A. 6054--A 2
FOR THE OPERATION OR PRESERVATION OF THE STRUCTURE. HOWEVER, NO MAJOR
CAPITAL IMPROVEMENT RENT INCREASE WILL BE APPROVED BY THE DIVISION OF
HOUSING AND COMMUNITY RENEWAL UNLESS THE WORK PERFORMED IS AN ENHANCE-
MENT OR UPGRADE TO A HOUSING ACCOMMODATION OR SERVICE THEREIN; OR IS AN
ADDITION TO SUCH HOUSING ACCOMMODATION AND OTHERWISE ELIGIBLE ACCORDING
TO THE PREREQUISITES FOR MAJOR CAPITAL IMPROVEMENT RENT INCREASES. ANY
REPAIR OR REPLACEMENT INTENDED TO MAINTAIN AN EXISTING SERVICE SHALL NOT
BE ELIGIBLE FOR A MAJOR CAPITAL IMPROVEMENT RENT INCREASE. NO APPLICA-
TION FOR A MAJOR CAPITAL IMPROVEMENT RENT INCREASE MAY BE APPROVED IF
THERE EXIST ANY OUTSTANDING HAZARDOUS VIOLATIONS AT THE TIME OF THE
CONSIDERATION OF SUCH APPLICATION, AS DETERMINED PURSUANT TO REGULATIONS
OF THE DIVISION OF HOUSING AND COMMUNITY RENEWAL OR ANY AGENCY ADMINIS-
TERING AND ENFORCING A BUILDING CODE IN THE JURISDICTION IN WHICH THE
PROPERTY IS LOCATED, UNLESS IT IS DETERMINED BY THE DIVISION OF HOUSING
AND COMMUNITY RENEWAL THAT SUCH WORK IS ESSENTIAL TO THE ALLEVIATION OF
THE VIOLATIONS AND SUCH APPROVAL IS CONSISTENT WITH THE PROVISIONS OF
THIS SECTION. EXCEPT IN THE CASE OF EMERGENCY OR GOOD CAUSE, THE OWNER
OF THE PROPERTY SHALL FILE, NOT LESS THAN THIRTY DAYS BEFORE THE
COMMENCEMENT OF THE IMPROVEMENT, WITH THE DIVISION OF HOUSING AND COMMU-
NITY RENEWAL A STATEMENT CONTAINING INFORMATION OUTLINING THE SCOPE OF
WORK, EXPECTED DATE OF COMPLETION FOR SUCH WORK AND AN AFFIDAVIT SETTING
FORTH THE FOLLOWING INFORMATION: (A) EVERY OWNER OF RECORD AND OWNER OF
A SUBSTANTIAL INTEREST IN THE PROPERTY OR ENTITY OWNING THE PROPERTY OR
SPONSORING THE IMPROVEMENT; AND (B) A STATEMENT THAT NONE OF SUCH
PERSONS HAD, WITHIN THE FIVE YEARS PRIOR TO THE IMPROVEMENT, BEEN FOUND
TO HAVE HARASSED OR UNLAWFULLY EVICTED TENANTS BY JUDGMENT OR DETERMI-
NATION OF A COURT OR AGENCY UNDER THE PENAL LAW, ANY STATE OR LOCAL LAW
REGULATING RENTS OR ANY STATE OR LOCAL LAW RELATING TO HARASSMENT OF
TENANTS OR UNLAWFUL EVICTION. UPON RECEIPT OF THE SCOPE OF WORK AND
AFFIDAVIT PROVIDED FOR HEREIN, THE DIVISION OF HOUSING AND COMMUNITY
RENEWAL SHALL PROVIDE THE TENANTS IN OCCUPANCY IN SUCH BUILDINGS WITH
SUCH INFORMATION. THE DIVISION OF HOUSING AND COMMUNITY RENEWAL SHALL,
IN ADDITION, IMPLEMENT PROCEDURES INCLUDING, BUT NOT LIMITED TO, ELICIT-
ING TENANT COMMENTS TO DETERMINE WHETHER MAJOR CAPITAL IMPROVEMENT REHA-
BILITATION WORK HAS BEEN SATISFACTORILY COMPLETED. NO MAJOR CAPITAL
IMPROVEMENT RENT INCREASE SHALL BECOME EFFECTIVE UNTIL ANY DEFECTIVE OR
DEFICIENT REHABILITATION WORK HAS BEEN CURED. THE INCREASE PERMITTED FOR
SUCH CAPITAL IMPROVEMENT SHALL BE COLLECTED AS A MONTHLY SURCHARGE TO
THE MAXIMUM RENT. IT SHALL BE SEPARATELY DESIGNATED AND BILLED AS SUCH
AND SHALL NOT BE COMPOUNDED BY ANY OTHER ADJUSTMENT TO THE MAXIMUM RENT.
