Bill S1005-2011

Relates to limited-profit housing companies

Relates to limited-profit housing companies; authorizes certain companies to pay dividends or interest in excess of six percent per annum; relates to the dissolution of certain rental housing companies.

Details

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  • Jan 4, 2012: REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOPMENT
  • Jan 5, 2011: REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOPMENT

Memo

 BILL NUMBER:  S1005

TITLE OF BILL : An act to amend the private housing finance law, in relation to limited-profit housing companies in a city with a population of one million or more

PURPOSE OR GENERAL IDEA OF BILL : The purpose of this bill is to encourage housing companies to remain in the Mitchell-Lama housing program and protect those tenants in post-1974 Mitchell-Lama developments under rent stabilization if an owner buys out of the program.

SUMMARY OF SPECIFIC PROVISIONS : This bill would: - authorize municipally-aided Mitchell-Lama developments to pay dividends in excess of 6% with the approval of the Department of Housing Preservation and Development (HPD); - authorize such developments to annually increase rents at a rate established by the New York City Rent Guidelines Board; and prohibit companies with a mortgage loan insured or held by the federal government from taking advantage of the above incentives. This bill would also: - provide that tenants in post-1974 Mitchell-Lama rental developments that voluntarily dissolve would be covered under rent stabilization; - provide that the initial legal regulated rent for units in post-1974 buildings following the dissolution date would be the last regulated rent before the dissolution date; provide that the regulated rent for Section 8 units would be equal to the maximum rent authorized under Section 8 guidelines; - provide that once a Section 8 unit ceases to be a Section 8 unit (i.e., due to vacancy or increase in tenant income) the initial regulated rent for such affected dwelling unit following such change in status would be equal to the sum of the last rent authorized before the housing company dissolved plus any adjustments to such rent authorized by law between the date the company dissolved and the date which the unit ceased being a Section 8 unit; - require the continuation of any partial tax exemption from real property tax granted to the housing development, but fully taxable units would be subject to full taxation; and - not apply to developments in which the owner and the tenants association enter into a written settlement agreement on or before the dissolution date and such settlement agreement specifies the respective rights and obligations of the tenants and owner subsequent to the dissolution date.

EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER : This bill would add a new subdivision four to the Section 28 of the Private Housing Finance Law.

JUSTIFICATION : Many housing companies are opting to buy-out of the Mitchell-Lama program in order to increase the return on their investment beyond the current Mitchell-Lama statutory limits. This bill is designed to encourage housing companies to remain in the Mitchell-Lama program by authorizing returns in excess of the current statutory limit. The bill is also intended to protect tenants of Mitchell-Lama developments that buyout of the program. There are currently two primary post-buyout protections for Mitchell-Lama tenants, but these protections are only available to some tenants. First, when Mitchell-Lama developments that were initially occupied before 1974 buyout of the program, the apartments are subject to rent stabilization. Second, when Mitchell-Lama developments that have federally assisted mortgages buyout of the program, eligible tenants (generally those with incomes up to $59,600 for a family of four) may receive special federal Section 8 rental subsidies, known as "sticky vouchers," that insulate the tenants from large rent increases. Under current law, approximately 32,000 tenants of post-1974 Mitchell-Lama developments would not be protected by rent stabilization upon buyout and would therefore be vulnerable to large rent increases and potential displacement unless they are eligible for sticky vouchers. Many of these tenants would be eligible for sticky vouchers, but those who live in developments that do not have federally assisted mortgages, or whose household income exceeds the federal guidelines for voucher eligibility, would have no protection at all. In all, an estimated 8,000 to 10,000 tenants of post-1974 Mitchell-Lama developments would be ineligible for sticky vouchers and would therefore have no protection against rent increases and displacement. The bill would give these tenants post-buyout rent stabilization protection. It would also protect them from potentially large rent increases based on "unique or peculiar circumstances" under current law. By providing incentives for owners to remain in the Mitchell-Lama program, and ensuring tenant protection upon buyout, this bill is essential to the preservation of affordable housing in New York City.

PRIOR LEGISLATIVE HISTORY : S.3688 of 2009 01/21/09 Referred to Housing 02/10/09 Reported Referred to Codes 02/11/09 Reported Referred to Ways and Means 04/06/09 Reported 04/09/09 Advanced to Third Reading Cal. 314 04/21/09 Passed Assembly 04/21/09 Delivered to Senate 04/21/09 Referred to Housing, Construction and Community Development 01/06/10 Died in Senate 01/06/10 Returned to Assembly 01/06/10 Ordered to Third Reading Cal. 244 04/12/10 Passed Assembly 04/12/10 Delivered to Senate 04/12/10 Referred to Housing, Construction and Community Develpment

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS : Continued property tax exemptions.

