Chapter 9 - Right of First Refusal and First Opportunity to Purchase

Section 26-801

Section 26-801

  §  26-801 Definitions. For the purposes of this section, the following
definitions shall apply:
  (a) "Affordable" shall mean that rental expenses for dwelling units do
not exceed thirty percent of the annual gross household  income  of  the
existing  tenants,  and/or  where rental expenses do not exceed the rent
levels allowable pursuant to the rent restrictions  applicable  to  such
dwelling units prior to conversion, provided however that dwelling units
which  become  vacant in assisted rental housing should not be rented to
households  whose  income  exceeds  eighty  percent  of  the  New   York
metropolitan  area  median  income  as  determined  by the United States
department of housing and urban development.
  (b) "Appraised value" shall mean the value as determined by a majority
vote of an advisory panel of three appraisers  who  shall  perform  such
appraisal  in  accordance  with  the  American Arbitration Association's
rules for the real estate industry.
  (c) "Assisted rental housing" shall mean  a  privately-owned  multiple
dwelling  or group of multiple dwelling units managed together under the
same ownership in which the  majority  of  dwelling  units  therein  are
subject to federal, state or city income eligibility restrictions and in
which  rents  for  such  dwelling  units  are  controlled,  regulated or
assisted by a federal, state or city agency  pursuant  to  a  regulatory
agreement  or rental assistance agreement designed to make such dwelling
units affordable on  a  project-based  basis.  Assisted  rental  housing
programs shall include:
  (1)  any  program  created, administered, or supervised by the city or
state under article II or article IV of the private housing finance law,
but shall not include any multiple  dwelling  owned  or  operated  by  a
company  organized under article II or article IV of the private housing
finance law that was occupied prior to January 1, 1974.
  (2) any program providing project-based assistance under section eight
of the United States housing act of 1937, as it may be amended from time
to time; and
  (3) housing programs governed by sections 202, 207, 221, 232, 236,  or
811  of  the national housing act, (12 U.S.C. 1701 et seq.), as they may
be amended from time to time;
  (d) "Bona fide purchaser" shall mean  a  person  or  entity  that  has
tendered a bona fide offer to purchase the assisted rental housing.
  (e)  "Bona fide offer to purchase" shall mean a good faith and without
fraud offer, made in writing and approved  by  the  department  that  is
tendered  by  a bona fide purchaser no later than one hundred and twenty
days after an appraisal performed pursuant to  section  26-804  of  this
chapter, and that is non-binding on the owner with intent to convert.
  (f)  "Conversion"  or  "convert"  shall  mean  the  transfer of title,
leasing, intention to sell or lease,  mortgage  pre-payment,  withdrawal
from  an  assisted  housing  program,  decision  not  to extend or renew
participation in the program or any other action taken by the owner that
would result in the termination of participation by  the  owner  in  the
assisted rental housing program.
  (g)  "Household"  shall mean all lawful occupants of any dwelling unit
as defined in section 27-2004 of this code.
  (h) "Household income" shall mean, for any household, the sum  of  the
amount  reported  separately  in the most recent individual or joint tax
return for wage or salary income, net  self-employed  income,  interest,
dividends,   rent  received,  royalties,  social  security  or  railroad
retirement benefits or disability benefits and all other income for each
member of the household reported on a tax return.
  (i) "Department" shall mean the department of housing preservation and
development or successor agency.

