Two “Tell-All” Bills Advance

For decades, lawmakers have been trying to pass bills that would fundamentally change the co-op admissions process, requiring board members to give prospective applicants the reasons for rejection or face fines. But that was news to Bonnie Honya, who has been on the board of her 1,788-unit Queens co-op, Clearview Gardens, for ten years. A few months ago, when Honya heard about a bill first proposed by Councilman Hiram Monserrate in 2004, she took action. She set up meetings with council members, wrote letters and emails, and lit fires under board members at other buildings to get them to do the same.

“I’m on a mission,” says Honya, who has lived at Clearview for all of her 49 years. “I’m very upset that volunteers are going to be treated like criminals.”

Monserrate’s bill would require that boards give applicants a list of reasons for denial within five days of their rejection, identifying specifically how the applicant failed to meet standards. Failing to do so could result in fines ranging from $1,000 to $15,000 for a first offense.

About two-thirds of the members on the City Council have signed on to the bill. Proponents say it would prevent boards from discriminating against prospective applicants because of such factors as race, family status, or disability. Critics contend it will encourage unnecessary and costly litigation and scare off prospective members from serving on the board.

“I think folks want to keep the privacy they had, the same way that country clubs had in the past,” says Monserrate, a Democrat from Queens, who drafted the bill after hearing complaints from constituents. “I don’t think that’s right, in fact, I think it’s very un-American.” The bill’s opponents point out that a more apt – and accurate – analogy would be to compare co-ops not to private clubs but to private corporations, which is in fact what they are. No one asks corporate boards to reveal their inner workings.

In May, a state bill identical to another state bill put forth in March 2005 was introduced that would go even further than the city legislation. In addition to demanding a list of reasons for rejection, this proposal would require the board to either reject or approve an applicant within 45 days. The penalty for noncompliance? The applicant is automatically granted acceptance.

Although the New York State Association of Realtors supports the city bill, it is also gunning to convince the council to adopt legislation that would include that 45-day deadline, says Duncan MacKenzie, director of government affairs. But Greg Carlson, executive director of the Federation of New York Housing Cooperatives & Condominiums, says that the deadline is too tight, the penalty too harsh, and the language too vague. He notes that the deadline clock starts ticking after a board receives a “completed” form, a nebulous term.

“Is it completed if I have questions and need additional information? This is going to be really onerous, especially on those self-managed buildings staffed by volunteers,” says Carlson, whose organization has joined forces with the Council of New York Cooperatives & Condominiums, the Coordinating Council of Cooperatives, and the HDFC Council to lobby against the legislation.

Barbara Ford, who owns both eponymous real estate and law firms in Queens, says the deadline was aimed at boards that want to reject someone for unlawful reasons and effectively do so by dragging their feet on applications. Ford cites a case where a woman who required full-time nursing care (a status protected under the Americans with Disabilities Act) applied to buy a unit in a Queens co-op, but the board stalled the application so long that she lost her bank commitments.

Ford argues that a list of reasons for rejection is important to keep boards honest. Say a board rejects Mr. Smith, an African-American, and says it denied him because he did not earn more than $100,000 a year. If the three prior white candidates earned only $80,000, Mr. Smith can prove discrimination. “If you have to give a reason, now there is a track record,” Ford says.

But Carlson and other critics say applicants who fear they were discriminated against can already pursue complaints with the city’s Commission on Human Rights and the state’s Division of Human Rights, and under the federal Fair Housing Act. According to the city agency, in 2006, there were 50 discrimination-in-housing complaints, but that number also includes rentals.

After a person files a complaint with the city agency, the commission can force a board to divulge the reasons for rejection, rendering the city bill unnecessary, Carlson says. He adds that the low numbers of complaints prove discrimination is not widespread.

Ford counters that, in her experience, few applicants who suspect discrimination wind up in court or filing official complaints. In just a three-month online survey, about 60 realtors on Long Island reported that they felt a client was rejected for discriminatory reasons.

Carlson warns that if the bill is passed, it might make it even more difficult for candidates to gain admission. “A lot of times, if the applicant is a bit iffy on the financials, the board will try to work it out,” he says. “This would leave no room for that because the boards will simply raise the financial requirements. That will have the reverse effect of what the people on the other side are spouting, and there will be fewer admissions.”

One co-op board told Carlson that if the bill were passed, it would require an attorney at every admissions meeting, a huge financial burden on the board. “No co-op board is going to write a rejection letter. They’ll hand it over to their attorney,” he says. “You have large co-ops that have an attorney on retainer, but what about those hundreds of small co-ops that [are financially strapped]?”

Councilman Leroy G. Comrie Jr. initially backed the bill but has rescinded his support. “There are many structural deficiencies in the bill, and my local co-op and condo associations have pointed them out to me,” Comrie says. An African-American who represents a Queens district, Comrie says that preventing discrimination is a noble goal. “We can still work to craft something that deals with discrimination issues,” but still protects co-ops, boards, and board members, he says.

Lawyer Geoffrey Mazel, a partner in Hankin, Handwerker & Mazel which represents buildings consisting of about 7,000 units, says the unique nature of co-ops requires that boards evaluate candidates thoroughly. Under the bill, if a board member finds out something bad about a prospective applicant from, say, a former neighbor, the board would have to list that source of information. “If I have to reveal that, let’s be real, no one would tell me anything.”

He adds that one particularly galling part of the City Council bill is the provision that allows lawyers and brokers to bring a discrimination complaint. Monserrate says that realtors and lawyers do have a stake and should not lose business because of unlawful behavior. Beyond that, he adds, sellers are also punished under the current system.

“A seller can say, ‘I had a perfect buyer but the board said no. Why? They won’t tell me.’ That’s not fair.” And, Monserrate argues that requiring a list of rejection reasons can help applicants do on their next application, fixing problems such as bad credit.

Mazel thinks that the lost-business argument is ridiculous. “Let’s put the moving company there, too,” he says, adding: “This legislation would be an attorney’s best friend and a board member’s nightmare. It helps nobody but attorneys who can make a living off technical violations. It provides no additional protections for individual purchasers and almost criminalizes the process by imposing such severe penalties for technical violations of the statute.”

Mazel says that in talking to City Council members who support the bill, he was “shocked to learn that many of them do not live in co-ops and have very little knowledge of how they operate, and yet would impose such a burdensome piece of legislation on board members.”

Honya, the board member in Queens, met with Monserrate in early May and said she didn’t change his mind, but that the councilman listened to her concerns and was gracious. “He said he would keep in touch,” Honya says. “I told him we’re still on our mission, and we’re going to try to get everyone [on the council] to drop [their support]. Maybe if we fight hard enough, we can do it.”