STATE OF NEW YORK ________________________________________________________________________ 8506 IN ASSEMBLY January 4, 2024 ___________ Introduced by M. of A. L. ROSENTHAL -- read once and referred to the Committee on Housing AN ACT to amend the administrative code of the city of New York and the emergency tenant protection act of nineteen seventy-four, in relation to establishing the legal regulated rent for the combination of two or more vacant apartments; to amend the emergency tenant protection act of nineteen seventy-four, in relation to exemptions from rent stabili- zation on the basis of substantial rehabilitation; to define clearly the scope of the fraud exception to the pre-HSTPA four-year rule for calculating rents; and to amend part B of a chapter of the laws of 2023 relating to defining clearly the scope of the fraud exception to the pre-HSTPA four-year rule for calculating rents, as proposed in legislative bills numbers S. 2980-C and A. 6216-B, in relation to claims of fraudulent schemes and determination relating thereto and in relation to the effectiveness thereof The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subparagraph (d) of paragraph 15 of subdivision c of 2 section 26-511 of the administrative code of the city of New York, as 3 added by part A of a chapter of the laws of 2023 amending the adminis- 4 trative code of the city of New York and the emergency tenant protection 5 act of nineteen seventy-four relating to establishing the legal regu- 6 lated rent for the combination of two or more vacant apartments, as 7 proposed in legislative bills numbers S. 2980-C and A. 6216-B, is 8 amended to read as follows: 9 (d) where the vacant housing accommodations are combined, modified, 10 divided or the dimension of such housing accommodation otherwise altered 11 and these changes are being made pursuant to a preservation regulatory 12 agreement with a federal, state or local governmental agency or instru- 13 mentality, the rent stabilized rents charged thereafter shall be based 14 on an initial rent set by such agency or instrumentality[, provided such 15 initial rent shall not be higher than if the initial rent was calculated 16 in accordance with subparagraphs (a), (b), (e) or (f) of this para- 17 graph]. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD07250-13-4
A. 8506 2 1 § 2. Subparagraph (iv) of paragraph 13 of subdivision (a) of section 2 10-b of section 4 of chapter 576 of the laws of 1974, constituting the 3 emergency tenant protection act of nineteen seventy-four, as added by 4 part A of a chapter of the laws of 2023 amending the administrative code 5 of the city of New York and the emergency tenant protection act of nine- 6 teen seventy-four relating to establishing the legal regulated rent for 7 the combination of two or more vacant apartments, as proposed in legis- 8 lative bills numbers S. 2980-C and A. 6216-B, is amended to read as 9 follows: 10 (iv) where the vacant housing accommodations are combined, modified, 11 divided or the dimension of such housing accommodation otherwise altered 12 and these changes are being made pursuant to a preservation regulatory 13 agreement with a federal, state or local governmental agency or instru- 14 mentality, the rent stabilized rents charged thereafter shall be based 15 on an initial rent set by such agency or instrumentality[, provided such 16 initial rent shall not be higher than if the initial rent was calculated 17 in accordance with subparagraphs (i), (ii), (v) or (vi) of this para- 18 graph]. 19 § 3. Paragraph 5 of subdivision a of section 5 of section 4 of chapter 20 576 of the laws of 1974, constituting the emergency tenant protection 21 act of nineteen seventy-four, as amended by part A of a chapter of the 22 laws of 2023 amending the administrative code of the city of New York 23 and the emergency tenant protection act of nineteen seventy-four relat- 24 ing to establishing the legal regulated rent for the combination of two 25 or more vacant apartments, as proposed in legislative bills numbers S. 26 2980-C and A. 6216-B, is amended to read as follows: 27 (5) housing accommodations in buildings completed or buildings 28 substantially rehabilitated as family units on or after January first, 29 nineteen hundred seventy-four; provided that an owner claiming exemption 30 from rent stabilization on the basis of a substantial rehabilitation, 31 where the work for such rehabilitation was initiated on or after the 32 first day of January, two thousand twenty-four, shall seek approval from 33 state division of housing and community renewal within one year of the 34 completion of the substantial rehabilitation, [or for any building 35 previously alleged to have been substantially rehabilitated before the 36 effective date of the chapter of the laws of two thousand twenty-three 37 that amended this paragraph, within six months of such effective date,] 38 and ultimately obtain such approval, which shall be denied on the 39 following grounds: 40 (a) the owner or its predecessors in interest have engaged in harass- 41 ment of tenants in the five years preceding the completion of the 42 substantial rehabilitation; 43 (b) the building