EFFECTIVE DATE : Immediately, provided, however, that section two of this act would apply to any development with a dissolution date on or after the effective date of this act.

Text

STATE OF NEW YORK ________________________________________________________________________ 1005 2011-2012 Regular Sessions IN SENATE (PREFILED) January 5, 2011 ___________
Introduced by Sen. SAMPSON -- 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 limit- ed-profit housing companies in a city with a population of one million or more THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 28 of the private housing finance law is amended by adding a new subdivision 4 to read as follows: 4. (A) NOTWITHSTANDING ANY INCONSISTENT PROVISION OF THIS ARTICLE OR OF ANY OTHER PROVISION OF GENERAL, SPECIAL OR LOCAL LAW, A COMPANY (OTHER THAN A MUTUAL COMPANY) THAT OPERATES A MUNICIPALLY-AIDED PROJECT IN A CITY WITH A POPULATION OF ONE MILLION OR MORE AND THAT IS OTHERWISE AUTHORIZED TO PAY DIVIDENDS UPON ITS SHARES OR INTEREST UPON ITS INCOME DEBENTURES MAY, WITH THE APPROVAL OF THE SUPERVISING AGENCY, PAY SUCH DIVIDENDS OR INTEREST IN EXCESS OF SIX PERCENT PER ANNUM. (B) ON AND AFTER THE DATE OF THE APPROVAL OF SUCH EXCESS DIVIDEND OR INTEREST BY THE SUPERVISING AGENCY PURSUANT TO PARAGRAPH (A) OF THIS SUBDIVISION, THE PROVISIONS OF SECTION THIRTY-ONE OF THIS ARTICLE RELAT- ING TO THE VARIATION OF RENTAL RATES OF DWELLING UNITS IN SUCH MUNICI- PALLY-AIDED PROJECT SHALL NOT APPLY AND RENTAL RATES OF DWELLING UNITS MAY BE INCREASED ANNUALLY BY SUCH COMPANY, WITHOUT PUBLIC HEARING OR FURTHER APPROVAL BY THE SUPERVISING AGENCY, IN THE AMOUNT AUTHORIZED BY THE RENT GUIDELINES BOARD ESTABLISHED PURSUANT TO THE RENT STABILIZATION LAW OF NINETEEN HUNDRED SIXTY-NINE FOR RENT STABILIZED DWELLING UNITS. (C) THIS SUBDIVISION SHALL NOT APPLY TO A COMPANY WITH A MORTGAGE LOAN INSURED OR HELD BY THE FEDERAL GOVERNMENT. S 2. The private housing finance law is amended by adding a new section 35-a to read as follows:
S 35-A. DISSOLUTION OF CERTAIN RENTAL HOUSING COMPANIES. 1. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE MEANINGS SET FORTH BELOW: (A) "AFFECTED DEVELOPMENT" SHALL MEAN HOUSING ACCOMMODATIONS (I) LOCATED IN A CITY WITH A POPULATION OF ONE MILLION OR MORE, (II) IN BUILDINGS COMPLETED OR BUILDINGS SUBSTANTIALLY REHABILITATED AS FAMILY UNITS ON OR AFTER JANUARY FIRST, NINETEEN HUNDRED SEVENTY-FOUR, AND (III) OPERATED PRIOR TO THE DISSOLUTION DATE AS A RENTAL DEVELOPMENT PURSUANT TO THIS ARTICLE. (B) "AFFECTED DWELLING UNIT" SHALL MEAN A DWELLING UNIT IN AN AFFECTED DEVELOPMENT. (C) "AFFECTED HOUSING COMPANY" SHALL MEAN A LIMITED-PROFIT HOUSING COMPANY WITH AN AFFECTED DEVELOPMENT. (D) "DISSOLUTION DATE" SHALL MEAN, WITH RESPECT TO ANY AFFECTED DEVEL- OPMENT, THE DATE OF THE DISSOLUTION OR RECONSTITUTION OF THE AFFECTED HOUSING COMPANY WITH SUCH AFFECTED DEVELOPMENT PURSUANT TO SECTION THIR- TY-FIVE OF THIS ARTICLE. (E) "VOUCHER RECIPIENT" SHALL