THE SURCHARGE ALLOCABLE TO EACH APARTMENT SHALL BE AN AMOUNT EQUAL TO
THE COST OF THE IMPROVEMENT DIVIDED BY EIGHTY-FOUR, DIVIDED BY THE
NUMBER OF ROOMS IN THE BUILDING, AND THEN MULTIPLIED BY THE NUMBER OF
ROOMS IN SUCH APARTMENT; PROVIDED THAT THE SURCHARGE ALLOCABLE TO ANY
APARTMENT IN ANY ONE YEAR MAY NOT EXCEED AN AMOUNT EQUAL TO SIX PERCENT
OF THE MONTHLY RENT COLLECTED BY THE OWNER FOR SUCH APARTMENT AS SET
FORTH IN THE SCHEDULE OF GROSS RENTS. ANY EXCESS ABOVE SAID SIX PERCENT
SHALL BE CARRIED FORWARD AND COLLECTED IN FUTURE YEARS AS A FURTHER
SURCHARGE NOT TO EXCEED AN ADDITIONAL SIX PERCENT IN ANY ONE YEAR PERIOD
UNTIL THE TOTAL SURCHARGE EQUALS THE AMOUNT IT WOULD HAVE BEEN IF THE
AFOREMENTIONED SIX PERCENT LIMITATION DID NOT APPLY; or
S 2. Subparagraph (k) 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:
(k) The landlord has incurred, since January first, nineteen hundred
seventy, in connection with and in addition to a concurrent major capi-
A. 6054--A 3
tal improvement pursuant to subparagraph (g) of this paragraph, other
expenditures to improve, restore or preserve the quality of the struc-
ture. An adjustment under this subparagraph shall be granted only if
such improvements represent an expenditure equal to at least ten per
centum of the total operating and maintenance expenses for the preceding
year. An adjustment under this subparagraph shall be in addition to any
adjustment granted for the concurrent major capital improvement and
shall be [in an amount sufficient to amortize the cost of the improve-
ments pursuant to this subparagraph over a seven-year period] IMPLE-
MENTED IN THE SAME MANNER AS SUCH MAJOR CAPITAL IMPROVEMENT AS A FURTHER
SURCHARGE TO THE MAXIMUM RENT.
