Tag Archives: cooperative

Creative Credit Union Mortgages

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Credit Union

DepositAccounts.com quoted me in Types of Institutions in the U.S. Banking System – Credit Unions. It reads, in part,

What You Need to Know About Credit Unions

For more than 100 years, credit unions have been providing financial services to their members. Forget about what you thought you knew about credit unions. Long gone are the days when credit unions were seemingly only a “bank” for government employees. Today some 100 million Americans are member-owners of 6,900 credit unions and credit unions have more than $1 trillion in assets.

The Credit Union National Association (CUNA) defines a credit union as a non-for-profit, member-owned financial cooperative, democratically managed by its members, and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members.

Simply put — credits unions are about their members, not profits.

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How are credit unions different from banks?

“They are structured very differently. Credit unions don’t issue stock or pay dividends to outside shareholders, so they are not beholden to outside third party interests,” says Steve Rick, chief economist of CUNA Mutual Group, an insurer and maker of financial productions within credit unions.

Each person who holds an account is a member, and each member has one vote, “rather than the voices of only the powerful few stockholders heard at for-profit banks. And all earnings go straight back to members in the form of favorable interest rates and lower fees that other for-profit institutions can’t beat,” he adds.

Banks are governed by paid shareholders and voting rights depend on the number of shares owned. Earnings go to outside bond and stockholders in the form of dividends.

As cooperatives, credit unions are part of a broader cooperative community that shares philosophies around benefiting their member owners. One of the core missions of the credit union system is to educate its members on financial issues to ensure their financial health.

“It’s worth noting that credit unions can offer creative types of mortgages that should be explored by first-time and experienced homebuyers alike. The PenFed Credit Union, along with some other credit unions, has a 5/5 ARM that adjusts every five years. A product like this combines aspects of a fixed rate mortgage (fewer, but not the fewest) surprises about payment sizes, with aspects of an ARM (lower, but not the lowest) interest rates,” says David Reiss, a Brooklyn Law School professor specializing in real estate.

Dirt Law Jobs Up

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photo by Mmw3v

The National Jurist quoted me in Hot Practice Areas For J.D.s. It opens,

Real Estate is hot again

Real estate is one of the most fickle industries around — hot when the economy is growing and cold when it is not. The good news is that real estate is growing again and that means more jobs for entry-level attorneys.

Robert Half Legal, a legal staffing agency, reports that real estate lawyer is the third most in-demand legal position in the South Atlantic region. Real estate is the second-fastest-growing legal industry in the South Atlantic region and the fourth fastest in the Mountain and Pacific regions.

At Brooklyn Law School, real estate law has become the most popular specialization. Graduates are finding more jobs in the specialization’s niche areas such as cooperative and condominium representation, said professor David Reiss.

“This is, in part because of our externship program that provides students with experience in the applicable government agencies and law firms, but also because of our Real Estate Certificate program, our wide array of real estate courses and the availability of courses at nearby urban planning schools,” Reiss said. “We also offer a Real Estate Law Certificate, and we find that most or all those receiving certificates are employed pretty quickly in any given year.”

Richard Hermann, a professor of Concord Law School who has written extensively about legal careers, recommends earning certificates in niche areas of the law, as they are inexpensive ways to increase your qualifications.

“Many such programs are available, and quite a few are online and inexpensive,” he said.

While real estate can be up and down, Reiss said real estate law could be a good field even during slower economic times.

“No matter what the economy as a whole is doing, clients are still buying and selling properties, financing and refinancing them, entering into property leases”, he said.

To prepare for careers in real estate law, Brooklyn Law School encourages its students to have very focused resumes, which increases their marketability. “We find that students with focused with focused resumes, can make a compelling case to a range of real estate employers, even if their overall GPA is not high,” Reiss said.

