Bill Text: NY S07830 | 2021-2022 | General Assembly | Introduced
Bill Title: Relates to certain duties of a board of directors of a mutual housing company; prohibits certain mutual housing companies from voluntarily dissolving during the COVID-19 state disaster emergency.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2022-03-18 - SIGNED CHAP.167 [S07830 Detail]
Download: New_York-2021-S07830-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 7830 IN SENATE January 12, 2022 ___________ Introduced by Sen. KAVANAGH -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT to amend the private housing finance law, in relation to certain duties of a board of directors of a mutual housing company and prohib- iting certain mutual housing companies from voluntarily dissolving during the state disaster emergency declared in response to the outbreak of COVID-19; and to amend a chapter of the laws of 2021 amending the private housing finance law relating 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, as proposed in legislative bills numbers S. 6412 and A. 7272, in relation to mutual housing companies and the effectiveness thereof The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 13-c of the private housing finance law, as added 2 by a chapter of the laws of 2021 amending the private housing finance 3 law relating to voting, election and referendum procedures; to require- 4 ments regarding mutual housing companies considering dissolution and/or 5 reconstitution; to certain duties of a board of directors of a limited- 6 profit housing company; and to prohibiting certain limited-profit hous- 7 ing companies from voluntarily dissolving during the state disaster 8 emergency declared in response to the outbreak of COVID-19, as proposed 9 in legislative bills numbers S. 6412 and A. 7272, is amended to read as 10 follows: 11 § 13-c. Voting, election and referendum procedures. 1. Any shareholder 12 vote involving the election of board members, by-law amendments, or on 13 dissolution or reconstitution or conversion of a mutual housing company 14 including any votes for a special assessment pursuant to subdivisions 15 one, two or three of section thirty-five-a of this article shall be 16 conducted using secret ballots. Such ballots shall be cast in-person by EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD10975-03-2S. 7830 2 1 tenants entitled to [occupancy] vote in the project; unless such tenant 2 casts such ballot using an absentee ballot issued pursuant to subdivi- 3 sion two of this section. 4 2. [A] Any shareholder entitled to [occupancy in the project shall be5entitled to] vote may request an absentee ballot to cast a ballot in any 6 shareholder vote. Such an absentee ballot [shall] may be delivered or 7 mailed only to the primary residence address of [a] the shareholder 8 entitled to [occupancy] vote in the project. An absentee ballot cast 9 pursuant to this subdivision shall be sealed within two envelopes[,10shall contain the signature of the shareholder casting the vote,] and 11 shall be mailed or delivered to a neutral third party not running for a 12 position on the board of directors. The outer envelope containing the 13 ballot shall instruct the shareholder to affix their signature to the 14 outer envelope only, and further instruct the shareholder not to sign 15 the ballot itself. 16 3. Proxy voting shall not be permitted in [an election] a vote for a 17 position on a board of directors, for dissolution or reconstitution of 18 the mutual housing company, for the authorization of a feasibility 19 study, [for an offering plan including a red herring or black book, or20any document offered in place of an offering plan as permitted by] for 21 the authorization to develop and submit to the attorney general an 22 offering plan for dissolution and reconstitution of the mutual housing 23 company, for the authorization to develop and submit to the attorney 24 general a proxy statement or any other documents permitted by the attor- 25 ney general instead of such offering plan, or any other vote relating to 26 dissolution or reconstitution required by the regulations of the commis- 27 sioner or supervising agency, or for an assessment approved pursuant to 28 section thirty-five-a of this article to fund the development, 29 submission, completion, or distribution of any of the aforementioned 30 documents. 31 4. [In-person] All ballots shall produce a paper or electronic record 32 which may be audited in the case of a contested election result. 