NY State Senate Bill 2011-S7760

Senate Bill S7760

2011-2012 Legislative Session

Requires the state division of housing and community renewal to verify there are no violations on the property prior to authorizing a rent increase for major capital

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Archive: Last Bill Status - In Senate Committee Rules Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 18, 2012	referred to rules

2011-S7760 (ACTIVE) - Details

See Assembly Version of this Bill:: A10170
Current Committee:: Senate Rules
Law Section:: New York City Administrative Code
Laws Affected:: Amd §§26-405 & 26-511, NYC Ad Cd; amd §6, Emerg Ten Prot Act of 1974; amd §4, Emerg Hous Rent Cont L
Versions Introduced in Other Legislative Sessions:: 2013-2014: S2830, A247
2015-2016: S3889
2017-2018: S3612
2019-2020: S4539
2021-2022: S4948
2023-2024: S6043

2011-S7760 (ACTIVE) - Summary

Requires the state division of housing and community renewal to verify there are no class B or C housing code violations or no more than 30 class A housing code violations on the property prior to authorizing a rent increase for major capital improvements for such property; provides that outstanding violations shall be corrected by the landlord and verified by the city rent agency prior to authorization of a rent increase.

2011-S7760 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S7760

TITLE OF BILL:
An act to amend the administrative code of the city of New York, the
emergency tenant protection act of nineteen seventy-four and the
emergency housing rent control law, in relation to requiring the state
division of housing and community renewal to verify there are no
housing code violations prior to authorizing a rent increase for major
capital improvements

PURPOSE OR GENERAL IDEA OF BILL:
The purpose of the bill is to require the state division of housing
and community renewal to verify, in collaboration with local
authorities responsible for inspecting buildings, that the landlord
applying for rent increase based on major capital improvement has no
more than A, no B, and C housing code violations on the property.

SUMMARY OF SPECIFIC PROVISIONS:
Section 1: amends subdivision (g) 26-405 of the administrative code of
the city of New York is amended by adding a new subparagraph requiring
the state division of housing and community renewal to verify, in
collaboration with local authorities responsible for inspecting
buildings, that the landlord filing an application for major capital
improvement does not have an more than thirty class A, or a class B,
or C housing code violation on the property.

Section 2: amends paragraph 6 of subdivision (c) of section 26-511 of
the administrative code of the city of New York to require the state
division of housing and community renewal to verify, in collaboration
with local authorities responsible for inspecting buildings, that the
landlord filing an application for major capital improvement does not
have an more than thirty class A, or a class B, or C housing code
violation on the property.

Section 3: amends subdivision d of section 6 of section 4 of chapter
576 of the laws of 1974 by adding paragraph 6 to require the state
division of housing and community renewal to verify, in collaboration
with local authorities responsible for inspecting buildings, that the
landlord filing an application for major capital improvement does not
have an more than thirty class A, or a class B, or C housing code
violation on the property.

Section 4: amends the second undesignated paragraph of paragraph (a)
of subdivision 4 of section 4 of the emergency rent control law to
amends section (g) 26-405 of the administrative code of the city of
New York is amended by adding a new subparagraph requiring the state
division of housing and community renewal to verify, in collaboration
with local authorities responsible for inspecting buildings, that the
landlord filing an application for major capital improvement does not
have an more than thirty class A, or a class B, or C housing code
violation on the property.

Section 5: establishes effective date and related specific provisions

JUSTIFICATION:


Since July 1, 1970, a major capital improvement is required for the
operation, preservation or maintenance of the structure. Under these
circumstances, a rent increase is authorized for rent controlled
apartments. Rent increases for rent stabilized apartments require the
improvement to be building-wide, needed for the operation,
preservation or maintenance of the structure; depreciable under the
Internal Revenue Code, other than for ordinary repairs; and to replace
an item whose useful life has expired.

Class A housing code violations are classified as non-hazardous and
include minor leaks, chipping or peeling paint when no children under
the age of six live in the home, or lack of signs designating floor
numbers. Class B violations are classified as hazardous such as
inadequate lighting in public areas, lack of posted certificate of
occupancy, or removal of vermin. Class C are immediately hazardous
violations and include inadequate fire exits, rodents, lead-based
paint, lack of heat, hot water, electricity, or gas.

