Page 8 - CooperatorNews NY March 2021

8 COOPERATORNEWS — MARCH 2021 COOPERATORNEWS.COM CooperatorNews.com From Since the second week of January, many co-op boards have been busy working with their banks to complete Paycheck Protection Program (PPP) applications. The inclusion of co-ops in the Fed’s forgivable loan program was the result of a joint effort of local co-op advocacy groups and several elected officials representing areas with a large number of co-ops. The inclusion of co-ops in the PPP initiative will provide much-needed relief to the many cooperative communities that have experienced financial uncertainty or instabil- ity during the COVID pandemic—but many questions remain for boards, managers, and shareholders alike. This article will review more details about co-op eligibility and the long fight to include residential co-ops in this legislation. How It Started On December 27, 2020, the COVID Stimulus Relief Bill (Consolidated Appropria- tions Act ) was signed into law by the Federal Government. This legislation included relief for many hard-hit industries (airlines, restau- rants, etc.) and provided direct relief to many Americans in the form of enhanced unem- ployment benefits and $600 direct payments to qualified persons making under $75,000. Buried away in this 5,000+-page document was a provision that makes co-op corpora- tions specifically eligible for forgivable loans under the PPP. The PPP works as follows: a small busi- ness completes a loan application to their bank and/or lender, which then submits it to the Small Business Administration (SBA). Although co-ops are now considered eligible entities, there are further eligibility require- ments an individual co-op must meet in order to obtain this forgivable loan. In order to be eligible, a co-op will have to certify that they are currently experiencing financial uncer- tainty due to the pandemic. In addition, they must certify that the loan is necessary to sup- port their ongoing operations. Obviously, this threshold for financial or economic ‘uncertainty’ is vague at best, and there is no clear standard or clarification from the SBA as to what exactly this means. Al- though many co-ops have struggled with re- duced income from both shareholder mainte- nance and commercial tenant rent arrears, as well as increased water/sewer charges due to residents being home all day and using more utilities; increased expenses for sanitizing common areas and supplying personal pro- tective equipment to staff members; and over- time and other administrative expenses, it is still imperative that boards and managers re- view their particular facts and circumstances with their professionals to confirm they meet all criteria for the PPP loan before they submit an application for funds. Some features of the PPP loan are: the loan can be forgiven if at least 60% of the funds are used for payroll expenses and the remain- ing 40% used for qualified expenses such as utilities, cleaning supplies, personal protec- tive equipment (PPE), and mortgage interest. Keep in mind that the money must be spent within certain time parameters, and a second application must be made to the SBA to have Co-ops Now Included in the Pay- check Protection Program (PPP) Help Is on the Way BY GEOFFREY MAZEL, ESQ. COOPERATORNEWS.COM 2019 NY Rent Law Impacts Condo & Co-op Sector Subletters Take Note! BY AJ SIDRANSKY continued on page 9 REBNY Report: NYC Construction in 2020 Lowest in Nearly a Decade Shutdowns, Economic Uncertainty to Blame BY DARCEY GERSTEIN Patch.com reports that a recent study by the Real Estate Board of New York (REB- NY) concluded that 2020 was a slow year for construction in the city—hitting the low- est point since 2012, according to the report. With shutdowns and economic uncertainty stemming from the coronavirus pan- demic throughout most of last year and beyond, the conclusions may not come as much of a surprise to most in the industry. But their ramifications might be felt across sectors and for years after the city’s eventual return to some form of normalcy. “The reality is that our city is not currently getting enough construction projects underway,” says REBNY president James Whelan, “and it is not creating enough hous- ing—including affordable housing—to address immediate and long-term needs.” When the State of New York passed the So tenants renting condominium units from Housing Stability and Tenant Protection Act their owners are subject to the law as well, as (HSTPA) in June 2019, legislators may not are the condo owner landlords. have envisioned that the law would have re- percussions for co-op and condo owners— but in fact it did just that. That’s because from condo and co-op owners when they rent out a legal point of view, co-ops are very much like or sublet their units. According to Hal Coo- rentals. Shareholders don’t own their units persmith, a New York City-based attorney outright; they own shares in a corporation and proprietor of RezCueMe.com, a provider that owns the building, and are entitled to oc- cupy their units under the co-op’s proprietary landlords, specific clauses dealing with lease lease. That lease is considered subject to the renewals and/or terminations, walk-throughs laws regulating residential leases. By contrast, and security deposits are likely to be flash- condominium units—which, unlike co-ops, points for condo and co-op owners renting are individually owned real property—are out or subletting their units. He explains that often held as an investment and rented out. “all landlords—even if they’re just a single unit Becoming a Landlord Certain aspects of the HSTPA do affect of compliance guidance and advice to small continued on page 9 continued on page 17 YOUR BOARD’S ATTENDANCE IS NOT REQUIRED. BUT IT SHOULD BE. WEDNESDAY, MARCH 24, 2021 - 10:00 AM TO 4:00 PM FREE REGISTRATION: NYC.YREXPOS.COM