Epstein Bill May Cost Low-Income Co-Op Owners Their Homes

Assemblymember Harvey Epstein (D-Lower East Side, East Village, Murray Hill) has sponsored legislation that has long time co-op residents alarmed that they may lose all the equity on their hard-fought property.

In 1981, New York City established Housing Development Fund Corporations (HDFCs) to help address the city’s drug and crime problems. These private organizations helped the city reduce its public housing costs by establishing affordable low-income cooperative apartments. In turn, HDFC residents would be able to “stabilize their communities” and “chart their own destinies.” Today, the city is home to about 1,200 HDFC buildings containing over 33,000 apartments.

However, the tax breaks given to HDFCs when they were first established will expire in 2029, and Epstein is one of many officials who believe they need more government regulation as times have changed.

On Jan. 27, he introduced A9608: the HDFC Ombudsman Bill. The legislation creates the office of the HDFC Ombudsman, which would help HDFC board members and shareholders manage their cooperatives.

“While housing development fund companies provide some of the most affordable housing in New York, there exist no meaningful government resource available to their boards and shareholders,” Epstein’s bill reads. “Tenants in buildings that are converting to a housing development fund company need training, and technical and legal assistance.To date, no such resources exist. This article is necessary to provide a neutral, informative, and accessible resource available to boards and shareholders of housing development fund companies.”

However, the shareholders and board members of these HDFCs seem to disagree, arguing that the bill would functionally make their homes into public housing once more.

“It is purposely designed to put our private homes under government control,” said John McBride, a member of the HDFC Coalition. “The ‘HDFC Ombudsman’ bill would require every HDFC co-op shareholder to pay a new annual fee to the government that normal co-ops are not required to pay…be deputized to enter our private co-ops to enforce the Private Housing Finance Law (PHFL), while at the same time Assembly Member Epstein, with his other HDFC draft bill described below, seeks to radically change the PHFL itself in draconian ways that HDFC shareholders strongly oppose.”

McBride also explained that the bill would enable corruption if passed.

“The bill would allow a so-called HDFC Ombudsman, working out of the NYS Attorney General’s Office, to outsource its work to unaccountable private contractors such as UHAB that helped develop Harvey Epstein’s legislation,” he said. “It would be a conflict of interest to award such a government contract to politically connected housing non-profits, and to give them the imprimatur of the Attorney General’s office. It is also highly problematic because such housing non-profits continually promote their other business services to HDFCs.”

The “HDFC Ombudsman” bill is an attempt to perform a controlled experiment on low-income HDFC co-ops, and is also an attempt to build support for a Co-op Ombudsman for regular co-ops, which those co-ops have opposed for years. We refuse to be guinea pigs, and we will NOT be experimented with!

Fortunately, HDFC residents currently have a reprieve. When this reporter asked Epstein about a senate sponsor, he indicated that they were “finalizing” whom. When asked to elaborate further, he declined to clarify.