S3167-2013 Actions

• Jan 31, 2013: REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOPMENT

S3167-2013 Memo

BILL NUMBER:S3167

TITLE  OF  BILL:    An  act to amend the private housing finance law, in
relation to the sale of limited-profit housing projects

PURPOSE OR GENERAL IDEA OF BILL:  This bill provides that upon sale of a
limited-profit housing company project, reserve and surplus  funds  must
be held in escrow and dedicated to major capital improvements.

SUMMARY  OF  SPECIFIC  PROVISIONS:   The bill amends the Private Housing
Finance Law (PHFL) by adding  a  new  section  36-b.  That  new  section
provides  that  if  a  limited profit housing company incorporated under
Article II of the PHFL sells a project to any entity other than a limit-
ed-profit housing company, then all reserve  and  surplus  funds  trans-
ferred to the new owner must be held in escrow for the purpose of making
major  capital  improvements  to  the project. The bill further provides
that the new owner may not increase rents or other charges, based on new
capital improvements, until after the reserve and surplus funds held  in
escrow have been exhausted.

JUSTIFICATION:    The  Mitchell-Lama  program  was established to create
affordable housing and guarantee developer profits of 6% on investments.
In the event of buyouts by owners of Mitchell-Lama developments,  owners
of  limited  profit  housing companies might transfer reserve or surplus
monies to the private sector,  and  those  funds  could  -  without  the
provisions  contained  in this bill- be used in a manner contrary to the
spirit and purpose of the Mitchell-Lama program and the law creating it.

In order to ensure that monies which rightfully belong to  residents  in
limited  profit  housing  companies are used to improve those buildings,
this bill would require that reserve or surplus funds be  placed  in  an
escrow  account if a housing company opts to buyout of the Mitchell-Lama
program, and limits the purpose for which the funds held in  escrow  may
be used.

FISCAL IMPLICATIONS:  None.

EFFECTIVE DATE:  This act shall take effect on the first of January next
succeeding the date on which it shall have become a law.

S3167-2013 Text

 S T A T E   O F   N E W   Y O R K
 
 
                                         3167
 2013-2014 Regular Sessions
 I N  SENATE
 January 31, 2013
 
 Introduced  by  Sen. KRUEGER -- 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 the sale
 of limited-profit housing projects
 

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 36-b to read as follows:

 

S  36-B.  SALE  OR  OTHER  CONVEYANCE  OF PROJECT. NOTWITHSTANDING ANY
 INCONSISTENT PROVISION OF LAW, UPON THE SALE OR OTHER  CONVEYANCE  OF  A
 PROJECT  BY  A COMPANY TO ANY ENTITY OTHER THAN A COMPANY, THE FOLLOWING
 REQUIREMENTS SHALL APPLY.
 1. ALL RESERVE AND SURPLUS FUNDS TRANSFERRED BY THE COMPANY TO THE NEW
 OWNER MUST BE HELD BY SUCH NEW OWNER IN ESCROW ACCOUNTS AND MAY BE  USED
 BY  SUCH  NEW  OWNER  SOLELY  FOR  THE  PURPOSE  OF MAKING MAJOR CAPITAL
 IMPROVEMENTS TO THE PROJECT.
 2. NO RENTAL OR OTHER CHARGE MAY BE INCREASED  BY  THE  NEW  OWNER  TO
 DEFRAY THE COST OF ANY MAJOR CAPITAL IMPROVEMENT UNLESS AND UNTIL ALL OF
 SUCH  RESERVE AND SURPLUS FUNDS HAVE BEEN EXPENDED TO DEFRAY THE COST OF
 MAJOR CAPITAL IMPROVEMENTS.
 

S 2. This act shall take effect on the first of January next  succeed
 ing the date on which it shall have become a law.
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD00805-01-3

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