Co-op board members are rallying against proposed laws aimed at increasing transparency and curtailing discrimination in the co-op board application review process.
Board leaders pushed back against three New York City Council bills that would mandate co-op boards to disclose their reasons for denying an application, among other provisions, at a hearing before the committee on housing and buildings on Tuesday.
“Let’s say this plainly: discrimination is happening today, and everyone knows it,” committee chairperson Pierina Sanchez said in her opening remarks. “Secrecy is not a neutral feature of the system. It is the condition that allows discrimination to flourish and go unchallenged.”
The bills are the latest iteration of city and state legislation looking to regulate the co-op application process, an undertaking that has long held a reputation for being onerous, opaque, and at times, discriminatory. Though previous attempts to pass similar legislation in the city have failed, nearby counties, such as Westchester, Suffolk and Nassau, have adopted their own versions of the laws.
Most of the testimony related to Intro 407, a rule co-proposed by Public Advocate Jumaane Wiliams and dubbed the “Reasons Bill.” The legislation, if approved, would require boards to provide written explanations of why they turned down a prospective buyer’s application to purchase an apartment.
Opponents of the bill argue that provision would create more liability for co-op board members. As written, they claim the legislation requires an individual board member to sign off on the reasons disclosed “under penalty of perjury.” They also raised concerns that the bill would discourage owners from volunteering to serve on boards, which members say is already a tall order.
“In the 28 years I’ve been on the co-op board, I can count on one hand the number of applications we have rejected,” said Will Kwan, who serves on the board of a co-op at 139 East 33rd Street. “Why have I been on the board so long? Because no one wants to volunteer their time.”
Kwan later added that he felt lawmakers were trying to “choke the life out of co-ops” with increasing regulation.
Williams responded, citing existing laws that target housing discrimination holding board members liable for their decisions on applications. He added that he was open to speaking with stakeholders to adjust language in the law to make compliance easier, though he believed that “some version” of the legislation was necessary.
“What we’re trying to do here is make some of the things that already exist more enforceable,” Williams said.
John Curtis, the vice president of a co-op at 370 Riverside Drive, suggested that Williams change the bill from requiring an individual member to sign off on the reasons to instead have the approval come from the co-op corporation. He also suggested that the board be required to state the primary reason, not every single reason taken into consideration.
Among the objections cited by the bill’s opponents was a lack of data tied to claims of discrimination in co-ops. JoAnn Kamuf Ward, a representative with the city’s commission on human rights, testified that of the 500 housing-related complaints filed with the agency last year, roughly 10 percent of them were about co-ops, and of those, only a handful were related to co-op purchases. (Individuals can also report claims of housing discrimination to state agencies or bring their own civil lawsuits.)
Ward’s response sparked outbursts from members of the audience in an overflow meeting room, with one woman saying “no kidding” and later adding “no shit.”
“There is no data,” said Tanya Arias, an agent with Corcoran and board president at 45 Tudor City Place. She added that the conventional industry wisdom is that co-ops have a 3 to 5 percent rejection rate.
Council member Lincoln Restler of North Brooklyn asked Ward whether she believed the low number of complaints was because prospective buyers lack insight into the board’s decision-making process and therefore don’t have any documentation or actionable evidence to bring forth a discrimination claim.
But Ward said that in most cases where discrimination is alleged, alleged victims typically don’t have access to documentation when they initially make the claim. Others later testified that cases of discrimination in co-ops could be underreported because of the burdensome process to bring those claims forward.
Council member Eric Dinowitz, who represents a district in the Bronx, suggested the committee refrain from moving any of the bills forward until more data becomes available, like the number of applications for co-op purchases and the rate of denial.
“Discrimination is already illegal,” Dinowitz said, adding later that the bills would likely significantly increase insurance and legal costs for boards. “Wouldn’t it be more prudent to just get more data, get better data before we invariably increase the risk for individual board members and increase the costs for shareholders?”
Sanchez interrupted testimony to say that though she understands the objections to the bills, “you are not the actors we’re worried about.”
“You are the good folks,” Sanchez said.
Board members also raised concerns about another bill, Intro 1120A, which would require co-op boards to mark an application as complete or incomplete within 10 days of receiving it. Once the application is considered complete, the board would then have 45 days to issue a decision, with an option for a 14-day extension.
The legislation was proposed by majority leader Amanda Farias of the Bronx, who said the bill was designed to “put an end to the limitless waiting so many applicants endure.”
Opponents of the bill largely took issue with a provision in the proposed law that would grant an automatic acceptance of an application if the board failed to respond within the timeline.
“That person could be financially unqualified or dangerous or just not a good fit, and the board would lose the opportunity to vote on that person,” Rebecca Poole, membership director of the Council of New York Cooperatives & Condominiums, said in an interview ahead of the hearing.
“All other timing bills come with a fine or financial penalty for not meeting that deadline,” she said and added that often delays are due to issues outside of the board’s control. “Automatic acceptance is problematic.”
Not all those present from the industry were there to testify against the bill. Michael Kelly with the New York State Association of Realtors, Yvette Clark Watkins with the Long Island Board of Realtors and Crystal Hawkins Syska of the Hudson Gateway Association of Realtors testified in support of the legislation.
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