MEAN A TENANT IN AN AFFECTED DWELLING UNIT WHO RECEIVES ENHANCED VOUCHER ASSISTANCE PURSUANT TO THE VOUCHER ACT FOR SUCH PERIOD AS SUCH TENANT RECEIVES SUCH ASSISTANCE. (F) "VOUCHER UNIT" SHALL MEAN AN AFFECTED DWELLING UNIT THAT IS AT ANY TIME OCCUPIED BY A VOUCHER RECIPIENT, FOR SUCH PERIOD AS SUCH AFFECTED DWELLING UNIT IS OCCUPIED BY A VOUCHER RECIPIENT. (G) "MARKET UNIT" SHALL MEAN AN AFFECTED DWELLING UNIT THAT IS NO LONGER SUBJECT TO THE RENT STABILIZATION LAW OF NINETEEN HUNDRED SIXTY- NINE AND THE EMERGENCY TENANT PROTECTION ACT OF NINETEEN SEVENTY-FOUR BECAUSE IT HAS BEEN DECONTROLLED PURSUANT TO THE TERMS OF APPLICABLE LAW OR PURSUANT TO SUBDIVISION THREE OF THIS SECTION. (H) "VACATED UNIT" SHALL MEAN AN AFFECTED DWELLING UNIT, OTHER THAN A VOUCHER UNIT OR A MARKET UNIT, THAT IS NO LONGER OCCUPIED BY THE TENANT WHO OCCUPIED SUCH UNIT ON THE DISSOLUTION DATE OR BY THE LAWFUL SUCCES- SORS IN INTEREST OF SUCH TENANT. (I) "FULLY TAXABLE UNITS" SHALL MEAN, WITH RESPECT TO ANY TAX YEAR, ALL AFFECTED UNITS THAT WERE VOUCHER UNITS, MARKET UNITS OR VACATED UNITS ON THE TAXABLE STATUS DATE OF SUCH TAX YEAR. (J) "PARTIALLY TAXABLE UNITS" SHALL MEAN, WITH RESPECT TO ANY TAX YEAR, ALL AFFECTED UNITS WHICH WERE NOT FULLY TAXABLE UNITS ON THE TAXA- BLE STATUS DATE OF SUCH TAX YEAR. (K) "VOUCHER ACT" SHALL MEAN SECTION 8(T) OF THE UNITED STATES HOUSING ACT OF NINETEEN THIRTY-SEVEN, AS AMENDED, OR ANY SUCCESSOR STATUTE, AND ANY REGULATIONS PROMULGATED THEREUNDER. 2. NOTWITHSTANDING ANY PROVISION TO THE CONTRARY CONTAINED IN THIS ARTICLE, AND NOTWITHSTANDING THE PROVISIONS OF ANY GENERAL, SPECIAL OR LOCAL LAW, AFTER THE DISSOLUTION DATE, AFFECTED DWELLING UNITS SHALL BE FULLY SUBJECT TO THE PROVISIONS OF THE RENT STABILIZATION LAW OF NINE- TEEN HUNDRED SIXTY-NINE AND THE EMERGENCY TENANT PROTECTION ACT OF NINE- TEEN SEVENTY-FOUR. (A) THE INITIAL LEGAL REGULATED RENT FOR ANY AFFECTED DWELLING UNIT FOLLOWING THE DISSOLUTION DATE SHALL BE THE LAST RENT AUTHORIZED FOR THE AFFECTED DWELLING UNIT BEFORE THE DISSOLUTION DATE, WHICH SHALL NOT BE SUBJECT TO ADJUSTMENT PURSUANT TO SUBDIVISION A OF SECTION 26-513 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK. (B) NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO THE CONTRARY, THE LEGAL REGULATED RENT FOR A VOUCHER UNIT SHALL BE EQUAL TO THE MAXIMUM RENT AUTHORIZED AND APPROVED IN CONNECTION WITH THE FEDERAL ASSISTANCE PROVIDED TO THE VOUCHER RECIPIENT OCCUPYING SUCH VOUCHER UNIT. IF AN
AFFECTED DWELLING UNIT WHICH WAS A VOUCHER UNIT CEASES TO BE A VOUCHER UNIT AT ANY TIME OR FOR ANY REASON, EXCEPT FOR THOSE REASONS SPECIFIED IN SUBDIVISION THREE OF THIS SECTION, THE INITIAL LEGAL REGULATED RENT FOR SUCH AFFECTED DWELLING UNIT FOLLOWING SUCH CHANGE IN STATUS SHALL BE EQUAL TO THE SUM OF (I) THE LAST RENT AUTHORIZED BEFORE THE DISSOLUTION DATE, PLUS (II) ANY ADJUSTMENTS TO SUCH RENT AUTHORIZED BY LAW BETWEEN THE DISSOLUTION DATE AND THE DATE UPON WHICH SUCH UNIT CEASED