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nyc BLOG estate

Future of HDFC Coops? Now May Be the Time to Sell.

Why sell your HDFC coop now? 

As an industry recognized expert in HDFC coop sales, I've been asked by buyers, sellers and HDFC coop board members about the proposed changes. At this point the changes have only been proposed to community boards by HPD and a "taskforce" working with HPD of so-called "interested stakeholders" aka affordable housing activists, community organizers, law firms and management companies with their own political and monetary agendas before taking this proposal to the City Council for a vote sometime in 2017. The City Council must vote to approve a new tax break for HDFCs before this program can go into effect. Tax break is fine the rest of the proposal is not.

The proposed changes may put the future of your investment and equity in jeopardy. Because of this uncertainty NOW may be the most advantageous time to sell.

Many shareholders that I sold HDFC units to have reached out to me with concerns about the price they paid for their unit and the new proposed resale caps. My understanding is HPD’s proposal exempts units that have already sold above the proposed price caps by excluding those units from price restriction, and allowing a higher income cap of 165% of AMI for the resale of those specific units. While such an accommodation sounds great in theory and intention it's not based in reality. 

Whether an apartment is "affordable" or "market" the market (supply and demand) determines what a buyer will pay regardless of income but not the government. The government can not guarantee to shareholders who bought their apartments at prices above the proposed price caps that they will not lose any equity when they sell.

All units in a building need to be priced accordingly. Why would one buyer pay a higher price for a comparable unit in the same building when other comparable units are being sold for less? 

Proposed Changes and New Regulatory Agreement: 

According to advocates for the proposed changes and new regulatory agreement, the proposed change aims to preserve true affordability: maintaining income restrictions, while introducing asset restrictions and caps on sales prices (in buildings that vote to sign the Agreement)

HPD’s current avenues to help are limited under Article XI of the Private Housing Finance Law (PHFL). HPD has authority over formation, dissolution, and changes to certificate of incorporation

The "taskforce" of "interested stakeholders" expects that introducing this Regulatory Agreement will create more clarity for buildings about the affordability intentions of Article. In my opinion these "Interested stakeholders" want to change the "P" in (PHFL) from Private Housing Finance Law to Public Housing Finance Law eliminating shareholders and self-sustaining coops their property rights.

 Provisions of Proposed New Regulatory Agreement 

• 40-year Agreement with corresponding tax exemption that will be more generous than the current tax exemption for properties sold through DAMP (The Division of Alternative Management) cap which expires in 2029) 
 • A deeper exemption to account for added requirements in the Regulatory Agreement
 • Every eligible HDFC Coop – even high-value coops – would receive a tax benefit
 • The lowest value coops, which experience high rates of financial distress, would pay no property taxes on the residential part of their building, and could use the savings to pay down delinquent tax bills or making building improvements
 • To improve a building’s overall financial health, the new Agreement will require a 30% flip tax. When units are sold, 30% of the profit from that sale will go to the building’s reserve fund

Sales Restrictions

 • Eligibility for becoming a shareholder in an HDFC:
• Household income at or below 120% of AMI ($108,750 for a family of 4 in 2016)
• Household assets at or below 175% of AMI
 • Household must make the HDFC unit its primary residence
• Shareholders cannot sublet their apartments for more than 18 months cumulative out of a five year period, and they must obtain Board and Monitor approval if they choose to sublet their units
• Shareholders cannot own property within 100 miles of New York City
• Sales of units at prices affordable to 110% of AMI or below

While the proposed changes add more restrictions, and burdens for both buyers and sellers it does not address the problem of coop boards lack of accountability to its shareholders and potential buyers.

The city council has never voted to make coops in NYC accountable even though bills have been proposed numerous times. A coop does not have to give a reason why they reject a purchaser, they do not have to follow any standard application process or procedures nor are they required to conduct the application/purchase approval process in a timely manner. No special training or knowledge of real estate or Fair Housing is required to be a director on a coop board. The city council, the mayor and HPD should be concerned about housing discrimination rather than punishing low and moderate income New Yorkers that were fortunate enough to be here 20-30 years ago and take the on abandoned buildings in deteriorating neighborhoods. The original intent and spirit of the HDFC.

Contact your city council member and let them know you're an HDFC shareholder that wants to sell your unit to a low or moderate income New Yorker but you don't want the government punishing you by mandating the price you can sell it for. The income restriction already in place naturally limits the price you can get and it's still significantly below market. A portion of your profit is going back to the HDFC housing corporation in the form of flip tax already limiting your equity.

If you have been considering selling your HDFC coop, please contact me for a complimentary market evaluation and consultation.


  1. is the following restriction preexisting?
    "Shareholders cannot own property within 100 miles of New York City"

  2. Preexisting? If you own another property you may not be eligible to purchase an HDFC coop. If you are already a shareholder in an HDFC coop and own another property it's probably fine although primary residence has always been a requirement of HDFC.


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