The Real Deal New York

De Blasio wants monitors to oversee 1,200 privately-owned co-ops

HDFC owners are pushing back
February 27, 2017 12:00PM

Mayor Bill de Blasio (Credit: Getty Images)

Mayor Bill de Blasio is rolling out a plan two years in the making to impose strict new regulations on some 1,200 privately owned co-ops, a move critics say is a brazen effort to give a bogus boost to his affordable-housing numbers.

The co-ops are part of the city’s Housing Development Fund Corporation, which the city established in the 1980s to sell off derelict buildings in places like Harlem, Washington Heights and the Lower East Side for as little as $250 per unit, the New York Post reported.

The properties had been abandoned by absentee landlords or seized from owners delinquent on their tax bills. The city sold the buildings to residents with restrictions, such as a ban on selling to developers and income limits on buyers. The properties also receive tax breaks worth tens of thousands of dollars a year.

Some co-op buildings have prospered, but the city says 27 percent of them are in “significant distress” due to mismanagement or other problems.

Under de Blasio’s proposal, these buildings would sign 40-year agreements with City Hall that would put them under the watch of a nonprofit monitor that the city would choose, and the co-op would pay for.

The monitor would have the power to approve co-op sales or leases in the building – including commercial leases – and have authority over board votes, leaving homeowners with few options to challenge the monitor’s decisions.

The city would also put in place a cap on all apartment sales prices for the first time and impose a flip tax requiring that 30 percent of the profit from an apartment sale be funneled back to the co-op. Under the new regulations, the maximum a seller could charge for a one-bedroom would be $347,636 this year. Buildings would also be forced to raise the maintenance charges by at least 2 percent a year.

But owners and elected officials are pushing back. A group of seven City Council members from Manhattan wrote a letter last week to the incoming Housing Preservation and Development commissioner demanding the agency halt the process in order to “ensure real meaningful input” from co-op residents.

“There was virtually no consultation with HDFC shareholders as this regulatory agreement was being crafted, and it was essentially sprung on them after it was already completed,” Council member Corey Johnson told the Post.

John McBride, a co-op owner who leads the opposition HDFC coalition, said the city “is attempting a land grab and it’s not progressive because [it is] … attacking the property rights of low, moderate and middle income people and trying to take the only thing that they have in the world.”

A spokesperson for City Hall said the proposal was meant to protect HDFC co-ops.

“Without strong reforms, we risk losing one of the most valuable sources of affordable homeownership — more than a quarter of which are in the brink of financial insolvency. The goal is to get all HDFCs, which receive significant public benefit, on solid footing and ensure their long-term affordability,” said spokesperson Melissa Grace.

She added that the plan “has nothing to do with ‘boosting’ the housing plan numbers.” [NYP]Rich Bockmann

Clarification: The headline was updated to reflect that not all 1,200 co-ops are considered to be in distress.