Currently, only class C violations prevent the state division of
housing and community renewal (DHCR) from approving a rent increase
based on major capital improvement. Tenants, however, are forced to
pay a higher rent even when class A and B violations are not corrected
by the landlord. It is the responsibility of landlords to provide
essential services to their tenants, repair housing code violations,
and maintain their properties in habitable conditions.

PRIOR LEGISLATIVE HISTORY:
New legislation.

FISCAL IMPLICATIONS:
To be determined.

EFFECTIVE DATE:
This act shall take effect on the sixtieth day after it shall have
become a law; provided that:

(a) the amendments to section 26-405 of the city rent and
rehabilitation law made by section one of this act shall remain in
full force and effect only as long as the public emergency requiring
the regulation and control of residential rents and evictions
continues, as provided in subdivision 3 of section 1 of the local
emergency housing rent control act;
(b) the amendments to section 26-511 of the rent stabilization law of
nineteen hundred sixty-nine made by section two of this act shall
expire on the same date as such law expires and shall not affect the
expiration of such law as provided under section 26-520 of such law,
as from time to time amended;
(c) the amendment to section 6 of the emergency tenant protection act
of nineteen seventy-four made by section three of this act shall
expire on the same date as such act expires and shall not affect the
expiration of such act as provided in section 17 of chapter 576 of the
laws of 1974, as from time to time amended; and
(d) the amendment to section 4 of the emergency housing rent control
law made by section four of this act shall expire on the same date as
such law expires and shall not affect the expiration of such law as
provided in subdivision 2 of section 1 of chapter 274 of the laws of
1946.

2011-S7760 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  7760

                            I N  S E N A T E

                              June 18, 2012
                               ___________

Introduced  by  Sen.  PARKER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Rules

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 the state
  division of housing and community renewal to verify there are no hous-
  ing code violations prior to authorizing a  rent  increase  for  major
  capital improvements

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph 1 of subdivision  g  of  section  26-405  of  the
administrative  code  of the city of New York is amended by adding a new
subparagraph (p) to read as follows:
  (P) ADJUSTMENTS MADE PURSUANT TO SUBPARAGRAPH (G)  OF  THIS  PARAGRAPH
SHALL  BE  COLLECTIBLE  UPON  THE LANDLORD'S FILING OF A REPORT WITH THE
CITY RENT AGENCY, SUBJECT TO THE PROVISIONS OF SUBPARAGRAPH (E) OF PARA-
GRAPH TWO OF SUBDIVISION A OF THIS SECTION AND VERIFICATION BY THE  CITY
RENT  AGENCY,  IN  COLLABORATION  WITH LOCAL AUTHORITIES RESPONSIBLE FOR
INSPECTING BUILDINGS, THAT THE APPLICANT DOES NOT HAVE MORE THAN  THIRTY
CLASS A HOUSING CODE VIOLATIONS OR A CLASS B OR C HOUSING CODE VIOLATION
ON  THE  PROPERTY.  OUTSTANDING  HOUSING  CODE VIOLATIONS THAT ARE FOUND
SHALL BE CLEARED, CORRECTED OR ABATED BY THE LANDLORD  AND  VERIFIED  BY
THE  CITY  RENT  AGENCY  PRIOR TO AUTHORIZATION OF A RENT INCREASE UNDER
SUBPARAGRAPH (G) OF THIS PARAGRAPH.
  S 2. Paragraph 6 of subdivision c of section 26-511 of the administra-
tive code of the city of New York, as amended by chapter 116 of the laws
of 1997, is amended to read as follows:
  (6) provides criteria whereby the commissioner may act  upon  applica-
tions  by  owners  for  increases  in  excess  of the level of fair rent
increase established under this law provided, however, that such  crite-
ria  shall  provide  (a) as to hardship applications, for a finding that
the level of fair rent increase is not sufficient to enable the owner to
maintain approximately the same average annual net income  (which  shall
be  computed  without regard to debt service, financing costs or manage-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD13794-04-2