  (j) "Financial assistance" shall  mean  any  benefits  received  as  a
result  of  an  assisted  rental  housing  program  that act to maintain
affordable rents in the assisted rental housing.
  (k)  "First  opportunity  to purchase" shall mean the opportunity by a
tenant association, or if applicable, a qualified entity, to purchase in
good faith and without fraud the assisted rental housing at or below its
appraised value before such assisted rental housing becomes  subject  to
conversion.
  (l)  "Notice" shall mean a written communication addressed to a tenant
association, or if no tenant association exists, to each tenant,  or  if
applicable,  to  a  qualified  entity,  by  means  of  first  class  and
registered mail, or personal delivery upon a tenant association,  or  if
no  tenant  association  exists,  upon  each tenant, or if applicable, a
qualified entity. Each such notice shall be deemed to  have  been  given
upon  the deposit of such first class and registered mail in the custody
of the  United  States  postal  service  or  upon  receipt  of  personal
delivery,  and  by  posting  of  such  notice in the common areas of the
assisted rental housing.
  (m) "Owner" shall mean any person or entity, or  combination  of  such
persons  or entities, or any agent of such persons or entities, that has
a controlling interest in assisted rental housing  that  is  subject  to
conversion.
  (n) "Qualified entity" shall mean any individual, partnership, limited
liability  partnership,  limited  liability  corporation, not-for-profit
corporation or business corporation, or other entity  authorized  to  do
business  in  New  York  state  and  experienced  in  the  management of
affordable housing, designated by the tenants residing in at least sixty
percent of the occupied dwelling units within the same  assisted  rental
housing  to act on its behalf pursuant to section 26-809 of this chapter
and approved in writing by the department and which obligates itself and
any successors in interest  to  assume  the  ongoing  responsibility  of
continuing  maintenance  and operation of the assisted rental housing as
affordable for  the  duration  of  the  housing's  useful  life  and  in
accordance with the purposes of this chapter.
  (o)  "Right  of  first  refusal"  shall  mean  the  right  of a tenant
association, or if applicable, a qualified  entity,  to  submit  a  good
faith  and  without fraud offer, in writing to the owner to purchase the
higher of the assisted rental housing's appraised value or the identical
price, terms and conditions offered by a bona fide purchaser as approved
by the department.
  (p) "Tenant" shall  mean  a  lawful  occupant  who  resides  within  a
dwelling  unit  within such assisted rental housing pursuant to law or a
lease recognized by either the owner of such  assisted  rental  housing,
the department or a court of competent jurisdiction.
  (q)   "Tenant   association"   shall   mean  an  association,  whether
incorporated or not, for which  written  consent  to  forming  a  tenant
association  has  been  given  by  tenants  representing  at least sixty
percent of the occupied dwelling units within the same  assisted  rental
housing, and which association notifies or has notified the owner of the
assisted   rental  housing  and  the  department  of  its  existence  or
establishment and has provided to such  owner  and  the  department  the
names  and  addresses of at least two of the officers or representatives
of such association.  Where more than one group of tenants in  the  same
assisted  rental  housing  claims  to be the tenant association for such
assisted rental housing, the department shall determine which group,  if
any,  is  the tenant association for the purposes of this chapter in the
same manner as the department certifies a  tenant  association  for  the
purposes of article II of the private housing finance law.