S 3. Paragraph 6 of subdivision c of section 26-511 of the administra-
tive code of the city of New York, as amended by section 29 of part A of
chapter 20 of the laws of 2015, 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] IN REGARD 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 management 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 nineteen hundred sixty-eight through nineteen hundred seventy, or
for the first three years of operation if the building was completed
since nineteen 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 nine-
teen hundred seventy despite diligent efforts to obtain same from prede-
cessors in title and further provided that the new owner can provide
financial data covering a minimum of six years under his or her contin-
uous and uninterrupted operation of the building to meet the three year
to three year comparative 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 an eight-year period for a
building with thirty-five or fewer housing accommodations, or a nine-
year period for a building with more than thirty-five housing accommo-
dations, for any determination issued by the division of housing and
community renewal after the effective date of the rent act of 2015,
based upon cash purchase price exclusive of interest or service charg-
es]. 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 manage-
ment services as determined by the commissioner, (iii) actual annual
mortgage debt service (interest and amortization) 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 principal amount of the mortgage
A. 6054--A 4
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 4. Subdivision c of section 26-511 of the administrative code of the
city of New York is amended by adding three new paragraphs 6-b, 6-c and
6-d to read as follows:
(6-B) PROVIDES CRITERIA WHEREBY THE COMMISSIONER MAY ACT UPON APPLICA-
TION 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 THAT:
(I) AS TO COMPLETED BUILDING-WIDE MAJOR CAPITAL IMPROVEMENTS, FIRST,
THAT A FINDING THAT SUCH IMPROVEMENTS ARE DEEMED DEPRECIABLE UNDER THE
INTERNAL REVENUE CODE AND SUCH IMPROVEMENTS ARE REQUIRED FOR THE OPERA-
TION OR PRESERVATION OF THE STRUCTURE;
(II) HOWEVER, NO MAJOR CAPITAL IMPROVEMENT RENT INCREASE WILL BE
APPROVED BY THE DIVISION OF HOUSING AND COMMUNITY RENEWAL UNLESS THE
WORK PERFORMED IS AN ENHANCEMENT OR UPGRADE TO A HOUSING ACCOMMODATION
OR SERVICE THEREIN; OR IS AN ADDITION TO SUCH HOUSING ACCOMMODATION AND
OTHERWISE ELIGIBLE ACCORDING TO THE PREREQUISITES FOR MAJOR CAPITAL
IMPROVEMENT RENT INCREASES. ANY REPAIR OR REPLACEMENT INTENDED TO MAIN-
TAIN AN EXISTING SERVICE SHALL NOT BE ELIGIBLE FOR A MAJOR CAPITAL
IMPROVEMENT RENT INCREASE;
(III) NO APPLICATION FOR A MAJOR CAPITAL IMPROVEMENT RENT INCREASE MAY
BE APPROVED IF THERE EXIST ANY OUTSTANDING HAZARDOUS VIOLATIONS AT THE
TIME OF THE CONSIDERATION OF SUCH APPLICATION, AS DETERMINED PURSUANT TO
REGULATIONS OF THE DIVISION OF HOUSING AND COMMUNITY RENEWAL OR ANY
AGENCY ADMINISTERING AND ENFORCING A BUILDING CODE IN THE JURISDICTION
IN WHICH THE PROPERTY IS LOCATED, UNLESS IT IS DETERMINED BY THE DIVI-
SION OF HOUSING AND COMMUNITY RENEWAL THAT SUCH WORK IS ESSENTIAL TO THE
ALLEVIATION OF THE VIOLATIONS AND SUCH APPROVAL IS CONSISTENT WITH THE
PROVISIONS OF THIS SECTION. EXCEPT IN THE CASE OF EMERGENCY OR GOOD
CAUSE, THE OWNER OF THE PROPERTY SHALL FILE, NOT LESS THAN THIRTY DAYS
BEFORE THE COMMENCEMENT OF THE IMPROVEMENT, WITH THE DIVISION OF HOUSING
AND COMMUNITY RENEWAL A STATEMENT CONTAINING INFORMATION OUTLINING THE
SCOPE OF WORK, EXPECTED DATE OF COMPLETION FOR SUCH WORK AND AN AFFIDA-
VIT SETTING FORTH THE FOLLOWING INFORMATION:
(A) EVERY OWNER OF RECORD AND OWNER OF A SUBSTANTIAL INTEREST IN THE
PROPERTY OR ENTITY OWNING THE PROPERTY OR SPONSORING THE IMPROVEMENT;
AND
(B) A STATEMENT THAT NONE OF SUCH PERSONS HAD, WITHIN THE FIVE YEARS
PRIOR TO THE IMPROVEMENT, BEEN FOUND TO HAVE HARASSED OR UNLAWFULLY
EVICTED TENANTS BY JUDGMENT OR DETERMINATION OF A COURT OR AGENCY UNDER
THE PENAL LAW, ANY STATE OR LOCAL LAW REGULATING RENTS OR ANY STATE OR
LOCAL LAW RELATING TO HARASSMENT OF TENANTS OR UNLAWFUL EVICTION.