33 5. No otherwise-eligible person shall be prevented from being a candi- 34 date for, being elected to, or serving on a board of directors based 35 solely on that person owing or having owed any amount of any form of 36 arrears to the mutual housing company, unless, at the time of nomi- 37 nation, that person currently owes an amount of [bona fide] arrears 38 greater than the equivalent of two months of that person's monthly main- 39 tenance. Nothing in this subdivision shall be construed to require or 40 mandate any mutual housing company to adopt bylaws, rules, policies, or 41 procedures restricting any person's eligibility to be nominated, 42 elected, or serve on a board of directors. [Nothing contained in this43subdivision] No grounds other than the above arrearages in excess of two 44 months maintenance shall be a basis in itself to deny such eligibility 45 to any person unless specifically incorporated in regulations promulgat- 46 ed by or procedures approved by the commissioner or supervising agency. 47 Neither a mutual housing company nor the commissioner or the supervising 48 agency may modify in any way the above limitation so as to restrict 49 eligibility on the basis of fewer than two months of arrears. 50 [6. For any shareholder vote requiring a specific percentage of dwell-51ing units, the term "dwelling units" shall mean all dwelling units for52which shares have been issued, regardless of whether such dwelling units53are occupied or vacant.] 54 § 2. Section 35-a of the private housing finance law, as added by a 55 chapter of the laws of 2021 amending the private housing finance law 56 relating to voting, election and referendum procedures; to requirementsS. 7830 3 1 regarding mutual housing companies considering dissolution and/or recon- 2 stitution; to certain duties of a board of directors of a limited-profit 3 housing company; and to prohibiting certain limited-profit housing 4 companies from voluntarily dissolving during the state disaster emergen- 5 cy declared in response to the outbreak of COVID-19, as proposed in 6 legislative bills numbers S. 6412 and A. 7272, is amended to read as 7 follows: 8 § 35-a. Requirements regarding dissolution. Mutual housing companies 9 considering dissolution and/or reconstitution pursuant to section thir- 10 ty-five of this article shall be subject to the following requirements: 11 1. Any preliminary vote [for dissolution of the company, or] to 12 authorize a feasibility study, [a preliminary offering plan which may be13referred to as a red herring, a final offering plan which may be14referred to as a black book, or a proxy statement, or to send a notice15of intent to dissolve to the commissioner or supervising agency shall16require the approval of eighty percent] or to approve a special assess- 17 ment to fund such feasibility study shall require the approval of a 18 minimum of two-thirds of all dwelling units [owned] for which shares 19 have been issued by the mutual housing company, regardless of whether 20 such dwelling units are occupied or vacant, provided however, that where 21 the shareholder of record is deceased, any vote attributable to the 22 dwelling unit shall be discounted, both in the number of votes cast and 23 in the total number of dwelling units upon which the vote is calculated, 24 until such time as a new shareholder of record is determined for that 25 dwelling unit. 26 2. Except as provided for in subdivision seven of this section, any 27 vote to authorize the funding, development, and submission to the attor- 28 ney general of an offering plan for dissolution and reconstitution of 29 the mutual housing company, or to authorize the funding, development, 30 and submission to the attorney general of a proxy statement, or any 31 other documents permitted by the attorney general instead of such offer- 32 ing plan, or any other preliminary vote for review by the commissioner 33 or supervising agency relating to the dissolution or reconstitution 34 required by the regulations of the commissioner or supervising agency, 35 shall require the approval of eighty percent of all dwelling units for 36 which shares have been issued, regardless of whether such dwelling units 37 are occupied or vacant, provided however, that where the shareholder of 38 record is deceased, any vote attributable to the dwelling unit shall be 39 discounted, both in the number of votes cast and in the total number of 40 dwelling units upon which the vote is calculated, until such time as a 41 new shareholder of record is determined for that dwelling unit. 42 3. No funds from the operating budget of the mutual housing company 43 shall be used for the preparation or distribution of a feasibility 44 study, a preliminary or filed offering plan [or red herring, a final45offering plan or black book] for dissolution and reconstitution of the 46 mutual housing company, a proxy statement or any other documents permit- 47 ted by the attorney general instead of such offering plan, or a notice 48 of intent to dissolve, or to pay for any services related to evaluation 49 of, preparation for, or execution of dissolution and/or reconstitution 50 pursuant to section thirty-five of this article, including but not 51 limited to legal services, but such funds may only be raised by special 52 assessment voted on and applicable to all shareholders using such proce- 53 dures as required by regulations of the commissioner or the supervising 54 agency which shall not allow proxies. 