STATE OF NEW YORK ________________________________________________________________________ 6852--A Cal. No. 498 2023-2024 Regular Sessions IN SENATE May 11, 2023 ___________ Introduced by Sens. PARKER, JACKSON, SEPULVEDA -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development -- recommitted to the Committee on Housing, Construction and Community Development in accordance with Senate Rule 6, sec. 8 -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading AN ACT to amend the administrative code of the city of New York, the emergency tenant protection act of nineteen seventy-four and the emer- gency housing rent control law, in relation to inspection of major capital improvements for which rent increases are requested and in relation to extending the provisions of the rent stabilization law The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subparagraph (g) of paragraph 1 of subdivision g of section 2 26-405 of the administrative code of the city of New York, as amended by 3 section 27 of part Q of chapter 39 of the laws of 2019, is amended to 4 read as follows: 5 (g) There has been since July first, nineteen hundred seventy, a major 6 capital improvement essential for the preservation energy efficiency, 7 functionality, or infrastructure of the entire building, improvement of 8 the structure including heating, windows, plumbing and roofing but shall 9 not be for operational costs or unnecessary cosmetic improvements. The 10 temporary increase based upon a major capital improvement under this 11 subparagraph for any order of the commissioner issued after [the effec- 12 tive date of the chapter of the laws of two thousand nineteen that 13 amended this subparagraph] June 14, 2019 shall be in an amount suffi- 14 cient to amortize the cost of the improvements pursuant to this subpara- 15 graph [(g)] over a twelve-year period for buildings with thirty-five or 16 fewer units or a twelve and one-half year period for buildings with more EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD07976-03-4
S. 6852--A 2 1 than thirty-five units, and shall be removed from the legal regulated 2 rent thirty years from the date the increase became effective inclusive 3 of any increases granted by the applicable rent guidelines board. Tempo- 4 rary major capital improvement increases shall be collectible prospec- 5 tively on the first day of the first month beginning sixty days from the 6 date of mailing notice of approval to the tenant. Such notice shall 7 disclose the total monthly increase in rent and the first month in which 8 the tenant would be required to pay the temporary increase. An approval 9 for a temporary major capital improvement increase shall not include 10 retroactive payments. The collection of any increase shall not exceed 11 two percent in any year from the effective date of the order granting 12 the increase over the rent set forth in the schedule of gross rents, 13 with collectability of any dollar excess above said sum to be spread 14 forward in similar increments and added to the rent as established or 15 set in future years. Upon vacancy, the landlord may add any remaining 16 balance of the temporary major capital improvement increase to the legal 17 regulated rent. No landlord shall deny access to a professional engi- 18 neer licensed to practice in the state of New York or a registered 19 architect licensed to practice in the state of New York hired by any 20 tenant, tenants or tenant association representing tenants for the 21 purpose of conducting an inspection of a major capital improvement for 22 which an application for adjustment of maximum rent has been filed. Such 23 inspection shall be conducted after notice to the landlord and during 24 normal business hours. Such tenant may file the report of the inspection 25 with the city rent agency for consideration in the determination of such 26 application. Notwithstanding any other provision of the law, for any 27 renewal lease commencing on or after June 14, 2019, the collection of 28 any rent increases due to any major capital improvements approved on or 29 after June 16, 2012 and before June 16, 2019 shall not exceed two 30 percent in any year for any tenant in occupancy on the date the major 31 capital improvement was approved, or 32 § 2. Paragraph 6 of subdivision c of section 26-511 of the administra- 33 tive code of the city of New York, as separately amended by section 12 34 of part K of chapter 36 and section 28 of part Q of chapter 39 of the 35 laws of 2019, is amended to read as follows: 36 (6) provides criteria whereby the commissioner may act upon applica- 37 tions by owners for increases in excess of the level of fair rent 38 increase established under this law provided, however, that such crite- 39 ria shall provide (a) as to