S T A T E O F N E W Y O R K
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6412
2021-2022 Regular Sessions
I N S E N A T E
April 27, 2021
___________
Introduced by Sen. KAVANAGH -- read twice and ordered printed, and when
printed to be committed to the Committee on Housing, Construction and
Community Development
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:
Section 1. The private housing finance law is amended by adding a new
section 13-c to read as follows:
§ 13-C. VOTING, ELECTION AND REFERENDUM PROCEDURES. 1. ANY SHAREHOLDER
VOTE SHALL BE CONDUCTED USING SECRET BALLOTS. SUCH BALLOTS SHALL BE
CAST IN-PERSON BY TENANTS ENTITLED TO OCCUPANCY IN THE PROJECT; UNLESS
SUCH TENANT CASTS SUCH BALLOT USING AN ABSENTEE BALLOT ISSUED PURSUANT
TO SUBDIVISION TWO OF THIS SECTION.
2. A SHAREHOLDER ENTITLED TO OCCUPANCY IN THE PROJECT SHALL BE ENTI-
TLED TO REQUEST AN ABSENTEE BALLOT TO CAST A BALLOT IN ANY SHAREHOLDER
VOTE. SUCH ABSENTEE BALLOT SHALL BE DELIVERED OR MAILED ONLY TO THE
PRIMARY RESIDENCE ADDRESS OF A SHAREHOLDER ENTITLED TO OCCUPANCY IN THE
PROJECT. AN ABSENTEE BALLOT CAST PURSUANT TO THIS SUBDIVISION SHALL BE
SEALED WITHIN TWO ENVELOPES, SHALL CONTAIN THE SIGNATURE OF THE SHARE-
HOLDER CASTING THE VOTE, AND SHALL BE MAILED TO A NEUTRAL THIRD PARTY
NOT RUNNING FOR A POSITION ON THE BOARD OF DIRECTORS.
3. PROXY VOTING SHALL NOT BE PERMITTED IN AN ELECTION FOR A POSITION
ON A BOARD OF DIRECTORS, FOR DISSOLUTION OF THE COMPANY, FOR THE AUTHOR-
IZATION OF A FEASIBILITY STUDY, FOR AN OFFERING PLAN INCLUDING A RED
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10975-02-1
S. 6412 2
HERRING OR BLACK BOOK, OR ANY DOCUMENT OFFERED IN PLACE OF AN OFFERING
PLAN AS PERMITTED BY THE ATTORNEY GENERAL.
4. IN-PERSON BALLOTS SHALL PRODUCE A PAPER RECORD WHICH MAY BE AUDITED
IN THE CASE OF A CONTESTED ELECTION RESULT.
5. NO OTHERWISE-ELIGIBLE PERSON SHALL BE PREVENTED FROM BEING A CANDI-
DATE FOR, BEING ELECTED TO, OR SERVING ON A BOARD OF DIRECTORS BASED
SOLELY ON THAT PERSON OWING OR HAVING OWED ANY AMOUNT OF ANY FORM OF
ARREARS TO THE HOUSING COMPANY, UNLESS, AT THE TIME OF NOMINATION, THAT
PERSON CURRENTLY OWES AN AMOUNT OF BONA FIDE ARREARS GREATER THAN THE
EQUIVALENT OF TWO MONTHS OF THAT PERSON'S MONTHLY MAINTENANCE. NOTHING
IN THIS SUBDIVISION SHALL BE CONSTRUED TO REQUIRE OR MANDATE ANY HOUSING
COMPANY TO ADOPT BYLAWS, RULES, POLICIES, OR PROCEDURES RESTRICTING ANY
PERSON'S ELIGIBILITY TO BE NOMINATED, ELECTED, OR SERVE ON A BOARD OF
DIRECTORS. NOTHING CONTAINED IN THIS SUBDIVISION SHALL BE A BASIS IN
ITSELF TO DENY SUCH ELIGIBILITY TO ANY PERSON.