Section 26-802

Section 26-802

  §  26-802  Notification  of  impending conversion. (a) Notice shall be
provided by the owner  to  the  tenant  association,  or  if  no  tenant
association  exists,  to  each  tenant,  and  to  the  department of the
intention of the owner to take  any  action  that  will  result  in  the
conversion of the assisted rental housing.
  (b)  Such notice shall be provided no less than twelve months prior to
the taking of such action by the owner. Such notice  shall  include  the
following information:
  (1) The name and address of each owner of the assisted rental housing.
For  any owner that is a corporation, the notice shall contain the names
and addresses of the officers and directors of the  corporation  and  of
any  person  directly or indirectly holding more than ten percent of any
class of the outstanding stock of the corporation. For any owner that is
a partnership or joint venture, the notice shall contain  the  name  and
address  of  each  individual who is a principal or exercises control of
such entities.
  (2) The address and/or addresses and the  name  and/or  names  of  the
assisted rental housing and the type of program or programs to which the
assisted rental housing is subject;
  (3)  The nature of the action that the owner intends to take that will
result in a conversion;
  (4) The date on which such  action  resulting  in  the  conversion  is
anticipated to take place;
  (5)  The  provision  of law, rule or regulation pursuant to which such
action is authorized;
  (6) The  total  number  and  type  of  dwelling  units  subject  to  a
conversion;
  (7)  The  current  rent  schedule for the dwelling units along with an
estimation of the rent increases anticipated upon conversion;
  (8) The income and expense report for the twelve-month period prior to
the notice including capital improvements, real property taxes and other
municipal charges;
  (9) The amount of the outstanding mortgage  as  of  the  date  of  the
notice;
  (10)  The  two  most  recent  inspection  reports from the real estate
assessment center of the United States department of housing  and  urban
development,  for  the  assisted  rental  housing  or  group of multiple
dwelling units operated together under the same ownership for which such
inspection reports are required, or, the reports of the two most  recent
comprehensive  building-wide  inspection  reports  that  may  have  been
conducted by the department or by the New York state division of housing
and community renewal;
  (11) A statement of notice in a  manner  approved  by  the  department
which  advises a tenant association, or if no tenant association exists,
advises each tenant, of the first opportunity to purchase as required by
section 26-806 of this chapter, or of the right  of  first  refusal,  as
required by section 26-805 of this chapter;
  (12) Such other information the department may require.
  (c)  During  the  twelve-month  notification  period  provided  for in
subdivision b of this section the owner may not sell or contract to sell
the assisted rental housing, but may engage  in  such  discussions  with
other interested parties.
  (d)  Notice  shall not be required of an owner who intends to maintain
the property as assisted rental housing or intends to transfer, lease or
refinance a mortgage in order  to  maintain  the  property  as  assisted
rental housing.
  (e)  Where an owner decides not to convert the assisted rental housing
program, such owner may withdraw the notice of intention to convert  the

assisted  rental  housing  program, subject to the terms of any accepted
offer to purchase or  executed  purchase  and  sale  agreement,  and  to
existing  statutory  and  common  law remedies. In such event, the owner
shall give notice to the tenant association, or if no tenant association
exists,  to each tenant, or if applicable, to a qualified entity, and to
the department. However, should the owner at any time decide to take  an
action that will result in conversion, the twelve-month notice period of
this  section  as  well  as  all  other  applicable requirements of this
chapter shall be complied with.
  (f) Notwithstanding any of the above, if  any  applicable  supervening
statute or program has a notice requirement substantially similar to any
notice  requirement  of  this section, then the notice requirement under
this section shall be that of the supervening statute or program.
  (g) Notwithstanding any of the above, if the notices required by  this
section  requires  more  information  than is required by any applicable
supervening city,  state  or  federal  statute  or  program,  then  such
additional   information  shall  be  provided  within  the  time  period
established by the supervening statute or program.

Section 26-803

Section 26-803

  § 26-803 Notification of bona fide offer to purchase. (a) If the owner
receives  a  bona  fide  offer  to  purchase and intends to consider, or
respond to such bona fide  offer  to  purchase,  then  notice  shall  be
provided  by  the  owner  to  a  tenant  association,  or  if  no tenant
association exists, to  each  tenant,  or  if  applicable,  a  qualified
entity, and the department, no more than fifteen days from the date that
such  bona fide offer to purchase is delivered to the owner. Such notice
shall contain the following information:
  (1) The name and address of the proposed bona fide purchaser; and
  (2) The price and terms and conditions of the offer;
  (b) The owner shall not be required to provide  notice  in  accordance
with subdivision a of this section if the bona fide purchaser making the
offer  agrees to maintain the assisted rental housing as affordable. The
bona fide purchaser shall be required to inform the department as to how
such bona fide purchaser intends to keep the assisted rental housing  as
affordable.