55 [3.] 4. Except as provided for in subdivision seven of this section, 56 any vote authorized by the regulations promulgated by the commissionerS. 7830 4 1 or the supervising agency that constitutes the vote for submission of a 2 certificate of no objection, consent to dissolution or reconstitution, 3 for submission to the attorney general of an offering plan for dissol- 4 ution and reconstitution of the mutual housing company, or for 5 submission to the attorney general of a proxy statement or any other 6 documents permitted by the attorney general instead of such offering 7 plan shall require the approval of eighty percent of all dwelling units 8 for which shares have been issued by the mutual housing company, regard- 9 less of whether such dwelling units are occupied or vacant, provided 10 however, that where the shareholder of record is deceased, any vote 11 attributable to the dwelling unit shall be discounted, both in the 12 number of votes cast and in the total number of dwelling units upon 13 which the vote is calculated, until such time as a new shareholder of 14 record is determined for that dwelling unit. 15 5. No vote [under subdivision] as set forth pursuant to subdivision 16 one, two, three or four of this section, shall occur within five years 17 following a vote [under subdivision one of this section] undertaken 18 pursuant to such subdivisions that failed to pass. No vote as set forth 19 pursuant to subdivision seven of this section shall occur within three 20 years following a vote undertaken pursuant to such subdivision that 21 failed to pass. 22 6. For any vote pursuant to subdivision one, two, three or seven of 23 this section, the proposal to be voted on shall state that the cost of 24 the action to be approved will be paid by a special assessment on share- 25 holders, that approval of the proposal authorizes the mutual housing 26 company to impose the assessment, and shall include the total dollar 27 amount of the proposed assessment and the dollar amount per dwelling 28 unit that will be imposed to fund the action if it is approved. Once an 29 assessment has been so approved by shareholder vote, the mutual housing 30 company shall not increase the amount of the approved assessment except 31 by further vote subject to the same procedures and threshold for 32 approval as were required for the vote initially approving the assess- 33 ment. 34 7. Notwithstanding any other provision to the contrary, any final or 35 preliminary vote regarding dissolution and reconstitution that involves 36 a conversion to a housing company organized under article eleven of this 37 chapter including, but not limited to, votes on the authorization to 38 fund, develop, and submit any required filing to the attorney general, 39 which pursuant to the conversion shall remain under the supervision of 40 the commissioner or the supervising agency, shall only require a vote of 41 a minimum of two thirds of the dwelling units for which shares have been 42 issued by the mutual housing company regardless of whether such dwelling 43 units are occupied or vacant, provided however, that where the share- 44 holder of record is deceased, any vote attributable to the dwelling unit 45 shall be discounted, both in the number of votes cast and in the total 46 number of dwelling units upon which the vote is calculated, until such 47 time as a new shareholder of record is determined for that dwelling 48 unit. Provided further however, that any dissolution and reconstitution 49 to a housing company organized under article eleven of this chapter as 50 provided by this subdivision shall not utilize funds from the operating 51 budget of such housing company to fund the preparation, creation or 52 distribution of any materials required for a vote to authorize any 53 dissolution and reconstitution to a housing company organized under 54 article eleven of this chapter as provided by this subdivision, and the 55 preparation, creation or distribution of such materials shall be 56 financed by special assessment voted on and applicable to all sharehold-S. 7830 5 1 ers as provided by subdivision three of this section, unless such hous- 2 ing company took any actions toward dissolution or reconstitution prior 3 to the date this section took effect. 