New York State Assembly

1998 Annual Report

Committee on Housing

Sheldon Silver, Speaker
Vito J. Lopez, Chairman

Vito J. Lopez Assembly Member 53rd District

THE ASSEMBLY STATE OF NEW YORK ALBANY

CHAIRMAN Committee on Housing Committees Rules Commerce, Industry & Economic Development Social Services Subcommittee on Mitchell-Lama Subcommittee on Problems of Elderly Minority Subcommittee on Affordable Housing

December 15, 1998

Honorable Sheldon Silver
Speaker of the Assembly
Legislative Office Building
Albany, New York 12248

Dear Mr. Speaker:

I am pleased to present the 1998 Annual Report for the Assembly Committee on Housing highlighting the accomplishments of the past Legislative Session. The achievements of the Committee include:

participating in an historic open and public budget process between the Assembly and the Senate which sought to provide millions of dollars in new funding for affordable housing;

increasing the Neighborhood and Rural Preservation Programs' lifetime funding caps by $300,000 and an annual funding limits by $15,000. These long-overdue increases will allow effective, community-based housing providers to continue to participate in these nationally acclaimed programs;

extending the powers of the State of New York Mortgage Agency (SONYMA) for an additional year and providing a $250 million increase in SONYMA's tax-exempt bonding authority. These initiatives will allow SONYMA to continue to make home ownership a reality for thousands of working families; and

providing the New York State Housing Finance Agency (HFA) a $330 million increase in tax-exempt bonding authority.

While the Committee successfully negotiated with the Senate to increase funding for a variety of housing programs, Governor Pataki vetoed these increases, leaving the State unequipped to address its ongoing affordable housing crisis. In fact, some housing programs have not received an increase in funding since 1985. Without the commitment of additional resources, it is likely that New York State will continue to be ranked last in the nation in housing affordability. Despite this, Governor Pataki continues to block the Assembly Housing Committee's efforts to increase New York State's support for affordable housing.

Also this year, the Committee held public hearings on several matters affecting affordable housing, including: the State's proposed takeover of the Federal Small Cities Community Development Block Grant Program (CDBG); the future of State-assisted public housing; and the impact of "buy-outs" on New York State's Mitchell-Lama housing stock.

Finally, the Assembly took action on a wide variety of measures seeking to protect the rights of tenants living in multiple dwellings and manufactured housing communities, as well as those tenants living in condominiums and cooperatives that are undergoing conversions.

I am pleased with the many successes of the Committee and am anxious to continue our efforts in the session ahead. I wish to extend my sincerest thanks to the members of the Committee, my staff, the staff of the Housing Committee, and to you, Mr. Speaker, for your commitment and support.

Sincerely,

Vito J. Lopez
Chairman

1998 ANNUAL REPORT

OF THE

ASSEMBLY STANDING COMMITTEE ON HOUSING

VITO J. LOPEZ, CHAIRMAN

Members of the Committee

STAFF

Jennifer Jorgensen, Legislative Aide to the Chairman
Deborah VanAmerongen, Legislative Coordinator
Don Lebowitz, Committee Counsel
Sean Fitzgerald, Senior Legislative Analyst
Jonathan L.M. Harkavy, Committee Clerk
Linda Camoin, Committee Assistant
Kathleen Quackenbush, Program and Counsel Secretary

TABLE OF CONTENTS

I. COMMITTEE JURISDICTION AND PURVIEW

The New York State Assembly Committee on Housing is composed of 23 members (16 majority members and 7 minority members), with John Guerin of the 101st Assembly District serving as Ranking Minority Member.

The Committee is responsible for legislation concerning housing development and preservation. It also has jurisdiction over rent regulation as well as all legislation that amends the following New York State Consolidated Laws:

Multiple Dwelling Law, which encompasses health and safety standards for buildings with three or more families living independently of each other in New York City and Buffalo;

Multiple Residence Law, which covers health and safety standards for buildings with three or more families living independently of each other in all localities other than New York City and Buffalo;

Private Housing Finance Law, which governs the following State programs: Mitchell-Lama, Limited Dividend Companies, Redevelopment Companies, Housing Trust Fund, Affordable Home Ownership Development, Turnkey, Permanent Housing for Homeless Families, Infrastructure Development Demonstration, Mobile Home Cooperative Fund, Housing Development Fund, Neighborhood Preservation, Rural Preservation, Rural Area Revitalization, Rural Rental Assistance, Special Needs Housing, Urban Initiatives, Permanent Housing for Homeless Families, several New York City programs, and the administration of the State Housing Finance Agency and New York City Housing Development Corporation; and,

Public Housing Law, which covers the safety, management, and financing of local public housing authorities throughout the State.

