HDFC Coop Maximum Income Determined by NY Private Housing Section 576

Maximum income determined by formula (NYS PHFL Section 576) 6-7 x Annual Maintenance

Some HDFC coops may be subject to governing documents or agreements like a Deed that, instead of specifying an AMI level, refers to a formula in Section 576 of the Private Housing Finance Law to determine the maximum income for new shareholders. This formula requires that units be made affordable to new shareholders (i.e. purchasers) that earn no more than 6 (for a 1-2 person household) or 7 (for a 3+ person household) times the annual maintenance fee plus utility costs (please use numbers located under Utility Allowance for utility amounts corresponding to unit size) plus six percent (6%) of the current shareholder’s (i.e. seller’s) original investment.

Outlined below are the steps to calculate the maximum household income in an HDFC coop subject to Section 576 restrictions.

Example 1: 1-bedroom apartment being sold to a 2-person household

Here is an example using the Section 576 formula for determining a new purchaser's maximum income based on the following details:

Unit size: 1-bedroom apartment
Monthly maintenance: $700
Annual maintenance: $8,400 ($700 x 12 months)
Annual utilities: $1,164 ($97 per month x 12)
Seller's purchase price ("original investment"): $260,000
6% of the original investment: $15,600 (6% of $260,000)
Purchaser's household size: 2
Multiplier based on household size (required by the Statute): 6x

For comparison, the 2020 Area Median Income level for a 2-person household earning $72,984 is 80% AMI.

Example 2: 3-bedroom apartment being sold to a 4-person household

Here is an example using the Section 576 formula for determining a new purchaser's maximum income based on the following details:

Unit size: 3-bedroom apartment
Monthly maintenance: $900
Annual maintenance: $10,800 ($900 x 12 months)
Annual utilities: $1,752 ($146 per month x 12)
Seller's purchase price ("original investment"): $240,000
6% of the original investment: $14,400 (6% of $240,000)
Purchaser's household size: 4
Multiplier based on household size (required by the Statute): 7x

For comparison, the 2020 Area Median Income level for a 2-person household earning $102,264 is 90% AMI.

HDFC coops should always refer to their governing documents such as a Certificate of Incorporation, Bylaws and Offering Plan, and any Deed, Regulatory Agreement, or similar document in determining income restrictions. Each HDFC must comply with the most restrictive requirements in place.