Section 26-804

Section 26-804

  §  26-804 Appraisal determination. (a) The department shall convene an
advisory panel, which advisory panel shall determine the appraised value
of  the  assisted  rental  housing  within  thirty  days  of  a   tenant
association's,  or  if  applicable,  a  qualified entity's notice to the
owner and the department pursuant to subdivision a of section 26-805  or
subdivision a of section 26-806 of this chapter.
  (b)  The advisory panel shall consist of one appraiser selected by the
owner,  one  appraiser  selected  by  the  tenant  association,  or   if
applicable,  a qualified entity, and one appraiser to be selected either
by mutual agreement between the owner and the tenant association  or  if
applicable,  a  qualified  entity,  or  by  mutual agreement between the
appraiser that was selected by the owner and the appraiser  selected  by
the  tenant  association,  or if applicable, a qualified entity, if such
condition is deemed acceptable to the owner and the tenants association,
or if applicable, a qualified entity, and is  agreed  upon  in  writing,
except that in the case of where there is no agreement between the owner
and  the  tenant  association,  or if applicable, a qualified entity, or
between the appraiser that was selected by the owner and  the  appraiser
selected  by  the  tenant  association,  or  if  applicable, a qualified
entity, then the appraiser will be selected by the department. The  cost
for  the appraiser shall be borne by the party responsible for providing
such appraiser. However, where the  department  must  select  the  third
appraiser,  the  cost  for  such appraiser shall be equally borne by the
owner and the tenant association, or if applicable, a qualified entity.
  (c) Notice shall be provided by the department to the  owner  and  the
tenant  association,  or if applicable, a qualified entity, fifteen days
before the intended date that such advisory panel  is  to  initiate  the
performance  of  the  appraisal.  In  the instance when either the owner
fails to provide an appraiser within fifteen days of such notice or when
the tenant association, or if applicable, a qualified entity,  fails  to
provide  an  appraiser  within  fifteen  days  of  such  notice then the
department shall select the appraiser on behalf of the party or  parties
that  failed  to select an appraiser. In such circumstance, the cost for
the appraiser selected by the department shall be  borne  by  the  party
responsible for providing that appraiser.
  (d) The department shall promulgate rules for the timely determination
of the appraised value and that such rules are to be consistent with the
notice  requirements  mandated  under this chapter. The department shall
make such appraised value publicly available within  fifteen  days  from
the date of such advisory panel's determination.
  (e)  In the instance where the owner and the tenant association, or if
applicable, a qualified entity, have mutually agreed upon  an  appraised
value  for  the  assisted  rental  housing prior to the convening of the
advisory panel, the owner and the tenant association, or if  applicable,
a  qualified entity, may in writing apply to the department for a waiver
from subdivisions a through d of this section. The department shall make
a determination upon such application for a waiver within  fifteen  days
from receipt of such application.

Section 26-805

Section 26-805

  §  26-805  Right  of  first  refusal.  (a) A tenant association, or if
applicable,  a  qualified  entity,  shall  notify  the  owner  and   the
department  in  writing  of  its  intent  to exercise its right of first
refusal within sixty days from receipt of notice from the owner pursuant
to subdivision a of section 26-802 of this chapter.
  (b) The tenant association, or  if  applicable,  a  qualified  entity,
following  notice  by  the  owner  in  compliance  with subdivision a of
section 26-802 of this chapter, shall have one hundred twenty days  from
the  date  of  the notice of the determination of the appraised value to
submit its offer to purchase.
  (c) The tenant association, or  if  applicable,  a  qualified  entity,
following  notice  by  the  owner  in  compliance  with subdivision a of
section 26-803 of this chapter, shall have one hundred twenty days  from
the  date  of  a  bona  fide  offer  to  purchase to submit its offer to
purchase.
  (d) If through no fault of a tenant association, or if  applicable,  a
qualified  entity,  or  the  owner,  the  time  periods  provided for in
subdivisions b or c of this section need to be extended, then such  time
periods  may  be  extended by the department. Should such time period be
extended past the notice period provided for in subdivision a of section
26-802 of this chapter, then the provisions of the  applicable  assisted
rental  housing  program  shall  remain  in full force and effect to the
extent permitted by law.
  (e) Unless the owner and a tenant association,  or  if  applicable,  a
qualified  entity,  otherwise  agree  to  purchase  the  assisted rental
housing below its appraised value, the owner shall  sell  such  assisted
rental  housing  at  the  appraised value or at the price contained in a
bona fide offer to purchase price as approved by the department.
  (f) The department shall promulgate rules for the timely completion of
all lending program applications, credit reviews and loan closings.
  (g) If a tenant association, or if  applicable,  a  qualified  entity,
does  not  submit  its  offer in writing to the owner and the department
within the time periods stated in subdivisions b or c  of  this  section
following  notice  by  the  owner  in  compliance  with subdivision a of
section 26-802 of this chapter, then such right will  be  deemed  waived
and  the  owner  shall  have  no further obligations under this section.
However, where a tenant  association,  or  if  applicable,  a  qualified
entity, has previously submitted a notice in accordance with subdivision
a  of  this  section decides not to exercise such right, it may withdraw
such notice by giving written notice to that effect to the owner and  to
the department.

