N.Y. Comp. Codes R. & Regs. Tit. 9 §§ 1729-1.2

Current through Register Vol. 46, No. 45, November 2, 2024

Section 1729-1.2 - Housing companies employing managing agents

(a) All managing agents must be approved by the division and meet minimum eligibility requirements as follows:

(1) be a real estate broker in good standing duly licensed by the State of New York;

(2) furnish the housing company and the division with evidence that each person authorized to receive, handle or disburse any monies of the housing company is covered by a fidelity bond, naming the housing company as beneficiary and equal to at least 25 percent of the annual rent roll. The bond shall be issued by an insured duly licensed by the Superintendent of Insurance of the State of New York to transact fidelity bond business in the State of New York and shall provide that any payment made thereunder shall be payable to the housing company. A copy of the bond shall be furnished to the commissioner and shall provide that the commissioner be given 15 days' written notice of any cancellation thereof. In lieu of a separate fidelity bond from the managing agent, the housing company may elect to provide the required coverage for the managing agent by the rider to its fidelity bond;

(3) provide the housing company and the division with a completed "Statement of Qualifications for Management Firm Seeking Owner/Agent Agreement";

(4) submit to the housing company and the division a proposed management plan for the housing development which shall contain:

(i) the name, title, job description, qualification of the prospective salary of any site manager who will manage the project. The site manager must be certified, by a professional organization which certifies property managers;

(ii) an organizational plan to set forth lines of responsibility and authority among the managing agent and staff assigned to the housing development as well as housing company employees supervised by the managing agent;

(iii) the location of and telephone numbers for the managing agent site office and the hours and days of operation;

(iv) an operational plan to administer agent functions pursuant to subdivision (i) of this section which include marketing (selling or renting), physical maintenance, financial administration, resident relations and general administration;

(v) an affirmative action plan to ensure that the employees are recruited, selected, and retained in such a manner as to ensure equal employment opportunities, and to require the agent to make all reasonable efforts to solicit bids from minority and women-owned business enterprises for the services and/or purchases to be contracted for on behalf of the housing company and to make certain that such bids receive full and fair consideration;

(vi) a representation to comply with the Private Housing Finance Law and Part 1700 of this Title; and

(vii) a representation that any changes in the approved management plan must be approved by the housing company and the division;

(5) maintain an office or place of business within the State of New York at no cost to the housing company where it will keep all books, records, bills and other documents relating to the housing development. The management agent shall keep these records available for inspection and review during regular business hours by the housing company, the division or their designees; and

(6) submit a request for managing agent fees which shall not exceed the maximum fee established by the division.

(b) Selection of a qualified managing agent shall be subject to the approval of the division. Housing companies which elect to select or are required by the division to select a new managing agent, shall select the managing agent in accordance with the following competitive bidding procedure:

(1) the division shall make available bidding specifications to the housing company, which shall include the minimum eligibility requirements as set forth in subdivision (a) of this section;

(2) the housing company shall solicit bids, review bids, select a prospective agent and submit its selection to the division together with all bids;

(3) the housing company shall take affirmative steps to solicit bids from managing agents which are minority and women-owned business enterprises and make certain that such bids receive full and fair consideration; and

(4) the division shall review the bids, considering primarily the qualifications and quality of the bidders, and either approve the housing company's proposed agent or disapprove the agent and direct the housing company to select another agent from among those acceptable to the division.

(c) A housing company with the approval of the division may select a managing agent affiliated with the principals of such housing company without such competitive bidding as part of an overall plan for its preservation as affordable housing.

(d) For the purpose of setting forth the guidelines governing managing agent compensation, the following terms shall have the following meanings:

(1) Initial base rate shall mean a dollar amount per dwelling unit per month established by the division. The initial base rate is subject to adjustment by the division either upon request or at the division's own initiative to reflect any changes in circumstances not reflected in the setting of the initial base rate.

(2) Percentage increment shall mean a percentage of the initial base rate or base rate, as the case may be, to be prescribed annually by the division, which will be the maximum percentage increase available to managing agents.

(3) Base rate shall mean the initial base rate plus earned percentage increments, if any.