In addition to legislation regarding these laws, the Committee has jurisdiction over legislation amending those sections of the Unconsolidated Laws that constitute the Emergency Housing Rent Control Law; the Local Emergency Housing Rent Control Law; the New York City Rent Stabilization Law; the Emergency Tenant Protection Act of 1974; sections of the New York City Administrative Code and the City of Buffalo Administrative Code; sections of the General Business Law that relate to the conversion of real property from rental to cooperative (co-op) or condominium (condo) status; and, sections of the Executive Law, Real Property Law, and the Public Authorities Law.

A. LEGISLATIVE HEARINGS

1. Community Development Block Grant (CDBG) - Small Cities Program

In December of 1997, the Committee held a joint hearing with the Committee on Economic Development, Job Creation, Commerce and Industry to examine the State's proposed takeover of the Federal Small Cities Community Development Block Grant (CDBG) program.

The purpose of the Small Cities CDBG program is to provide smaller communities with a source of funding for developing low-income housing, improving public facilities and engaging in economic development. In September 1996, Governor Pataki notified HUD of New York State's intention to takeover administration of the Small Cities CDBG program. Despite HUD's rejection of the takeover, in 1997 the State again notified HUD of its intention to administer the program beginning in federal FY 1997-98.

Most witnesses at the hearing presented testimony in opposition to the proposed State takeover of Small Cities CDBG, citing the well established and successful working relationships they have developed with HUD. In addition, many communities expressed concern over the State's plan to use 2 percent of the total Small Cities award to cover administrative costs. Because HUD currently pays the entire cost of administering Small Cities CDBG in New York, a State takeover of the Program would mean fewer dollars available for needed community projects. Due to this opposition, HUD again denied New York State's request to take over administration of the Small Cities CDBG Program.

2. The Future of Public Housing in New York State

In June and July, the Committee held joint hearings with its Sub-Committee on Public Housing to examine how various budgetary and regulatory proposals would impact public housing. The Committees also sought to explore how State subsidized housing authorities might adapt their missions and operations to meet future challenges.

In light of Governor Pataki's stated desire to privatize public housing and his drastic cuts in funding for public housing, many witnesses offered a bleak assessment of the future of public housing in New York State. Housing Authorities and tenants alike expressed concern over the State's decreased support for public housing at a time of increased demand for services. Many witnesses stated how New York State's modernization and operating funding is critical to the continued viability of public housing in New York. Many feared that without State support, the most vulnerable tenants would be pushed out in favor of higher income tenants so that Housing Authorities could increase rents to keep projects operating.

3. Mitchell-Lama Buy-Outs

Responding to mounting public concern over the possible deregulation of two middle-income housing developments located in New York City, the Housing Committee convened a public hearing to explore the future of New York State's Mitchell-Lama housing program.

During the sixties and seventies, the Mitchell-Lama housing program provided private developers long-term, low-cost mortgages and real estate tax exemptions as incentives to create housing that would be affordable to middle income New Yorkers. In exchange, developers agreed to limit their profits and submit to government supervision. Under this pioneering program, over 150,000 units of middle income housing in 400 developments were created statewide.

Under State law, owners of Mitchell-Lama developments have the option of leaving or "buying out" of the program on or after the 20th anniversary of the development's occupancy date, provided that the development's government subsidized mortgage is pre-paid by the owner. By the end of 1997, 13,657 units had left the program.

Two recent buy-out proposals made by the owners of the Cooper Gramercy Plaza apartments and Ruppert-Yorkville Towers in Manhattan have drawn considerable attention due to their potential impact on existing tenants. Since both developments were occupied after January 1, 1974, rents may skyrocket to market levels upon completion of the buy-outs. Developments occupied prior to that date become rent stabilized after a buy-out occurs.

The Committee received testimony from both residents and housing advocates concerned about the future of the Program. Based on this testimony, the Committee is currently developing several initiatives that would both encourage owners to stay in the Program and provide greater protections to residents who are undergoing buy-outs.

II. 1998 LEGISLATIVE HIGHLIGHTS

A. PUBLIC AUTHORITIES

The State of New York Mortgage Agency (SONYMA) provides mortgage insurance and purchases residential mortgages from lenders to assist first-time home buyers who would otherwise be unable to finance the purchase of a home. SONYMA programs include both low interest rate and conventional rate mortgage programs, as well as the Mortgage Insurance Program.

