West Village Housing Settles Election Lawsuit

By Brian J Pape, AIA, LEED-AP

We last reported on the transition of West Village Housing (WVH) from the income-restricted and subsidized Mitchel-Lama program started in the 1960’s, until that program expired, to its current market-based cooperative status.

The issues facing the 420 shareholders in the 42 buildings of WVH revolve around the affordability and marketing of these unique homes. When the West Village Housing Corporation board met on June 30, 2021, they had many controversial topics to discuss, as well as conducting the annual election for the board. Heated debate reportedly caused some confusion, and the process of voting was contested by Stephen Roberts and Joseph Menzie (the “dissenters” or “petitioners”). A lawsuit ensued, as court records referenced below indicate.

On July 22, 2021, Richard A. McGuirk, partner at Nixon Peabody, representing WVH, wrote to the Hon. Alexander M. Tisch of the New York Supreme Court, excerpted here:

“On June 30, 2021, WVH attempted to conduct its annual election. Unfortunately, the process was marred by a number of irregularities. As an initial matter, there was confusion as to when the polls were supposed to close, and the online portion of the meeting closed even earlier than any announced schedule. Moreover, there was significant confusion in the community room while the polls were open, as a result of people congregating and arguing about a variety of issues.

That confusion appears to have caused the following situation: a proxy holder (Ms. Julia Rosner) went to the community room to vote on behalf of 65 shareholders for whom she held proxies. Ms. Rosner turned in the 65 proxies to MK Elections; 63 were deemed valid.

MK Elections scanned and coded the 63 proxies and issued 63 ballots in exchange for those proxies. For reasons that are not entirely clear (presumably due to the confusion), though Ms. Rosner believes that she turned the ballots in to MK Elections for counting, those ballots were not counted and appear to have been returned to Ms. Rosner uncounted. It was not until the results were released by WVH’s management company that Ms. Rosner noticed the low shareholder turnout at the election, which was due to the exclusion of those ballots.

When the WVH board learned of the mistake, it did not reopen the June 30th election results in order to count the proxies from the 63 shareholders (approximately 15 percent of all shareholders) that were mistakenly excluded, though, as discussed below, under the WVH by-laws that would have been proper. Instead, in an effort to be fair to all involved, the board decided that the best course of action, the course of action most fair to all shareholders, was to conduct a new election and to not try to “fix” a fatally flawed attempted election. Contrary to dissenters’ repeated assertions, the board is thus not trying to overturn “certified” election results.

Timing is important as WVH is facing serious, immediate challenges, and if the election does not proceed, it may irreparably harm the corporation and its shareholders.

• WVH has substantial debt, is operating at a deficit, and must take action to address its operational shortfalls and capital needs. One such action is the consideration of the contract of sale for a $64 million asset known as the “garage.” The purchase and sale contract for the garage expressly provides a time frame to call a shareholder vote to approve the transaction. This vote was scheduled for July but was postponed due to the pending threats of litigation, in particular, by one of the members of the board.
• WVH has retained a housing consultant to explore redevelopment options for the community, primarily to address its financial and physical conditions. Currently, all efforts are on hold due to the current dispute. Again, this can lead to irreparable harm as WVH must address its capital and financial needs.
• Finally, WVH is also in the process of refinancing its underlying first mortgage, which is more than $60 million. Because the board is currently inoperative, WVH is unable to proceed with this transaction (which is well underway), cannot lock in an interest rate, and in a precarious environment for interest rates, may be irreparably harmed by the inability to consummate this necessary transaction to take advantage of the historically low interest rates.”

On November 29, 2021, the case was decided. The court ordered and adjudged that Michael W. Stout, Robin Andrade, Katy Bordonaro, and Philipp Englin were duly elected as directors of the co-op at the June 30, 2021, meeting, and that respondents (WVH Housing Corp.) are enjoined and prohibited from acting on behalf of the co-op without Stout, Andrade, Bordonaro, and Englin seated on the board as directors.

Many aspects of the current WVH circumstances are reflected in the larger community: disappearing federal funding for affordable housing programs, the change from a rough-and-tumble maritime industrial area to a highly improved expensive and desirable residential neighborhood, and rising and unevenly meted real estate taxes.

With this case decided, the board and co-op members will need to decide on the important issues noted above.

Brian J. Pape is a LEED-AP “green” architect consulting in private practice, serves on the Manhattan District 2 Community Board Landmarks Committee and Quality of Life Committee, is co-chair of the American Institute of Architects NY Design for Aging Committee, and is a member of AIANY Historic Buildings Committee. He is also a journalist who specializes in architecture subjects.