STATE OF NEW YORK ________________________________________________________________________ 9325 IN SENATE May 13, 2024 ___________ Introduced by Sen. JACKSON -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development 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 requiring notice be provided to tenants prior to the beginning of work on a major capital improvement 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] part K of chapter thirty-six of the laws of two thou- 13 sand nineteen [that amended this subparagraph] shall be in an amount 14 sufficient to amortize the cost of the improvements pursuant to this 15 subparagraph (g) over a twelve-year period for buildings with thirty- 16 five or fewer units or a twelve and one-half year period for buildings 17 with more than thirty-five units, and shall be removed from the legal 18 regulated rent thirty years from the date the increase became effective 19 inclusive of any increases granted by the applicable rent guidelines 20 board. Temporary major capital improvement increases shall be collect- 21 ible prospectively on the first day of the first month beginning sixty 22 days from the date of mailing notice of approval to the tenant. Such 23 notice shall disclose the total monthly increase in rent and the first 24 month in which the tenant would be required to pay the temporary EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14871-01-4
S. 9325 2 1 increase. An approval for a temporary major capital improvement increase 2 shall not include retroactive payments. The collection of any increase 3 shall not exceed two percent in any year from the effective date of the 4 order granting the increase over the rent set forth in the schedule of 5 gross rents, with collectability of any dollar excess above said sum to 6 be spread forward in similar increments and added to the rent as estab- 7 lished or set in future years. Upon vacancy, the landlord may add any 8 remaining balance of the temporary major capital improvement increase to 9 the legal regulated rent. Notwithstanding any other provision of the 10 law, for any renewal lease commencing on or after June 14, 2019, the 11 collection of any rent increases due to any major capital improvements 12 approved on or after June 16, 2012 and before June 16, 2019 shall not 13 exceed two percent in any year for any tenant in occupancy on the date 14 the major capital improvement was approved. To be eligible for a tempo- 15 rary rent increase based upon a major capital improvement under this 16 subparagraph, notice shall be required to be provided to tenants prior 17 to the beginning of work on such major capital improvement, or 18 § 2. Paragraph 6 of subdivision c of section 26-511 of the administra- 19 tive code of the city of New York, as separately amended by section 12 20 of part K of chapter 36 and section 28 of part Q of chapter 39 of the 21 laws of 2019, is amended to read as follows: 22 (6) provides criteria whereby the commissioner may act upon applica- 23 tions by owners for increases in excess of the level of fair rent 24 increase established under this law provided, however, that such crite- 25 ria shall provide (a) as to hardship applications, for a finding that 26 the level of fair rent increase is not sufficient to enable the owner to 27 maintain approximately the same average annual net income (which shall 28 be computed without regard to debt service, financing costs or manage- 29 ment fees) for the three year period ending on or within six months of 30 the date of an application pursuant to such criteria as compared with 31 annual net income, which prevailed on the average over the period nine- 32 teen hundred sixty-eight through nineteen hundred seventy, or for the 33 first three years of operation if the building was completed since nine- 34 teen hundred sixty-eight or for the first three fiscal years after a 35 transfer of title to a new owner provided the new owner can establish to 36 the satisfaction of the commissioner that he or she acquired title to 37 the building as a result of a bona fide sale of the entire building and 38 that the new owner is unable to obtain requisite records for the fiscal 39 years nineteen hundred sixty-eight through nineteen hundred seventy 40 despite diligent efforts to obtain same from predecessors in title and 41 further provided that the new owner can provide financial data covering 42 a minimum of six years under his or her continuous and uninterrupted 43 operation of the building to meet the three year to three year compar- 44 ative test periods herein provided; and (b) as to completed building- 45 wide major capital improvements, for a finding that such improvements 46 are deemed depreciable under the Internal Revenue Code and that the cost 47 is to be amortized over a twelve-year period for a building with thir- 48 ty-five or fewer housing accommodations, or a twelve and one-half-year 49 period for a building with more than thirty-five housing accommodations, 50 for any determination issued by the division of housing and community 51 renewal after the effective date of [the the] part K of chapter thirty- 52 nine of the laws of two thousand nineteen [that amended this paragraph] 53 and shall be removed from the legal regulated rent thirty years from the 54 date the increase became effective inclusive of any increases granted by 55 the applicable rent guidelines board. Temporary major capital improve- 56 ment increases shall be collectible prospectively on the first day of
