It's shaping up to be an unexpectedly busy news week for HDFC co-ops: Just a couple of days after we wrote about the loopholes that make these affordable apartments favorable for "trust fund babies," it turns out the the city is looking to institute measures to solve the problem.
Since the tax breaks for HDFC expire in 2029, DNAinfo reports, the city is taking the opportunity to overhaul the entire program, including potential new rules such as sales price caps and new asset restrictions for buyers. (As we wrote previously, HDFCs currently have strict income caps on buyers but no such rules about assets, which are notoriously hard to track.) The proposed new rules would also require HDFCs seeking the tax break to allow oversight by a third-party monitor, and make mandatory an already-common flip tax on apartment sale profits.
Though the new measures are aimed at keeping HDFCs affordable and preventing the mismanagement that's plagued some buildings under the program, DNAinfo reports that some shareholders have bristled at the potential new regulations, and have already launched a petition against the new regulatory agreement.
However, city officials have said that some co-ops could opt out of the third-party monitor requirement if they prove themselves to be self-sustaining and well managed. “The proposals on the table would include restrictions that allow sufficient oversight to ensure HDFC co-op buildings remain viable and affordable for another generation or more, as intended under the law," an HPD spokesperson told DNAinfo.
It's unclear how the city plans to track buyer assets, but as far as price caps go, with some exceptions for pricier apartments, the plan is to set home prices and levels deemed affordable for buyers making no more than 110 percent of Area Median Income (AMI), which is currently $89,760 for a family of three.
In any case, given that the tax breaks don't expire until 2029, there's plenty of time for the city and HDFC shareholders to come to a mutually agreeable arrangement. We suspect this isn't the last we'll be hearing of the issue.
You Might Also Like