UPON RECEIPT OF THE SCOPE OF WORK AND AFFIDAVIT PROVIDED FOR HEREIN,
THE DIVISION OF HOUSING AND COMMUNITY RENEWAL SHALL PROVIDE THE TENANTS
IN OCCUPANCY IN SUCH BUILDINGS WITH SUCH INFORMATION. THE DIVISION OF
HOUSING AND COMMUNITY RENEWAL SHALL, IN ADDITION, IMPLEMENT PROCEDURES
INCLUDING, BUT NOT LIMITED TO, ELICITING TENANT COMMENTS TO DETERMINE
WHETHER MAJOR CAPITAL IMPROVEMENT REHABILITATION WORK HAS BEEN SATISFAC-
A. 6054--A 5
TORILY COMPLETED. NO MAJOR CAPITAL IMPROVEMENT RENT INCREASE SHALL
BECOME EFFECTIVE UNTIL ANY DEFECTIVE OR DEFICIENT REHABILITATION WORK
HAS BEEN CURED.
(6-C) THE INCREASE PERMITTED FOR SUCH CAPITAL IMPROVEMENT SHALL BE
COLLECTED AS A MONTHLY SURCHARGE TO THE LEGAL REGULATED RENT. IT SHALL
BE SEPARATELY DESIGNATED AND BILLED AS SUCH AND SHALL NOT BE COMPOUNDED
BY ANY ANNUAL ADJUSTMENT OF THE LEVEL OF FAIR RENT PROVIDED FOR UNDER
SUBDIVISION B OF SECTION 26-510 OF THIS LAW. THE SURCHARGE ALLOCABLE TO
EACH APARTMENT SHALL BE AN AMOUNT EQUAL TO THE COST OF THE IMPROVEMENT
DIVIDED BY EIGHTY-FOUR DIVIDED BY THE NUMBER OF ROOMS IN THE BUILDING,
AND THEN MULTIPLIED BY THE NUMBER OF ROOMS IN SUCH APARTMENT; PROVIDED
THAT THE SURCHARGE ALLOCABLE TO ANY APARTMENT, IN ANY ONE YEAR MAY NOT
EXCEED AN AMOUNT EQUAL TO SIX PERCENT OF THE MONTHLY RENT COLLECTED BY
THE OWNER FOR SUCH APARTMENT AS SET FORTH IN THE SCHEDULE OF GROSS
RENTS. ANY EXCESS ABOVE SAID SIX PERCENT SHALL BE CARRIED FORWARD AND
COLLECTED IN FUTURE YEARS AS A FURTHER SURCHARGE NOT TO EXCEED AN ADDI-
TIONAL SIX PERCENT IN ANY ONE YEAR PERIOD UNTIL THE TOTAL SURCHARGE
EQUALS THE AMOUNT IT WOULD HAVE BEEN IF THE AFOREMENTIONED SIX PERCENT
LIMITATION DID NOT APPLY.
(6-D) COLLECTION OF SURCHARGES IN EXCESS OF THE LEVEL OF FAIR RENT
AUTHORIZED PURSUANT TO PARAGRAPH SIX-B AND SIX-C OF THIS SUBDIVISION
SHALL CEASE WHEN THE OWNER HAS RECOVERED THE COST OF THE MAJOR CAPITAL
IMPROVEMENT.
