BILL NUMBER:S7408

TITLE OF BILL:
An act
to amend chapter 375 of the laws of 1999 amending the real property
actions and proceedings law relating to new owners of buildings for
which administrators have been appointed pursuant to article 7-A of such
law, in relation to the effectiveness thereof

SUMMARY OF PROVISIONS:
Subdivision 10 of section 778 of the Real
Property Actions and Proceedings Law (the "RPAPL") grants the City of
New York the authority to evaporate ("reduce to zero") liens on
Article 7-A properties for municipally financed repairs. Such
authority expires on June 30, 2012 and this legislation would extend
this authority until June 30, 2015. Furthermore, the City's deadline
for submitting a report to the Governor, the Senate and the Assembly,
describing the program activities carried out during the two prior
calendar years pursuant to subdivision 10, is also extended.

REASONS FOR SUPPORT:
Pursuant to Article 7-A, the Civil Court of the
City of New York appoints administrators to operate privately owned
buildings that have been effectively abandoned by their owners and
are plagued by conditions dangerous to the life, health and safety of
tenants occupying such buildings. Administrators act under court
              

order to collect rents; which are used for providing essential
services to tenants and for making necessary repairs. In many
instances, City capital funds are utilized to repair or replace
buildings systems or to make essential repairs.

All money expended by the City for such purposes becomes a lien on the
property. Subdivision 10 of Section 778 of the RPAPL provides that a
new owner of an Article 7-A property may take advantage of lien
evaporation only if the owner enters into a regulatory agreement with
the New York City Department of Housing Preservation and Development
("HPD"). This regulatory agreement requires that the 7-A property
must be utilized for affordable housing for a term of not less than
30 years. The regulatory agreement also requires that the new owner
has no direct or indirect interests with the prior owner.

Article 7-A has enabled the City to encourage not-for-profit and
for-profit entities to purchase 7-A buildings, thereby allowing such
properties to be developed into a source of permanent affordable
housing for families and individuals. Article 7-A evaporation is
limited exclusively to the transfer of a building to a new owner who
has no business or other interests with the original owner. This will
prevent a prior owner of a 7-A administered building from benefiting
from lien evaporation. The new owner must comply with all provisions
of the regulatory agreement entered into with HPD in order for lien
evaporation to be utilized.

Since 2002, Article 7-A has helped make necessary repairs in 34
buildings consisting of 422 units. As a result, these residential
units have been successfully integrated back into communities
throughout New York City.


This legislation will continue to allow the City of New York to help
transform effectively abandoned buildings, often in dangerous
disrepair, sources of affordable housing.

Accordingly, the Mayor urges the earliest possible favorable
consideration of this proposal by the Legislature.