Affordable New York

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Beyond My Ken

I just came back from a great couple of exhibits at the Museum of the City of New York that would be of great interest to the readers of this blog. The first, Affordable New York: A Housing Legacy, provides a history and education of affordable housing programs that have been integral to the development of the City:

New York City has a long history of creating below-market housing for its residents. Today the city offers subsidized housing to families across a wide economic spectrum; more than 400,000 in public housing, and many more in privately or cooperatively owned apartments. With affordable housing a cornerstone of Mayor Bill de Blasio’s administration, New York’s housing legacy—often overlooked and little understood—is more relevant than ever.

Affordable New York traces over a century of affordable housing activism, documenting the ways in which reformers, policy makers, and activists have fought to transform their city. A focus on current and future housing initiatives demonstrates how New Yorkers continue to promote subsidized housing as a way to achieve diversity, neighborhood stability, and social justice.

The exhibit has a lot of good pictures that give a sense of the range of options that exist for affordable housing development. It also provides a condensed history of the NYC experience with subsidized housing.

The other exhibit, Jacob A. Riis: Revealing New York’s Other Half, is a bit more somber, but when viewed in the context of the first it shows the great progress we have made in providing decent housing to a broader range of City residents:

Jacob Riis (1849-1914) was a pioneering newspaper reporter and social reformer in New York at the turn of the 20th century. His then-novel idea of using photographs of the city’s slums to illustrate the plight of impoverished residents established Riis as forerunner of modern photojournalism. Jacob A. Riis: Revealing New York’s Other Half features photographs by Riis and his contemporaries, as well as his handwritten journals and personal correspondence.

This is the first major retrospective of Riis’s photographic work in the U.S. since the City Museum’s seminal 1947 exhibition, The Battle with the Slum, and for the first time unites his photographs and his archive, which belongs to the Library of Congress and the New York Public Library.

The pictures of the homeless kids are heartbreaking — Newsies without the songs — and the recreation of one of Riis’ public talks is pretty extraordinary. The shows are running for a few more months, so there is still plenty of time to see them.

Rapid Growth for Property Managers

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hot air balloons

Buildium.com quoted me in Can Rapid Growth Endanger Your Business? It reads, in part,

For property managers, the prospect of rapid growth can be thrilling. You lease the units in your first building, fill vacancies quickly, add services that let you charge higher rent, the building owner compliments your work, and before you know it, you’re thinking: “Why not more?” After all, why waste a great opportunity to make more money by simply repeating what you’ve done so well at your first property? All the stars seem aligned…

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7 Steps to Find Out If You’re Ready to Expand Your Property Management Portfolio

Here are seven steps to take before fast-tracking you company’s expansion:

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#6: Know the local rules & the laws

If the buildings you manage are different entities — one rent-controlled and the other a cooperative in an historic neighborhood, for example — you must understand their different requirements. The same can hold true for buildings in different communities where regulations covering trash pick-up and snow removal may vary.

And differences can be even greater for buildings in different states. In New York City, multifamily buildings with more than four units [may be] rent-regulated and involve a complex set of regulations between landlord and tenant, says attorney David Reiss, a professor of law and the Research Director at Brooklyn Law School’s Center for Urban Business Entrepreneurship. “If you don’t know what they are, it can be a recipe for disaster,” he says.

Also important to know, he says, is that some buildings are located in historic districts, which the Landmarks Preservation Commission can authorize, and that affects how owners and managers can renovate, rehab, and maintain exteriors, Reiss says. “You might have to place an air conditioning unit a certain way.”

#7: Consult with other property managers

Besides doing your homework, talk to owners and managers of similar properties who’ve expanded beyond a single listing. Reiss says many communities have property management organizations that share information, or your city or town may have an association of like-minded businesses. If not, maybe, you can become a local hero by starting one.

 

Showdown at the Dakota

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"The Dakota May 2005" by Makemake at the German language Wikipedia. Licensed under CC BY-SA 3.0 via Wikimedia Commons - https://commons.wikimedia.org/wiki/File:The_Dakota_May_2005.jpg#/media/File:The_Dakota_May_2005.jpg

Jeremy Cohen, a partner with Wolf Haldenstein Adler Freeman & Herz, and I discussed a lawsuit brought by a New York City co-op owner who says he’s been unable to move into his apartment at the famed Dakota coop for 16 years.

