New York's Cooperative and Condominium Community

Habitat Magazine October 2020 free digital issue

HABITAT

ARCHIVE ARTICLE

The Battle-Tested Co-op and Condo Warriors

On May 22, with New York City reeling from the first wave of the coronavirus pandemic, U.S. Sen. Charles Schumer participated in a video conference call with leaders of the city’s co-op and condo community. Among those on the call were the executive director of the Council of New York Cooperatives & Condominiums (CNYC), leaders of the Presidents Co-op and Condo Council, the head of the Builders’ Realty Institute and the publisher of Habitat magazine. Hundreds more viewed the call from their homes.

 

The subject of the call was a new $3.4 trillion coronavirus relief bill crafted by Democrats in the House of Representatives that was ready for introduction in the U.S. Senate. Speaking from his Park Slope co-op, Schumer delivered the welcome news that the bill would make co-ops eligible for the Paycheck Protection Program (PPP), which provides forgivable loans to small businesses that keep employees on the payroll during the pandemic. A companion bill, Schumer said, would make condos eligible. The Small Business Administration, which Schumer derided as “incompetent and stingy,” had decreed earlier that the loans were not available to real-estate interests, including housing cooperatives and condominium associations. That ruling had infuriated many co-op and condo advocates. Now their fury turned to cautious optimism.

 

After the call ended, Schumer told Habitat: “The PPP is critical for many housing co-ops to weather this crisis and maintain their buildings and employees – as member-owners struggle to pay fees. I will continue to fight for expanding PPP eligibility to cover housing co-ops.”

 

The optimism generated by Schumer’s support did not last long. The Democrats’ coronavirus relief bill got a chilly reception from the Republicans who control the Senate, who proposed a far more modest $1 trillion package. Negotiations faltered, and at the end of July the legislative impasse led to the end of supplemental payments for 30 million unemployed workers and the end of an eviction moratorium for renters. A week later, the PPP expired. With administration officials and congressional Democrats unable to work out a compromise, President Trump signed executive orders designed to extend supplement unemployment benefits and temporarily halt evictions. When the smoke cleared, the PPP was dead, for the time being, and co-ops and condos were not even an afterthought.

 

Stuart Saft, for one, was not surprised that Schumer’s efforts had come to nothing. “That conference call with Chuck Schumer was a perfect illustration that there’s a lot of talk, but nothing ever seems to break to the benefit of co-ops and condos,” says Saft, a partner at the law firm Holland & Knight and chairman of the CNYC. “I’ve been trying to get co-ops and condos to unite for years, but it hasn’t gone anywhere. Boards are so busy running their buildings that they can’t really unite.”

 

Saft has written and spoken extensively on what he calls “the war against co-ops and condos.” As he sees it, co-ops and condos are being bombarded by onerous governmental rules and regulations, including high and unfair property taxes, the looming Climate Mobilization Act, the state’s conflict-of-interest law and its new Housing Security and Tenant Protection Act, which lumps co-ops in with rental properties based on the faulty logic that co-op shareholders are governed by the same type of lease as renters. The exclusion from the PPP is, in Saft’s view, merely the latest in a long string of insults.

 

Yet this setback is not to suggest that co-op and condo advocates have met only with defeat. These warriors have won significant victories over the past four decades in the legal, political and financial spheres. Here is a look at the major advocacy groups, along with what they see as their signal achievements and the biggest challenges they face in the future.

 

National Association of Housing Cooperatives

With roots dating back to the 1950s, this Washington, D.C.-based lobbying organization represents more than 1 million units of cooperative housing coast to coast, including the CNYC and the Presidents Co-op and Condo Council in New York City. “The Paycheck Protection Program is our number-one issue right now,” says Judy Sullivan, government relations representative for the NAHC, who notes that lobbying for the program will continue. “It has been very difficult with the Republicans, but the New York congressional delegation has been wonderful, and I don’t think the Democrats are going to cave in.”

 

Another ongoing fight is over federal disaster relief. “The Federal Emergency Management Agency will only cover the outside of a housing cooperative after a disaster like Hurricane Sandy – not the boiler room, not the common areas,” Sullivan says. U.S. Rep. Jerrold Nadler, a New York City Democrat, has been leading this fight. “Nothing happens quickly here,” Sullivan adds, “but we’re going to get this changed – especially if we get a Democrat majority in the Senate in November.”