hardship applications, for a finding that 40 the level of fair rent increase is not sufficient to enable the owner to 41 maintain approximately the same average annual net income (which shall 42 be computed without regard to debt service, financing costs or manage- 43 ment fees) for the three year period ending on or within six months of 44 the date of an application pursuant to such criteria as compared with 45 annual net income, which prevailed on the average over the period nine- 46 teen hundred sixty-eight through nineteen hundred seventy, or for the 47 first three years of operation if the building was completed since nine- 48 teen hundred sixty-eight or for the first three fiscal years after a 49 transfer of title to a new owner provided the new owner can establish to 50 the satisfaction of the commissioner that he or she acquired title to 51 the building as a result of a bona fide sale of the entire building and 52 that the new owner is unable to obtain requisite records for the fiscal 53 years nineteen hundred sixty-eight through nineteen hundred seventy 54 despite diligent efforts to obtain same from predecessors in title and 55 further provided that the new owner can provide financial data covering 56 a minimum of six years under his or her continuous and uninterrupted
S. 6852--A 3 1 operation of the building to meet the three year to three year compar- 2 ative test periods herein provided; and (b) as to completed building- 3 wide major capital improvements, for a finding that such improvements 4 are deemed depreciable under the Internal Revenue Code and that the cost 5 is to be amortized over a twelve-year period for a building with thir- 6 ty-five or fewer housing accommodations, or a twelve and one-half-year 7 period for a building with more than thirty-five housing accommodations, 8 for any determination issued by the division of housing and community 9 renewal after [the effective date of the the chapter of the laws of two 10 thousand nineteen that amended this paragraph] June 14, 2019 and shall 11 be removed from the legal regulated rent thirty years from the date the 12 increase became effective inclusive of any increases granted by the 13 applicable rent guidelines board. Temporary major capital improvement 14 increases shall be collectible prospectively on the first day of the 15 first month beginning sixty days from the date of mailing notice of 16 approval to the tenant. Such notice shall disclose the total monthly 17 increase in rent and the first month in which the tenant would be 18 required to pay the temporary increase. An approval for a temporary 19 major capital improvement increase shall not include retroactive 20 payments. The collection of any increase shall not exceed two percent in 21 any year from the effective date of the order granting the increase over 22 the rent set forth in the schedule of gross rents, with collectability 23 of any dollar excess above said sum to be spread forward in similar 24 increments and added to the rent as established or set in future years. 25 Upon vacancy, the landlord may add any remaining balance of the tempo- 26 rary major capital improvement increase to the legal regulated rent. No 27 landlord shall deny access to a professional engineer licensed to prac- 28 tice in the state of New York or a registered architect licensed to 29 practice in the state of New York hired by any tenant, tenants or tenant 30 association representing tenants for the purpose of conducting an 31 inspection of a major capital improvement for which an application for 32 adjustment of maximum rent has been filed. Such inspection shall be 33 conducted after notice to the landlord and during normal business hours. 34 Such tenant may file the report of the inspection with the state divi- 35 sion of housing and community renewal for consideration in the determi- 36 nation of such application. Notwithstanding any other provision of the 37 law, for any renewal lease commencing on or after June 14, 2019, the 38 collection of any rent increases due to any major capital improvements 39 approved on or after June 16, 2012 and before June 16, 2019 shall not 40 exceed two percent in any year for any tenant in occupancy on the date 41 the major capital improvement was approved or based upon cash purchase 42 price exclusive of interest or service charges. Where an application for 43 a temporary major capital improvement increase has been filed, a tenant 44 shall have sixty days from the date of mailing of a notice of a proceed- 45 ing in which to answer or reply. The state division of housing and 46 community renewal shall provide any responding tenant with the reasons 47 for the division's approval or denial of such application. Notwithstand- 48 ing anything to the contrary contained herein, no hardship increase 49 granted pursuant to this paragraph shall, when added to the annual gross 50 rents, as determined by the commissioner, exceed the sum of, (i) the 51 annual operating expenses, (ii) an allowance for management services as 52 determined by the commissioner, (iii) actual annual mortgage debt 53 service (interest and amortization) on its indebtedness to a lending 54 institution, an insurance company, a retirement fund or welfare fund 55 which is operated under the supervision of the banking or insurance laws 56 of the state of New York or the United States, and (iv) eight and one-