was not in a substandard or seriously deteriorated 44 condition requiring substantial rehabilitation; or 45 (c) any additional grounds as set forth by regulation; 46 § 4. Section 2 of part B of a chapter of the laws of 2023 relating to 47 defining clearly the scope of the fraud exception to the pre-HSTPA four- 48 year rule for calculating rents, as proposed in legislative bills 49 numbers S. 2980-C and A. 6216-B, is amended, and a new section 2-a is 50 added to read as follows: 51 § 2. [(a)] Nothing in this act, or the HSTPA, or prior law, shall be 52 construed as restricting, impeding or diminishing the use of records of 53 any age or type, going back to any date that may be relevant, for 54 purposes of determining the status of any apartment under the rent 55 stabilization law[;
A. 8506 3 1 (b) With respect to the calculation of legal rents for the period 2 either prior to or subsequent to June 14, 2019, an owner shall be deemed 3 to have committed fraud if the owner shall have committed a material 4 breach of any duty, arising under statutory, administrative or common 5 law, to disclose truthfully to any tenant, government agency or judicial 6 or administrative tribunal, the rent, regulatory status, or lease infor- 7 mation, for purposes of claiming an unlawful rent or claiming to have 8 deregulated an apartment, whether or not the owner's conduct would be 9 considered fraud under the common law, and whether or not a complaining 10 tenant specifically relied on untruthful or misleading statements in 11 registrations, leases, or other documents. The following conduct shall 12 be presumed to have been the product of such fraud: (1) the unlawful 13 deregulation of any apartment, including such deregulation as results 14 from claiming an unlawful increase such as would have brought the rent 15 over the deregulation threshold that existed under prior law, unless the 16 landlord can prove good faith reliance on a directive or ruling by an 17 administrative agency or court; or (2) beginning October 1, 2011, fail- 18 ing to register, as rent stabilized, any apartment in a building receiv- 19 ing J-51 or 421-a benefits.] or for such other purposes permitted under 20 law or the regulations of the New York State division of housing and 21 community renewal. 22 § 2-a. When a colorable claim that an owner has engaged in a fraudu- 23 lent scheme to deregulate a unit is properly raised as part of a 24 proceeding before a court of competent jurisdiction or the state divi- 25 sion of housing and community renewal, a court of competent jurisdiction 26 or the state division of housing and community renewal shall issue a 27 determination as to whether the owner knowingly engaged in such fraudu- 28 lent scheme after a consideration of the totality of the circumstances. 29 In making such determination, the court or the division shall consider 30 all of the relevant facts and all applicable statutory and regulatory 31 law and controlling authorities, provided that there need not be a find- 32 ing that all of the elements of common law fraud, including evidence of 33 a misrepresentation of material fact, falsity, scienter, reliance and 34 injury, were satisfied in order to make a determination that a fraudu- 35 lent scheme to deregulate a unit was committed if the totality of the 36 circumstances nonetheless indicate that such fraudulent scheme to dereg- 37 ulate a unit was committed. 38 § 5. Section 3 of part B of a chapter of the laws of 2023 relating to 39 defining clearly the scope of the fraud exception to the pre-HSTPA four- 40 year rule for calculating rents, as proposed in legislative bills 41 numbers S. 2980-C and A. 6216-B, is amended to read as follows: 42 § 3. This act shall take effect immediately and shall apply to any 43 action or proceeding in any court or any application, complaint or 44 proceeding before an administrative agency on the effective date of this 45 act. 46 § 6. This act shall take effect immediately; provided, however that 47 sections one, two, and three of this act shall take effect on the same 48 date and in the same manner as part A of a chapter of the laws of 2023 49 amending the administrative code of the city of New York and the emer- 50 gency tenant protection act of nineteen seventy-four relating to estab- 51 lishing the legal regulated rent for the combination of two or more 52 vacant apartments, as proposed in legislative bills numbers S. 2980-C 53 and A. 6216-B, takes effect; and provided further, however, that 54 sections four and five of this act shall take effect on the same date 55 and in the same manner as part B of a chapter of the laws of 2023 relat- 56 ing to defining clearly the scope of the fraud exception to the
A. 8506 4 1 pre-HSTPA four-year rule for calculating rents, as proposed in legisla- 2 tive bills numbers S. 2980-C and A. 6216-B, takes effect; and provided 3 further, however, that the amendments to section 26-511 of chapter 4 of 4 title 26 of the administrative code of the city of New York made by 5 section one of this act shall expire on the same date as such law 6 expires and shall not affect the expiration of such law provided under 7 section 26-520 of such law.