BILL NUMBER: S4910

SPONSOR: FELDER
 
TITLE OF BILL:

An act to amend the general business law, in relation to the conversion
of certain real property to cooperative or condominium ownership in the
city of New York

 
PURPOSE:

To permit occupied buildings to convert to cooperative or condominium
ownership upon purchase agreements being executed and delivered by twen-
ty-five percent of the bona fide tenants in occupancy and written
consent obtained from fifty-one percent of bona fide tenants in occupan-
cy.

 
SUMMARY OF PROVISIONS:

Section 1: Amends section 352-eeee of the general business law by
providing that for a Non-eviction plan for an occupied building , a plan
may not be declared effective for conversion to cooperative or condomin-
              

ium ownership until written purchase agreements have been executed and
delivered for at least twenty-five percent of all dwelling units in the
building or group of buildings or development by bona fide tenants in
occupancy on the date a letter was issued by the attorney general
accepting the plan for filing and written consent obtained by the bona
fide tenants in occupancy of fifty-percent of the dwelling units in the
building or group of buildings or development on the date a letter was
issued by the attorney general accepting the plan for filing.

Section 2: Amends section 352-eeee of the general business law by
providing that for a Non-eviction plan for an occupied building, the
offering plan may not be declared effective until written purchase
agreements have been executed and delivered for at least twenty-five
percent of all dwelling units in the building or group of buildings or
development by bona fide tenants in occupancy on the date a letter was
issued by the attorney general accepting the plan for filing and written
consent obtained by the bona fide tenants in occupancy of fifty-one
percent to the dwelling units in the building or group of buildings or
development on the date a letter was issued by the attorney general
accepting the plan for filing.

Section three sets an effective date 19 days after it shall become law.

 
JUSTIFICATION:

In June 2019, General Business Law Section 352-eeee was amended to
provide that in New York City, an occupied multifamily rental building
cannot be converted into a cooperative or condominium unless fifty-one
percent (51%) of the apartments are entered into contract by tenants who
were occupying the building at the time that the offering plan was
accepted.

Previously, these conversions added a very important option to real
property ownership in New York City. In many instances, it became viable
to convert a rental building into a cooperative or condominium building.
This conversion would enable the owner of the building to sell apart-
ments to the tenants or the public, and the tenants or the public would
purchase apartments. This created an affordable home ownership option
for purchasers since the prices for these apartments would usually be
significantly less than the prices for single family homes. At the same
time, tenants who purchased were able to stay in their homes that many
were living in for years prior. This resulted in a win-win situation for
everyone involved.

Unfortunately, due to the 2019 amendment, the sponsor is unaware of any
cooperative or condominium conversions in New York City since the amend-
ment went into effect on June 16, 2019 because it is virtually impossi-
ble to obtain purchase agreements from 51V of the tenants in occupancy.
Despite this, there are tenants who wish to purchase their unit but
because of this strict restriction added into the law, they cannot. Many
of these tenants are then forced to leave New York City to purchase an
affordable home.

This bill will reduce the percentage from 51% to 25% of the tenants in
occupancy who must have accepted a purchase agreement. An additional
stipulation is that 51% of the tenants in occupancy must consent to the
conversion of the building to a cooperative or condominium. This will
result and benefit to everyone involved:

1. Tenants in occupancy will be able to purchase their apartment at an
affordable price;

2. The owners of the building, in contemplation of the sales, will
improve the conditions of the buildings to get more sales. The sales
will result in funds they can use for such improvement,

3. There will be an increase in jobs for workers and manual laborers as
owners begin to renovate and improve conditions in these buildings; and

4. The conversion of a rental building to a cooperative or condominium
building will increase the property taxes and income from the sales of
the units will generate transfer taxes which will both New York City and
New York State.

This bill would still require written consent from tenants in occupancy
of 51% of the units. Therefore, a majority of the tenants in the build-
ing would have to approve this change before any sales would take place.
In addition, at least twenty-five percent of the units in the condomin-
ium would thereafter be owned by former tenants and would then have more
say over how the building is operating, as unit owners. Accordingly, the
building would likely be maintained at a higher level by those living in
the building.

 
LEGISLATIVE HISTORY:

New Bill

 
FISCAL IMPLICATIONS:

The sales of the units will generate transfer taxes for both New York
City and New York State.

 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law.