S 5. Paragraph 3 of subdivision d of section 6 of section 4 of chapter
576 of the laws of 1974, constituting the emergency tenant protection
act of nineteen seventy-four, as amended by section 30 of part A of
chapter 20 of the laws of 2015, is amended to read as follows:
(3) (I) COLLECTION OF SURCHARGES IN ADDITION TO THE LEGAL REGULATED
RENT AUTHORIZED PURSUANT TO SUBPARAGRAPH (II) OF THIS PARAGRAPH SHALL
CEASE WHEN THE OWNER HAS RECOVERED THE COST OF THE MAJOR CAPITAL
IMPROVEMENT;
(II) there has been since January first, nineteen hundred seventy-four
a major capital improvement [required for the operation, preservation or
maintenance of the structure. An adjustment under this paragraph shall
be in an amount sufficient to amortize the cost of the improvements
pursuant to this paragraph over an eight-year period for a building with
thirty-five or fewer housing accommodations, or a nine-year period for a
building with more than thirty-five housing accommodations, for any
determination issued by the division of housing and community renewal
after the effective date of the rent act of 2015,]; PROVIDED THAT THE
COMMISSIONER FIRST FINDS THAT SUCH IMPROVEMENTS ARE DEEMED DEPRECIABLE
UNDER THE INTERNAL REVENUE CODE AND SUCH IMPROVEMENTS ARE REQUIRED FOR
THE OPERATION OR PRESERVATION OF THE STRUCTURE. HOWEVER, NO MAJOR CAPI-
TAL IMPROVEMENT RENT INCREASE WILL BE APPROVED BY THE DIVISION OF HOUS-
ING AND COMMUNITY RENEWAL UNLESS THE WORK PERFORMED IS AN ENHANCEMENT OR
UPGRADE TO A HOUSING ACCOMMODATION OR SERVICE THEREIN; OR IS AN ADDITION
TO SUCH HOUSING ACCOMMODATION AND OTHERWISE ELIGIBLE ACCORDING TO THE
PREREQUISITES FOR MAJOR CAPITAL IMPROVEMENT RENT INCREASES. ANY REPAIR
OR REPLACEMENT INTENDED TO MAINTAIN AN EXISTING SERVICE SHALL NOT BE
ELIGIBLE FOR A MAJOR CAPITAL IMPROVEMENT RENT INCREASE. NO APPLICATION
FOR A MAJOR CAPITAL IMPROVEMENT RENT INCREASE MAY BE APPROVED IF THERE
EXIST ANY OUTSTANDING HAZARDOUS VIOLATIONS AT THE TIME OF THE CONSIDER-
ATION OF SUCH APPLICATION, AS DETERMINED PURSUANT TO REGULATIONS OF THE
DIVISION OF HOUSING AND COMMUNITY RENEWAL OR ANY AGENCY ADMINISTERING
AND ENFORCING A BUILDING CODE IN THE JURISDICTION IN WHICH THE PROPERTY
IS LOCATED, UNLESS IT IS DETERMINED BY THE DIVISION OF HOUSING AND
A. 6054--A 6
COMMUNITY RENEWAL THAT SUCH WORK IS ESSENTIAL TO THE ALLEVIATION OF THE
VIOLATIONS AND SUCH APPROVAL IS CONSISTENT WITH THE PROVISIONS OF THIS
SECTION. EXCEPT IN THE CASE OF EMERGENCY OR GOOD CAUSE, THE OWNER OF THE
PROPERTY SHALL FILE, NOT LESS THAN THIRTY DAYS BEFORE THE COMMENCEMENT
OF THE IMPROVEMENT, WITH THE DIVISION OF HOUSING AND COMMUNITY RENEWAL A
STATEMENT CONTAINING INFORMATION OUTLINING THE SCOPE OF WORK, EXPECTED
DATE OF COMPLETION FOR SUCH WORK AND AN AFFIDAVIT SETTING FORTH THE
FOLLOWING INFORMATION: (A) EVERY OWNER OF RECORD AND OWNER OF A SUBSTAN-
TIAL INTEREST IN THE PROPERTY OR ENTITY OWNING THE PROPERTY OR SPONSOR-
ING THE IMPROVEMENT; AND (B) A STATEMENT THAT NONE OF SUCH PERSONS HAD,
WITHIN THE FIVE YEARS PRIOR TO THE IMPROVEMENT, BEEN FOUND TO HAVE
HARASSED OR UNLAWFULLY EVICTED TENANTS BY JUDGMENT OR DETERMINATION OF A
COURT OR AGENCY UNDER THE PENAL LAW, ANY STATE OR LOCAL LAW REGULATING
RENTS OR ANY STATE OR LOCAL LAW RELATING TO HARASSMENT OF TENANTS OR