Section 26-806

Section 26-806

  §  26-806  First opportunity to purchase. (a) A tenant association, or
if applicable, a qualified  entity,  shall  notify  the  owner  and  the
department  in  writing  of  its  intent  to exercise its right of first
opportunity to purchase within sixty days from receipt  of  notice  from
the owner pursuant to subdivision a of section 26-802 of this chapter.
  (b)  The  tenant  association,  or  if applicable, a qualified entity,
following notice by the  owner  in  compliance  with  subdivision  a  of
section  26-802 of this chapter, shall have one hundred twenty days from
the date of the notice of the determination of the  appraised  value  to
submit its offer to purchase.
  (c)  If  through no fault of a tenant association, or if applicable, a
qualified entity,  or  the  owner,  the  time  period  provided  for  in
subdivision  b  of  this  section  needs  to be extended, then such time
period may be extended by the department. Should  such  time  period  be
extended past the notice period provided for in subdivision a of section
26-802  of  this chapter, then the provisions of the applicable assisted
rentalhousing program shall remain in  full  force  and  effect  to  the
extent permitted by law.
  (d) Except where the owner and a tenant association, or if applicable,
a  qualified  entity,  agree  to a purchase price of the assisted rental
housing at an amount below the appraised value, any offer made  pursuant
to this section shall be accepted by the owner.
  (e)  If  a  tenant  association, or if applicable, a qualified entity,
does not submit its offer in writing to the  owner  and  the  department
within  the  time  periods  stated  in  subdivision  b  of  this section
following notice by the  owner  in  compliance  with  subdivision  a  of
section  26-802  of  this chapter, then such right will be deemed waived
and the owner shall have no  further  obligations  under  this  section.
However,  where  a  tenant  association,  or  if applicable, a qualified
entity, has previously submitted a notice in accordance with subdivision
a of this section decides not to exercise such right,  it  may  withdraw
such  notice by giving written notice to that effect to the owner and to
the department.

Section 26-807

Section 26-807

  §  26-807  Prior  notification. Notwithstanding any other provision of
this chapter, where an owner has given notice  prior  to  the  effective
date  of  this  chapter  and  the intent of such notice is to initiate a
procedure to withdraw the assisted rental housing  from  a  program  set
forth  in  subdivision  c  of  section  26-801 of this chapter, and such
notice was properly  given  in  accordance  with  any  other  applicable
provision  of  law  and  more  than  forty-five days remain prior to the
expiration of the time  period  applicable  to  such  notice,  a  tenant
association,  or  if  applicable,  a  qualified entity, may complete any
action authorized by sections 26-804, 26-805 and 26-806 of this  chapter
at any time prior to the expiration of such time period.

Section 26-808

Section 26-808

  §  26-808  Long  term  affordability.  A  tenant  association,  or  if
applicable, a qualified entity, including all  successors  in  interest,
which  chooses  to exercise the rights provided for in section 26-805 or
section 26-806 of  this  chapter  will  be  obligated  to  maintain  the
assisted rental housing as affordable.