This chapter amends Section 2407 of the Public Authorities Law to increase SONYMA's tax-exempt bonding authority to a total of $5.945 billion, an increase of $250 million. This increase is expected to provide SONYMA with sufficient bonding authority to cover its activities for the next year. In addition, this Chapter extends SONYMA's authority to purchase mortgages and issue tax-exempt bonds until July 15, 1999, and extends SONYMA's authority to issue taxable bonds until March 31, 2000.

The New York State Housing Finance Agency was created as a public benefit corporation in 1960 to finance the development of low income housing by providing low-cost mortgage loans to both for-profit and not-for-profit developers. In its 38 year history, the Agency has issued more than $3 billion in bonds to finance affordable housing developments. These developments include multi-family rental housing, senior housing, staff housing for educational and medical institutions, congregate care facilities, adult homes and other special needs housing.

The chapter increases HFA's tax-exempt bonding authority by $330 million from $3.75 billion to $4.08 billion. This increase will enable HFA to continue to meet the demand for below market financing among both for-profit and not-for-profit housing developers.

The Federal Tax Reform Act of 1986 imposed strict limits on the amount of private activity tax-exempt bonds that could be issued by the states and their localities. In response, the New York State Legislature has adopted legislation each year establishing a formula by which this scarce financing resource is allocated among the State's agencies and municipalities.

This Chapter does not change the formula for allocating private activity tax-exempt bonding among the State's agencies and localities. However, this Chapter does for the first time allow multi-family housing developments to receive allocations of bonding authority that will be counted against future years' private activity volume caps. As a result, this legislation will make it easier for developers of large housing projects to secure tax-exempt financing through HFA. In the past, some large projects were unable to secure HFA financing due to the limited amount of private activity tax-exempt bonding authority that is available in any single year.

B. MANUFACTURED HOMES

Manufactured homes serve as a primary residence for more than 250,000 people living in more than 2,100 manufactured housing communities throughout the State. Counties with the highest concentration (75 or more) of these communities include Saratoga, Dutchess, Ulster, Oneida, and Chautauqua, while those with the lowest concentration (five or less) include Westchester, Nassau, Schenectady, and Hamilton.

Since manufactured home owners generally own their homes, but not the land on which they are placed, these owners are faced with a number of unique problems. First, the monetary investment involved in purchasing a manufactured home is substantial, with prices ranging from $20,000 to $100,000. Second, once purchased and placed in a community, a manufactured home is extremely difficult to move. Besides the obvious problems involved in moving such a large structure, other difficulties arise since porches and outside attachments cannot be moved without the threat of damage. Third, the cost of moving is prohibitively expensive, generally exceeding a few thousand dollars. Finally, in many areas of the State, relocating to another community is extremely difficult due to a shortage of available lots and zoning laws that restrict the placement of manufactured homes.

Given these problems, the Assembly passed several pieces of legislation designed to assist and protect the rights of manufactured home owners. While the Senate failed to take action on many of these measures, the Committee will continue to work toward enacting these important initiatives in the upcoming session.

This Chapter requires owners of manufactured housing communities to provide prospective residents with a copy of the community's rules and regulations prior to occupancy. Currently, rules and regulations must be provided only after a resident has gone through the time and expense of moving into a community. As such, this measure affords prospective residents a valuable opportunity to inspect a community's rules and regulations prior to signing a lease and occupying a lot.

This legislation would prohibit a manufactured housing community owner from requiring a tenant to pay a security deposit which is greater than the equivalent of one month's rent if that tenant has lived in the community for two years or more and is a tenant in good standing.

This bill would enable counties to adopt local laws which would provide greater protection than State law to the residents of manufactured housing communities. Counties currently are preempted from providing stronger protection to residents of these communities. Some counties have attempted to adopt stricter statutes, but have had those local laws struck down by the courts. This bill would clarify that Real Property Law '233 does not restrict or preempt the authority of counties to adopt and enforce laws which offer greater protection to these residents.

This bill would provide manufactured home owners with the ability to form homeowners' association which could then buy the community in which their homes are located whenever the land is offered for sale. Under this legislation, homeowners' associations would have the opportunity to match any bona fide offer for the purchase of the land within 90 days.  The bill would preserve the property rights of community owners' by specifying that the homeowners' associations must meet the price, terms, and conditions dictated by the owners. 

This bill would require the availability of an agent to act on the owner's behalf to provide emergency services to the tenants of manufactured housing communities at anytime of the day or night. Failure of an owner to provide such an agent would constitute a violation and subject the owner to a fine of between $50 and $1500.