S. 7760                             2

ment fees) for the three year period ending on or within six  months  of
the  date  of  an application pursuant to such criteria as compared with
annual net income, which prevailed on the average over the period  nine-
teen  hundred  sixty-eight  through nineteen hundred seventy, or for the
first three years of operation if the building was completed since nine-
teen hundred sixty-eight or for the first three  fiscal  years  after  a
transfer of title to a new owner provided the new owner can establish to
the  satisfaction  of  the commissioner that he or she acquired title to
the building as a result of a bona fide sale of the entire building  and
that  the new owner is unable to obtain requisite records for the fiscal
years nineteen hundred  sixty-eight  through  nineteen  hundred  seventy
despite  diligent  efforts to obtain same from predecessors in title and
further provided that the new owner can provide financial data  covering
a  minimum  of  six  years under his or her continuous and uninterrupted
operation of the building to meet the three year to three  year  compar-
ative  test  periods  herein provided; and (b) as to completed building-
wide major capital improvements, for a finding  that  such  improvements
are deemed depreciable under the Internal Revenue Code and that the cost
is  to  be  amortized over a seven-year period, based upon cash purchase
price exclusive of interest or service charges.  THE DIVISION OF HOUSING
AND COMMUNITY RENEWAL SHALL REQUIRE THE SUBMISSION OF A REPORT BY  LAND-
LORDS APPLYING FOR A RENT INCREASE FOR MAJOR CAPITAL IMPROVEMENTS PURSU-
ANT  TO  THIS  PARAGRAPH  AND SUBJECT TO VERIFICATION BY THE DIVISION OF
HOUSING AND COMMUNITY RENEWAL, IN COLLABORATION WITH  LOCAL  AUTHORITIES
RESPONSIBLE FOR INSPECTING BUILDINGS, CERTIFYING THAT THERE ARE NOT MORE
THAN  THIRTY  CLASS A HOUSING CODE VIOLATIONS NOR A CLASS B OR C HOUSING
CODE VIOLATION ON THE PROPERTY, PRIOR TO  RECEIVING  APPROVAL  FOR  SUCH
RENT  INCREASE. Notwithstanding anything to the contrary contained here-
in, no hardship increase granted pursuant to this paragraph shall,  when
added  to  the  annual  gross  rents, as determined by the commissioner,
exceed the sum of, (i) the annual operating expenses, (ii) an  allowance
for  management services as determined by the commissioner, (iii) actual
annual mortgage debt service (interest and amortization) on its  indebt-
edness to a lending institution, an insurance company, a retirement fund
or  welfare  fund which is operated under the supervision of the banking
or insurance laws of the state of New York or  the  United  States,  and
(iv) eight and one-half percent of that portion of the fair market value
of  the  property which exceeds the unpaid principal amount of the mort-
gage indebtedness referred to in subparagraph (iii) of  this  paragraph.
Fair  market value for the purposes of this paragraph shall be six times
the annual gross rent. The collection of any increase in the  stabilized
rent  for  any apartment pursuant to this paragraph shall not exceed six
percent in any year from the effective date of the  order  granting  the
increase  over  the  rent set forth in the schedule of gross rents, with
collectability of any dollar excess above said sum to be spread  forward
in similar increments and added to the stabilized rent as established or
set in future years;
  S  3.  Subdivision  d  of section 6 of section 4 of chapter 576 of the
laws of 1974, constituting the emergency tenant protection act of  nine-
teen  seventy-four,  is  amended  by adding a new paragraph 6 to read as
follows:
  (6) ADJUSTMENTS MADE PURSUANT TO PARAGRAPH  (3)  OF  THIS  SUBDIVISION
SHALL  BE  COLLECTABLE  UPON  THE LANDLORD'S FILING OF A REPORT WITH THE
STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL AND SUBJECT TO VERIFICA-
TION BY THE STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, IN  COLLAB-
ORATION  WITH  LOCAL  AUTHORITIES  RESPONSIBLE FOR INSPECTING BUILDINGS,