S. 6852--A 4 1 half percent of that portion of the fair market value of the property 2 which exceeds the unpaid principal amount of the mortgage indebtedness 3 referred to in subparagraph (iii) of this paragraph. Fair market value 4 for the purposes of this paragraph shall be six times the annual gross 5 rent. The collection of any increase in the stabilized rent for any 6 apartment pursuant to this paragraph shall not exceed six percent in any 7 year from the effective date of the order granting the increase over the 8 rent set forth in the schedule of gross rents, with collectability of 9 any dollar excess above said sum to be spread forward in similar incre- 10 ments and added to the stabilized rent as established or set in future 11 years; 12 § 3. Paragraph 3 of subdivision d of section 6 of section 4 of chapter 13 576 of the laws of 1974, constituting the emergency tenant protection 14 act of nineteen seventy-four, as amended by section 26 of part Q of 15 chapter 39 of the laws of 2019, is amended to read as follows: 16 (3) there has been since January first, nineteen hundred seventy-four 17 a major capital improvement essential for the preservation, energy effi- 18 ciency, functionality, or infrastructure of the entire building, 19 improvement of the structure including heating, windows, plumbing and 20 roofing, but shall not be for operation costs or unnecessary cosmetic 21 improvements. An adjustment under this paragraph shall be in an amount 22 sufficient to amortize the cost of the improvements pursuant to this 23 paragraph over a twelve-year period for a building with thirty-five or 24 fewer housing accommodations, or a twelve and one-half period for a 25 building with more than thirty-five housing accommodations and shall be 26 removed from the legal regulated rent thirty years from the date the 27 increase became effective inclusive of any increases granted by the 28 applicable rent guidelines board, for any determination issued by the 29 division of housing and community renewal after [the effective date of 30 the chapter of the laws of two thousand nineteen that amended this para- 31 graph] June 14, 2019. Temporary major capital improvement increases 32 shall be collectable prospectively on the first day of the first month 33 beginning sixty days from the date of mailing notice of approval to the 34 tenant. Such notice shall disclose the total monthly increase in rent 35 and the first month in which the tenant would be required to pay the 36 temporary increase. An approval for a temporary major capital improve- 37 ment increase shall not include retroactive payments. The collection of 38 any increase shall not exceed two percent in any year from the effective 39 date of the order granting the increase over the rent set forth in the 40 schedule of gross rents, with collectability of any dollar excess above 41 said sum to be spread forward in similar increments and added to the 42 rent as established or set in future years. Upon vacancy, the landlord 43 may add any remaining balance of the temporary major capital improvement 44 increase to the legal regulated rent. No landlord shall deny access to 45 a professional engineer licensed to practice in the state of New York or 46 a registered architect licensed to practice in the state of New York 47 hired by any tenant, tenants or tenant association representing tenants 48 for the purpose of conducting an inspection of a major capital improve- 49 ment for which an application for adjustment of maximum rent has been 50 filed. Such inspection shall be conducted after notice to the landlord 51 and during normal business hours. Such tenant may file the report of the 52 inspection with the state division of housing and community renewal for 53 consideration in the determination of such application. Notwithstanding 54 any other provision of the law, the collection of any rent increases for 55 any renewal lease commencing on or after June 14, 2019, due to any major 56 capital improvements approved on or after June 16, 2012 and before June
