• Tenant Opportunity to Purchase Act Update
• MAHC Improving Housing Cooperative Property Management
• Corporate Transparency Act Filing Requirements

On final day of the legislature's formal session, August 1st, the fourth effort in nearly eight years to give tenants the right to buy their apartment building when it is put up for sale was once again stymied by a cartel of landlords, investors and real estate flippers determined to block cities and towns from giving tenants the tools to compete in the market to save their homes.

MAHC was a leader in a coalition of some 80 neighborhood, citywide, regional, statewide and national organizations seeking to include the Tenant Opportunity to Purchase Act (TOPA) in the historic Housing Bond bill proposed by Governor Maura Healey earlier this year. 

In Washington DC, where tenants right of first refusal has been the law since 1981, thousands of housing units have been preserved as affordable by tenants, often working with capable affordable housing developers. More than a third of these tenant-purchased buildings have been established as limited equity cooperatives.  Even in Massachusetts mobile home parks have used a version of TOPA to preserve their communities as cooperatives.  

The defeat of TOPA this year is a disappointing surrender to real estate interests. The lead legislative sponsors were Rep. Jay Livingstone, representing Boston’s Beacon Hill, Back Bay and Fenway, and Sen. Patricia Jehlen, representing Somerville and a portion of Cambridge.   

Among the Senators on the Conference Committee which decided to toss TOPA out of the Housing Bond Bill were Will Brownsberger and Lydia Edwards, whose districts overlap with Rep Livingstone’s and adjoin Senator Jehlen’s. The highest concentration of cooperative housing in the Commonwealth is located in the four districts represented by these legislators. 

At the end of the day TOPA was not primarily about creating new cooperatives but rather stemming the erosion of "naturally occurring affordable housing" around the state, a problem too long neglected by both state officials and legislators.  The fight for TOPA seems to have opened the eyes to this urgent issue of many decision-makers.  But the real estate industry sees any impediment to quickly extract profits from housing as an affront to their business model, which sees gentrification and displacement as an opportunity to make money.  

Tenant purchase of their housing as a way of expanding homeownership, another theme of the TOPA fight, was understood by a much smaller group.  The benefits of cooperatives in stabilizing neighborhoods and keeping existing housing affordable didn't seem to resonate.   MAHC wasn’t able to amplify that message enough because we did not have the hard facts about how many of our member housing cooperatives were formed by a negotiation between renters and a friendly landlord. We need to know all of these stories.  

How MAHC will continue to fight for TOPA will be decided by a re-energized MAHC Advocacy Committee. Beyond legislation should MAHC support conversion of rental housing to co-ops through tenant purchase?  What other local and state laws and policies are needed to help co-ops and their members thrive? Join us at MAHC if you want to be part of this discussion and create a strategy that will help create more cooperatives.  

MAHC's Forum on Property Management in Housing Coops

Last December, some fifty co-op members, directors and friends of housing co-ops gathered at an MAHC-sponsored forum, "Housing Co-ops and their Managers: Forging a Happy marriage." With a  panel moderated by Jim Stockard, the co-founder of a multi-decade old Cambridge housing co-operative, elder statesman and community development guru, participants learned about recent research and surveys pointing to difficult relationships between co-ops and their management firms.  The panel also discussed experiences of some co-ops with self-management and emerging new models of co-op housing management.  The discussion also touched on the nuts and bolts questions about insurance, member selection and other operational issues faced by housing cooperative boards and their management.  

Feedback and Next Steps

The enthusiastic response of Forum participants has led MAHC to undertake a deep dive into the issues facing housing co-op boards and their managers. One of the takeaways from the discussion was the need to educate Coop Board members about their role in managing the financial operations of their cooperative.  This Fall MAHC will launch a three-part workshop series on Financial Literacy for Co-op Board members. In September a training will be offered on Developing an annual Operating Budget. This will be followed later in the Fall with a workshop on monitoring and managing co-op finances, and ending in the early winter with a workshop on Capital planning.

Save the Date for a Workshop

Creating your Cooperative's Annual Operating Budget

Saturday, September 21 from 10AM to 2PM

Virtually every housing cooperative in Massachusetts must comply with the federal Corporate Transparency Act by January 1, 2025. The 2021 law was "intended to help prevent and combat money laundering, terrorist financing, corruption, and tax fraud."  The "Beneficial Owner(s)” of any company subject to the law must provide personal information to the Financial Crimes Enforcement Network  (FinCen).  "A beneficial owner is any individual (1) who directly or indirectly exercises ‘substantial control’ over the reporting company, or (2) who directly or indirectly owns or controls 25 percent or more of the ‘ownership interests’ of the reporting company…. This includes senior officers in the reporting company …"

Co-ops that are aware of the requirements of the CTA are nevertheless unsure about who are the co-op’s "beneficial owners" Some co-ops that MAHC has surveyed expect the President to be the registered individual. Arguably the entire Board or all of the officers together exercise "substantial control" over the company. MAHC urges its members to consult their attorneys on this and carefully review the websites linked above.

MAHC believes that (most) housing cooperatives should be exempt from the Corporate Transparency Act. We would be surprised to learn of a housing co-op anywhere that has engaged in money laundering or terrorist activities or tax fraud. Co-ops do not have "beneficial owners who substantially control their operations." Subjecting co-op members to government surveillance will deter many from joining or remaining on co-op boards. 

Earlier this year FinCen indicated that exempting homeowner associations was under review. In the meantime the Community Associations Institute (CAI) has sued FinCen seeking exemption of "homeowners associations". Regardless of the outcome of FinCen’s exploration or CAI’s lawsuit it is not apparent that housing cooperatives would come under the label of "homeowner association" .
 MAHC will be asking the entire Massachusetts Congressional delegation – especially Senator Warren – to press for the exemption of Housing Cooperatives from the Corporate Transparency Act. 

We'd like to hear your comments and questions about anything in this newletter or housing cooperatives in Massachusetts.  Please send us an email at: info@masshousing.coop. 

If you want to be on our email list or update what you're interested in use this form, particularly if you want to sign up to help us make cooperatives more successful by public advocacy or learning how you can help make your cooperative run more smoothly and successfully.

Saturday, August 17 at Noon:  MAHC will have a table at the Fenway Community Day and Ward 4 Democratic Ice Cream Social.  Come by and say hello.  More information here.

Saturday, September 21 at 10am:  MAHC Workshop on Creating Your Cooperative's Operating Budget.  We'll be sending out details later this month.