6. FOR ANY SHAREHOLDER VOTE REQUIRING A SPECIFIC PERCENTAGE OF DWELL-
ING UNITS, THE TERM "DWELLING UNITS" SHALL MEAN ALL DWELLING UNITS FOR
WHICH SHARES HAVE BEEN ISSUED, REGARDLESS OF WHETHER SUCH DWELLING UNITS
ARE OCCUPIED OR VACANT.
§ 2. The private housing finance law is amended by adding a new
section 35-a to read as follows:
§ 35-A. REQUIREMENTS REGARDING DISSOLUTION. MUTUAL HOUSING COMPANIES
CONSIDERING DISSOLUTION AND/OR RECONSTITUTION PURSUANT TO SECTION THIR-
TY-FIVE OF THIS ARTICLE SHALL BE SUBJECT TO THE FOLLOWING REQUIREMENTS:
1. ANY VOTE FOR DISSOLUTION OF THE COMPANY, OR TO AUTHORIZE A FEASI-
BILITY STUDY, A PRELIMINARY OFFERING PLAN WHICH MAY BE REFERRED TO AS A
RED HERRING, A FINAL OFFERING PLAN WHICH MAY BE REFERRED TO AS A BLACK
BOOK, OR A PROXY STATEMENT, OR TO SEND A NOTICE OF INTENT TO DISSOLVE TO
THE COMMISSIONER OR SUPERVISING AGENCY SHALL REQUIRE THE APPROVAL OF
EIGHTY PERCENT OF ALL DWELLING UNITS OWNED BY THE MUTUAL HOUSING COMPA-
NY.
2. NO FUNDS FROM THE OPERATING BUDGET OF THE MUTUAL HOUSING COMPANY
SHALL BE USED FOR THE PREPARATION OR DISTRIBUTION OF A FEASIBILITY
STUDY, A PRELIMINARY OFFERING PLAN OR RED HERRING, A FINAL OFFERING PLAN
OR BLACK BOOK, A PROXY STATEMENT, OR A NOTICE OF INTENT TO DISSOLVE, OR
TO PAY FOR ANY SERVICES RELATED TO EVALUATION OF, PREPARATION FOR, OR
EXECUTION OF DISSOLUTION AND/OR RECONSTITUTION PURSUANT TO SECTION THIR-
TY-FIVE OF THIS ARTICLE, INCLUDING BUT NOT LIMITED TO LEGAL SERVICES.
3. NO VOTE UNDER SUBDIVISION ONE OF THIS SECTION, SHALL OCCUR WITHIN
FIVE YEARS FOLLOWING A VOTE UNDER SUBDIVISION ONE OF THIS SECTION THAT
FAILED.
§ 3. Section 17 of the private housing finance law is amended by
adding two new subdivisions 4 and 5 to read as follows:
4. NOTWITHSTANDING THE PROVISIONS OF ANY LAW, GENERAL OR SPECIAL, A
BOARD OF DIRECTORS OF A COMPANY CREATED PURSUANT TO THE PROVISIONS OF
THIS ARTICLE SHALL:
(A) HOLD AT LEAST SIX MEETINGS OF ITS MEMBERS ANNUALLY. SUCH MEETINGS
SHALL BE OPEN TO THE SHAREHOLDERS AND RESIDENTS, EXCEPT THAT THEY MAY
INCLUDE EXECUTIVE SESSIONS OPEN ONLY TO DIRECTORS FOR THE SOLE PURPOSE
OF DISCUSSING CONFIDENTIAL PERSONNEL ISSUES, LEGAL ADVICE AND COUNSEL
FROM AN ATTORNEY TO WHOM THE HOUSING COMPANY IS A CLIENT, OR CONFIDEN-
TIAL ISSUES AFFECTING INDIVIDUAL SHAREHOLDERS OR RESIDENTS, OR CONTRACT
NEGOTIATION.
(B) FILE WITH THE COMMISSIONER OR THE SUPERVISING AGENCY, AS THE CASE
MAY BE, A RECORD OF ANY VOTE ON A RESOLUTION OF SUCH BOARD, INCLUDING
S. 6412 3
SPECIFICATION OF HOW EACH DIRECTOR VOTED. SUCH RECORD SHALL BE A MATTER
OF PUBLIC RECORD.
