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Co-op Disclosure Bill Stalls in Council

by Andy Humm, May 22, 2007
 

A civil rights bill that would require co-op boards to lift their veil of secrecy and provide a reason when they reject a buyer is stalled in the New York City Council despite the support of the vast majority of council members and other key backing. Opposition to the bill in its present form as, the Fair and Prompt Co-op Disclosure Act, Intro 119, comes from white, generally liberal council members from Manhattan, most of whom previously expressed support for the idea. The city’s real estate industry strenuously opposes the measure.

In a city with 300,000 co-ops, the sale of an apartment is packed with stress for buyers and sellers. What may seem like a great deal for both sides can be overruled by the building’s volunteer co-op board, which must approve any sale – and any buyer. While the board may not violate human-rights laws in rejecting someone, it can turn a person down for any other reason.

In most cases, potential buyers are rejected because the board has concerns about their financial situation – whether, for example, the prospective co-op member can actually afford the mortgage and monthly maintenance fee. But it is impossible to know that for a fact because the boards operate in secrecy and do not have to provide any reason for rejection.

If a board is sued for alleged illegal discrimination, it must then explain its reason and that rationale can be examined in court. In other words, if the board says it rejected a family because their finances did not measure up, a trial could explore whether the board has been consistent in such rejections and is not really trying to keep the people out because of their race, religion, sexual orientation, disability, or other trait covered by anti-discrimination laws.

While most co-op boards attract little attention, some rejections involving celebrities have made headlines. In the mid 1980s, the San Remo on Central Park West nixed Madonna, apparently because they found her too vulgar. Former President Richard Nixon could not get into the East Side’s River House, even though it was home to his former secretary of state, Henry Kissinger. And that same famously snooty co-op turned down Gloria Vanderbilt. She sued for discrimination, alleging that the River House rejected her because the board believed she was going to marry her good friend singer Bobby Short and bring a gay black man into the building. Unlike Nixon and Madonna, Vanderbilt was given a reason for her rejection: The board said that with only about $7 million she really was not rich enough. But she only received that explanation after she sued.

SECRET DISCRIMINATION

A coalition of 40 civil rights groups is supporting the disclosure bill. “If the boards are able to keep their shroud of secrecy, people who feel they were discriminated against are much less likely to pursue their rights or even apply in the first place in some buildings,” said Craig Gurian, a civil rights attorney with the Anti-Discrimination Center of Metro New York, one of the chief proponents of the bill. In the rare cases where someone does sue, Gurian says, “the reason for the rejection that you get is the one that a defense lawyer thinks is most convenient.” The bill, he argued, would lock the board into the reason that they had at the time of rejection and could not be changed.

“The bill is about fighting discrimination,” said Gurian. “It has the good side effect of promoting decency and transparency.”

The NAACP in New York has endorsed the measure. Hazel Dukes, executive director of the NAACP in New York. “Discrimination is alive and well, especially in housing. It continues to raise its ugly head,” said Hazel Dukes, the groups’ executive director.

A DANGER FOR BOARDS

But some representatives of co-op boards fear the bill will create problems for them, opening them to liability. “Anytime you try to give a reason, you’re going to get sued. You say the guy was obnoxious at the meeting, he comes in and says, ‘I’m going to sue you,’” Marc Luxemburg, president of the Co-Op and Condominium Council, told the New York Times.

Interestingly co-op owners who do not serve on boards back disclosure. A survey conducted by Schulman, Ronca & Bucuvales, Inc. found that 63 percent of these co-op owners supported the idea.

OPPOSITION IN THE COUNCIL

The bill, though, has attracted significant opposition and so seems unlikely to pass. Perhaps most importantly, Council Speaker Christine Quinn, who endorsed the bill when running for re-election from her Chelsea district in 2005, is now against it. According to her spokesperson Sandy Mullin, Quinn does not think “this bill is the right answer to the problem and we’re to keep looking at other solutions.”

Quinn is not alone. Councilmember Gale Brewer, who represents Manhattan’s West Side, has been against the disclosure bill from the get-go. She said that “progressive” friends on co-op boards told her such a disclosure law “would make it harder to recruit people” to volunteers for the co-op board. Brewer said that her office gets lots of complaints about the way co-op boards are run but not about discrimination by the boards.

Councilmember Jessica Lappin of the East Side endorsed the bill in 2005. In a response to a questionnaire from Citizens Union, Lappin said then, “If required to disclose the reasons for rejecting an applicant, co-op boards would be subjected to a proper level of public scrutiny and might be less inclined to arbitrarily deny applications based on discriminatory reasons.” Now she has reversed herself, saying that she has heard from “hundreds of constituents opposed to it.” (Citizens Union is the sister organization of Citizens Union Foundation, which published Gotham Gazette.)

“I support the concept and the goal,” she said, but acknowledged that she was not making any proposals on the bill could be improved.

Another council member from the East Side, Dan Garodnick, also, also came out for the bill in 2005, saying, “As a lawyer with a background in civil rights, I support initiatives that protect New Yorkers from invidious discrimination in all its forms.” He too now opposes it, saying he does not think “that this law would accomplish these goals.”

MANY SPONSORS, NO HEARINGS

Faced with such opposition, no hearing has been scheduled on the bill, whose chief sponsor is Councilmember Hiram Monserrate of Queens. “There should be a hearing,” Monserrate said. The General Welfare Committee did hold a hearing on the measure in September 2005 – before Quinn became speaker.

Dick Dadey, executive director of Citizens Union which questioned the candidates in 2005, also is concerned that the bill is not being allowed a hearing now, despite its sponsorship by a two-thirds majority of the council.

Monserrate said he is “in discussions with attorneys for the council that they think would make it a better bill.” But he said he “cannot understand why someone would not support this call for disclosure--it insures transparency.”

At the 2005 hearing, Deputy City Human Rights Commissioner Cliff Mulqueen testified that the “commission supports the idea of requiring co-op boards to provide reasons for the rejection of purchase applications.” He did raise concerns about some procedural aspects of the proposal, however.

Andy Humm, a former member of the City Commission on Human Rights, has been in charge of the civil rights topic page since its inception in 2001. He is co-host of the weekly "Gay USA" on Manhattan Neighborhood Network (34 on Time-Warner; 107 on RCN) on Thursdays at 11 PM.  


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