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BLOG / 11.10.20 /Kenneth R. Jacobs

Covid-19: Burdens Facing Co-ops and Condos in 2021 and Beyond

While New York State remains preoccupied with controlling the latest COVID surges, the NYC Council has imposed new burdens on cooperatives and condominium in the name of safety. What are we facing for 2021?

1. NYS Quarantine Rules Change Again. As of November 4th, persons spending more than 24 hours in another state are required to self-quarantine for three (3) days and get COVID-tested. If the test is negative, they are released from quarantine. No distinction is made between neighboring states and other states. Enforcement remains the responsibility of your local or state Department of Health. Call 1-833-789-0470 to report quarantine violations, or click HERE.

Taken literally, everyone who commutes to work from New Jersey or Connecticut has to quarantine every Monday! Good luck with that.

Quarantine is also required for those returning from travel outside of the United States if the country to which they have traveled is classified as a level 2 or 3 warning by the CDC.

2. NYC Council Narrows Exceptions to Emissions Caps. By 2024, buildings in NYC which are 25,000 sf or larger need to reduce their carbon footprints by significant amounts. The amount by which the carbon footprint is to be reduced depends on the nature of the use and occupancy of the building. Previously, buildings with at least one rent-regulated apartment had been exempted from these requirements. The City Council has just reduced that exemption to cover only those buildings having at least 35% rent-stabilized or rent-controlled apartments.

Who this Change Affects: All converted Co-ops with “Unsold Shares” and Condos with “Unsold Units” who previously thought they were exempt.

2024 is not that far away! Buildings will need to hire energy consultants and then implement energy reduction plans. Low-hanging fruit like switching to LED lighting likely won’t meet the City requirements. Special Note: Requests by buildings for changes in building emission limits due to financial hardship or special use and occupancy requirements are due by July 1, 2021.

3. Lead-Based Paint Inspections to Cost More. All owners of units in buildings constructed before 1960, or in buildings built before 1978 (if the owner had actual knowledge of lead paint in a unit), had to conduct inspections for lead paint contamination within one year after a child 6 years old or younger moved into a unit. Co-ops and Condos had to inspect the common areas of such a building as well.

Now the inspection must be conducted using “x-ray fluorescence” (XRF), a more expensive method. Environmental consultants in the City are gearing up for the new technique.

4. Reminder: Local Law 11 Façade Inspections Also to Cost More. As reported earlier this year, Local Law 11 façade inspections will now need to be conducted using multiple scaffold drops rather than simply using binoculars. Prepare for a substantial price increase in the cost of inspections. Façade repairs will also need to be made sooner in order to comply with Local Law requirements for a “safe” building.

In the past 24 months the City Council has imposed significant reductions in emission caps by 2024, required installation of automatic elevator brakes by 2027, and tried to mandate solar or photovoltaic “green” roofs for new buildings (apparently the last has been scaled back in response to broad resistance). Now we are seeing 10+% increases in insurance premiums, significant COVID-related labor costs and growing maintenance arrears. Luxury Co-ops and Condos now have to pay “prevailing wages” to their employees in order to continue to receive the co-op/condo tax abatement. And what will our real estate tax assessments and tax rates look like for the tax year beginning July 2021?

Some Good News on the COVID Front. Most buildings have developed protocols to deal with reopening issues, such as access to amenities, making alterations, holding open houses, and running Annual Meetings. What have we learned?

A. “Virtual” Annual Meetings work. Attendance has not slumped when meetings go online. As long as the host has laid out clear guidelines for speaking (or chatting) and voting, the meetings move smoothly. Soliciting nominations from the floor is cumbersome (since you can’t add them easily to online ballots). Therefore we are recommending that you either (a) set a deadline for nominations to the Board before sending the formal Notice of Meeting (so that you can send the Notice, a Proxy with the names of all nominees, and biographical statements in one package), or (b) solicit nominations in the Notice and then delay sending the Proxy until the nomination deadline has passed, so that the “official” Proxy contains the names of all nominees.

B. Your By-laws or Prop Leases May Need Updating. Many associations who changed their By-laws to hold Zoom meetings have started to consider wholesale updates. For Co-ops this is easy (it usually only takes a Board vote), but for Condos it can take a 2/3 vote of unit owners. Suggestion: combine these “housekeeping” changes with one or more substantive modifications that you have put off, e.g., unit owner insurance requirements, fine schedules, changing borrowing or repair limits, even smoking. These stimulate attention, and owners are paying more attention right now.

We will continue to keep you advised of current developments affecting cooperatives and condominiums. Have a Happy November!

For more information, please contact:

Kenneth Jacobs
kjacobs@sbjlaw.com