HDFC Timeline

New York State enacted Article XI of the Private Housing Finance Law, creating Housing Development Fund Companies (HDFCs) to provide housing for low-income households.

The statute was designed to provide temporary assistance and financing mechanisms for affordable housing initiatives rather than permanent government ownership or control.

New York City experienced a historic housing crisis.

Housing abandonment spread across large areas of Upper Manhattan, the Bronx, and Brooklyn. Banks stopped lending. Buildings burned, deteriorated, and were abandoned.

As a result, the City acquired over 100,000 apartments through tax foreclosure (“in rem” housing).

Many of these buildings were in extremely poor condition and had little or no market value.

The City adopted a new approach.

Tenants were allowed to self-manage their buildings under the Tenant Interim Lease (TIL) program. 

If tenants succeeded in stabilizing their building, the City transferred ownership to them as HDFC cooperatives. 

Apartments were often sold to tenants for nominal prices (sometimes as little as $250).

When HDFCs were created, most buildings were physically distressed and many required major repairs and upgrades.

Resident-shareholders replaced boilers and roofs, repaired plumbing and electrical systems, stabilized finances, and secured private loans to rehabilitate buildings.

Over time, tens of thousands of residents preserved their own housing and stabilized their neighborhoods.

When buildings were transferred to tenants, the City imposed time-limited resale restrictions.

Typical terms were 10 years for early HDFCs and 25 years for later ones.

The City’s offering plans made clear that restrictions would expire after a fixed period and equity appreciation would be permitted thereafter.

Residents purchased their homes in reliance on those promises.

The City enacted the DAMP tax exemption, which caps assessed property values for HDFCs.

This benefit stabilized maintenance costs and allowed HDFCs to remain financially viable.

It was scheduled to run for 40 years, until 2029.

Today HDFCs represent a major component of New York City’s affordable housing: – 1,048 HDFC cooperatives, ~25,000 apartments, and ~75,000 residents.

For four decades, resident-owners have maintained their buildings, financed repairs, and preserved affordable housing without large public subsidies.

The DAMP tax exemption is scheduled to expire in 2029.

If the tax benefit disappears, property taxes could rise dramatically, maintenance costs could become unaffordable, and financially fragile HDFCs could face foreclosure.

At the same time, lenders are already reluctant to finance HDFCs because of the uncertainty surrounding the 2029 expiration.