts with the owners of apartment buildings and condo complexes in a move to increase competition and give consumers more choice.

Issues of the Recent Past

This might be a good time to mention some laws or rules that have changed in the recent past. One was the 80/20 rule. This rule, which had been part of the IRS code since 1942, stipulated that 80 percent of co-op income had to come from tenant-related revenue streams, such as maintenance fees, and only 20 percent could come from other streams, such as rent for parking garages or commercial tenants. If the latter exceeded 20 percent, the co-op could lose its status as a cooperative corporation. For this reason, many co-ops deliberately kept their stores’ rents low.

Groups such as CNYC and FHNYC fought against the rule for years, and eventually, at their behest, Congressman Charles Rangel helped to get the rule changed as part of the “Mortgage Forgiveness Debt Relief Act of 2007.” Now, it’s easier to for co-ops to charge their commercial tenants market rents—if they wish to do so, of course.

One city bill which real estate-related organizations generally opposed was first introduced in 2006—then-Councilman Hiram Monserrate’s “Fair and Prompt Co-op Disclosure Law,” otherwise known as Intro 119. This bill would have mandated that co-ops tell rejected applicants the reason they were rejected. The bill, according to the Council’s website, made it to committee, but that was about it. (As for Monserrate, he’s now in the state Senate.)

The bill had substantial support, especially from the minority community who suspected bias by co-op boards. But the co-op community tended to feel that it would not only weaken the power of boards, but that the possibility of serious legal exposure for board members would make it even harder than it already is to find people willing to serve on their boards. By and large, boards feel this would have been an intrusion on their “turf.”

According to Rothman, “CNYC opposes this legislation and supports the right of cooperatives to select who will live there, provided that no protected categories [i.e., minorities, disabled people, etc.] are discriminated against.”

New York to Albany

What is the attitude among the state legislators in Albany toward co-op and condo legislation? After all, the predominant form of housing throughout the state is the single-family home.

While that may indeed be the case, there are co-ops and condos throughout New York. Think of all the condos in Long Island, for example. Owners’ groups continuously work with legislators to make them aware of issues affecting the condo/co-op community.

That being said, the largest concentration of multifamily housing is in the city. Indeed, a look at some of the aforementioned bills before the Assembly at the time of this writing reveals that most are by either legislators from New York City (Vito Lopez, Liz Krueger, Deborah Glick) or those whose districts are fairly close to the city (Richard Brodsky of Westchester).

“With the large number of condo and co-op units in New York City,” says Davenport, “and the important differences between co-ops and condos, it’s vital for legislators to understand this market. They need to understand how real estate activity here is different than other parts of the state, and how legislation could impact the unique New York City market.”

The Recession Effect

Finally, since the current recession is affecting just about everything else, how is it affecting the types of measures that are being debated and voted on?

If one looks at some of the bills in the Assembly mentioned above, the topics, by and large, are still the same ones that are addressed year in and year out. Some do focus on protecting low-income individuals, such as A05011, which would “extend rent stabilization to dwelling units owned by a cooperative or condominium basis” or A05610, which would “protect non-purchasing senior citizens threatened by eviction pursuant to a cooperative/ condominium conversion plan.” However, there have always been bills seeking to protect low-income people and seniors, even during the best of times.

These issues may be more evident in the federal arena. Rothman says much of her time is spent on Congressional legislation. For example, she says, “to try to make sure that there are no adverse effects upon cooperatives and condominiums if individual shareholders or unit owners default on their mortgages or obtain help through the `cramdown’ provisions currently being put forth in H.R. 1106 and S 61.”

(According to the website www.teachmefinance.com, the term “cramdown” refers to “a court-ordered reduction of the secured balance due on a home mortgage loan, granted to a homeowner who has filed for personal bankruptcy.”)

One reason you don’t hear that much about condo and co-op issues in connection with the recession may be that it’s still just too early to tell what’s going to happen. Shyman says, “In most buildings, if you have someone being laid off and they get a severance package—you may not see the result for a few months.”

As this article was being written, the budget process in Albany was still taking center stage, and co-op and condo concerns, like many others, were still waiting in the wings. Let the debates begin!

Raanan Geberer is a freelance writer and editor living in New York City.

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Comments

  • A bill (A4090) was introduced last year. It was in respect to the STAR exemption. It says that Board of directors must distribute the Star exemption within 60 days of receipt of the coops tax bill or face a fine of $500.for each violation. It also states that eligible shareholders can withhold their maintenance until they recoup their STAR exemption