City Council Members to Introduce Bills on HDFC Co-op Transparency

Legislation includes requirements for public reporting on average sale price of units and tax arrears

Councilman Mark Levine is sponsoring legislation on HDFC transparency.

Councilman Mark Levine is sponsoring legislation on HDFC transparency. (William Alatriste/NYC Council)

The long-running debate on how to make sure that Housing Development Fund Corporation co-ops remain successful low-income home-ownership vehicles may soon get a boost from something it’s been conspicuously missing: cold, hard data.

“It’s a murky world right now,” Manhattan Councilman Mark Levine told the Observer. While problems with HDFCs are “one of the single greatest issues for [his] constituents,” the lack of clear information means he and his colleagues have to rely on hearsay and accounts from affected shareholders.

That is why Mr. Levine, who has 297 HDFCs in his district, and other members of the Affordable Housing Preservation Task Force are introducing three bills to the City Council on Wednesday that would ramp up reporting requirements on the co-ops. 

One bill would require the Department of Housing Preservation and Development (HPD) to publicly report the median and average maximum incomes, resale prices, maintenance fees, and rents set in regulatory agreements with HDFCs. Currently, only a small percentage of city HDFCs, 175 of around 1,200 total, have these agreements.

The other bills would mandate disclosure of the average sale price of an HDFC unit per Community Board district, as well as information on tax arrears and outstanding Housing Maintenance Code violations affecting the HDFCs.

In testimony last month before the State Assembly Committee on Housing, the city’s deputy commissioner of Housing Preservation and Development, Anne-Marie Hendrickson, admitted that despite “two-thirds” of HDFCs functioning well, “there is a subset that is performing poorly and heading towards, or are already, in distress.”

The residential corporations are owned and governed by the tenant shareholders, with shareholder boards that run their day-to-day operation. HPD, citing that it had not yet seen the legislation, declined to comment.

Jason Wu, an attorney with the Legal Aid Society, called the measures “ a good first step in terms of collecting information,” adding that Legal Aid was “hopeful the next steps will address some of the issues we’ve identified.”

These issues include opaque shareholder boards that mismanage funds and fail to maintain the properties, and shareholders who sell what are supposed to be affordable units for high prices.

“It seems that the legislation is designed to keep [HDFCs] affordable,” said Susan Saegert, a professor at the Graduate Center, CUNY, who has done research into affordable housing, but she emphasized that the bigger problem was what she called the city’s reluctance to enforce provisions to help them remain affordable.

Responding to details of the legislation, Gregory Baggett, director of research and advocacy group New York Council for HDFCs, said it seemed like a precursor to another long-sought reform.

“We understood they were going to roll out the regulatory agreements with enforcement and a sales cap,” he said, adding, “This is a good thing that this legislation is being put forth first to gather information, which will open up a much broader debate.”

The sales cap is one reform that has been floated to address the specter of HDFCs falling out of affordability. Currently, the income of a buyer and not the sales price is capped, leading to the possibility of a buyer using a trust fund or other non-income source to purchase the unit.

This and other proposed fixes, like having third-party managers operate HDFCs in cases of board mismanagement and revamping the regulatory agreements between HDFCs and HPD, are under consideration by the task force. “The data will be critical to the policy development,” said Mr. Levine of future legislation.

Bronx Councilman Andrew Cohen said the data on each HDFC will help determine what that particular corporation needs to thrive.

“I don’t know that there’s going to be a one-size-fits-all solution, but we’re building an infrastructure on the municipal side to support these HDFCs,” he said.

For example, the data on tax arrears might point to which HDFCs require outside management to stay solvent, and if “HDFCs are in trouble, they may look at our regulatory agreement as an opportunity,” according to Mr. Cohen.

Mr. Baggett urged data-driven nuance when it comes time to use the information to develop policy.

“When the city chooses to regulate, more often than not they’re going to produce a blunt instrument,” he said.

City Council Members to Introduce Bills on HDFC Co-op Transparency