Condos and co-ops not covered under FEMA’s disaster aid policy


Co-op owners are not eligible for aid in the wake of superstorm Sandy — or in the aftermath of any other disaster, for that matter. 

As it stands, Homeland Security and Federal Emergency Management Agency policy classifies co-ops and condominiums as businesses rather than as residences, therefore excluding their residents from receiving disaster aid. 

The Association of Riverdale Cooperatives & Condominiums, upon learning of what it called this “gross inequity,” joined with other local and national housing associations to call for change. 

Although he knew of no Riverdale residents who would have been eligible for FEMA funding, ARC president Stephen Budihas wrote to Rep. Eliot Engel, a senior member of the House Energy and Commerce Committee, and New York Sens. Kirsten Gillibrand and Charles Schumer, asking them to pressure FEMA to amend its rules. 

ARC blamed the exclusion on a misinterpretation of the Stafford Act, which constitutes the statutory authority for most federal disaster responses.                                                                                                                       

“We believe that FEMA has misinterpreted the Stafford Act by arbitrarily classifying housing cooperatives, condominiums and homeowners associations as ‘business associations,’ which are excluded from the assistance provisions of the Stafford legislation,” Mr. Budihas wrote in an e-mail. “The issue is not that FEMA nor Homeland Security deliberately wants to exclude co-ops from assistance, but rather that the law does not currently specifically cite individually owned and run ‘co-ops’ anywhere in its text, and therefore, the agencies have no specific guideline in their regard.” 

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This is extremely misleading and shows poor research. Co-op and condo homeowners ARE covered by FEMA -- countless affected apartment owners in New York City and on Long Island have received grants of up to $31,000 for immediate help such temporary relocation costs.

It's only co-op and condo BOARDS (i.e., the governing representatives of the buildings themselves) that are ineligible. No one lives in the common areas (hallways, lobbies, etc.) and FEMA's mandate is to give homeowners immediate survival / shelter help. It's NOT a reconstruction fund. Do your homework. It's both inaccurate and grossly insulting to suggest that FEMA has left co-op and condo homeowners out in the cold with no help. You should be ashamed of yourself for suggesting that. It's verifiably untrue.

Friday, February 22, 2013

Perhaps the "business" classification was intentional; not a filing mistake. The "business" classification does not allow coop homes to be protected in bankruptcy court or Housing Court. Due to the business classification, board of directors, management and sponsor believe they are above the law; they add usurious late charges and legal fees to our maintenance and demand payment immediately. Ironically, refuse to itemize the excessive usury charges. As a result, coop apartment owners are loosing their homes just for falling behind a few dollars in their maintenance, disregarding the difficult economic times that we are all facing. We are losing our homes in great numbers by being evicted in Housing Court, and they don't even bother to keep statistics about it. We are forced to face this abuse without a lawyer in court because we are not eligible for legal aid help, and we cannot afford the high legal expenses required for Supreme Court litigation.

The “business” classification was perhaps intentional on the part of the sponsor because he never intended to allow shareholder residents to manage their cooperative. Coops were advertised as a home within a community, and housing cooperatives are in fact, for tax purposes, a non-profit type of corporation dedicated exclusively to providing residences for its members. However, most of 80’s coops were formed to eliminate the need to comply with 70’s rent regulation laws. Another reason was to control who lives in the coop without having to explain the denial -then this power could be used to discriminate against Hispanic, African American, single women, gay and lesbian, or they could be used it for personal vendettas. A more obscure and sinister reason was for the landlord to get exceedingly high profits, keep control of the new coop and have no responsibility for the overhead -maintaining the apartments and the cost of doing business as a rental corporation.

It is obvious that these sponsors never intended to release control of the building, that's why we have a lot of coops where the sponsor still owns more than 50% shares after 25 years of conversion. Sometimes they are called HUS (holder of the unsold shares). Very cleverly; they created corporations and bought the unsold shares. Then they created management companies and got them hired by the coop boards, to ensure their continual financial control of the coops. The contract between the coop and the management is a one-sided contract that only benefits the management company and their vendors, and ultimately the sponsor. When they vote their large block of shares, any decision becomes his decision. These decisions affects the resident shareholders since they deal with refinancing of the building mortgage, renovations, employees salaries, etc., all of which has to come out of the maintenance paid by the shareholders.