 

Council of New York Cooperatives & Condominiums

This venerable New York City organization began as an informal gathering of a dozen co-op shareholders in the 1970s. “We came together to help each other learn how to best manage our cooperatives,” recalls Mary Ann Rothman, who is now the executive director of a powerhouse that counts more than 2,000 co-op corporations and condominium associations as members. “With time, we learned that we also needed to influence legislation.”

 

One of the biggest legislative battles, dating back to the 1980s, was the fight against the so-called 80/20 rule, which decreed that in order to pass to shareholders deductions for property taxes and mortgage interest paid by the corporation, the co-op had to derive at least 80% of its income from shareholders, while no more than 20% could come from outside sources, including rental income paid by commercial tenants. As a result of this rule, cooperatives with substantial commercial space often capped their commercial tenants’ rents below market rates. Thanks to U.S. Rep. Charles Rangel, a Harlem Democrat, the 80/20 rule was eliminated in 2007. Co-ops received a financial windfall that they continue to enjoy today.

 

“That certainly is one of our biggest achievements,” Rothman says. “The big issue now is property tax fairness for homeowners’ associations, co-ops and condos. We haven’t solved that yet. And we’re doing our best to make sure the carbon-reduction mandates (under the Climate Mobilization Act) are practical, equitable and affordable. I think we are in very, very tough times, but I’m guardedly optimistic.”

 

The Presidents Co-op and Condo Council

Founded in 2007 by a group of Queens co-op shareholders, this council now speaks for more than 100,000 residents of cooperative and condominium housing in Queens, Manhattan and the Bronx.

 

Bob Friedrich, a co-president of the council and a participant in the May 22 conference call, says, “There was no mechanism for presidents of co-ops and condos to speak to each other about anything, from political issues to laundry-room contracts. Basically I look at us as a think tank. A lot of the issues that come up are political – legislation that deals with the way we govern our properties. Things like admission policies, the Climate Mobilization Act, energy audits and unfunded mandates in general. Our biggest achievement is that we’ve become a go-to organization for many legislators. That means we have a lot of credibility and a lot of knowledge. Our biggest future challenge is property tax reform.”

 

National Cooperative Bank

Chartered by Congress in 1978 and privatized in 1981, National Cooperative Bank offers financial assistance to numerous types of cooperatives, including housing co-ops, condominiums and homeowners’ associations. The bank now works with more than 4,500 housing communities nationwide.

 

“Our strategy is to educate legislators,” says Casey Fannon, NCB’s president. “A lot of congressmen and senators don’t understand cooperatives, including housing cooperatives, so we go up to the Hill to meet with staff and try to educate them as to what NCB does. The biggest problem is that housing cooperatives are not thought about when rules for things like the Paycheck Protection Program get made. Housing co-ops are still seen as a New York City concentration.”

 

NCB was successful in getting rural electric cooperatives declared eligible for the PPP. “We’ve had other successes,” Fannon says, “but it’s a multi-year process. One of our most successful efforts has been getting consumer cooperatives, such as the Park Slope Food Co-op in Brooklyn, eligible for Small Business Administration loans that are backed by a corporate rather than a personal guarantee.”

 

The Cooperative and Condominium Advisory Council

This Westchester County group has been together since 1979 and now represents about 400 co-ops and condos throughout the county. “Building a network for mutual support and education has been our primary mission,” says executive director Tim Foley. “In 2018, we rebuffed a local bill that would have required co-op boards to supply reasons why they reject applicants. We were able to negotiate a compromise that established a timeline of notification for applicants.”

 

As for forthcoming challenges, “The Paycheck Protection is the number one issue for us,” Foley says. “We have legislators that still don’t understand the co-op application process, and we’re trying to educate them. We’re also trying to educate our members about changing regulations.”

 

Association of Riverdale Cooperatives and Condominiums

“We were at the forefront of this push to get co-ops included in the PPP,” says Stephen Budihas, president of this Bronx-based association, which was founded in 1982 and now represents 20,000 residents in 135 properties.

 

Budihas believes the coronavirus will continue to be a concern for the foreseeable future. “The pandemic has been a serious bump in the road for every one of our boards and their managers,” he says. “My concern is making sure the newly elected board members are fully educated and informed about the issues their buildings face – the normal obligations as well as the challenges posed by COVID-19.”

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