C. ADDRESSING NEW YORK CITY'S HOUSING NEEDS

New York City's need for quality, affordable housing is among the greatest in the nation. As a result, the Housing Committee works closely with New York City's Department of Housing, Preservation and Development to ensure that those needs are met. The following are summaries of bills acted upon by the Assembly that will assist HPD in their work.

This chapter allows municipalities to increase the affordability of rental units for low-income families by reducing to zero over a 15 year period rehabilitation mortgage loans made through the Participation Loan Program (Article 15 of the Private Housing Finance Law). Prior to reducing a loan, municipalities must make a written finding that such a reduction is necessary either to ensure the affordability or to maintain the economic viability of the housing.

This chapter allows municipalities to increase the affordability of rehabilitated rental units by reducing to zero over a 15 year period small rehabilitation loans made through Article 8-A of the Private Housing Finance Law. Prior to reducing a loan, HPD must make a written finding that such a reduction is necessary either to ensure the affordability or to maintain the economic viability of the housing.

This chapter allows municipalities to reduce to zero over a 15 year period rehabilitation mortgage loans made through Article 8 of the Private Housing Finance Law. Prior to reducing a loan, HPD must make a written finding that such a reduction is necessary either to ensure the affordability or to maintain the economic viability of the housing.

This chapter allows municipalities to reduce to zero over a 15 year period development loans made through the Affordable Housing Development Loan Program (Article 22 of the Private Housing Finance Law). Prior to reducing a loan, HPD must make a written finding that such a reduction is necessary either to ensure the affordability or to maintain the economic viability of the housing.

This chapter extends until 2002 the authority of municipalities to establish initial rents for dwelling units which have been aided by loans made pursuant to Article 8 of the Private Housing Finance Law. This authority allows municipalities to adjust rents to ensure that recently rehabilitated rent regulated buildings have sufficient cash flow to meet expenses.

This chapter extends until 2002 the authority of municipalities to establish initial rents for dwelling units which have been aided by loans made pursuant to Article 11 of the Private Housing Finance Law. This authority allows municipalities to adjust rents to ensure that recently rehabilitated rent regulated buildings have sufficient cash flow to meet expenses.

This chapter extends until 2002 the authority of municipalities to establish initial rents for dwelling units which have been aided by loans made pursuant to Article 8-A of the Private Housing Finance Law. This authority allows municipalities to adjust rents to ensure that recently rehabilitated rent regulated buildings have sufficient cash flow to meet expenses.

This chapter extends until 2003 HPD's authority to provide affordable housing development loans for up to 100 percent of the development cost of housing projects. Without this legislation, HPD could only finance up to 60 percent of the development cost. This increased loan authority is used to increase the affordability of the rehabilitated housing by reducing the debt service associated with the rehabilitation.

Municipalities are already authorized to reduce to zero rehabilitation loans made pursuant to the Urban Development Action Area Act. To ensure that these public funds are used in the most productive and efficient manner possible, this Chapter requires that prior to reducing a loan, municipalities must make a written finding that such a reduction is necessary either to ensure the affordability or to maintain the economic viability of the housing.

Municipalities are already authorized to reduce to zero rehabilitation loans made pursuant to Article 11 of the Private Housing Finance Law. To ensure that these public funds are used in the most productive and efficient manner possible, this Chapter requires that prior to reducing a loan, municipalities must make a written finding that such a reduction is necessary either to ensure the affordability or to maintain the economic viability of the housing.

D. KEEPING PUBLIC HOUSING VIABLE

The State of New York continues to play an important role in regulating and supporting public housing operations. Currently, over 18,000 State regulated public housing units are operated by 30 public housing authorities. In New York City alone, State supervised public housing developments provide housing to over 30,000 people.

Despite the importance of these developments in the State's efforts to provide affordable housing, public housing authorities desperately need additional assistance in order to make long overdue capital improvements. However, due to the inadequate level of funding provided through the State's Public Housing Modernization program, many essential improvements and repairs continue to languish for lack of available funds. Increasing funding for Modernization remains one of the Committee's top priorities.

This chapter authorizes the North Hempstead Housing Authority to sell or lease all or part of its public housing projects. The transfer of the housing projects to a not-for-profit entity will allow the Housing Authority to access various sources of funding that are not currently available to public housing authorities. This access to funds will allow the housing authority to undertake a much needed rehabilitation of its developments. Once the sale and rehabilitation of the developments is completed, the new not-for-profit owner must continue to meet conditions related to tenant incomes, tenant selection and rent levels for the units.

This bill would increase the term of office for elected tenant board members on public housing authority boards of directors from 2 years to 5 years. This change would make the tenant member's term consistent with the terms of appointed board members.

