NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5006
SPONSOR: Rosenthal (MS) TITLE OF BILL: An act to amend the private housing finance law, in
relation to right of first refusal
PURPOSE:
This bill protects the residents of all Mitchell-Lama, Limited Dividend
and federally subsidized developments in the state that are being priva-
tized by granting tenants the right to purchase their buildings at a
fair market value.
SUMMARY OF SPECIFIC PROVISIONS:
Section one amends the private housing finance law by adding a new arti-
cle 2-A.
Terms are defined including "right of first refusal" which means the
right of a tenant association or a qualified entity to purchase a Mitc-
hell-Lama, Limited Dividend or a federally subsidized property, such as
a Project-based section B building.
This measure would require all owners of Mitchell-Lama, Limited Dividend
and federally subsidized housing developments that plan to privatize
their buildings to provide advance notification to all tenants and the
State Division of Housing and Community Renewal (DRCR). Such notice
shall be-made no less than twelve months prior to, the owner taking any
action, and contain specific information related to the-property and its
ownership. The bill provides for the tenant or tenants' association to
notify the owner in writing of their intent to exercise their right of
first refusal within 60 days. In relation to value of the property, the
DRCR shall convene an advisory panel to determine the appraised value of
the housing, and promulgate rules for the timely determination of the
appraised value.
This bill also requires that any owner who receives a bona-fide offer
for a property to provide the terms and conditions of the offer to the
tenants' association, or each individual tenant, within 15 days. In the
event the prospective purchaser agrees to maintain the housing as
affordable, the owner does not need to notify tenants.
If the tenants choose not to exercise their right of first refusal, they
shall have the right to remain in their prospective dwelling units for
six months from the date of the conversion or until their leases expire,
whichever is longer. With the agreement of the tenant or tenants, the
new owner may relocate tenant(s) to comparable units with comparable
rents in accordance with procedures established by the DHCR.
An owner in violation of this article is liable for a civil penalty of
five thousand dollars per month per dwelling with total civil penalties
not to exceed $100,000 per dwelling unit. This legislation shall not
affect existing agreements or the purchase by a governmental entity
utilizing the powers of eminent domain, bankruptcy proceedings, or the
judicially supervised sale or transfer of the property. Judicial review
is available for persons aggrieved by an appraisal determination.
Section two sets forth the effective date.
JUSTIFICATION:
New York State is facing an affordable housing crisis that is widespread
and diverse. Few problems facing our state are critical than New York's
severe shortage of safe, decent, affordable homes. During much of the
last century, New York State has been a national leader in the creation
of affordable housing and protection of tenants' rights.
In the 1950s, the state enacted the extremely successful Mitchell-Lama
program which created more than 150,000 homes across New York that were
affordable to middle income families. The Mitchell-Lama housing program
was created in 1955, with new developments continuing to be built into
the mid-1970's under a mix of state, local and federal funding. Low
interest loans covering up to 95% of all development costs were made
available to developers. The developments came with 20-, 30- or 40-year
affordability requirements, after which those developments could be
privatized. New York State also has a large number of federally subsi-
dized developments which house hundreds of thousands of low-income,
elderly, and disabled residents across the state. Mitchell-Lama, Limited
Dividend and federally subsidized rental units are found throughout New
York State, including in New York City, Buffalo, Albany, Rochester,
Syracuse, Westchester and Nassau Counties.
In recent years, there has been a significant loss of Mitchell-Lama
rental units. 65,000 units across the state have already been lost and
dozens of additional developments have already initiated the buyout
process. New York City, in particular, is facing a particularly grave
loss of rental units more than 40 of its Mitchell-Lama rental units.
have been privatized since 1990, New York State has also already lost
over 10,000 units of federally subsidized project based Section 8 homes.
Currently, tenants of Mitchell-Lama, Limited Dividend and federally
subsidized rental buildings have few protections if an owner decides to
opt out of the subsidy program. While many tenants living in federally
subsidized buildings that have privatized are eligible for enhanced
Section 8 vouchers, these vouchers require a lengthy application process
and are not guaranteed. Family size and housing quality standards can
often make a tenant ineligible to remain in his or her home and force
the use of a standard voucher that has a reduced value when not used in
the original building.
Faced with an increasing crisis of privatizations and opts-outs in most
of its communities, New York City passed Local Law 79 in 2003; which
granted Mitchell-Lama and Section 8 tenants a "right-of-first-refusal."
However, it was struck down in April 2007 by the New York State Supreme
Court in the court's decision; the judge issued a clear directive to the
State Legislature. The judge wrote that not only does the Legislature
have the authority to enact such a measure; it also has the duty to
provide this protection to tenants. Whether it be by creating a right of
first refusal or by extending rent stabilization, the State Legislature
may well have the ability to protect low and middle-income residents of
Mitchell-Lama buildings, as it has done in the past. In failing to do
so, or to permit the City of the New York to do so the State Legislature
has failed the residents of the City of New York. The recent sales and
proposed sales of major assisted rental housing complexes it this City
and the likely devastating impact of those sales on low and moderate-in-
come residents of New York may and should function as a wake-up call for
the need for immediate action by the State. By providing for a right of
first refusal, New York State will have the necessary statutory frame-
work needed to preserve affordable and subsidized housing. Several other
states, including Rhode Island, Maine, Texas and Illinois, have adopted
right of first refusal and right to purchase laws. New York State should
once again become a national leader, as it once was, in providing for
progressive housing laws and tenant protections.
LEGISLATIVE HISTORY:
2015-16: A.I067 - Referred to Housing; S.2779 - Referred to Housing,
Construction and Community Development
2013-14: A.6583 - Referred to Housing; S.3155-A - Referred to Housing,
Construction and Community Development
2011-12: A.1841 - Referred to Housing; 5.428 - Committed to Rules
2009-10: A.9974 - Referred to Housing; S.3852 - Referred to Housing,
Construction and Community Development
FISCAL IMPLICATIONS:
None to the State.
EFFECTIVE DATE:
This bill shall take effect on the thirtieth day after it shall have
become a law.
