Housing Development Fund Corporation (HDFC)

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HDFC Cooperatives

HPD has created tens of thousands of affordable homes as shareholder-owned Housing Development Fund Corporation, or HDFC, cooperatives, making them a significant part of the fabric of New York City’s affordable housing. Incorporated under Article XI of the Private Housing Finance Law, HDFC coops benefit from reduced real estate taxes in exchange for following certain standards for the selling and renting of apartments. Additionally, HDFC board members should exhibit careful, ethical behavior in carrying out their responsibilities. HPD is authorized to remove this benefit if the agency determines that the HDFC’s requirements are being violated.

HDFC Cooperative Income Standards

Under the Private Housing Finance Law (PHFL), all HDFCs must be low income, meaning that HDFC cooperatives have maximum income standards for shareholders, tenants of the cooperative, and subtenants of shareholders. The standard definition of low income has changed during the existence of the program so shareholders must consult their deed or certificate of incorporation to determine the standard applicable to their cooperative. One common standard (Section 576 of the PHFL) is that the income of an incoming family can be no more than six times the annual maintenance plus a factor for utilities for a family with fewer than three dependents, or seven times the maintenance plus a factor for utilities for families with three or more dependents. The other common standard is 120% Area Median Income (AMI) for families with fewer than three dependents or 165% AMI for families with three or more dependents. If the specific definition of low income for your HDFC cooperative was time limited and has expired, your cooperative must adopt a new standard. The new standard may not exceed 165% AMI.

HDFC Cooperative Maximum Income Standards: 2015

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The costs of owning shares in a cooperative include the apartment maintenance, the monthly payments on any loan used to purchase the shares, utilities, and homeowner’s insurance. Generally, buyers should not pay more than 30% of their gross income in housing costs. HPD expects boards will set and enforce sales prices that are affordable to people within your HDFC’s target Income range.

If you have questions, you may contact the Urban Homesteading Assistance Board (UHAB) at 212-828-2670 or the Department of Housing Preservation and Development (HPD) at 212-863-7327.

Renting and Subletting

The PHFL requires that all apartments in HDFC cooperatives be owner-occupied. Although many cooperatives house original non-purchasing tenants and others have benefited from the additional income of renters, all vacant HDFC owned apartments must be sold to new shareholders who have stated their intention to owner-occupy.

Almost all HOFC cooperatives require owner occupancy and limit subletting. Although short-term subletting with board permission is acceptable where the shareholder intends to return to the apartment, long-term sublets are not permissible in any circumstance. Generally, subletting should be limited to no more than 18 months in any 5-year period. In addition, it is not acceptable for shareholders to charge subtenants more than 10% above the monthly maintenance. Any subtenant should meet the applicable income standard of the cooperative.

Fiduciary Responsibility

HDFC Directors are legally required to act in the best Interests of the HDFC and its shareholders. We urge shareholders to be aware of some important facts about their HDFCs. Directors are volunteer positions; managers are paid. If your HDFC’s directors are being paid, it should be for the management work that they are doing for the corporation, such as collecting rents, paying bills, supervising the janitor, or going to court on behalf of the HDFC. Directors should not be receiving payment for any other reason. In all cases there should be volunteer directors who supervise the work of the manager.

Guidelines for the Board of Directors:

  • A director should abstain from voting when the board is considering selling or contracting with that Director’s friends or relatives, as it constitutes a conflict of interest.
  • Directors should ensure that real estate taxes and water and sewer charges are being paid. This information is publicly available at NYCServ.nyc.gov. Any open charges can be viewed by entering the building address at this website. Inquiries on open charges can also be made by calling the Department of Finance (DOF) at 212-504-4080 and the Department of Environmental Protection at 718-595-7000.
  • Boards should ensure that shareholders receive annual financial reports.
  • Corporations should hold annual elections.

HDFCs have a cap on the taxable value of the units that, in most cases, significantly lowers real estate takes on the property. The Board of Estimate and City Council resolutions that grant these caps stipulate that this exemption is effective only as long as the project is owned and operated by an HDFC that is in conformity with the requirements of Article XI of the PHFL. HPD Is authorized to revoke this partial real estate tax exemption if it determines that the HDFC is not properly owned or operated.


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