TO BE A VOUCHER UNIT. 3. NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO THE CONTRARY, WHERE AN AFFECTED DEVELOPMENT CONTAINS DWELLING UNITS WHICH MAY BE ELIGIBLE FOR ENHANCED VOUCHER ASSISTANCE PURSUANT TO THE VOUCHER ACT, ANY DWELLING UNIT IN SUCH AFFECTED DEVELOPMENT SHALL BE DEEMED TO BE A MARKET UNIT AND NOT SUBJECT TO THE RENT STABILIZATION LAW OF NINETEEN HUNDRED SIXTY-NINE AND THE EMERGENCY TENANT PROTECTION ACT OF NINETEEN SEVENTY-FOUR FOR THE DURATION OF SUCH TENANCY IF: (A) THE TENANT RESID- ING IN SUCH DWELLING UNIT AS OF THE DISSOLUTION DATE FAILS TO SUBMIT ALL OF THE REQUIRED DOCUMENTATION FOR THE INITIAL APPLICATION FOR ENHANCED VOUCHER ASSISTANCE PURSUANT TO THE VOUCHER ACT, (B) A VOUCHER RECIPIENT RESIDING IN SUCH DWELLING UNIT FAILS TO SUBMIT THE REQUIRED DOCUMENTA- TION FOR RECERTIFICATION FOR ENHANCED VOUCHER ASSISTANCE PURSUANT TO THE VOUCHER ACT, OR (C) A VOUCHER RECIPIENT RESIDING IN SUCH DWELLING UNIT VIOLATES, THROUGH ACTION OR INACTION, THE REQUIREMENTS OF THE VOUCHER ACT. UPON THE FIRST VACANCY OF AN AFFECTED DWELLING UNIT WHICH BECOMES A MARKET RATE UNIT PURSUANT TO THIS SUBDIVISION, SUCH AFFECTED DWELLING UNIT SHALL BE FULLY SUBJECT TO THE PROVISIONS OF THE RENT STABILIZATION LAW OF NINETEEN HUNDRED SIXTY-NINE AND THE EMERGENCY TENANT PROTECTION ACT OF NINETEEN SEVENTY-FOUR, AND THE INITIAL LEGAL REGULATED RENT FOR SUCH AFFECTED DWELLING UNIT FOLLOWING SUCH CHANGE IN STATUS SHALL BE EQUAL TO THE SUM OF (I) THE LAST RENT AUTHORIZED BEFORE THE DISSOLUTION DATE, PLUS (II) ANY ADJUSTMENTS TO SUCH RENT AUTHORIZED BY LAW BETWEEN THE DISSOLUTION DATE AND THE DATE UPON WHICH SUCH UNIT CEASES TO BE A MARKET UNIT. 4. NOTWITHSTANDING ANY PROVISION TO THE CONTRARY CONTAINED IN THIS ARTICLE, AND NOTWITHSTANDING THE PROVISIONS OF ANY GENERAL, SPECIAL OR LOCAL LAW, AFTER THE DISSOLUTION DATE, ANY PARTIAL EXEMPTION FROM REAL PROPERTY TAXATION GRANTED TO THE REAL PROPERTY IN AN AFFECTED DEVELOP- MENT PURSUANT TO SECTION THIRTY-THREE OF THIS ARTICLE SHALL CONTINUE WITH RESPECT TO ANY PARTIALLY TAXABLE UNITS, BUT ANY FULLY TAXABLE UNITS SHALL BE SUBJECT TO FULL REAL PROPERTY TAXATION. 5. THIS SECTION SHALL NOT APPLY TO AN AFFECTED DEVELOPMENT IF: (A) THE OWNER AND A DULY RECOGNIZED TENANTS ASSOCIATION EXECUTE A WRITTEN SETTLEMENT AGREEMENT ON OR BEFORE THE DISSOLUTION DATE, AND (B) SUCH WRITTEN SETTLEMENT AGREEMENT SPECIFIES THE RESPECTIVE RIGHTS AND OBLI- GATIONS OF THE TENANTS AND OWNER SUBSEQUENT TO THE DISSOLUTION DATE. S 3. If any clause, sentence, paragraph, section or part of this act shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, section or part thereof directly involved in the controversy in which judgment shall have been rendered. S 4. This act shall take effect immediately; provided, however, that section two of this act shall apply to any affected development with a dissolution date on or after the effective date of this act.

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