Pheffer Amato, Richardson, De La Rosa, Davila, Cymbrowitz, Seawright, Barnwell, Epstein, Burdick,
Cook, Reyes, Barron, Jackson, Forrest, Zinerman, Simon
MLTSPNSR
Add §§13-c & 35-a, amd §17, Priv Hous Fin L
Relates to voting, election and referendum procedures; requirements regarding mutual housing companies considering dissolution and/or reconstitution; duties of a board of directors of a limited-profit housing company; prohibits certain limited-profit housing companies from voluntarily dissolving during the state disaster emergency declared in response to the outbreak of COVID-19.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7272 Revised 5/26/2021
SPONSOR: Rosenthal L TITLE OF BILL:
An act to amend the private housing finance law, in relation to voting,
election and referendum procedures; to requirements regarding mutual
housing companies considering dissolution and/or reconstitution; to
certain duties of a board of directors of a limited-profit housing
company; and to prohibiting certain limited-profit housing companies
from voluntarily dissolving during the state disaster emergency declared
in response to the outbreak of COVID-19
PURPOSE:
This bill is intended to ensure open, transparent, and democratic gover-
nance of "Mitchell-Lama" cooperatives, which are organized as limited-
profit housing companies, and to protect the interests of shareholders
and the public interest in preserving affordable housing. It would
accomplish this by establishing certain voting and election procedures,
duties of boards of directors, and high thresholds for votes to approve
dissolution or steps related to dissolution. The bill also seeks to
protect the public health and the interests of shareholders by prohibit-
ing dissolution or semi privatization, or related actions or
proceedings, during the COVID-19 state disaster emergency period.
SUMMARY OF PROVISIONS:
Section one of the bill amends the private housing finance law by adding
a new section 13-c outlining voting, election and referendum procedures.
Section two of the bill amends the private housing finance law by adding
a new section 35-a setting requirements regarding dissolution or recon-
stitution of mutual housing companies. Subdivisions 1 through 4 of the
new section 35-a provide that: any vote for dissolution of the company
shall require the approval of 8096 of all dwelling units owned by the
mutual housing company;
* any vote to authorize a feasibility study, preliminary offering plan,
final offering plan, proxy statement, or notice of intent to dissolve
shall require approval of 80'-'6 of all dwelling units; * no funds from
the operating budget may be used for the preparation or distribution of
any plans or studies or for services related to dissolution and/or
reconstitution of the mutual housing company; and *no vote regarding
disillusion may occur within five years following a failed vote.
Section three of the bill amends section 17 of the private housing
finance law by adding two new subdivisions 4 and 5. Paragraphs a-d of
the new subdivision 4 require each board of directors to:
* hold six meetings annually, with meetings open to shareholders and
residents, except in limited circumstances when executive sessions open
only to directors are permitted;
* file with the commissioner or the supervising agency any votes of the
board, indicating how each director voted, which will be a matter of
public information;
* distribute to all shareholders any communication to the board from
oversight agencies and, in the event of a proposed dissolution, the
review of any version of an offering plan; and
* investigate any substantive allegation that a tenant is not occupying
his or her dwelling unit as a primary residence. Paragraphs a-c of the
new subdivision 5 require that:
* no board may interfere with the right of a shareholder or tenant to
participate in the lawful activities of any group formed to protect the
rights of shareholders and tenants, or penalize shareholders or tenants
for exercising such right;
* shareholder and tenant groups may meet without being required to pay a
fee in any location on the premises that are devoted to the common use
of all shareholders or tenants;
* boards will take all necessary and appropriate actions to ensure that
a manager or agent of the housing company complies with these require-
ments.
Section four of the bill requires that, notwithstanding any provision of
law to the contrary, no company or urban rental company, as defined by
section 12 of the private housing finance law, shall be dissolved,
undergo semi-privatization, or initiate related actions or proceeding
during the COVID-19 state disaster emergency period.
Section five of the bill sets forth the effective date.
JUSTIFICATION:
Nearly 65 years ago, State Senator MacNeil Mitchell and Assemblymember
Alfred Lama passed landmark legislation to provide incentives for
investment in affordable housing. "Mitchell-Lama" cooperatives are
governed by their respective boards of directors, composed of elected
volunteer shareholders who work to preserve and manage this vital
affordable housing on behalf of themselves and their neighbors. The New
York City Department of Housing Preservation and Development or New York
State Homes and Community Renewal provide oversight of these important
sources of affordable housing.