(4) [Reserved]

(5) Marketing fee shall mean a fee to be established by the division, to compensate for the cost of marketing, selling and renting activities.

(6) Commercial and professional leasing fee shall mean a fee established by the division to compensate for the services of renting commercial and professional space.

(e) The monthly fee to be paid the managing agent shall be established by the housing company but shall not exceed the total of the initial base rate or base rates and the annual percentage increment. Upon the division's approval of a change in managing agent, the housing company may include such increment or increments in the base rate annual percentage which were not previously taken or earned by a managing agent.

(f) Where directed by the division, the managing agent fee shall be deposited in an escrow account to be withdrawn, for the purpose of compensating the managing agent, only upon the approval of the division.

(g) If the division determines that a full-time or part-time site manager is required to effectively carry out the prescribed managing agent functions, the site manager shall be employed by the managing agent. Unless the division directs otherwise, the agent shall be reimbursed by the housing company for up to 50 percent of either the manager's entire salary and fringe benefits or, in the event of a part-time site manager, a prorated portion of the salary and fringe benefits. The agent's reimbursement is subject to the division's determination that a site manager is needed and the division's approval of the manager's qualifications, salary and fringe benefits. Managing agents shall not be reimbursed, in whole or in part, by the housing company for salary and/or fringe benefit compensation in excess of the amounts approved by the division.

(h) If additional staff expertise is required to address the extraordinary needs of the housing development (e.g., a marketing specialist to reduce high vacancies), the staff shall be compensated by the housing company subject to the division's determination that additional staff expertise is needed and the division's approval of staff qualifications and compensation.

(i) The managing agent shall enter into an annual agreement with the housing company pursuant to a contract in the form prescribed by the division and shall comply with the terms of the agreement which will include a division-approved management plan. The agent shall obtain the prior approval of the division for amendments to those components of the plan set forth in paragraph (a)(5) of this section. The agreement shall require managing agents to perform specified functions which shall include, but not necessarily be limited to, the following:

(1) Marketing, sales and renting:

(i) operation in accordance with a division-approved marketing and sales plan;

(ii) maintenance of waiting lists and selection of applicants in accordance with this Subchapter;

(iii) prompt restoration of vacated apartments and inspection of apartments after occupancy; and

(iv) compliance with division reporting requirements.

(2) Physical maintenance:

(i) maintenance of apartments, public areas, building components and grounds in accordance with division standards, local codes and ordinances;

(ii) maintenance of structures, elevators, heating systems, utility systems and refuse disposal systems to include adherence to preventive maintenance requirements and compliance with division reporting requirements, local codes and ordinances;

(iii) selection and supervision of contractual service providers in accordance with division guidelines and the agent's affirmative action plan.

(3) Fiscal administration:

(i) collection of rents, carrying charges and vacated arrears in accordance with division standards;

(ii) preparation of housing company budgets and rent applications in accordance with sections 1728-1.1, 1728-1.2 and 1728-1.5 of this Title;

(iii) execution of the division-approved housing company budget in accordance with division policies and procedures;

(iv) compliance with Federal requirements regarding subsidy programs;

(v) administration of all activities relating to resident security deposits in accordance with applicable statutes and division requirements;

(vi) prompt payment of all obligations, including accounts payable, wages and fringe benefits, operating escrows, debt service and return on equity; and

(vii) adherence to division purchasing and inventory procedures.

(4) Activities to promote effective relations with residents:

(i) periodic meetings with the leaders of duly organized resident associations;

(ii) posting a schedule of office hours to improve resident access to the site manager and other staff;

(iii) provision for emergency and off-hour services; and

(iv) make available division field reports, pertinent memoranda and other information to improve communications with residents.

(5) General administration:

(i) staffing in accordance with the approved housing company budget and management plan;

(ii) compliance with Federal and division regulations governing resident income reviews; and

(iii) submission of all reports and maintenance of all files in accordance with division requirements.