4 § 3. Subdivisions 4 and 5 of section 17 of the private housing finance 5 law, as added by a chapter of the laws of 2021 amending the private 6 housing finance law relating to voting, election and referendum proce- 7 dures; to requirements regarding mutual housing companies considering 8 dissolution and/or reconstitution; to certain duties of a board of 9 directors of a limited-profit housing company; and to prohibiting 10 certain limited-profit housing companies from voluntarily dissolving 11 during the state disaster emergency declared in response to the outbreak 12 of COVID-19, as proposed in legislative bills numbers S. 6412 and A. 13 7272, are amended to read as follows: 14 4. Notwithstanding the provisions of any law, general or special, a 15 board of directors of a mutual housing company created pursuant to the 16 provisions of this article shall: 17 (a) Hold at least [six] four meetings of [its members] the board of 18 directors annually. Such meetings shall be open to [the] all sharehold- 19 ers and residents, except that they may include executive sessions open 20 only to directors for the sole purpose of discussing confidential 21 personnel issues, legal advice and counsel from an attorney to whom the 22 mutual housing company is a client, or confidential issues affecting 23 individual shareholders or residents, or contract negotiation. Any such 24 board of directors meetings held in addition to the minimum number of 25 four as required by this section shall be open to shareholders and resi- 26 dents, and subject to the aforementioned exception regarding executive 27 sessions. 28 (b) [File with the commissioner or the supervising agency, as the case29may be,] Maintain a record of any vote on a resolution of such board, 30 including specification of how each director voted. Such record shall be 31 a matter of public record which will be made available as a paper copy 32 at the request of a shareholder and will also be posted on a website 33 that is accessible by all shareholders maintained by the board of direc- 34 tors, provided however, that there may be redactions to the extent 35 minutes would reflect the discussions held in executive session. 36 (c) Promptly [give notice of and make] post on a website available to 37 all shareholders and maintained by the board of directors to communicate 38 with shareholders, (i) any [communication to] request by the mutual 39 housing company [from] to the commissioner or the supervising agency, as 40 the case may be, [or the office of the attorney general, regarding] and 41 any final resolution regarding such request, when the request relates to 42 a change in regulations, [changes in regulations,] a change in its real 43 estate taxation, [finances,] in a refinancing, financing being offered 44 by the commissioner, supervising agency, or any other agency or, [in the45event of] a proposed dissolution and [reincorporation, the review of any46version of an offering plan] reconstitution, (ii) any deficiency letters 47 issued by the office of the attorney general to the mutual housing 48 company regarding an offering plan for dissolution and reconstitution of 49 the mutual housing company, any deficiency letters issued by the office 50 of the attorney general to the mutual housing company regarding a proxy 51 statement or any other documents permitted by the attorney general 52 instead of such offering plan, and any of the mutual housing company's 53 resubmissions of such offering plan or proxy statement or any other 54 documents permitted by the attorney general instead of such offering 55 plan in response to such deficiency letters issued by the office of theS. 7830 6 1 attorney general, or (iii) any offer of financing from the commissioner, 2 supervising agency, or any other agency to the mutual housing company. 3 [(d) Investigate any substantive allegation that a tenant is not occu-4pying his or her dwelling unit as his or her primary residence.] 5 5. (a) No mutual housing company shall interfere with the right of a 6 shareholder or tenant to form, join or participate in the lawful activ- 7 ities of any group, committee or other organization formed to protect 8 the rights of shareholders and tenants; nor shall any mutual housing 9 company harass, punish, penalize, diminish, or withhold any right, bene- 10 fit or privilege of a shareholder or tenant under their proprietary 11 lease or tenancy for exercising such right. 