The sponsors also created a Proprietary Lease which has an expiration date. When this date arrives, if the coop faces financial trouble, a decision will be made whether to continue or dissolve the corporation. Since the sponsor owns the majority of the shares, the final decision will be up to him.

Today, most NYC cooperative housing still has a strong presence of the sponsor; they still own more than 50% share and stopped selling since at least 1998. In these coops, it is not uncommon to find that a major investor of the sponsor is also a major investor of the management company. Nor is it uncommon to find coop boards with the same directors since the formation of the coops. Common complaints among shareholders are the refusal to disclose records of the coop, excessive late and legal charges, overpriced unnecessary projects, irresponsible borrowing and unfavorable refinance of underling mortgage, self-serving violations of fiduciary duties, etc. Most of their abuses are targeted at minorities and foreigners and at elderly shareholders with no mortgage on their apartments. The board usually is too weak to resist the sponsor's demands for more money, nor can they be replaced because the sponsor votes his shares to perpetuate them as directors. But almost nobody dares to take them to court because of excessive cost of suing them in State

Supreme Court, due to the "business association" category we were assigned: we know that the exorbitant legal costs will make us lose our homes. It is as if the courts are colluding with them to render us homeless. This is perhaps because the laws were created by the sponsors to benefit themselves at our expense. We whole-heartedly agree with Congressman Israel and Senator Schumer that that the legal status of the coops should be changed from "Business Association" to Home-Residential, entitled to all protections for our apartments, and that FEMA should provide funds for coop homes hit by calamities like the Sandy super-storm. However, in providing any financial help you should make sure then it goes only to the resident shareholders, not to the sponsors, who are carrying on a rental business in our cooperatives: they should pay their share of the damages from their profit, or from their insurance, or by taking a loan just like any other business. In NYC we get TAX abatement every year. However, inexplicably, every time we are supposed to receive abatement credit, the coop imposes an assessment that offsets the amount of credit, which goes to the Sponsor instead. We are afraid the help from FEMA will have the same fate as the tax abatements.

For us, resident shareholders, our coop is our only home. We are senior citizens, single mothers, families with children, gays and straight, and for all of us our coop apartment is our home. A coop was our only affordable option to home ownership. We are people with limited incomes; therefore we can’t fight the abuses of the sponsor-dominated Coop Board. We need help like any other home owner to protect our homes against the financial onslaughts of the Sponsor-dominated board, who seem determined to destroy our homes and steal our apartments. For example, for senior citizens on limited income, reverse mortgages are the only way to keep their homes, but most Coop boards do not allow them to take reverse mortgages. We, like many other Americans, are facing financial difficulties and need the government to protect our homes. We are Americans and our home is no different than a one or two-family homes. We deserve to be treated the same. However, right now we are being treated as second, or perhaps third, class citizens, or as business owners pursuing profits. The coop apartment was sold to us as a home, not as a business.

Sunday, February 24, 2013

Indeed, now we discover the Mother of all evils that beset the wretched coop owners: we thought we were home owners, and it turns up now that the government considers us BUSINESS OWNERS seeking profits. That's a colossal aberration, but it explains why the Sponsors consider themsemves entitled to stay in the Coop on forever, practically running the Coops as unregulated rental businesses, which yields them them exorbitant profits without hardly any overhead or tax liabilities. Since they also take our tax abatements, I surmise they practically don't pay any taxes for their extraordinary profits.

When we tried to persuade our Sponsor that he should consider getting out of the Coop, citing the Jannifer case, in which the judge ruled the Sponsor has an oligation to sell his units within a reasonable time, our President answered - "Why would he walk away from his investment? He has every right to continue renting his apartments for as long as he wants" That means, forever - He's been here for more than 25 years. This Sponsor in Perpetuity syndrome, is the principal cause of the coops being in such chaotic state, because it subvert the very nature of the coops, converting them into vehicles for the profits of a few - Sponsor Mgmt , vendors, at the expense of the many: the coop owners who are are merely living in their apts and are not allowed to make any Concerned Citizens for Coop Reform.

Sunday, February 24, 2013

The Riverdale Press is a defender of the freedom of the press therefore needS to stop covering the sun with one finger. There exist all type of abuse, violations and crimes in the COOP BUSINESS and we resident shareholders are the victims. contact me at COOPHOMEDEFENDERS@GMAIL.COM

Sunday, February 24, 2013