UNLAWFUL EVICTION. UPON RECEIPT OF THE SCOPE OF WORK AND AFFIDAVIT
PROVIDED FOR HEREIN, THE DIVISION OF HOUSING AND COMMUNITY RENEWAL SHALL
PROVIDE THE TENANTS IN OCCUPANCY IN SUCH BUILDINGS WITH SUCH INFORMA-
TION. THE DIVISION OF HOUSING AND COMMUNITY RENEWAL SHALL, IN ADDITION,
IMPLEMENT PROCEDURES INCLUDING, BUT NOT LIMITED TO, ELICITING TENANT
COMMENTS TO DETERMINE WHETHER MAJOR CAPITAL IMPROVEMENT REHABILITATION
WORK HAS BEEN SATISFACTORILY COMPLETED. NO MAJOR CAPITAL IMPROVEMENT
RENT INCREASE SHALL BECOME EFFECTIVE UNTIL ANY DEFECTIVE OR DEFICIENT
REHABILITATION WORK HAS BEEN CURED. THE INCREASE PERMITTED FOR SUCH
CAPITAL IMPROVEMENT SHALL BE COLLECTED AS A MONTHLY SURCHARGE TO THE
LEGAL REGULATED RENT. IT SHALL BE SEPARATELY DESIGNATED AND BILLED AS
SUCH AND SHALL NOT BE COMPOUNDED BY ANY ANNUAL RENT ADJUSTMENT AUTHOR-
IZED BY THE RENT GUIDELINES BOARD UNDER THIS ACT. THE SURCHARGE ALLOCA-
BLE TO EACH APARTMENT SHALL BE AN AMOUNT EQUAL TO THE COST OF THE
IMPROVEMENT DIVIDED BY EIGHTY-FOUR, DIVIDED BY THE NUMBER OF ROOMS IN
THE BUILDING, AND THEN MULTIPLIED BY THE NUMBER OF ROOMS IN SUCH APART-
MENT; PROVIDED THAT THE SURCHARGE ALLOCABLE TO ANY APARTMENT IN ANY ONE
YEAR MAY NOT EXCEED AN AMOUNT EQUAL TO SIX PERCENT OF THE MONTHLY RENT
COLLECTED BY THE OWNER FOR SUCH APARTMENT AS SET FORTH IN THE SCHEDULE
OF GROSS RENTS. ANY EXCESS ABOVE SAID SIX PERCENT SHALL BE CARRIED
FORWARD AND COLLECTED IN FUTURE YEARS AS A FURTHER SURCHARGE NOT TO
EXCEED AN ADDITIONAL SIX PERCENT IN ANY ONE YEAR PERIOD UNTIL THE TOTAL
SURCHARGE EQUALS THE AMOUNT IT WOULD HAVE BEEN IF THE AFOREMENTIONED SIX
PERCENT LIMITATION DID NOT APPLY, or
S 6. 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, subparagraph 7 as amended by section
32 of part A of chapter 20 of the laws of 2015, 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
A. 6054--A 7
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
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
A. 6054--A 8
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)(I) COLLECTION OF
SURCHARGES TO THE MAXIMUM RENT AUTHORIZED PURSUANT TO ITEM (II) OF THIS
CLAUSE SHALL CEASE WHEN THE OWNER HAS RECOVERED THE COST OF THE MAJOR
CAPITAL IMPROVEMENT; (II) there has been since March first, nineteen
hundred fifty, a major capital improvement [required for the operation,
preservation or maintenance of the structure; which for any order of the
commissioner issued after the effective date of the rent act of 2015 the
cost of such improvement shall be amortized over an eight-year period
for buildings with thirty-five or fewer units or a nine year period for
buildings with more than thiry-five units, or]; PROVIDED THAT THE
COMMISSIONER FIRST FINDS THAT SUCH IMPROVEMENTS ARE DEEMED DEPRECIABLE
UNDER THE INTERNAL REVENUE CODE AND SUCH IMPROVEMENTS ARE REQUIRED FOR
THE OPERATION OR PRESERVATION OF THE STRUCTURE. HOWEVER, NO MAJOR CAPI-
TAL IMPROVEMENT RENT INCREASE WILL BE APPROVED BY THE DIVISION OF HOUS-
ING AND COMMUNITY RENEWAL UNLESS THE WORK PERFORMED IS AN ENHANCEMENT OR
UPGRADE TO A HOUSING ACCOMMODATION OR SERVICE THEREIN; OR IS AN ADDITION
TO SUCH HOUSING ACCOMMODATION AND OTHERWISE ELIGIBLE ACCORDING TO THE
PREREQUISITES FOR MAJOR CAPITAL IMPROVEMENT RENT INCREASES. ANY REPAIR
OR REPLACEMENT INTENDED TO MAINTAIN AN EXISTING SERVICE SHALL NOT BE
