“Without this reform,” Rosenthal says, “which was shaped by Mitchell-Lama shareholders from across the city and state, we would continue to bleed desperately needed units of affordable Mitchell-Lama housing to the private market.” The new legislation was sponsored in the state Legislature by two New York City Democrats, Assembly member Linda Rosenthal and Sen. The positive side is that this will lead to greater communication between boards and shareholders because of the mandated six meetings a year.” This law empowers the minority to control the majority - even a big majority. Now, 20.1% of the shareholders know they can block the whole process. “This law makes it very difficult - not impossible, but very difficult to opt out. “Some people believe this is a mechanism to prevent all buyouts because the requirements are so high,” says Scott Mollen, a partner at the law firm Herrick Feinstein who has extensive experience with past opt-outs. It also requires Mitchell-Lama co-op boards to hold six shareholder meetings a year, and if a vote to opt out fails, it places a five-year moratorium on a new vote. The new law requires that 80% of residents - up from 67% - must choose to opt out of the program.
Supporters of affordable housing are delighted shareholders and sponsors in Mitchell-Lama co-ops who yearn to transform their apartments to market rate are equally dismayed. The governor’s move has sparked sharp divisions. Kathy Hochul has signed a law that raises the bar for Mitchell-Lama co-ops to opt out of the affordable-housing program and convert their apartments to market rate.
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