Martin Act Applies to Proposed Privatization of a Mitchell-Lama Cooperative Apartment ComplexBased on the Facts of This Case, a Vote to Determine Whether the Cooperative Withdraws From the Mitchell-Lama Program Must Be Counted on an Apartment Basis Rather Than a Pro Share Basis
A petitioner limited-profit housing company organized under the Mitchell-Lama (ML) law since 1968, operated a 746 unit cooperative housing project (project). Ownership shares in the petitioner were not allocated equally among apartment units. Larger units were allocated more shares. The petitioner’s certificate of incorporation (certificate) provided that "each shareholder is entitled to one vote at shareholder meetings, regardless of the number of shares owned." In 2004, the shareholders held a vote to determine "whether to withdraw from the [ML] program and become a private cooperative apartment complex, as permitted by Private Housing Finance Law [PHFL] §35." Under the proposed privatization plan, the petitioner would "dissolve and all its assets would be transferred to a newly incorporated private cooperative, accompanied by a formal issuance of new shares in the entity. If the votes were counted on a per-share basis, the 2004 proposal achieved the requisite two-thirds supermajority for passage, but if the votes were counted on a per-apartment basis, the proposal did not garner sufficient votes for privatization."
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