In this war, as in all wars, there was that unforgettable moment when the first shots were fired. In this war, it fell on April 2, 2020, when the Small Business Administration (SBA) ruled that housing cooperatives were ineligible for a slice of the $659 billion of forgivable loans provided by the CARES Act’s Paycheck Protection Program (PPP).
It was the shot heard round the co-op world, and in New York City it mobilized a small army of advocates who set out to reverse a bureaucratic decision they viewed as unfair, capricious and potentially ruinous to housing co-ops. This is the story of how that army marched to a landmark victory on Capitol Hill.
The army was made up of many loosely organized platoons. The point man in bringing them together was Geoffrey Mazel, a partner at the law firm Hankin & Mazel and legal advisor to the Presidents Co-op & Condo Council (PCCC). In its dozen years of existence, this group, which speaks for more than 100,000 co-op and condo residents in New York City, has become a formidable advocacy force, primarily on the local level. Now it faced its biggest battle: wrestling a New York City issue onto the national stage.
Mazel understood the magnitude of the challenge as well as its source: housing cooperatives are not common outside metropolitan New York City, and few national politicians are familiar with their virtues, their peculiarities or their needs. As Mazel puts it, “Nobody outside the metro New York cares about housing cooperatives.”
Shortly after the SBA’s April 2 decree, Mazel started recruiting. Among the first to enlist was the Council of New York Cooperatives & Condominiums (CNYC). “Our first salvo was to contact our elected officials – on the City Council, the Legislature and the New York congressional delegation – and make them aware of the issue,” Mazel says. “The next step was to engage co-op and condo boards to write letters to their legislators. The response was immediate and encouraging. The legislators had been made aware of the issue, and they were engaged.”
Soon afterward, on April 22, Paul Vallone, who represents northeast Queens on the City Council, introduced a resolution urging Congress and President Trump to include co-ops in the PPP loan program. The resolution, supported by 22 members of the City Council, was the beginning of a protracted bombardment.
In an April 27 letter to Treasury Secretary Steven Mnuchin and Jovita Carranza, the SBA Administrator, members of New York City’s congressional delegation echoed Vallone’s argument that co-ops and condominiums should be ruled eligible for PPP loans. They wrote: “During this crisis, these units are facing the same dire liquidity challenges as other businesses, including declining revenues due to job losses, declining rental income from commercial tenants and lost revenue. And due to the stay-at-home statewide orders, there are significant increases in utility usage (water, electric and fuel). Many of the residents are also seniors with fixed incomes.” Signatories included Reps. Grace Meng, Thomas Suozzi, Nydia Velázquez, Adriano Espaillat, José E. Serrano, Jerrold Nadler, Carolyn Maloney, Kathleen Rice and Yvette Clarke.
By now the advocates had the ear of U.S. Sen. Chuck Schumer, then minority leader, who delivered a message to the troops: “When we spoke to our New York co-ops, to Geoffrey Mazel and Mary Ann Rothman (executive director of the CNYC), we said, ‘Reach out to other co-ops. There are general cooperative associations that include housing co-ops.’”
Mazel and his fellow troopers got in touch with the National Cooperative Business Association (NCBA) and the National Association of Housing Cooperatives (NAHC), among other organizations. “We did a full-court press,” says Judy Sullivan, the government relations representative at NAHC, which represents more than 1 million units of cooperative housing nationwide. “We sent out e-blasts to our members to contact Sen. Schumer’s office. We sent out e-blasts to co-ops wherever we could find them. We found what are called land-only co-ops in Maine, who could contact U.S. Sen. Susan Collins. We got Greenbelt Homes, a huge co-op in Maryland, to contact Rep. Steny Hoyer (the House majority leader). I worked this as hard as I could to get as much support as possible.”
Rothman of the CNYC spent hours on the phone with Sullivan, who handles the council’s Washington lobbying. “Every time we talked,” Rothman says, “we said we need to include co-ops plus condominiums and homeowners’ associations. Sen. Schumer and Rep. Velázquez worked as hard as they could to expand the universe.”
Down in the trenches with them was Rep. Grace Meng of Queens, who had been alerted to the problem back in the spring by the Presidents Council. “We worked with Reps. Nydia Velázquez and Tom Suozzi and Sen. Schumer to help the administration understand that co-ops are small businesses, and therefore they should be eligible for PPP loans,” Meng says. “Many people don’t understand how co-ops function. Plus, back then, New York City co-ops had the added burden of being in the epicenter of the epicenter of the pandemic.”
