BILL NUMBER: S880A
SPONSOR: JACKSON
 
TITLE OF BILL:
An act to amend the private housing finance law, in relation to enacting
the housing development fund company self-determination, preservation
and affordability act
 
PURPOSE:
To clarify and update the private housing finance law to incentivize
housing development fund company (HDFC) cooperatives to remain in NYC's
affordable housing stock and to promote their long-term viability and
continued affordability.
 
SUMMARY OF PROVISIONS:
Section 1 states that this act shall be known and may be cited as the
"housing development fund company self-determination, preservation and
affordability act."
Section 2 includes legislative findings and declarations regarding the
history and development of HDFCs and the challenges HDFCs face with the
sunsetting in 2029 of the partial tax exemption.
Section 3 amends § 576 of the private housing finance law by adding a
new subdivision 4, which provides that an HDFC that is no longer subject
to regulatory controls imposed by the commissioner or supervising agency
shall continue to be subject to the oversight of the commissioner or
supervising agency, as long as it elects to receive a tax exemption or
abatement under § 577 of the private housing finance law. If an HDFC
elects not to receive this tax exemption or abatement, it will no longer
be subject to the regulation and oversight of the commissioner or super-
vising agency.
Section 4 amends subdivision 1 of § 577 of the private housing finance
law to grant a tax exemption and abatement to HDFCs that comply with
specified affordability requirements. This section details that HDFCs
electing to receive this benefit must limit the income of purchasers to
either the threshold set in paragraph b of subdivision 1 of § 576 or to
165% of the area median income as determined by the U.S. Department of
Housing and Urban Development. Section 5 also requires HDFCs to file an
annual certification confirming compliance with these affordability
requirements and grants the supervising agency authority to audit sales
records and to suspend or revoke the tax exemption and abatement if an
HDFC is found in willful noncompliance.
Section 5 amends paragraph (b) of subdivision 1 of § 577-b of the
private housing finance law, specifying that for the term eligible prop-
erty to apply under this section, an HDFC must have outstanding munici-
pal real estate taxes as of January 1, 2024, relating to an y period
prior to January 1, 2023. This amendment replaces the previous require-
ment, which was based on outstanding taxes as of January 1, 2002, for
periods prior to January 1, 2001. Section 6 applies to certain HDFCs
with real estate tax arrears of one year or more and that require finan-
cial assistance with appropriate oversight by the supervisory agency.
Section 6 sets the effective date.
 
JUSTIFICATION:
Housing Development Fund Companies (HDFCs) have been a crucial source of
affordable housing for New York City residents since the early 1980s,
when the city converted hundreds of tax-foreclosed multifamily buildings
into cooperatively owned housing. Today, over 1,100 HDFCs provide
affordable homes to approximately 90,000 New Yorkers. However, these
affordable housing cooperatives are at a crossroads. HDFCs were
initially subject to fixed-term regulatory controls that maintained
affordability and imposed certain regulatory controls. As these controls
expire and the partial tax exemption sunsets, many HDFCs face uncertain-
ty as to their legal status and financial future.
This bill would address this uncertainty by incentivizing them to remain
permanently affordable and promoting their long-term economic viability.
The bill offers tax incentives for HDFCs that elect to remain afforda-
ble, ensuring they continue to serve low and middle-income residents and
remain in New York City's affordable housing stock.
The DAMP (Division of Alternative Management Programs) tax exemption for
HDFCs is set to expire in 2029, which may lead some HDFCs to convert to
market-rate housing or simply abandon affordability restrictions to
avoid financial collapse. This bill provides incentives for HDFCs to
remain affordable by offering a tax exemption and abatement to those
that meet income limitations and other conditions designed to support
long-term financial stability for their 90,000 residents. The bill also
establishes annual compliance requirements to ensure HDFCs receiving
these tax benefits adhere to affordability standards.
This bill ensures that these vital housing resources remain accessible
to low and middle-income New Yorkers and that HDFCs that agree to remain
as affordable housing are in sound condition and are economically self-
sufficient. This bill recognizes the contributions of HDFC shareholders
who have worked to stabilize and improve their communities and respects
their right to homeownership.
 
LEGISLATIVE HISTORY:
2024 - S. 9950 - REFERRED TO RULES
 
FISCAL IMPLICATIONS:
Minimal
 
EFFECTIVE DATE:
This act shall take effect on the first of January next succeeding the
date on which it shall have become a law.

Statutes affected:
S880: 573 private housing finance law, 573(5) private housing finance law, 576 private housing finance law, 577-b private housing finance law, 577-b(1) private housing finance law
S880A: 576 private housing finance law, 577-b private housing finance law, 577-b(1) private housing finance law