S. 7760                             3

THAT THE APPLICANT DOES NOT HAVE MORE THAN THIRTY CLASS A  HOUSING  CODE
VIOLATIONS  OR  A  CLASS  B OR C HOUSING CODE VIOLATION ON THE PROPERTY.
OUTSTANDING HOUSING CODE VIOLATIONS THAT ARE  FOUND  SHALL  BE  CLEARED,
CORRECTED  OR  ABATED BY THE LANDLORD AND VERIFIED BY THE STATE DIVISION
OF HOUSING AND COMMUNITY  RENEWAL  PRIOR  TO  AUTHORIZATION  OF  A  RENT
INCREASE UNDER PARAGRAPH (3) OF THIS SUBDIVISION.
  S 4. The second undesignated paragraph of paragraph (a) of subdivision
4  of  section  4  of  chapter 274 of the laws of 1946, constituting the
emergency housing rent control law, as amended by section 25 of  part  B
of chapter 97 of the laws of 2011, is amended to read as follows:
  No application for adjustment of maximum rent based upon a sales price
valuation  shall  be filed by the landlord under this subparagraph prior
to six months from the date of such sale of the property.  In  addition,
no  adjustment  ordered  by  the  commission based upon such sales price
valuation shall be effective prior to one year from  the  date  of  such
sale.  Where,  however,  the assessed valuation of the land exceeds four
times the assessed valuation of the buildings  thereon,  the  commission
may determine a valuation of the property equal to five times the equal-
ized  assessed  valuation  of  the  buildings,  for the purposes of this
subparagraph. The commission may make a determination that the valuation
of the property is an amount  different  from  such  equalized  assessed
valuation  where  there  is  a  request for a reduction in such assessed
valuation currently pending; or where there has been a reduction in  the
assessed valuation for the year next preceding the effective date of the
current  assessed  valuation  in effect at the time of the filing of the
application. Net annual return shall be the amount by which  the  earned
income  exceeds  the operating expenses of the property, excluding mort-
gage interest and amortization, and excluding  allowances  for  obsoles-
cence  and  reserves, but including an allowance for depreciation of two
per centum of the value of the buildings exclusive of the land,  or  the
amount  shown  for  depreciation of the buildings in the latest required
federal income tax return, whichever is lower; provided,  however,  that
(1)  no  allowance  for  depreciation of the buildings shall be included
where the buildings have been fully depreciated for federal  income  tax
purposes  or  on the books of the owner; or (2) the landlord who owns no
more than four rental units within the state has not been fully  compen-
sated  by  increases  in  rental income sufficient to offset unavoidable
increases in property taxes, fuel, utilities, insurance and repairs  and
maintenance, excluding mortgage interest and amortization, and excluding
allowances  for  depreciation,  obsolescence  and  reserves,  which have
occurred since the federal date determining the maximum rent or the date
the property was acquired by the present owner, whichever is  later;  or
(3) the landlord operates a hotel or rooming house or owns a cooperative
apartment  and  has  not  been  fully compensated by increases in rental
income from the controlled housing accommodations sufficient  to  offset
unavoidable increases in property taxes and other costs as are allocable
to  such controlled housing accommodations, including costs of operation
of such hotel or rooming house,  but  excluding  mortgage  interest  and
amortization,  and  excluding  allowances for depreciation, obsolescence
and reserves, which have occurred since the federal date determining the
maximum rent or the date the landlord commenced  the  operation  of  the
property, whichever is later; or (4) the landlord and tenant voluntarily
enter into a valid written lease in good faith with respect to any hous-
ing  accommodation,  which lease provides for an increase in the maximum
rent not in excess of fifteen per centum and for a term of not less than
two years, except that where such lease  provides  for  an  increase  in