S. 9325 3 1 the first month beginning sixty days from the date of mailing notice of 2 approval to the tenant. Such notice shall disclose the total monthly 3 increase in rent and the first month in which the tenant would be 4 required to pay the temporary increase. An approval for a temporary 5 major capital improvement increase shall not include retroactive 6 payments. The collection of any increase shall not exceed two percent in 7 any year from the effective date of the order granting the increase over 8 the rent set forth in the schedule of gross rents, with collectability 9 of any dollar excess above said sum to be spread forward in similar 10 increments and added to the rent as established or set in future years. 11 Upon vacancy, the landlord may add any remaining balance of the tempo- 12 rary major capital improvement increase to the legal regulated rent. 13 Notwithstanding any other provision of the law, for any renewal lease 14 commencing on or after June 14, 2019, the collection of any rent 15 increases due to any major capital improvements approved on or after 16 June 16, 2012 and before June 16, 2019 shall not exceed two percent in 17 any year for any tenant in occupancy on the date the major capital 18 improvement was approved or based upon cash purchase price exclusive of 19 interest or service charges. To be eligible for a temporary rent 20 increase based upon a major capital improvement under this paragraph, 21 notice shall be required to be provided to tenants prior to the begin- 22 ning of work on such major capital improvement. Where an application for 23 a temporary major capital improvement increase has been filed, a tenant 24 shall have sixty days from the date of mailing of a notice of a proceed- 25 ing in which to answer or reply. The state division of housing and 26 community renewal shall provide any responding tenant with the reasons 27 for the division's approval or denial of such application. Notwithstand- 28 ing anything to the contrary contained herein, no hardship increase 29 granted pursuant to this paragraph shall, when added to the annual gross 30 rents, as determined by the commissioner, exceed the sum of, (i) the 31 annual operating expenses, (ii) an allowance for management services as 32 determined by the commissioner, (iii) actual annual mortgage debt 33 service (interest and amortization) on its indebtedness to a lending 34 institution, an insurance company, a retirement fund or welfare fund 35 which is operated under the supervision of the banking or insurance laws 36 of the state of New York or the United States, and (iv) eight and one- 37 half percent of that portion of the fair market value of the property 38 which exceeds the unpaid principal amount of the mortgage indebtedness 39 referred to in subparagraph (iii) of this paragraph. Fair market value 40 for the purposes of this paragraph shall be six times the annual gross 41 rent. The collection of any increase in the stabilized rent for any 42 apartment pursuant to this paragraph shall not exceed six percent in any 43 year from the effective date of the order granting the increase over the 44 rent set forth in the schedule of gross rents, with collectability of 45 any dollar excess above said sum to be spread forward in similar incre- 46 ments and added to the stabilized rent as established or set in future 47 years; 48 § 3. Paragraph 3 of subdivision d of section 6 of section 4 of chapter 49 576 of the laws of 1974, constituting the emergency tenant protection 50 act of nineteen seventy-four, as amended by section 26 of part Q of 51 chapter 39 of the laws of 2019, is amended to read as follows: 52 (3) there has been since January first, nineteen hundred seventy-four 53 a major capital improvement essential for the preservation, energy effi- 54 ciency, functionality, or infrastructure of the entire building, 55 improvement of the structure including heating, windows, plumbing and 56 roofing, but shall not be for operation costs or unnecessary cosmetic
S. 9325 4 1 improvements. An adjustment under this paragraph shall be in an amount 2 sufficient to amortize the cost of the improvements pursuant to this 3 paragraph over a twelve-year period for a building with thirty-five or 4 fewer housing accommodations, or a twelve and one-half period for a 5 building with more than thirty-five housing accommodations and shall be 6 removed from the legal regulated rent thirty years from the date the 7 increase became effective inclusive of any increases granted by the 8 applicable rent guidelines board, for any determination issued by the 9 division of housing and community renewal after the effective date of 10 the chapter of the laws of two thousand nineteen that amended this para- 11 graph. Temporary major capital improvement increases shall be collecta- 12 ble prospectively on the first day of the first month beginning sixty 13 days from the date of mailing notice of approval to the tenant. Such 14 notice shall disclose the total monthly increase in rent and the first 15 month in which the tenant would be required to pay the temporary 16 increase. An approval for a temporary