ELIGIBLE FOR A MAJOR CAPITAL IMPROVEMENT RENT INCREASE. NO APPLICATION
FOR A MAJOR CAPITAL IMPROVEMENT RENT INCREASE MAY BE APPROVED IF THERE
EXIST ANY OUTSTANDING HAZARDOUS VIOLATIONS AT THE TIME OF THE CONSIDER-
ATION OF SUCH APPLICATION, AS DETERMINED PURSUANT TO REGULATIONS OF THE
DIVISION OF HOUSING AND COMMUNITY RENEWAL OR ANY AGENCY ADMINISTERING
AND ENFORCING A BUILDING CODE IN THE JURISDICTION IN WHICH THE PROPERTY
IS LOCATED, UNLESS IT IS DETERMINED BY THE DIVISION OF HOUSING AND
COMMUNITY RENEWAL THAT SUCH WORK IS ESSENTIAL TO THE ALLEVIATION OF THE
VIOLATIONS AND SUCH APPROVAL IS CONSISTENT WITH THE PROVISIONS OF THIS
SECTION. EXCEPT IN THE CASE OF EMERGENCY OR GOOD CAUSE, THE OWNER OF THE
PROPERTY SHALL FILE, NOT LESS THAN THIRTY DAYS BEFORE THE COMMENCEMENT
OF THE IMPROVEMENT, WITH THE DIVISION OF HOUSING AND COMMUNITY RENEWAL A
STATEMENT CONTAINING INFORMATION OUTLINING THE SCOPE OF WORK, EXPECTED
DATE OF COMPLETION FOR SUCH WORK AND AN AFFIDAVIT SETTING FORTH THE
FOLLOWING INFORMATION: (A) EVERY OWNER OF RECORD AND OWNER OF A SUBSTAN-
TIAL INTEREST IN THE PROPERTY OR ENTITY OWNING THE PROPERTY OR SPONSOR-
ING THE IMPROVEMENT; AND (B) A STATEMENT THAT NONE OF SUCH PERSONS HAD,
WITHIN THE FIVE YEARS PRIOR TO THE IMPROVEMENT, BEEN FOUND TO HAVE
HARASSED OR UNLAWFULLY EVICTED TENANTS BY JUDGMENT OR DETERMINATION OF A
COURT OR AGENCY UNDER THE PENAL LAW, ANY STATE OR LOCAL LAW REGULATING
RENTS OR ANY STATE OR LOCAL LAW RELATING TO HARASSMENT OF TENANTS OR
UNLAWFUL EVICTION. UPON RECEIPT OF THE SCOPE OF WORK AND AFFIDAVIT
PROVIDED FOR HEREIN, THE DIVISION OF HOUSING AND COMMUNITY RENEWAL SHALL
PROVIDE THE TENANTS IN OCCUPANCY IN SUCH BUILDINGS WITH SUCH INFORMA-
TION. THE DIVISION OF HOUSING AND COMMUNITY RENEWAL SHALL, IN ADDITION,
IMPLEMENT PROCEDURES INCLUDING, BUT NOT LIMITED TO, ELICITING TENANT
COMMENTS TO DETERMINE WHETHER MAJOR CAPITAL IMPROVEMENT REHABILITATION
WORK HAS BEEN SATISFACTORILY COMPLETED. NO MAJOR CAPITAL IMPROVEMENT
RENT INCREASE SHALL BECOME EFFECTIVE UNTIL ANY DEFECTIVE OR DEFICIENT
REHABILITATION WORK HAS BEEN CURED. THE INCREASE PERMITTED FOR SUCH
CAPITAL IMPROVEMENT SHALL BE COLLECTED AS A MONTHLY SURCHARGE TO THE
A. 6054--A 9
MAXIMUM RENT. IT SHALL BE SEPARATELY DESIGNATED AND BILLED AS SUCH AND
SHALL NOT BE COMPOUNDED BY ANY OTHER ADJUSTMENT TO THE MAXIMUM RENT. THE
SURCHARGE ALLOCABLE TO EACH APARTMENT SHALL BE AN AMOUNT EQUAL TO THE
COST OF THE IMPROVEMENT DIVIDED BY EIGHTY-FOUR, DIVIDED BY THE NUMBER OF
ROOMS IN THE BUILDING, AND THEN MULTIPLIED BY THE NUMBER OF ROOMS IN
SUCH APARTMENT; PROVIDED THAT THE SURCHARGE ALLOCABLE TO ANY APARTMENT
IN ANY ONE YEAR MAY NOT EXCEED AN AMOUNT EQUAL TO SIX PERCENT OF THE
MONTHLY RENT COLLECTED BY THE OWNER FOR SUCH APARTMENT AS SET FORTH IN
THE SCHEDULE OF GROSS RENTS. ANY EXCESS ABOVE SAID SIX PERCENT SHALL BE
CARRIED FORWARD AND COLLECTED IN FUTURE YEARS AS A FURTHER SURCHARGE NOT
TO EXCEED AN ADDITIONAL SIX PERCENT IN ANY ONE YEAR PERIOD UNTIL THE
TOTAL SURCHARGE EQUALS THE AMOUNT IT WOULD HAVE BEEN IF THE AFOREMEN-
TIONED SIX PERCENT LIMITATION DID NOT APPLY; 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, however, 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 sublet-
ting 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 compensated 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 accommo-