S. 7760                             4

excess  of  fifteen  per  centum,  the  increase  shall be automatically
reduced to fifteen per centum; or (5) the landlord and tenant by  mutual
voluntary  written agreement agree to a substantial increase or decrease
in dwelling space or a change in the services, furniture, furnishings or
equipment provided in the housing accommodations; provided that an owner
shall  be entitled to a rent increase where there has been a substantial
modification or increase  of  dwelling  space  or  an  increase  in  the
services, or installation of new equipment or improvements or new furni-
ture  or furnishings provided in or to a tenant's housing accommodation.
The permanent increase in the maximum  rent  for  the  affected  housing
accommodation  shall  be  one-fortieth,  in  the case of a building with
thirty-five or fewer housing accommodations,  or  one-sixtieth,  in  the
case  of  a  building  with more than thirty-five housing accommodations
where such permanent increase takes effect on or after  September  twen-
ty-fourth,  two thousand eleven, of the total cost incurred by the land-
lord in providing such  modification  or  increase  in  dwelling  space,
services,  furniture,  furnishings  or  equipment, including the cost of
installation, but excluding finance charges  provided  further  that  an
owner  who  is entitled to a rent increase pursuant to this clause shall
not be entitled to a further rent increase based upon  the  installation
of  similar equipment, or new furniture or furnishings within the useful
life of such new equipment, or new furniture or furnishings.  The  owner
shall  give  written  notice  to  the  commission of any such adjustment
pursuant to this clause; or (6) there has been, since March first, nine-
teen hundred fifty, an increase in  the  rental  value  of  the  housing
accommodations as a result of a substantial rehabilitation of the build-
ing  or housing accommodation therein which materially adds to the value
of the property or appreciably prolongs  its  life,  excluding  ordinary
repairs, maintenance and replacements; or (7) there has been since March
first,  nineteen hundred fifty, a major capital improvement required for
the operation, preservation or maintenance  of  the  structure;  or  (8)
there  has been since March first, nineteen hundred fifty, in structures
containing more than four  housing  accommodations,  other  improvements
made  with  the  express consent of the tenants in occupancy of at least
seventy-five per centum of the housing accommodations, provided,  howev-
er, that no adjustment granted hereunder shall exceed fifteen per centum
unless  the  tenants  have agreed to a higher percentage of increase, as
herein provided; or (9) there has  been,  since  March  first,  nineteen
hundred fifty, a subletting without written consent from the landlord or
an  increase in the number of adult occupants who are not members of the
immediate family of the tenant, and the landlord has  not  been  compen-
sated  therefor  by  adjustment of the maximum rent by lease or order of
the commission or pursuant to the federal act; or (10) the  presence  of
unique  or  peculiar circumstances materially affecting the maximum rent
has resulted in a maximum rent which is  substantially  lower  than  the
rents  generally  prevailing  in the same area for substantially similar
housing accommodations.  ADJUSTMENTS MADE PURSUANT TO  SUBPARAGRAPH  (7)
OF  THIS  PARAGRAPH SHALL BE COLLECTIBLE UPON THE LANDLORD'S FILING OF A
REPORT WITH THE COMMISSION AND SUBJECT TO VERIFICATION  BY  THE  COMMIS-
SION, IN COLLABORATION WITH LOCAL AUTHORITIES RESPONSIBLE FOR INSPECTING
BUILDINGS,  THAT  THE  APPLICANT DOES NOT HAVE MORE THAN  THIRTY CLASS A
HOUSING CODE VIOLATIONS OR A CLASS B OR C HOUSING CODE VIOLATION ON  THE
PROPERTY.  OUTSTANDING  HOUSING  CODE VIOLATIONS THAT ARE FOUND SHALL BE
CLEARED, CORRECTED OR ABATED BY THE LANDLORD AND VERIFIED BY THE COMMIS-
SION PRIOR TO AUTHORIZATION OF A RENT INCREASE UNDER SUBPARAGRAPH (7) OF
THIS PARAGRAPH.

S. 7760                             5

  S 5. This act shall take effect on the sixtieth  day  after  it  shall
have become a law; provided that:
  (a)  the  amendments  to section 26-405 of the city rent and rehabili-
tation law made by section one of this act shall remain  in  full  force
and effect only as long as the public emergency requiring the regulation
and control of residential rents and evictions continues, as provided in
subdivision  3  of section 1 of the local emergency housing rent control
act;
  (b) the amendments to section 26-511 of the rent stabilization law  of
nineteen hundred sixty-nine made by section two of this act shall expire
on the same date as such law expires and shall not affect the expiration
of  such  law as provided under section 26-520 of such law, as from time
to time amended;
  (c) the amendment to section 6 of the emergency tenant protection  act
of  nineteen seventy-four made by section three of this act shall expire
on the same date as such act expires and shall not affect the expiration
of such act as provided in section 17 of chapter  576  of  the  laws  of
1974, as from time to time amended; and
  (d)  the  amendment to section 4 of the emergency housing rent control
law made by section four of this act shall expire on the  same  date  as
such  law  expires  and  shall  not affect the expiration of such law as
provided in subdivision 2 of section 1 of chapter 274  of  the  laws  of
1946.

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