S. 6852--A 5 1 16, 2019 shall not exceed two percent in any year for any tenant in 2 occupancy on the date the major capital improvement was approved, or 3 § 4. Subparagraph 7 of the second undesignated paragraph of para- 4 graph (a) of subdivision 4 of section 4 of chapter 274 of the laws 5 of 1946, constituting the emergency housing rent control law as sepa- 6 rately amended by section 14 of part K of chapter 36 and section 25 of 7 part Q of chapter 39 of the laws of 2019, is amended to read as follows: 8 (7) there has been since March first, nineteen hundred fifty, a major 9 capital improvement essential for the preservation, energy efficiency, 10 functionality, or infrastructure of the entire building, improvement of 11 the structure including heating, windows, plumbing and roofing, but 12 shall not be for operational costs or unnecessary cosmetic improvements; 13 which for any order of the commissioner issued after [the effective date 14 of the chapter of the laws of two thousand nineteen that amended this 15 paragraph] June 14, 2019 the cost of such improvement shall be amortized 16 over a twelve-year period for buildings with thirty-five or fewer units 17 or a twelve and one-half year period for buildings with more than thir- 18 ty-five units, and shall be removed from the legal regulated rent thirty 19 years from the date the increase became effective inclusive of any 20 increases granted by the applicable rent guidelines board. Temporary 21 major capital improvement increases shall be collectible prospectively 22 on the first day of the first month beginning sixty days from the date 23 of mailing notice of approval to the tenant. Such notice shall disclose 24 the total monthly increase in rent and the first month in which the 25 tenant would be required to pay the temporary increase. An approval for 26 a temporary major capital improvement increase shall not include retro- 27 active payments. The collection of any increase shall not exceed two 28 percent in any year from the effective date of the order granting the 29 increase over the rent set forth in the schedule of gross rents, with 30 collectability of any dollar excess above said sum to be spread forward 31 in similar increments and added to the rent as established or set in 32 future years. Upon vacancy, the landlord may add any remaining balance 33 of the temporary major capital improvement increase to the legal regu- 34 lated rent. No landlord shall deny access to a professional engineer 35 licensed to practice in the state of New York or a registered architect 36 licensed to practice in the state of New York hired by any tenant, 37 tenants or tenant association representing tenants for the purpose of 38 conducting an inspection of a major capital improvement for which an 39 application for adjustment of maximum rent has been filed. Such 40 inspection shall be conducted after notice to the landlord and during 41 normal business hours. Such tenant may file the report of the inspection 42 with the state division of housing and community renewal for consider- 43 ation in the determination of such application. Notwithstanding any 44 other provision of the law, for any renewal lease commencing on or after 45 June 14, 2019, the collection of any rent increases due to any major 46 capital improvements approved on or after June 16, 2012 and before June 47 16, 2019 shall not exceed two percent in any year for any tenant in 48 occupancy on the date the major capital improvement was approved; 49 provided, however, where an application for a temporary major capital 50 improvement increase has been filed, a tenant shall have sixty days from 51 the date of mailing of a notice of a proceeding in which to answer or 52 reply. The state division of housing and community renewal shall provide 53 any responding tenant with the reasons for the division's approval or 54 denial of such application; or 55 § 5. This act shall take effect on the one hundred twentieth day 56 after it shall have become a law; provided, however, that the amendments
S. 6852--A 6 1 to section 26-405 of the city rent and rehabilitation law made by 2 section one of this act shall remain in full force and effect only so 3 long as the public emergency requiring the regulation and control of 4 residential rents and evictions continues, as provided in subdivision 3 5 of section 1 of the local emergency housing rent control act; and 6 provided further that the amendments to section 26-511 of the rent 7 stabilization law of nineteen hundred sixty-nine made by section two of 8 this act shall expire on the same date as such law expires and shall not 9 affect the expiration of such law as provided under section 26-520 of 10 such law. Effective immediately, the addition, amendment and/or repeal 11 of any rule and regulation necessary for the implementation of this act 12 on its effective date are authorized to be made on or before such date.