(C) PROMPTLY GIVE NOTICE OF AND MAKE AVAILABLE TO ALL SHAREHOLDERS ANY
COMMUNICATION TO THE HOUSING COMPANY FROM THE COMMISSIONER OR THE SUPER-
VISING AGENCY, AS THE CASE MAY BE, OR THE OFFICE OF THE ATTORNEY GENER-
AL, REGARDING REGULATIONS, CHANGES IN REGULATIONS, TAXATION, FINANCES,
REFINANCING, OR, IN THE EVENT OF A PROPOSED DISSOLUTION AND REINCORPORA-
TION, THE REVIEW OF ANY VERSION OF AN OFFERING PLAN.
(D) INVESTIGATE ANY SUBSTANTIVE ALLEGATION THAT A TENANT IS NOT OCCU-
PYING HIS OR HER DWELLING UNIT AS HIS OR HER PRIMARY RESIDENCE.
5. (A) NO HOUSING COMPANY SHALL INTERFERE WITH THE RIGHT OF A SHARE-
HOLDER OR TENANT TO FORM, JOIN OR PARTICIPATE IN THE LAWFUL ACTIVITIES
OF ANY GROUP, COMMITTEE OR OTHER ORGANIZATION FORMED TO PROTECT THE
RIGHTS OF SHAREHOLDERS AND TENANTS; NOR SHALL ANY HOUSING COMPANY
HARASS, PUNISH, PENALIZE, DIMINISH, OR WITHHOLD ANY RIGHT, BENEFIT OR
PRIVILEGE OF A SHAREHOLDER OR TENANT UNDER THEIR PROPRIETARY LEASE OR
TENANCY FOR EXERCISING SUCH RIGHT.
(B) SHAREHOLDER AND/OR TENANTS' GROUPS, COMMITTEES OR OTHER SHAREHOLD-
ER AND/OR TENANTS' ORGANIZATIONS SHALL HAVE THE RIGHT TO MEET WITHOUT
BEING REQUIRED TO PAY A FEE IN ANY LOCATION ON THE PREMISES INCLUDING A
COMMUNITY OR SOCIAL ROOM WHERE USE IS NORMALLY SUBJECT TO A FEE WHICH IS
DEVOTED TO THE COMMON USE OF ALL SHAREHOLDERS AND/OR TENANTS IN A PEACE-
FUL MANNER, AT REASONABLE HOURS AND WITHOUT OBSTRUCTING ACCESS TO THE
PREMISES OR FACILITIES. NO HOUSING COMPANY SHALL DENY SUCH RIGHT.
(C) THE BOARD OF DIRECTORS SHALL TAKE ALL NECESSARY AND APPROPRIATE
ACTIONS TO ENSURE THAT A MANAGER OR AGENT OF THE HOUSING COMPANY
COMPLIES WITH THE REQUIREMENTS IN THIS SUBDIVISION.
§ 4. 1. Notwithstanding any provision of law to the contrary, no
company or urban rental company, as such terms are defined in section 12
of the private housing finance law, shall be dissolved pursuant to the
provisions of section 35 of such law or shall undergo semi-privatization
pursuant to 28 RCNY 3-14(i)(15), or shall initiate any actions or
proceedings related to dissolution or semi-privatization, including but
not limited to, conducting a vote to authorize a feasibility study;
submitting a preliminary offering plan to the attorney general for
approval; distributing a preliminary offering plan to shareholders;
distributing a final offering plan or proxy statement to shareholders;
submitting a notice of intent to dissolve to the commissioner of housing
or supervising agency; committing, promising, or expending funds in any
way for the purposes of dissolution or semi-privatization; or holding
any of the required notice meetings during the state disaster emergency
declared pursuant to executive order 202 of 2020 in response to the
outbreak of novel coronavirus, COVID-19.
2. As used in this act, the term "semi-privatization" means dissolving
as a mutual housing company and transferring the property to a housing
development fund company organized pursuant to article XI of the private
housing finance law.
§ 5. This act shall take effect immediately; provided, however,
sections one, two and three of this act shall take effect on the nineti-
eth day after it shall have become a law.