(j) Unless the division determines otherwise, the managing agent shall be entitled, with the housing company's concurrence, to an annual review of its management agent contract and a percentage increment with the consent of the housing company without further review or approval of the division, effective July 1st of each year. A division determination to require further review and approval prior to both renewal of the contract and receipt of the percentage increment annually based on the division's analysis of various factors which indicate that there may be issues with respect to managing agent's performance. Although the existence of any of the listed factors may not necessarily be determinative, these factors may include:

(1) High or increasing vacancy rate.

(2) Major systems that require replacement, or major repairs.

(3) Physical problems of a persistent nature.

(4) A failure by the housing company to make required escrow reserve deposits or make mortgage or loan payments.

(5) Failure to abide by regulations concerning admission or occupancy or variances between admission to or occupancy in the development and those entitled to such admission or occupancy pursuant to these regulation.

(6) Failure to provide required or requested information to the division.

(7) The housing company or the agent have not met the contractual, statutory and/or managerial obligations and have not developed programs to address them.

(8) A failure by the managing agent to perform its functions in whole or in part in a manner in which the division ascertains is best for the housing company or its tenants or cooperators.

(k) The division may review the performance of a management agent at any time. In addition to reviewing the contract renewal and the annual percentage increment awarded, it is determined by the division that:

(1) the agent has failed to comply with the management agreement;

(2) the agent's performance has not been satisfactory;

(3) the managing agent is failing to do that which is required by law, regulation, or division directive, then the following remedies are available:

(i) The agent may not be awarded the annual fee increase.

(ii) The agent's fee may be reduced. Any reduction in fees may be imposed by either the division or the housing company, subject to division approval.

(iii) Pursuant to subdivision (f) of this section, the housing company and managing agent may be directed to deposit a portion of the entire managing agent's fee as it is or becomes due in a restricted housing company account to be withdrawn only upon the approval of the division.

(iv) The managing agent agreement may be terminated pursuant to this Subpart.

(l) The agreement between the managing agent and the housing company may be terminated as follows:

(1) by mutual consent upon 30 days' written notice to the division;

(2) by the division, with cause, such termination to be effective immediately upon notice to the housing company and agent;

(3) by the division, without cause, upon 30 days' written notice to the housing company and agent;

(4) by the housing company or the division effective immediately upon notice, in the event a petition in bankruptcy is filed by or against either the housing company or agent, or in the event that either should make an assignment for the benefit of creditors or take advantage of any insolvency act;

(5) by the managing agent effective immediately upon notice if the housing company shall fail or refuse to comply with or abide by any rule, order, determination, ordinance or law of any Federal, State or municipal authority, upon giving 24 hours' written notice mailed to the housing company at its address;

(6) by the housing company upon not less than 30 days' written notice to the agent in the event of a bona fide sale or demolition of the property;

(7) by the housing company with cause upon prior approval by the division.

Upon termination, the managing agent shall promptly turn over to the housing company all project records, rent rolls, bills, cancelled checks, bank statements and all other papers in the possession of the agent which are owned by the housing company.

(m) Notwithstanding the above, the housing company may choose not to renew a managing agent contract upon its expiration on 30 days' notice. However, a housing company may not exercise such notice until it has selected a new managing agent in accordance with the procedures set forth in these regulations and such agent has been approved by the division or the housing company has established to the division that exigent circumstances require a different basis for more immediate selection. Where the managing agent contract is not renewed, it will be continued on a month-to-month basis at the existing rate of compensation until a new managing agent is selected.

(n) The division will advise the housing company and managing agent in writing in those instances where either a renewal of the agreement or the award of a percentage increment shall not be approved, or where the termination of the managing agent's contract is recommended. Upon receipt of such advice, the housing company shall either:

(1) select a new managing agent in accordance with subdivision (b) of this section;

(2) request the division to approve continuation of the present agreement on a month-to-month basis without the award of a percentage increment; or

(3) request the division, within 30 days from receipt of such advice, to reconsider and reevaluate the managing agent's performance based upon evidence submitted therewith. If the matter has not been resolved prior to the expiration date of the agreement, the division may approve a continuation of the existing agreement on a month-to-month basis without a percentage increment.

(o) Every managing agent agreement entered into by a housing company shall be deemed to incorporate the applicable provisions of this section.

N.Y. Comp. Codes R. & Regs. Tit. 9 §§ 1729-1.2