It's hard to believe that 20 years could have elapsed so quickly. I have witnessed this period from several vantage points: as chair of the Council of New York Cooperatives & Condominiums (CNYC), as an attorney representing boards, as a board president for 17 of those years, and as a life-long New York City resident.
In some respects, nothing has changed: I'm still practicing real estate law; New York City is still having a budget crisis; there is a shortage of affordable housing; there's trouble in the Middle East; the president of the United States is a conservative Republican; the Council of New York Cooperatives is still trying to educate boards and politicians; and my dear friend Mary Ann Rothman is executive director of CNYC.
On the other hand, so much has changed: my sons, one of whom was three and the other a fetus, are now thinking about where they can live in a city with no affordable housing; the number of cooperatives and condominiums has grown from less than 1,000 to over 6,000; the absence of something called a condominium has been replaced with possibly a thousand condominium buildings or complexes with more being formed every day; court decisions that affect co-ops and condos have grown from one or two a year to dozens every month; there are more people living in co-ops and condos than in private houses; the mayor and governor are Republicans; the New York City public school system that prepared me and millions of others for college and graduate school has become a political football where everyone knows who to blame but no one has solutions; and, we now rely on receiving our monthly copy of Habitat for guidance on what's happening in our industry.
In 20 years, CNYC's fundamental mission has not changed, although we have grown geometrically with the growth of co-op and condo boards. During the '80s, we not only were educating these new boards, but were regularly complaining to the attorney general's office. Our fear: that many of the buildings being converted were not being done so on a sound financial base, which would result in serious problems if the market ever collapsed or the sponsors defaulted. We became so concerned that residents of buildings undergoing conversion so misunderstood the process that Art Weinstein and I made a videotape called What to Do When You Get a Red Herring.
Unfortunately, our concern was well-founded. By the end of the '80s, following the stock market crash of 1987 and the ensuing recession, many sponsors did default and it almost destroyed the still-adolescent co-op boom. However, recognizing what was happening, CNYC had formed the Sponsor Default Task Force and started educating everyone on what to do when the sponsor defaulted. We also lobbied with various governmental and lending institutions to ameliorate the situation. The end result was that probably fewer than a dozen buildings were lost and, as a result of the renaissance of the city in the late '90s, most of the lost equity has been recovered.
It was during this time that we realized that co-ops and condos were being unfairly taxed as rentals rather than as a group of private homes. We responded by forming the Task Force on Reasonable Real Estate Taxes, led by Martin Karp, who proved Margaret Mead's adage that "a small group of committed citizens can change the world."
Unfortunately, during this period we also saw several waves of indictments for corruption by some managing agents and contractors/vendors. Again, CNYC was there to provide guidance to boards on how to deal with it. There were also the many amicus curiae briefs that Marc Luxemburg and I wrote on issues that we felt were important to our industry. And Marc Luxemburg, Mark Shernicoff, Art Weinstein, and I pooled our efforts under Marc's leadership to devise a new form of proprietary lease and shareholders agreement. We fought the IRS to a standoff on the Section 277 taxation issue, and, of course, there were all of the seminars and workshops given by dozens of people who recognized the value of providing this information.
Nevertheless, there are things that we have attempted to do that we could not accomplish — although it was not for lack of trying. These include: attempting to get government agencies to force sponsors to sell unsold apartments, which we did through our Completing the Conversion Task Force; getting congress to do something about the absurd dangers of Internal Revenue Code Section 216; obtaining a permanent solution to the disparity of real estate taxes between co-ops and condos and private homes; and attempting to get the legislature to modernize the Condominium Act.
Although CNYC was in the forefront of many issues, in truth we worked in tandem with Carol Ott and the staff of Habitat. I cannot even begin to count how many conversations I have had with Carol or Tom Soter that began with "Did you hear about...?" or "What are you going to do about...?" Although they are journalists and just write about events, their questions and probing certainly led to getting things aired and resolved in many matters. Most significantly, they have never let the fear of losing advertising revenue affect their editorial decisions.
In 20 years, we have seen an industry grow from infancy to adulthood and lay a solid foundation for the future. We have worked ourselves through unimaginable problems and calamities. In the end, we are all stronger and smarter for it. For CNYC and Habitat have, through hard work and diligence, helped thousands of New Yorkers reach the dream of owning their own home. Our work has resulted in huge windfalls for those who bought at the right time and better housing for all. Yes, the market had a great deal to do with it. But there would have been no market if the industry was stillborn.
Nevertheless, this is not our epitaph for we still have a long way to go and a great deal to do. This is merely a reflection on where we came from. Happy anniversary, Habitat. I'm looking forward to the 240 issues I will see between now and your fortieth anniversary.