E. NEIGHBORHOOD AND RURAL PRESERVATION PROGRAMS

The Neighborhood and Rural Preservation programs (NPP and RPP) provide grants to cover the administrative costs of not-for-profit community groups engaged in a variety of housing activities ranging from housing development and rehabilitation to homebuyer counseling and tenant assistance. These not-for-profits are known as neighborhood and rural preservation companies (NPCs and RPCs). Since 1990, NPCs and RPCs have played an instrumental role in the creation of over 32,000 units of affordable housing. According to the New York State Division of Housing and Community Renewal, for every dollar invested in NPCs and RPCs, another $20 is leveraged from private and other public sources for affordable housing.

This chapter increases the lifetime funding limit on contracts with neighborhood and rural preservation companies by $300,000. This increase will enable these housing organizations to continue to receive state funding and therefore continue to provide communities across New York State with valuable housing services. Without this increase, several NPCs were expected to reach their lifetime cap in 1999, leaving them without access to State administrative funding.

This chapter increases the annual funding limitation on contracts with NPCs and RPCs by $15,000. This is the first increase in the annual contract limit since the inception of both NPP and RPP. This increase will ensure that preservation companies can continue to provide high quality housing services to communities throughout New York State.

F. PROTECTING COOPERATIVES AND CONDOMINIUMS

The purchase of a cooperative or condominium is viewed by many as an alternative to home ownership. However, buying a coop or condo is oftentimes a complex process requiring a substantial investment of time and money on the part of the purchaser.

Upon purchase, a co-op shareholder or condo unit-owner holds an interest in the cooperative or condominium corporation and has a tremendous stake in the management of the property. But unlike owning a home, where an individual owner has the final say as to property management decisions, an elected board has these responsibilities in a co-op or condo. Condo unit-owners elect a board of managers, while co-op shareholders elect a board of directors.

Many of the financial problems associated with cooperatives and condominiums resulted from the tremendous conversion boom that took place in the 1980s. As the economy declined, a soft real estate market hurt both the sponsors who had invested huge sums of money to convert buildings and the shareholders who had purchased shares in troubled buildings.

Because a rental building can be converted with as little as 15 percent of the tenants wishing to purchase, many sponsors converted under less than ideal financial circumstances. Trouble resulted when sponsors had difficulty selling vacant units. Unable to meet mortgage payments and sustain building services, some sponsors defaulted on bank loans, souring the investment for shareholders and placing building residents at risk.

The Assembly passed several pieces of legislation this year, much of which was not acted upon by the Senate, which would alleviate problems in the cooperative and condo housing market and protect this invaluable source of housing.

This chapter provides financial protection for all cooperative corporations or condominium associations where a non-occupying owner, frequently the sponsor, fails to pay monies due to the co-op or condominium while continuing to collect rental money from the tenant occupying the unit. This legislation permits a cooperative board of directors or a condominium association to collect directly from a tenant all rental payments that would otherwise go to a non-occupying owner who has fallen more than 45 days in arrears in payments for maintenance, assessments or late fees. Current law only provides this protection if there are shares that remain unsold in the cooperative or condominium.

This chapter also adds a new Article 14, entitled "Property Owners or Homeowners Associations," to the Real Property Law to establish the same provisions for commercial property owner and homeowner associations.

This bill would strengthen the rights of cooperative shareholders and condominium owners by requiring sponsors of conversion plans to notify them of their right to terminate a self-dealing contract. Self-dealing contracts are contracts entered into for the management or maintenance of the coop or condominium between the conversion sponsor and itself or an affiliate of the sponsor.

This bill would amend the laws regulating the conversion of residential rental property to cooperative and condominium status by extending the definition of "eligible senior citizens" to include family members of the tenants who are 62 years of age or older, and who have resided within the housing unit for at least one year. It would also extend the definition of "eligible disabled tenant" to include a family member who has a disability and who has resided within the housing unit for at least one year. The bill would replace the restriction that the disability must prevent the tenant from engaging in any substantial gainful employment with the criterion that the disability must substantially limit one or more of the tenant's or family member's major life activities. The provisions of this bill would apply to all cooperative and condominium conversions statewide.

G. PROTECTING NEW YORK STATE'S MITCHELL-LAMA HOUSING

Since the 1950s, the Mitchell-Lama program has provided affordable housing to moderate-income New Yorkers. More than 400 Mitchell-Lama developments, housing approximately 150,000 families, are scattered throughout the State. The continued viability of this housing remains a critical part of New York State's effort to ensure the availability of affordable housing.

