In response to a large amount of requests by Housing Development Fund Corporations (HDFC) formed pursuant to Article XI of the Private Housing Finance Law (PHFL) and the Business Corporation Law (BCL), the Department of Law of the Real Estate Finance Bureau of the State of New York gave guidance as to whether HDFCs can convert their properties to market-rate coop and condominium housing.

 

HDFCs are corporations governed by the PHFL and are also incorporated by the BCL. They came around in the 1970 at a time of financial chaos where buildings were falling into severe disrepair and abandon.  The HDFC gave (and give) an opportunity to the tenants of those dilapidated buildings to purchase their own buildings and run the building as a cooperative with the tenants being under Tenant Interim Leases. The main requirement for HDFCs is that they are regulated by their supervising agencies (Housing Preservation and Development - HPD and Division of Housing and Community Renewal - DHCR) to ensure that they provide housing for people with low income. Indeed, the HDFC is required by the PHFL section 573(3)(a) to contain a statement in their certificate of incorporation that states "that the company has been organized exclusively to develop a housing project for persons of low income;"