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2012 Legislative Update New Laws for the Empire State

The 2011-12 legislative session is on in Albany as this article is being written, and bills of all kinds are being considered—including some with implications for co-op and condo owners and administrators across the state. Housing is also on the agenda in the New York City Council.

While in years past there have been large numbers of co-op and condo-related bills put before the Assembly and state Senate, this year's crop appears sparser. As this article was being written, a search for generic housing-related bills returned 379 results; a search for co-op/condo-specific legislative proposals turned up only eight—some of which are duplicates of bills that are both in the Assembly and the state Senate.

Let's take a look at the pending co-op and condo-related legislation working its way through the halls of governance, and check in with how condo and housing-related organizations are making the wishes of their constituents known to elected representatives.

Calling All Bills

One of the new pieces of legislation, A07366 (the same as S-4790A in the state Senate), deals with “limiting the increase in real property tax assessments on residential cooperatives and condominiums to 6 percent over the previous liability,” and is almost certainly a response to the recent controversy in Queens whereby residents of several large co-ops charged that their properties had been overvalued by the city.

Another bill, A00797 (also known in the Senate as S-05250), has been referred to the Judiciary Committee and should sound familiar to Cooperator readers because it’s not new. It would create a sub-part of the Housing Part of state court to deal expressly with co-op and condo-related cases.

Yet another bill that has been around for a while is A02163, which would require condos and co-ops to act upon a buyer's application within 45 days of receipt, with failure resulting in automatic approval (A different bill, A03035, has the same idea, but would extend the period to 60 days).

Finally, some of the bills dealt only with specific geographic areas, such as A02326, which deals with affordable housing in the City of Yonkers.

Remixed & Repeated

As this article was being written, all of the bills were still in committee—but not always in the Housing Committee. A few were in the Government Affairs Committee, and some were in the Judiciary Committee. Jonathan Harkavy, chief of staff for Assemblyman Vito Lopez (D-Brooklyn), chair of the Assembly Committee on Housing, explains, “Some of the co-op related bills to the Housing Committee, but more go to the Judiciary Committee, because anything that amends an old business law goes there.”

As to why some of the same bills are seen year after year, Harkavy explains, “Many times, at the end of each session, the bill is just reintroduced every two years for the new session. Sometimes, an issue may seem unimportant one year, but because of an unforeseen development like a court decision or something else, it may suddenly take on a new importance the next year. That’s why, when we look at a bill, we look at it based on its merits, not on what we did last time.”

As for what's on deck for the City Council, one bill in particular this session may be of interest to co-op and condo dwellers and administrators—Intro 0757-2012, which deals with amending the city’s administrative code to disclose energy and water efficiency for “dwelling units, co-ops and condominiums” in buildings under 50,000 square feet.

Some Important Issues

All in all, which issues are most important to organizations representing co-op and condo owners, as well as real estate organizations in general?

Mary Ann Rothman, executive director of the Council of New York Cooperatives and Condominiums (CYNC), says that “CNYC’s most important goal this year is to ensure that the property tax abatement for qualifying homeowners in New York City cooperatives and condominiums is extended beyond its present sunset date of June 30. It is also very important that the extender be passed early in the spring so that property tax bills that are prepared in June can include the abatement.”

She also says that “CNYC continues to monitor the rules and procedures for the implementation of energy-saving legislation. This includes the phasing out of No. 6 oil, benchmarking, and the energy audits and retro-commissioning requirements.” Benchmarking refers to New York City’s Local Law 84, which went into effect last year and which requires buildings over 50,000 square feet to submit an annual energy “benchmark” report.

Gregory Carlson, executive director of the Federation of New York Housing Cooperatives and Condominiums (FNYHC) as well as a property manager and Queens realtor, also says that his group’s first and highest priority is the extension of the cooperative and condominium tax abatements.

“The city must send a Home Rule message to Albany, and Albany must pass the extension,” he says. “Time is an important factor. This extension must be done before the city issues its July 2012 real estate tax bills. If the extension fails to pass on time, millions of dollars would be paid to the city needlessly.”

In addition to citywide organizations like these, there are also local co-op and condo organizations, such as the Brooklyn Co-op and Condo Coalition, the Association of Riverdale Co-ops, and the Queens-based Presidents Council.

Bob Friedrich, president of the Glen Oaks Co-op Association in Queens and head of Presidents Council, talked about some of the issues his group has been following. The main issue for them, as one might expect, is the issue of property tax evaluation—co-ops in Eastern Queens were the ones who charged the city with over-valuing their properties, which would lead to higher assessments and higher maintenance charges being passed on to the shareholders.

“There was a temporary Band-Aid last year, when the city’s Department of Finance held the valuations to 10 percent increases,” says Friedrich. “That was only a one-year fix, and now we’re back to Square One.”

Asked about the bill that would mandate co-op and condo boards act on applications within 45 days, he says, “We’re reviewing that bill. There are parts of that bill we’re opposed to, but there are other parts that we don’t have a problem with. We’re reviewing that bill.”

In the past, one of the bills that had the co-op and condo community up in arms and that kept coming up every year, in both city and Albany versions, was the “written rejection” bill. This bill would have obligated co-op boards to inform applicants why their applications were rejected, if they were, and would have to give the applicant a statement that the decision was reached without regard to race, national origin, marital status, age and several other factors. (The 45-day bill is related to this bill, but is not quite the same).

The co-op condo community objected to the bill because they felt it would take power away from boards, and indeed would discourage residents from serving on boards because of fear of legal liability. A glance at legislation on tap shows that, as of this writing, the bill has not been introduced, at least not in its original form.