This bill would extend from 20 years to the life of the mortgage the time period before which Mitchell-Lama companies may "buy-out" and leave the program. As such, this legislation would protect thousands of New York's working families from the uncertainty and expense associated with buy-outs. Once again this year, the Senate failed to take action on this important legislation.

The purpose of this legislation is to ensure the delivery of essential services in Mitchell-Lama housing developments by conditioning approval of a development's rent increase application on the delivery of those services and the correction of any hazardous conditions that might exist. Under the bill, the Division of Housing and Community Renewal (DHCR) would be prohibited from approving an increase in a development's average monthly rental if the applicant is not maintaining all essential services (as defined) or if a dwelling accommodation is determined to be a fire hazard or in a dangerous condition or is occupied in violation of the law. If a dangerous condition exists, the bill would authorize DHCR to approve a rent increase only upon a showing that the increase is needed to maintain essential services or to cure the hazardous condition.

This bill would require housing companies to use competitive bidding when hiring managing agents.

This legislation would require Mitchell-Lama housing companies which intend to dissolve to provide notice of such intention to all their lease holders at least six months prior to the anticipated date of dissolution. The bill specifies certain information that must be included in the required notice.

H. MAINTAINING AND EXPANDING RENT REGULATION

New York's rent regulation laws provide protection to over 2.5 million tenants throughout the State. The basis for both rent control and rent stabilization is a housing emergency, defined as a vacancy rate below five percent, that still exists in many areas of the State. Due to the existence of such an emergency, government intervention is critical to the protection of tenants from unreasonable rent increases and evictions.

This bill would prevent landlords from evicting tenants who are forced to flee their rent regulated homes to escape domestic violence. Specifically, this legislation provides that victims of domestic violence, as defined by Section 459-A of the Social Services Law, would be deemed to occupy their rent-regulated unit as their primary residence if they have been forced to leave the unit because of such violence and if they assert an intent to return.

I. OTHER TENANT PROTECTIONS

The purpose of this legislation is to protect prospective tenants from unnecessary and unreasonable application fees, while at the same time enabling property owners to recover the actual costs involved in a credit history check. The bill would allow landlords to charge a prospective tenant an application fee equal to the cost of a credit check or other related services, provided that the fee does not exceed $30.

This bill would allow municipalities throughout the State to establish and utilize administrative procedures to enforce state and local housing codes.

This bill would provide tenants with greater procedural rights in eviction proceedings.

J. HOUSING REHABILITATION AND DEVELOPMENT

This legislation would provide for the prompt processing of applications for Low Income Housing Trust Fund monies by establishing a schedule for the submission and review of applications and a requirement that the Division of Housing and Community Renewal issue its funding decisions within 90 days of the last day for the receipt of applications.

The Farmworker Housing Program provides loans to local loan administrators who in turn make loans to farmers to help them bring seasonal farmworker housing into compliance with the New York State Sanitary Code. As a result of delays in the implementation of the Farmworker Housing Program, the maximum repayment period for these loans had become too short, making it difficult for farmers to repay the loans. In response, this legislation provides farmers with two additional years to repay Program loans.

III. 1998 BUDGET HIGHLIGHTS

This year the Assembly and the Senate came together in an open and public process to negotiate a state budget that meets the needs of New York State's working families. One of the most important issues addressed was the need for safe, affordable housing. The budget passed by the Legislature included long overdue increases in funding for programs which are essential to addressing New York State's ongoing affordable housing crisis.

Unfortunately, through his budget vetoes, Governor Pataki slashed funding for many of these critical programs. The Governor's actions will result in lower quality housing, prevent many elderly New Yorkers from keeping their homes and cripple tenants' rights in New York City Housing Court.

With these vetoes, Governor Pataki has once again failed to acknowledge the affordable housing crisis that exists in New York State. Despite New York's dubious distinction of being ranked last in the nation in housing affordability, Governor Pataki continues to block the Assembly's efforts to increase support for affordable housing development.

A. HOUSING PROGRAM FUNDING

1. Service Contract Obligation Revenue Bonds

The Service Contract Obligation Revenue (SCOR) bond program was created in 1990 to end the practice of providing unfunded appropriations for the State's housing capital programs. The SCOR bonding program works as a reimbursement process to pay for various housing initiatives throughout the State. Expenditures are made from various housing capital programs (listed below) and administering agencies then apply to the State Comptroller for reimbursement. The Comptroller certifies that the expense is eligible for reimbursement (administrative and certain other costs cannot be reimbursed through the sale of bonds), and notifies the New York Housing Finance Agency (HFA). When HFA has accumulated enough expenditures, it proceeds with a bond issuance, after which the various capital programs are reimbursed for their bondable expenditures.