major capital improvement increase 17 shall not include retroactive payments. The collection of any increase 18 shall not exceed two percent in any year from the effective date of the 19 order granting the increase over the rent set forth in the schedule of 20 gross rents, with collectability of any dollar excess above said sum to 21 be spread forward in similar increments and added to the rent as estab- 22 lished or set in future years. Upon vacancy, the landlord may add any 23 remaining balance of the temporary major capital improvement increase to 24 the legal regulated rent. Notwithstanding any other provision of the 25 law, the collection of any rent increases for any renewal lease commenc- 26 ing on or after June 14, 2019, due to any major capital improvements 27 approved on or after June 16, 2012 and before June 16, 2019 shall not 28 exceed two percent in any year for any tenant in occupancy on the date 29 the major capital improvement was approved. To be eligible for a tempo- 30 rary rent increase based upon a major capital improvement under this 31 paragraph, notice shall be required to be provided to tenants prior to 32 the beginning of work on such major capital improvement, or 33 § 4. Subparagraph 7 of the second undesignated paragraph of paragraph 34 (a) of subdivision 4 of section 4 of chapter 274 of the laws of 1946, 35 constituting the emergency housing rent control law, as separately 36 amended by section 25 of part Q of chapter 39 and section 14 of part K 37 of chapter 36 of the laws of 2019, is amended to read as follows: 38 (7) there has been since March first, nineteen hundred fifty, a major 39 capital improvement essential for the preservation, energy efficiency, 40 functionality, or infrastructure of the entire building, improvement of 41 the structure including heating, windows, plumbing and roofing, but 42 shall not be for operational costs or unnecessary cosmetic improvements; 43 which for any order of the commissioner issued after the effective date 44 of [the] part K of chapter thirty-six of the laws of two thousand nine- 45 teen [that amended this paragraph] the cost of such improvement shall be 46 amortized over a twelve-year period for buildings with thirty-five or 47 fewer units or a twelve and one-half year period for buildings with more 48 than thirty-five units, and shall be removed from the legal regulated 49 rent thirty years from the date the increase became effective inclusive 50 of any increases granted by the applicable rent guidelines board. Tempo- 51 rary major capital improvement increases shall be collectible prospec- 52 tively on the first day of the first month beginning sixty days from the 53 date of mailing notice of approval to the tenant. Such notice shall 54 disclose the total monthly increase in rent and the first month in which 55 the tenant would be required to pay the temporary increase. An approval 56 for a temporary major capital improvement increase shall not include
S. 9325 5 1 retroactive payments. The collection of any increase shall not exceed 2 two percent in any year from the effective date of the order granting 3 the increase over the rent set forth in the schedule of gross rents, 4 with collectability of any dollar excess above said sum to be spread 5 forward in similar increments and added to the rent as established or 6 set in future years. Upon vacancy, the landlord may add any remaining 7 balance of the temporary major capital improvement increase to the legal 8 regulated rent. Notwithstanding any other provision of the law, for any 9 renewal lease commencing on or after June 14, 2019, the collection of 10 any rent increases due to any major capital improvements approved on or 11 after June 16, 2012 and before June 16, 2019 shall not exceed two 12 percent in any year for any tenant in occupancy on the date the major 13 capital improvement was approved; provided, however, to be eligible for 14 a temporary rent increase based upon a major capital improvement under 15 this subparagraph, notice shall be required to be provided to tenants 16 prior to the beginning of work on such major capital improvement; 17 provided, however, where an application for a temporary major capital 18 improvement increase has been filed, a tenant shall have sixty days from 19 the date of mailing of a notice of a proceeding in which to answer or 20 reply. The state division of housing and community renewal shall provide 21 any responding tenant with the reasons for the division's approval or 22 denial of such application; or 23 § 5. This act shall take effect on the ninetieth day after it shall 24 have become a law; provided that: 25 (a) the amendments to section 26-405 of the city rent and rehabili- 26 tation law made by section one of this act shall remain in full force 27 and effect only as long as the public emergency requiring the regulation 28 and control of residential rents and evictions continues, as provided in 29 subdivision 3 of section 1 of the local emergency housing rent control 30 act; and 31 (b) the amendments to section 26-511 of chapter 4 of title 26 of the 32 administrative code of the city of New York made by section two of this 33 act shall expire on the same date as such law expires and shall not 34 affect the expiration of such law as provided under section 26-520 of 35 such law.