12 (b) Shareholder and/or tenants' groups, committees or other sharehold- 13 er and/or tenants' organizations shall have the right to meet without 14 being required to pay a fee in any location on the premises including a 15 community or social room where use is normally subject to a fee which is 16 devoted to the common use of all shareholders and/or tenants in a peace- 17 ful manner, at reasonable hours and without obstructing access to the 18 premises or facilities. [No housing company shall deny such right] 19 Nothing in this subdivision shall be construed to limit or impede the 20 authority of the board of directors to act on behalf of the mutual hous- 21 ing company or regulation by the commissioner or supervising agency with 22 respect to the recognition of a tenant group representing all tenants, 23 or to require the continued recognition of a cooperators' advisory coun- 24 cil formed pursuant to subdivision one of section thirty-two-a of this 25 article when superseded by the election of a board of directors. 26 [(c) The board of directors shall take all necessary and appropriate27actions to ensure that a manager or agent of the housing company28complies with the requirements in this subdivision.] 29 § 4. Section 32-a of the private housing finance law is amended by 30 adding a new subdivision 9 to read as follows: 31 9. Promulgate regulations to require each tenant use their dwelling 32 unit as their primary residence to maintain their right of continued 33 occupancy or be subject to eviction in a court of competent jurisdiction 34 by a mutual housing company. 35 § 5. Sections 4 and 5 of a chapter of the laws of 2021 amending the 36 private housing finance law relating to voting, election and referendum 37 procedures; to requirements regarding mutual housing companies consider- 38 ing dissolution and/or reconstitution; to certain duties of a board of 39 directors of a limited-profit housing company; and to prohibiting 40 certain limited-profit housing companies from voluntarily dissolving 41 during the state disaster emergency declared in response to the outbreak 42 of COVID-19, as proposed in legislative bills numbers S. 6412 and A. 43 7272, are amended to read as follows: 44 § 4. 1. Notwithstanding any provision of law to the contrary, no mutu- 45 al housing company or urban rental company, as such terms are defined in 46 section 12 of the private housing finance law, shall be dissolved pursu- 47 ant to the provisions of section 35 of such law or shall undergo semi- 48 privatization pursuant to 28 RCNY 3-14(i)(15), or shall initiate any 49 actions or proceedings related to dissolution or semi-privatization, 50 including but not limited to, conducting a vote to authorize a feasibil- 51 ity study; submitting a preliminary offering plan to the attorney gener- 52 al for approval; distributing a preliminary offering plan to sharehold- 53 ers; distributing a final offering plan or proxy statement to 54 shareholders; submitting a notice of intent to dissolve to the commis- 55 sioner of housing or supervising agency; committing, promising, or 56 expending funds in any way for the purposes of dissolution or semi-pri-S. 7830 7 1 vatization; or holding any of the required notice meetings during the 2 state disaster emergency declared pursuant to executive order 202 of 3 2020 in response to the outbreak of novel coronavirus, COVID-19. 4 2. As used in this [act] section, the term "semi-privatization" means 5 dissolving as a mutual housing company and transferring the property to 6 a housing development fund company organized pursuant to article XI of 7 the private housing finance law. 8 § 5. This act shall take effect immediately; provided, however, 9 sections one, two and three of this act shall take effect on the nineti- 10 eth day after it shall have become a law and shall apply to any pending 11 or future dissolution or reconstitution proceedings on and after such 12 date; provided, however, that where a mutual housing company taking 13 certain intermediate votes were appropriately performed prior to the 14 effective date of the act, the provision in effect at the time those 15 votes were taken shall apply to those acts. 16 § 6. Severability. If any provision of this act, or any application 17 of any provision of this act, is held to be invalid, that shall not 18 affect the validity or effectiveness of any other provision of this act, 19 any other application of any provision of this act, or any other 20 provision of any law or code amended by this act. 21 § 7. This act shall take effect immediately, provided however that 22 sections one, two, three and four of this act shall take effect on the 23 same date and in the same manner as a chapter of the laws of 2021 amend- 24 ing the private housing finance law relating to voting, election and 25 referendum procedures; to requirements regarding mutual housing compa- 26 nies considering dissolution and/or reconstitution; to certain duties of 27 a board of directors of a limited-profit housing company; and to prohib- 28 iting certain limited-profit housing companies from voluntarily dissolv- 29 ing during the state disaster emergency declared in response to the 30 outbreak of COVID-19, as proposed in legislative bills numbers S. 6412 31 and A. 7272, takes effect.
