S T A T E   O F   N E W   Y O R K
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                                  5826

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                              March 6, 2013
                               ___________

Introduced by M. of A. WRIGHT -- read once and referred to the Committee
  on Housing

AN  ACT  to  amend  the  administrative code of the city of New York, in
  relation to rent adjustments for major capital improvements

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

  Section 1. Subparagraph (g) of paragraph 1 of subdivision g of section
26-405 of the administrative code of the city of New York, as amended by
chapter 749 of the laws of 1990, is amended to read as follows:
  (g) There has been since July first, nineteen hundred seventy, a major
capital  improvement required for the operation, preservation or mainte-
nance of the structure. An  adjustment  under  this  subparagraph  [(g)]
shall  be  in  an amount sufficient to amortize the cost of the improve-
ments pursuant to this subparagraph [(g)] over a  seven-year  period.  A
RENT  ADJUSTMENT  FOR A MAJOR CAPITAL IMPROVEMENT MAY ONLY BE GRANTED IF
THE OWNER OR AGENT  OF  THE  SUBJECT  BUILDING  FIRST  APPLIES  FOR  AND
RECEIVES BENEFITS PURSUANT TO SECTION 11-243 OF THIS CODE FOR THE BUILD-
ING  FOR  WHICH  THEY  ARE  SEEKING  A  MAJOR  CAPITAL  IMPROVEMENT FOR,
PROVIDED, HOWEVER, AN OWNER OR AGENT OF THE  SUBJECT  BUILDING  THAT  IS
DENIED  BENEFITS  PURSUANT  TO  SECTION  11-243 OF THIS CODE FOR REASONS
UNRELATED TO AN UNTIMELY OR IMPROPERLY COMPLETED APPLICATION SHALL STILL
BE  ELIGIBLE  TO  RECEIVE  A  RENT  ADJUSTMENT  FOR  A   MAJOR   CAPITAL
IMPROVEMENT; or
  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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09592-03-3
              

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maintain  approximately  the same average annual net income (which shall
be computed without regard to debt service, financing costs  or  manage-
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.  A RENT ADJUSTMENT FOR A
MAJOR CAPITAL IMPROVEMENT MAY ONLY BE GRANTED IF THE OWNER OR  AGENT  OF
THE SUBJECT BUILDING FIRST APPLIES FOR AND RECEIVES BENEFITS PURSUANT TO
SECTION  11-243 OF THIS CODE FOR THE BUILDING FOR WHICH THEY ARE SEEKING
A MAJOR CAPITAL IMPROVEMENT FOR, PROVIDED, HOWEVER, AN OWNER OR AGENT OF
THE SUBJECT BUILDING THAT IS DENIED BENEFITS PURSUANT TO SECTION  11-243
OF  THIS  CODE  FOR  REASONS  UNRELATED  TO  AN  UNTIMELY  OR IMPROPERLY
COMPLETED APPLICATION SHALL STILL BE ELIGIBLE TO RECEIVE A RENT  ADJUST-
MENT  FOR  A  MAJOR CAPITAL IMPROVEMENT. Notwithstanding anything to the
contrary contained herein, 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  commis-
sioner,  (iii) actual annual mortgage debt service (interest and amorti-
zation) on its indebtedness  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 prin-
cipal amount of the mortgage 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. This act shall take effect immediately,  provided,  however  that
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 so 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; and provided, further, that the amendments to section 26-511 of the

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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; and provided, further,
that the provisions of sections one and two of this act shall only apply
to  those buildings that commence work on a major capital improvement 45
days or later than the effective date of this act.