The Legislature establishes a statutory cap on the total dollar value of SCOR bonds that can be sold to finance the development of affordable housing. Until 1994, the SCOR bond cap was raised each year to keep pace with housing capital appropriations. However, due to opposition from the Executive and the Senate, the SCOR bond cap was not increased in either 1995, 1996 or 1997.

This year, in response to intense pressure from the Assembly, the Senate and Executive finally conceded to a small increase in the SCOR bond cap of $35 million. However, because the cap had not been increased to cover appropriations over a three-year period, it is expected that the SCOR bond cap must be increased in the 1999-00 fiscal year by at least another $100 million simply to keep pace with anticipated expenditures. Without this increase, it is likely that the production of affordable housing in New York State will grind to a halt.

Housing Trust Fund (HTF)--$25 million

This program provides grants and loans of up to $55,000 per unit (plus an additional $20,000 in high-cost areas) for rehabilitation and new construction. Developments funded under this program must be occupied by low and/or very low-income persons for 15 to 30 years. The Governor vetoed the $13.5 million in additional funding for HTF that the Legislature sought to provide. With only 1 in 5 Housing Trust Fund applications receiving funding, there is clearly tremendous unmet need for this program. Funding for HTF has not been increased since the program's inception in 1985.

Affordable Housing Corporation (AHC)--$25 million

This program provides grants and loans of up to $20,000 per unit (plus an additional $5,000 in high-cost areas) for rehabilitation and new construction of one-to four-family dwellings. The $13.5 million increase in AHC funding vetoed by the Governor would have created 2,700 additional homes and 750 construction related jobs. Like HTF, funding levels for AHC have not been increased since the program's inception in 1985.

Homeless Housing Assistance Program (HHAP)--$30 million

This program provides grants for emergency transitional and permanent housing for the homeless through acquisition, construction, and rehabilitation.

Public Housing Modernization (PHM)--$12.8 million

This program provides funding to modernize state-aided public housing projects and to address structural problems that threaten the safety of tenants. Despite the efforts of the Legislature to increase funding for this vital program by over $6 million, the Executive vetoed this much needed support. In New York City alone, over $140 million is needed simply to address problems which threaten the health and safety of tenants. As a result of Governor Pataki's vetoes, critical public housing maintenance and modernization projects will continue to languish due to the lack of available funds.

Public Housing Drug Elimination Program (PHDEP)--$500,000

This program helps stem the sale and use of illegal drugs in public housing through drug abuse education programs for kids and building security improvements. Despite the obvious need to eradicate drug sale and use from public housing, Governor Pataki vetoed the Legislature's $400,000 increase in funding for this program. Governor Pataki's veto denies housing authorities an invaluable tool in the war on drugs and disregards the safety of thousands of families who live in public housing.

HOPE/RESTORE--$400,000

This program provides grants of up to $5,000 to correct hazardous conditions in one-to-four family homes owned by elderly, low-income residents. Because Governor Pataki vetoed $1.8 million in additional funding for this program, elderly New Yorker's throughout the State will needlessly suffer the loss of dignity and freedom that comes with the loss of a home. The additional funding that the Legislature sought to provide would have allowed another 1,200 senior citizens across New York State to receive assistance.

2. NEIGHBORHOOD AND RURAL PRESERVATION PROGRAMS (NPP and RPP)

For every dollar spent on NPP and RPP, the not-for-profit community organizations funded by these programs generated an additional $20 for affordable housing from other public and private sources. Despite this proven record of effectiveness, the Governor vetoed the $1,000,000 increase in funding sought by the Legislature for these programs. This increase in funding would have benefitted over 100 communities throughout New York State.

IV. OUTLOOK FOR 1999

The challenge of providing safe and affordable housing in New York State is tremendous. The Committee seeks to achieve this goal through the development of policies which leverage private resources, encourage individual home ownership, and lead to the development of new housing opportunities. Despite the ever-increasing demands on state resources, the Assembly's commitment to housing remains strong.

One of the Committee's top priorities in the upcoming Legislative Session will be the extension of the "Loft Law." This statute protects thousands of New Yorkers who live in and work out of commercial space that is not in compliance state and local housing maintenance codes.

The Committee will also be focused on securing an increase in the SCOR Bond cap to ensure an uninterrupted flow of state resources to affordable housing development. Without a significant increase in the cap, all of New York State's housing capital programs could be shut down.

Another priority for the Committee is to extend the authority of the Housing Finance Agency (HFA) and the State of New York Mortgage Agency (SONYMA) to engage in various affordable housing programs.