We spoke with June Grasso on Bloomberg Radio’s “Bloomberg Law” show. The podcast of the show is here and the complaint in the case is here. A Bloomberg news story summarizes the allegations:

Robert Siegel, chief executive officer of Metropole Realty Advisors Inc., said in his lawsuit that he paid $2.23 million in 1999 for an apartment at the Dakota and has never spent a night there because the board refused to approve his renovation plans and took part of his unit as storage space for the building. He’s seeking $55 million in damages and a court order allowing him to make the renovations.

“These bad-faith acts foreclosed the possibility of Mr. Siegel constructing bedrooms there and thus ensured that the apartment could not be used by Mr. Siegel and his family,” according to the June 29 complaint, filed in New York State Supreme Court.

Before buying the street-level duplex at the building on 72nd Street and Central Park West — once home to celebrities such as John Lennon and Lauren Bacall — Siegel got permission from the co-op board to convert the lower level into four bedrooms with air conditioning for his children, according to the lawsuit. Once the sale was complete, the board said it would only approve Siegel’s plans if he agreed to buy additional shares of Dakota co-operative stock for $1.8 million, which would about double his monthly maintenance charges, according to the complaint.

After Siegel refused to make the additional payments, the board voted to reclassify half of Siegel’s apartment as “non-habitable storage space,” according to the lawsuit. The board also barred him from adding air conditioning or ventilation to the lower level, thereby making it unsuitable for bedrooms, according to the complaint.

NYC’s 421-Abyss

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Andrew_Cuomo_by_Pat_Arnow_cropped

New York City’s 421-a tax exemption has lapsed as of yesterday because of disagreements at the state level (NYS has a lot of control over NYC’s laws and policies, for those of you who don’t follow the topic closely). 421-a subsidizes a range of residential development from affordable to luxury. In the main, though, it subsidizes market-rate units.

This subsidy for residential development is heavily supported by the real estate industry. Many others think that the program provides an inefficient tax subsidy for residential development, particularly affordable housing development.

I fall into the latter camp. I would note, however, that NYC’s dysfunctional property tax system is highly inequitable because it taxes different types of housing units (single family, coop and condo, rental) so very differently.

With that in mind, let me turn to a policy brief from the Community Service Society, Why We Need to End New York City’s Most Expensive Housing Program. The reports key conclusions are,

At $1.07 billion a year, 421-a is the largest single housing expenditure that the city undertakes, larger than the city’s annual contribution of funds for Mayor de Blasio’s Housing New York plan.

The annual cost of 421-a to the city exploded during the recent housing boom as a result of market changes, not because of any intentional policy decision to increase the amount of tax incentives for housing construction.

Half of the total 421-a expenditure is devoted to Manhattan.

The 421-a tax exemption is a general investment subsidy that has been only superficially modified to contribute to affordability goals.

The 421-a tax exemption is extremely inefficient as an affordable housing program, costing the city well over a million dollars per affordable housing unit created.

The reforms made to 421-a in 2006 and 2007 have not resulted in a significant improvement of 421-a’s efficiency as an affordable housing program.

A large share of buildings that receive 421-a and include affordable housing also receive other subsidies, such as tax-exempt bond financing. Affordable units in these buildings cannot be credited entirely to the 421-a program.

The great majority of the tax revenue forgone through 421-a is subsidizing buildings that would have been developed without the tax exemption. (3-4)

The brief argues that 421-a should be allowed to expire and be replaced “with a targeted tax credit or other new incentive that is structured to provide benefits only in proportion with a building’s contribution to the affordable housing supply.” (4)

I don’t have any real disagreement with the thrust of this brief. I would just add that the fight over 421-should be expanded to include an overhaul of the City’s property tax regime. It is unclear, of course, whether Governor Cuomo and NYS legislators have the stomach for a battle so large.