Filing a Complaint with the Attorney General

December 11, 2008

Last night, attorneys Al Taffae and Theresa Racht led a workshop on filling out a complaint and filing it with the Attorney General’s office.  The basic reasons for a complaint are:

  • the sponsor is not selling apartments, instead continuing to run an unregulated rental business
  • the sponsor continues to control the Board, either formally or in some de facto manner

Theresa and Al created a checklist form to make it easier to structure the information needed for a complaint.  If you didn’t attend and would like a copy of the form, please email and we will send it to you. It’s important to be aware that in signing the complaint form, you are attesting to the truthfulness of your allegations.

One of the important goals of RSU is to bring to the attention of politicians and the Attorney General how widespread and pernicious the problem of sponsor-controlled co-ops is.  If you have not downloaded the letters to the Governor, the NYC Public Advocate or the Attorney General from the September 10 meeting, do so now — they are Word documents. Change the date, add any of your own language and send them in.

We need to make some collective noise.


Why Should Shareholders Care if the Sponsor Keeps Apartments?

November 30, 2008

In the very loose credit market that has now ended, it might have seemed like sponsor-controlled co-ops weren’t really such a bad thing — after all, if the building is comfortable to live in, who cares that the sponsor is running a free market rental business with half the apartments, or controlling the building finances?  Now that we are in an era of extremely tight credit, banks will have much more stringent policies about lending in co-ops, preferring to see over 50% of units owner-occupied.

When shareholders cannot sell or refinance their apartments, the sponsor is causing very direct harm to shareholders.

December 10th Meeting Details

November 23, 2008

Theresa Racht and Al Taffae, attorneys and partners in Racht & Taffae, LLP, will be leading the meeting on Wednesday, December 10th, 2008 at 6:30.  They will help resident shareholders draft complaint letters to the Attorney General.  To make the best use of this time, it’s important you come prepared.  Try to get as much of the following information together as you can:

  • Address of Building
  • Name of Sponsor and principals of Sponsor
  • Date the building converted to a coop/condo
  • Number of residential units in the building
  • Number of residential units still owned by sponsor
  • Of sponsor owned units, how many are free market (non-rent stabilized)?
  • Is Sponsor filing update amendments to the offering plan?
  • When was the date of the last amendment?
  • When did the sponsor last sell an apartment?
  • Does the coop/condo have annual meetings?
  • Do you receive minutes of the annual meeting?
  • Does the sponsor control the Board of Directors?
  • If sponsor controls,  is it by electing sponsor’s own people (principals, employees) or by voting for allied shareholders?
  • Does sponsor either manage the building or pick the managing agent?
  • What is the name of the managing agent?

Speak to the other shareholders in your building and work together to gather this information.

The meeting will be held at:  MS 142, 610 Henry Street, Carroll Gardens, Brooklyn.  (Take the F to Carroll Street, exit South end of the train near 2nd Place, go right on 2nd Place to Henry Street, left on Henry and you will see the school.)

Next Meeting: December 10th

November 11, 2008

Come meet with two attorneys who will help shareholders determine how to write a complaint to the Attorney General’s office.

Wednesday, December 10, 2008

6:30 p.m.  in Carroll Gardens, Brooklyn (F train to Carroll Street — just 4 stops from Manhattan)

Exact address and more details to come…

Make sure you and your fellow shareholders have sent these letters:

September 26, 2008

The three letters below are to Attorney General Andrew Cuomo, NY Governor David Paterson, and the NYC Public Advocate Betsy Gotbaum (download links are at the bottom of the post The Big Meeting was Big). It expresses a general complaint about sponsors retaining significant numbers of apartments and continuing to rent, rather than sell, them.

It’s crucial that we raise the visibility of this issue.

Before you mail them, make copies and send them to your NY State Senator and NY State Assemblyperson. Email if you don’t know your local state represenatives.

The Big Meeting was Big!

September 11, 2008

Over 100 shareholders from about 15 buildings in Brooklyn and the Bronx packed the first meeting of the RSU NYC group, sponsored by the Flatbush Development Corp (FDC). Speakers included Helene Weinstein and Jim Brennan, both Assembly Members from Brooklyn; Beatrice Lesser, attorney at Gallet Dreyer & Berkey, LLP, who spoke about the Jennifer Realty case; and Jason Otoño, counsel from Brooklyn Borough President’ office.

As shareholders from different buildings introduced themselves, certain issues (and sponsor names) were repeated: lack of regular Board and annual meetings, sponsors electing/appointing majority of Board even twenty years after conversion, sponsors serving as managing agent or controlling the managing agent, lack of services for shareholders, supers doing renovation work for sponsors’ apartments and neglecting resident shareholders, unpaid utility bills for the building (e.g. Con Ed bills for over $100,000 going unpaid), financial information not shared with resident Board members, lack of regular and timely distribution of annual financial statements. Several buildings also described retaliatory actions taken by the sponsor once the shareholders began to organize and demand the cooperative function legally.

Many avenues for justice were discussed. The first steps were taken at the meeting — shareholders signed letters to the Governor, the Attorney General and the NYC Public Advocate, which will be xeroxed and copies sent to each shareholder’s NY State representatives and NYC Council members. Copies of those letters are posted below, so if you want to print them and send them (or get all the shareholders in your building to do so, you can.) Please send copies to your State Assemblyperson and State Senator. Email us to let us know that you are doing so. There is strength in numbers.

Stay tuned to this blog for the date and place of the next meeting, which will focus on filing a complaint with the Attorney General’s office.

Letter to Governor Paterson

Letter to the Attorney General

Letter to the NYC Public Advocate

Sponsor-Controlled Co-ops…another form of predatory equity?

August 25, 2008

Much has been written about “predatory equity,” where a landlord/management company receives financing from a large bank like Credit Suisse, promising a rate of profit that is not possible if the apartments remain rent-regulated. So, of course, there are strong incentives to reduce the number of rent-regulated apartments and turn them to market-rate rentals. This is the same thing that happens in co-ops where the sponsor retains half of the shares.

In a typical sponsor-controlled co-op, now a co-op for 20 years, a large percentage of that 50% of apartments have now moved out of rent-regulation. In a co-op building, as soon as the original tenant leaves, the apartment is now no longer regulated. Shareholders in these buildings — where the sponsor is almost always also the management company — report repairs and renovations to rental apartments being done on the shareholders’ dime.

How big a problem is this? In a report published by the NYC Rent Guidelines Board, “Changes to the Rent Stabilized Housing Stock in New York City, 1994-2002,” the numbers look like this: during the 1980s, when the vast majority of conversions occurred, over 315,000 rent-stabilized units were in conversion buildings. Just during the 1994-2002 period, 32,660 of those rent-stabilized units became free-market rentals.