BY GEOFFREY MAZEL, ESQ.
On Dec. 27, 2020, President Donald Trump finally signed a coronavirus stimulus relief bill. This bill includes relief for a wide range of Americans, including $600 direct relief checks for qualified people; relief for the airline industry and restaurant industry; extension of supplemental unemployment benefits; and may other provisions. The legislation is over 5,000 pages in length.
Tucked away in this legislation is much-needed relief for cooperative housing corporations. This legislation specifically makes co-ops eligible for forgivable loans under the Payment Protection Program. The inclusion of co-ops in this legislation was the result of a long, hard battle, led by a Queens-based organization, the President’s Co-op & Condo Council (“PCCC”). The PCCC is a residential cooperative advocacy organization. While they have vast experience on local issues with the New York City Council and New York State Legislature, they had to reach out to a national network of organizations to push for this legislation.
The Payroll Protection Program (“PPP”) was part of the original CARES Act passed by the U.S. Congress and it provided forgivable loans to small businesses in March 2020. Since the COVID pandemic was raging at this time, this program provided a glimmer of financial relief to the suffering co-op community. Obviously, PPP loans would provide much-needed relief to co-op residents who have been hit hard by the COVID-19 crisis, especially in New York City, the epicenter of the pandemic at that point in time.
However, on April 2, 2020, the tens of thousands of co-op residents in our area and the 1.5 million co-op residents in this country were devastated to learn that the U.S. Small Business Administration (SBA) issued an Interim Final Rule stating that the Payroll Protection Program excluded “passive entities,” which would include residential cooperative corporations. This ruling unfairly carved residential co-ops out of this critical relief program. The PCCC took immediate action to right this tremendous injustice.
At that time, the PCCC spearheaded a national coalition of co-op advocates, including elected officials and sister co-op organizations. The feedback was immediate and effective. On April 22, 2020, Northeast Queens Councilman Paul Vallone introduced a resolution calling on Congress and President Trump to expand the CARES Act and Payroll Protection Program to include considerations for residential cooperatives and condominiums, allowing them to access critical PPP loans processed by the U.S. Small Business Administration.
In May, 2020, as a result of the support of Congress members Grace Meng and Tom Suozzi and the Queens Congressional Delegation, the House of Representatives passed the Heroes Act, which included explicit language that would qualify co-ops for PPP loans. Obviously, the biggest hurdle was yet to come — passing this legislation in the United States Senate.
Thereafter, the PCCC worked closely with New York Senator Chuck Schumer’s office to ensure that any stimulus package in the U.S. Senate would include co-ops in the PPP Lending Program. Senator Schumer met with the PCCC personally and fought doggedly for our co-op residents to ensure that co-ops were included in any further stimulus package. On Dec. 21, 2020, Senator Schumer announced that co-ops would finally become eligible for forgivable PPP loans as part of the new $900 billion stimulus package hammered out by House and Senate. Finally, on Dec. 27, 2020, this legislation was signed into law by the president.
Co-op residents throughout the city are relieved that they can now enjoy some financial relief because of this important program.
“Co-ops are facing the same severe revenue problems as other business concerns. They are suffering declining revenues and increased expenses. It was a critical victory that they are now included in the PPP program,” said Bob Friedrich, co-president of the PCCC.
“As a result of this injustice, the PCCC, along with co-op advocacy groups across the nation, made their voices heard loud and clear in Congress,” added Warren Schreiber, co-president of the PCCC.
At this point, the bill will require the issuance of guidelines from the Small Business Administration, which is expected sometime in January 2021. It will be at that time that co-ops will be able to discern if they meet all eligibility requirements. Time will tell the true effects of this legislation on the co-op community, but the passage of this legislation on the national stage is the result of the hard work and determination of the efforts of the Queens co-op owners who fought so diligently on this issue.
Geoffrey Mazel, Esq., is counsel to the President’s Co-op & Condo Council