Section 26-809

Section 26-809

  §  26-809 Right of transfer. (a) During the notice period provided for
in section 26-802 of this chapter, the tenants, by  written  consent  of
the  tenants residing in at least sixty percent of the occupied dwelling
units within the same assisted rental housing, may transfer  the  rights
established  by  section  26-805 and section 26-806 of this chapter to a
qualified entity.
  (b) Notice of such transfer shall be provided to  the  owner  and  the
department  in writing within sixty days from receipt of notice from the
owner pursuant to section 26-802 of this chapter.

Section 26-810

Section 26-810

  §  26-810  Conversion  of  property. Notwithstanding the provisions of
section 26-805 and section 26-806 of this  chapter,  when  a  conversion
occurs,  an  owner or bona fide purchaser shall allow the current tenant
or tenants to remain in their respective dwelling units for  the  longer
of  six  months  from  the effective date of the conversion or until the
tenant's lease expires, and at the same terms and conditions  as  before
such  conversion. Such owner or purchaser may, with the agreement of the
tenant or tenants, relocate such tenant or tenants to  comparable  units
with comparable rents in accordance with procedures to be established by
the rules of the department.

Section 26-811

Section 26-811

  §  26-811  Penalty.  An  owner found to have violated any provision of
this chapter shall, in addition to any other monetary  and/or  equitable
damages for which the owner may be liable, be liable for a civil penalty
of  five  thousand  dollars  per month per dwelling unit in the assisted
rental housing, and shall also pay to a tenant  association,  or  if  no
tenant  association  exists,  each tenant, or if applicable, a qualified
entity, fees and costs incurred in bringing an  enforcement  proceeding.
The  total  civil  penalties may not exceed one hundred thousand dollars
per dwelling unit. Nothing in  this  section  shall  be  interpreted  as
prohibiting  the tenant association, or if no tenant association exists,
the  tenants,  or  if  applicable,  a  qualified  entity,  from  seeking
injunctive  relief  against a non-compliant owner. Such proceeding shall
be brought in a court of competent jurisdiction.

Section 26-812

Section 26-812

  §  26-812  Exclusions.  (a)  Nothing  in this chapter shall affect any
existing agreement between a tenant association and an  owner  regarding
the  management  and  operation  of  the  assisted rental housing or the
transfer of the assisted rental  housing  to  a  tenant  association  or
similar  organization  in  effect on the effective date of this chapter,
except that any renewal, modification or  amendment  of  such  agreement
occurring  on  or  after  the  effective date of this local law shall be
subject to the provisions of this chapter.
  (b) Nothing in  this  chapter  shall  affect  any  existing  agreement
between  an  owner and one or more governmental entities relating to the
management and operation of a multiple dwelling that  is  not  otherwise
subject to the private housing finance law or to federal law.
  (c)  Nothing  in  this  chapter shall affect an owner or purchaser who
wants to refinance in order to maintain  participation  in  an  assisted
rental housing program.
  (d)  The provisions of this chapter shall not apply to a purchase by a
governmental  entity  implementing  its  powers  of  eminent  domain;  a
judicially  supervised  sale  or  transfer  of  property; any bankruptcy
proceedings; or operation of law.
  (e) The provisions of this chapter shall not apply where a  notice  as
described  in  section  26-807  of  this  chapter  was properly given in
accordance with any other applicable provision of law and forty-five  or
fewer  days  remain  prior  to  the expiration of such applicable notice
period.

Section 26-813

Section 26-813

  § 26-813  Judicial  Review.  Any  person  aggrieved  by  an  appraisal
determination made pursuant to section 26-804 of this chapter, or by the
failure of the department to approve a bona fide offer to purchase, may,
within thirty days of the  appraisal  determination  or  action  by  the
department,  seek  judicial  review pursuant to article seventy-eight of
the civil practice law and rules in the supreme court for the county  in
which  the assisted rental housing is located. In the event that a court
may find that the appraisal or action by the department constitutes  the
equivalent  of  a  taking  without  just  compensation,  the court shall
require that a new appraisal or determination be made. The time  periods
set  forth in this chapter shall be tolled during the pendency of such a
proceeding and until a new appraisal or  determination,  if  needed,  is
made.