Getting the Word Out

How do organizations like CNYC and FNYHC, as well as others such as the Real Estate Board of New York (REBNY) and the Institute of Real Estate Managers (IREM), make their wishes known before the legislature?

Different organizations have different approaches. Carlson says the FNYHC educates lawmakers on behalf of the membership. Rothman says that the CNYC does so through testimony at hearings, private meetings with legislators and their aides, letters and phone calls.

Friedrich says his Queens-based organization puts out newsletters that are closely followed by politicians because “the residents of our community also happen to be voters. When we say, we want them to support a bill or work on a particular bill, more often that not, they’re willing to sit down with us.”

According to Ralph Perfetto, chair of the Brooklyn Co-op and Condo Coalition, says, “When we have a legislative issue, we bring it to the attention of the respective chairperson of the committee that reviews that issue, whether state or city, and lobby that legislative body.”

The Mood Upstate

What is the attitude toward condo and co-op legislation among non-metro area legislators in Albany? After all, while condos are spreading through the state, co-ops are almost exclusively a New York City phenomenon. And in most places, single-family homes far outnumber other types of housing.

“There are some cooperatives and many condominiums and homeowners’ associations throughout the state, though issues like our property tax abatement are specifically for New York City and Nassau County, which are designated as `municipalities of more than a million,’” says Rothman. “In those cases, if the city supports a measure that costs the state nothing, then colleagues support the city lawmakers.”

As far as programs to promote affordable housing are concerned, Carlson says, “We need to reinstate the J-51 program, which expired on December 31, 2011.” This is a city measure that encourages the renovation of residential apartment buildings by giving partial property tax exemptions and abatement benefits.

Another matter of concern is that of the new Fannie Mae/Freddie Mac regulations. Both Carlson and Rothman say that the new regulations make getting a mortgage or share loan more difficult for buyers.

Among these regulations are provisions stating that buildings must have 10 percent or more of their funds set aside in a reserve fund, that no more than 15 percent of the units can be more than a month behind in maintenance or common charges, that the budget must include provision for insurance deductibles, and more.

Manager Licensing

Another issue on the docket that has been a perennial topic for more than 20 years is the issue of licensing for managing agents and property managers. Today, the only licensing that exists for New York property managers falls under the aegis of the state real estate broker's license. The vast majority of managers in the New York City area hold brokers' licenses, which includes a component on real estate management within the curriculum required to earn certain accredited organization’s designations.

New York is one of the few states that has wrestled with this topic for years but has not been able to come to a consensus to pass any significant legislation. Carlson, a property manager himself, who says the measure is “long overdue,” is working with government affairs and the chief lobbyist from the Community Associations Institute (CAI) to address possible licensing adoption.

According to CAI, several bills on licensing have been proposed. A2582, introduced by Assemblymember Dennis H. Gabryszak, D-143, provides for the licensing of individuals and companies engaged in the business of residential realty management; imposes a $150 annual registration fee; further imposes on every residential real property owner a fiduciary responsibility for all funds received or collected on behalf of the owner and tenants of multiple dwellings; grants the secretary of state authority to revoke or suspend a license of a residential real property manager; provides for judicial review under an article 78 proceeding for denial, revocation or suspension of such license; directs the attorney general to prosecute any criminal actions for violations; sets forth license requirements, fees, penalties for violations and related matters. State Senator Liz Krueger, D-26, has introduced a companion bill in the Senate, S3051.

One other proposal belongs to Assemblymember Brian Kavanaugh, D-74. A5985, introduced by Kavanaugh, with an S87 companion bill, sponsored by Senator Daniel Squadron, D-25, calls for residential real property managers or any firm employing a property manager, contracting with a property manager or contracting to provide a property manager to file a registration statement with the secretary of state and to be certified from an approved certifying organization. All of the bills are currently in committee.

Housing & the Recession

Of course, the Recession, which is now four years old, has affected the housing measures that are being debated and voted on, both in Albany and in the City Council. In many cases, other matters—such as pay for teachers or preventing mass layoffs—are now seen as being more urgent than co-op and condo-related legislation.

Within the housing community itself, the recession can mean that certain issues are now in the forefront that wouldn’t have been a few years ago. “In this poor economy,” says Perfetto, “our priority is to monitor complaints by shareholders regarding sponsors taking wrap-around mortgages that throw the co-op into default and render shareholders into tenants when the bank takes over the building. We also compared fuel costs and water usage.”

“With government not affording to give incentives to produce the results wanted,” says Carlson, “legislation is passed, driving up the costs to housing in general—e.g. the energy bills, phasing out of No. 6 oil and updates in the housing maintenance code.”

Similarly, Friedrich says the Presidents Council opposes “unfunded mandates” in which “the legislature starts imposing costs upon us without providing the revenue to implement those costs.”

In particular, he criticizes the city’s aforementioned benchmarking rules: “Benchmarking requires co-ops to implement certain environmental tests to see how environmentally friendly they are. We say that cooperative housing contributes very little to pollution in the City of New York.”

For her part, Rothman feels that it’s possible that the recession is behind the relative lack of support for extending the J-51 program. In these days of budget squeezes, giving tax breaks to particular industries or sectors of the economy may not be too popular with some people.

Whatever the issues and problems of the day, it’s important that there are organizations out there representing the interests of condo and co-op owners when our city and state representatives meet.

Raanan Geberer is a freelance writer and a frequent contributor to The Cooperator.

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