This year the Committee began work on a number of important initiatives which it will continue to pursue next year. The Committee will continue its push for the adoption of a State Low Income Housing Tax Credit. The Federal Low Income Housing Tax Credit has been very successful in producing affordable housing by leveraging private resources. The Committee believes this successful relationship between the public and private sector can be replicated on the State level.

Another important initiative is the establishment of a revolving loan fund to help working families purchase and rehabilitate homes. Many of these families can currently afford monthly mortgage payments, but are unable to buy a home due to high downpayment and closing costs. By assisting families with these costs, as well as the cost of necessary repairs, this initiative could make the American dream a reality for thousands of New Yorkers.

Finally, the Committee will continue its fight to ensure that the State budget provides adequate funding to assist in the development of affordable housing, the rehabilitation of existing units, and the expansion of housing opportunities for the homeless, the elderly and those with special needs.

I look forward to my sixth year as chairman with enthusiasm and will make every effort to uphold the Assembly's commitment to quality, affordable housing for all of New York State's citizens.

V. APPENDICES

APPENDIX A

1998 Summary Sheet

Summary of Action on all Bills
Referred to the Committee On Housing

APPENDIX B

Bills That Passed the Assembly

APPENDIX C

Bills Signed By The Governor

CHAPTER	BILL and SPONSOR	SUBJECT
22	A.8869 (Lopez)	Extends until 2002 the City of New York's authority to establish initial rents for multiple dwelling units which have been rehabilitated through loans made pursuant to Article 8 of the Private Housing Finance Law.
23	A.8870 (Lopez)	Extends until 2002 the authority of municipalities to establish initial rents for dwelling units which have been aided by loans made pursuant to Article 11 of the Private Housing Finance Law.
24	A.8871 (Lopez)	Extends until 2002 the authority of the City of New York to establish initial rents for dwelling units which have been aided by loans made pursuant to Article 8-A of the Private Housing Finance Law.
48	A.4577 (Koon)	Requires manufactured housing community owners or operators to provide a copy of all rules and regulations governing rental or occupancy at the time the lease is presented to a prospective tenant.
93	A.9520 (Lopez)	Extends until 2003 the New York City Department of Housing, Preservation and Development's authority to provide loans for up to 100 percent of the development cost of affordable housing projects.
96	A.7613 (Lopez)	Requires the courts to notify the owner or lessee of a mortgaged premises that they must turn security deposits over to the receiver where one has been appointed in a foreclosure action.
142	A.10407 (Lopez)	Extends the sunset dates of SONYMA's mortgage financing and mortgage insurance programs and increases the amount of tax-exempt bonds SONYMA is authorized to issue to $5.945 billion.
187	A.10404-A (Lopez)	Increases the bonding authority of the New York State Housing Finance Agency to $4.08 billion.
230	A.11409 (DiNapoli)	Authorizes the North Hempstead Housing Authority to sell or lease all or part of its public housing projects to help ensure the housing authority can continue providing housing for low-income families.
235	A.6023-B (Lopez)	Allows municipalities to forgive after 15 years any outstanding debt on loans made through the Participation Loan Program (Article 15 of the Private Housing Finance Law).
241	A.9284-A (Lopez)	Allows municipalities to forgive after 15 years any outstanding debt on loans made to rental projects through the Affordable Housing Development Loan Program (Article 22, Private Housing Finance Law).
242	A.9282-A (Lopez)	Allows municipalities to forgive after 15 years any outstanding debt on loans made pursuant to Article 8 of the Private Housing Finance Law for the rehabilitation of residential property.
243	A.9281-A (Lopez)	Allows municipalities to forgive after 15 years any outstanding debt on loans made pursuant to Article 8-A of the Private Housing Finance Law for the rehabilitation of residential property.
244	A.9419-A (Parment)	Extends the period of time for repayment of loans by agricultural producers under the farmworker housing project loan fund program from January 1, 2004 to January 1, 2006.
253	A.9191-C (Lopez)	Increases the lifetime funding cap by $300,000 for neighborhood and rural preservation companies.
254	A.11041 (Mayersohn)	Requires the New York City Department of Housing, Preservation and Development (HPD) to determine, in writing, that loan evaporation is necessary to ensure the affordability or economic viability of the building being rehabilitated under the Article 11 program.
283	A.11012 (Cummings)	Requires the New York City Department of Housing, Preservation and Development (HPD) to determine, in writing, that loan evaporation is necessary to ensure the affordability or economic viability of the building being rehabilitated under the Urban Development Action Area program.
422	A.3591-B (Wright)	Provides recourse for cooperatives, condominiums and property owners or homeowners associations where non-occupying owners default on payments due.

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