A coalition had begun to coalesce, and on June 1 a letter was sent to Mnuchin and Carranza under the National Cooperative Business Association letterhead. It was signed by 34 organizations sprinkled from California to Mississippi to New York, including the Presidents Council, the CNYC and the Cooperative & Condominium Advisory Council of Westchester County. After stating that 1.5 million American families living in co-ops were “devastated” by the April 2 ruling, the letter concludes: “Housing cooperatives operate in an identical manner to cooperatives in other sectors and therefore should be treated the same under SBA regulations... Therefore, we ask for your support to...include residential cooperative corporations as eligible participants in the Paycheck Protection Program.”
“Now we had penetrated all the right sources,” Mazel says. “But we still had to overcome a reluctant Republican-controlled Senate.”
A Robust Turnout
Meanwhile, Mazel had been busy building a platform for Schumer to address New York City’s co-op and condo community. His efforts paid off days before the coalition’s letter went out when Schumer, speaking from his Brooklyn co-op, held a video conference call that attracted a robust turnout of advocates, board members and shareholders. During the call, Schumer derided the SBA as “incompetent and stingy” before he announced that the $3.4 trillion Heroes Act that had just passed in the House specifically made co-ops eligible for PPP loans. Schumer promised that future legislation would also make condos eligible for such loans.
But, as Mazel had predicted, the bill got a chilly reception in the Republican-controlled Senate, which proposed a far more modest $1 trillion stimulus package. Negotiators could not bridge the gulf, and the PPP quietly slipped into limbo.
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, nothing ever seems to break to the benefit of co-ops and condos,” said 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.”
Members of the growing coalition were determined to prove him wrong. The barrage continued when the New York congressional delegation sent another letter to Mnuchin and Carranza, this one signed by the original signatories as well as Schumer and Sen. Kirsten Gillibrand, plus Reps. Eliot Engel, Hakeem Jeffries, Alexandria Ocasio-Cortez and Gregory Meeks. The time had come for education and arm twisting.
“I had to fight and fight and fight,” Schumer says. “I had to persuade so many different senators and congressmen to go along...but I didn’t get much support from people because they didn’t understand. I do understand because in the state Assembly and in Congress, I represented neighborhoods that have lots of co-ops. I’m a cooperator myself, have been since 1982.”
In October, a second Heroes Act passed the House, with PPP eligibility extended to condominiums as well as co-ops. That bill also languished in the Senate. Undeterred, Schumer and other members of the New York delegation kept grinding. Schumer made a vow: “I said, ‘I’m going to work as hard as I can to get housing co-ops included in the next round of PPP.’”
In December, the months of work finally paid off. A new $900 billion COVID-19 stimulus bill passed in the Senate – with a specific provision making housing cooperatives eligible for the $284 billion set aside for PPP loans. (Condominiums and homeowners associations were not included.) Victory seemed to be at hand, but there was one more large obstacle: the lame duck then living in the White House.
A Long Time Coming
Donald J. Trump wasn’t happy about much in the weeks between Election Day and President-elect Joseph R. Biden’s Jan. 20 inauguration. That included the new stimulus bill’s provision for $600 individual relief checks. In a departing gesture of largess, Trump wanted the government to send out $2,000 checks, which lined up with the Democrats’ wishes but had been rejected by his administration’s negotiators. Trump threatened to veto the bill if he didn’t get his way – though there were enough votes in the Senate to override a veto. In the end, Trump caved in to the inevitable and signed the bill into law two days after Christmas.
The co-op army had won the war.
“It’s a major sea change,” Schumer told Habitat the day after he became majority leader of the Senate. “It’s the first time that housing co-ops were recognized for their importance and vitality. I was able to get legislators who didn’t know about housing co-ops to come on board to help me. And I think it’ll be a change that will work in the future.”
An unheralded foot soldier in the battle was Tim Foley, the executive director of the Cooperative & Condominium Advisory Council of Westchester, which represents 300 buildings. “We’re hopeful this means housing co-ops are no longer an afterthought,” he says. “When people put together these big housing relief packages, they didn’t always think about how co-ops are different from other forms of housing. This feels like a big victory that was a long time coming.”
Rothman of the CNYC adds, “This is a wonderful boon, and very deserved. It’s a life-saver for co-ops that have lost income from their commercial space, especially less affluent co-ops that are unable to afford an assessment to make up for the shortfall.” Her only regret is that condominiums and homeowners’ associations are not eligible for the loans – yet. “This ain’t over,” Rothman says. “Chuck Schumer is now the majority leader.”
The man who marshaled the troops shares in the elation. “It’s extraordinary that such a niche type of housing got included in this legislation,” Mazel said a few days after the bill was signed into law. “This is the result of a concerted effort by advocates and elected officials at the city, state and federal levels. It’s a model of how good government is supposed to work.”
Asked to sum up what he and the army had accomplished, Mazel put it succinctly: “We moved the needle.”