This legislation seeks to ensure open, transparent, and democratic
governance of Mitchell-Lama coops and to protect the interests of share-
holders and the public interest in preserving affordable housing. It
would accomplish this by establishing certain voting and election proce-
dures, duties of boards of directors, and high thresholds for votes to
approve dissolution or steps related to dissolution. Such supermajority
voting thresholds are intended to ensure that changes to the basic
ownership structure and long-term affordability of the coops are only
undertaken when there is a broad consensus among shareholders that the
changes are in their best interest. The bill also seeks to protect the
public health and the interests of shareholders by prohibiting dissol-
ution or semi-privatization, or related actions or proceedings, during
the COVID-19 state disaster emergency -- a period when the pandemic
imposes significant barriers to effective and transparent resident and
shareholder engagement and decision making.
LEGISLATIVE HISTORY:
New bill.
Provisions of this bill are similar to those of the following bills:
A9719A of 2020 (Rosenthal L) A9720A of 2020 (Rosenthal L) A9721A of 2020
(Rosenthal L) A5420A of 2021 (Rosenthal L)
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
Minimal.
EFFECTIVE DATE:
This act shall take effect immediately; provided, however, sections one,
two and three of this act shall take effect on the ninetieth day after
it shall have become a law.
STATE OF NEW YORK
________________________________________________________________________
7272
2021-2022 Regular Sessions
IN ASSEMBLY
April 29, 2021
___________
Introduced by M. of A. L. ROSENTHAL -- read once and referred to the
Committee on Housing
AN ACT to amend the private housing finance law, in relation to voting,
election and referendum procedures; to requirements regarding mutual
housing companies considering dissolution and/or reconstitution; to
certain duties of a board of directors of a limited-profit housing
company; and to prohibiting certain limited-profit housing companies
from voluntarily dissolving during the state disaster emergency
declared in response to the outbreak of COVID-19
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The private housing finance law is amended by adding a new
2 section 13-c to read as follows:
3 § 13-c. Voting, election and referendum procedures. 1. Any shareholder
4 vote shall be conducted using secret ballots. Such ballots shall be
5 cast in-person by tenants entitled to occupancy in the project; unless
6 such tenant casts such ballot using an absentee ballot issued pursuant
7 to subdivision two of this section.
8 2. A shareholder entitled to occupancy in the project shall be enti-
9 tled to request an absentee ballot to cast a ballot in any shareholder
10 vote. Such absentee ballot shall be delivered or mailed only to the
11 primary residence address of a shareholder entitled to occupancy in the
12 project. An absentee ballot cast pursuant to this subdivision shall be
13 sealed within two envelopes, shall contain the signature of the share-
14 holder casting the vote, and shall be mailed to a neutral third party
15 not running for a position on the board of directors.
16 3. Proxy voting shall not be permitted in an election for a position
17 on a board of directors, for dissolution of the company, for the author-
18 ization of a feasibility study, for an offering plan including a red
19 herring or black book, or any document offered in place of an offering
20 plan as permitted by the attorney general.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10975-02-1
A. 7272 2
1 4. In-person ballots shall produce a paper record which may be audited
2 in the case of a contested election result.
3 5. No otherwise-eligible person shall be prevented from being a candi-
4 date for, being elected to, or serving on a board of directors based
5 solely on that person owing or having owed any amount of any form of
6 arrears to the housing company, unless, at the time of nomination, that
7 person currently owes an amount of bona fide arrears greater than the
8 equivalent of two months of that person's monthly maintenance. Nothing
9 in this subdivision shall be construed to require or mandate any housing
10 company to adopt bylaws, rules, policies, or procedures restricting any
11 person's eligibility to be nominated, elected, or serve on a board of
12 directors. Nothing contained in this subdivision shall be a basis in
13 itself to deny such eligibility to any person.
14 6. For any shareholder vote requiring a specific percentage of dwell-
15 ing units, the term "dwelling units" shall mean all dwelling units for
16 which shares have been issued, regardless of whether such dwelling units
17 are occupied or vacant.
18 § 2. The private housing finance law is amended by adding a new
19 section 35-a to read as follows:
20 § 35-a. Requirements regarding dissolution. Mutual housing companies
21 considering dissolution and/or reconstitution pursuant to section thir-
22 ty-five of this article shall be subject to the following requirements:
23 1. Any vote for dissolution of the company, or to authorize a feasi-
24 bility study, a preliminary offering plan which may be referred to as a
25 red herring, a final offering plan which may be referred to as a black
26 book, or a proxy statement, or to send a notice of intent to dissolve to
27 the commissioner or supervising agency shall require the approval of
28 eighty percent of all dwelling units owned by the mutual housing compa-
29 ny.
30 2. No funds from the operating budget of the mutual housing company
31 shall be used for the preparation or distribution of a feasibility
32 study, a preliminary offering plan or red herring, a final offering plan
33 or black book, a proxy statement, or a notice of intent to dissolve, or
34 to pay for any services related to evaluation of, preparation for, or
35 execution of dissolution and/or reconstitution pursuant to section thir-
36 ty-five of this article, including but not limited to legal services.
37 3. No vote under subdivision one of this section, shall occur within
38 five years following a vote under subdivision one of this section that
39 failed.
40 § 3. Section 17 of the private housing finance law is amended by
41 adding two new subdivisions 4 and 5 to read as follows:
42 4. Notwithstanding the provisions of any law, general or special, a
43 board of directors of a company created pursuant to the provisions of
44 this article shall:
45 (a) Hold at least six meetings of its members annually. Such meetings
46 shall be open to the shareholders and residents, except that they may
47 include executive sessions open only to directors for the sole purpose
48 of discussing confidential personnel issues, legal advice and counsel
49 from an attorney to whom the housing company is a client, or confiden-
50 tial issues affecting individual shareholders or residents, or contract
51 negotiation.
52 (b) File with the commissioner or the supervising agency, as the case
53 may be, a record of any vote on a resolution of such board, including
54 specification of how each director voted. Such record shall be a matter
55 of public record.
A. 7272 3
1 (c) Promptly give notice of and make available to all shareholders any
2 communication to the housing company from the commissioner or the super-
3 vising agency, as the case may be, or the office of the attorney gener-
4 al, regarding regulations, changes in regulations, taxation, finances,
5 refinancing, or, in the event of a proposed dissolution and reincorpora-
6 tion, the review of any version of an offering plan.
7 (d) Investigate any substantive allegation that a tenant is not occu-
8 pying his or her dwelling unit as his or her primary residence.
9 5. (a) No housing company shall interfere with the right of a share-
10 holder or tenant to form, join or participate in the lawful activities
11 of any group, committee or other organization formed to protect the
12 rights of shareholders and tenants; nor shall any housing company
13 harass, punish, penalize, diminish, or withhold any right, benefit or
14 privilege of a shareholder or tenant under their proprietary lease or
15 tenancy for exercising such right.
16 (b) Shareholder and/or tenants' groups, committees or other sharehold-
17 er and/or tenants' organizations shall have the right to meet without
18 being required to pay a fee in any location on the premises including a
19 community or social room where use is normally subject to a fee which is
20 devoted to the common use of all shareholders and/or tenants in a peace-
21 ful manner, at reasonable hours and without obstructing access to the
22 premises or facilities. No housing company shall deny such right.
23 (c) The board of directors shall take all necessary and appropriate
24 actions to ensure that a manager or agent of the housing company
25 complies with the requirements in this subdivision.
26 § 4. 1. Notwithstanding any provision of law to the contrary, no
27 company or urban rental company, as such terms are defined in section 12
28 of the private housing finance law, shall be dissolved pursuant to the
29 provisions of section 35 of such law or shall undergo semi-privatization
30 pursuant to 28 RCNY 3-14(i)(15), or shall initiate any actions or
31 proceedings related to dissolution or semi-privatization, including but
32 not limited to, conducting a vote to authorize a feasibility study;
33 submitting a preliminary offering plan to the attorney general for
34 approval; distributing a preliminary offering plan to shareholders;
35 distributing a final offering plan or proxy statement to shareholders;
36 submitting a notice of intent to dissolve to the commissioner of housing
37 or supervising agency; committing, promising, or expending funds in any
38 way for the purposes of dissolution or semi-privatization; or holding
39 any of the required notice meetings during the state disaster emergency
40 declared pursuant to executive order 202 of 2020 in response to the
41 outbreak of novel coronavirus, COVID-19.
42 2. As used in this act, the term "semi-privatization" means dissolving
43 as a mutual housing company and transferring the property to a housing
44 development fund company organized pursuant to article XI of the private
45 housing finance law.
46 § 5. This act shall take effect immediately; provided, however,
47 sections one, two and three of this act shall take effect on the nineti-
48 eth day after it shall have become a law.