dations.
S 7. Paragraph 5 of subdivision d of section 6 of section 4 of chapter
576 of the laws of 1974, constituting the emergency tenant protection
act of nineteen seventy-four, as amended by chapter 102 of the laws of
1984, is amended and a new paragraph 6 is added to read as follows:
(5) as an alternative to the hardship application provided under para-
graph four of this subdivision, owners of buildings acquired by the same
owner or a related entity owned by the same principals three years prior
to the date of application may apply to the division for increases in
excess of the level of applicable guideline increases established under
this law based on a finding by the commissioner that such guideline
increases are not sufficient to enable the owner to maintain an annual
gross rent income for such building which exceeds the annual operating
expenses of such building by a sum equal to at least five percent of
such gross rent. For the purposes of this paragraph, operating expenses
shall consist of the actual, reasonable, costs of fuel, labor, utili-
ties, taxes, other than income or corporate franchise taxes, fees,
permits, necessary contracted services and non-capital repairs, insur-
ance, parts and supplies, management fees and other administrative costs
and mortgage interest. For the purposes of this paragraph, mortgage
interest shall be deemed to mean interest on a bona fide mortgage
including an allocable portion of charges related thereto. Criteria to
be considered in determining a bona fide mortgage other than an institu-
tional mortgage shall include[;]: condition of the property, location of
the property, the existing mortgage market at the time the mortgage is
placed, the term of the mortgage, the amortization rate, the principal
amount of the mortgage, security and other terms and conditions of the
mortgage. The commissioner shall set a rental value for any unit occu-
A. 6054--A 10
pied by the owner or a person related to the owner or unoccupied at the
owner's choice for more than one month at the last regulated rent plus
the minimum number of guidelines increases or, if no such regulated rent
existed or is known, the commissioner shall impute a rent consistent
with other rents in the building. The amount of hardship increase shall
be such as may be required to maintain the annual gross rent income as
provided by this paragraph. The division shall not grant a hardship
application under this paragraph or paragraph four of this subdivision
for a period of three years subsequent to granting a hardship applica-
tion under the provisions of this paragraph. The collection of any
increase in the rent for any housing accommodation 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
rent as established or set in future years. No application shall be
approved unless the owner's equity in such building exceeds five percent
of: (i) the arms length purchase price of the property; (ii) the cost of
any capital improvements for which the owner has not collected a
surcharge; (iii) any repayment of principal of any mortgage or loan used
to finance the purchase of the property or any capital improvements for
which the owner has not collected a surcharge; and (iv) any increase in
the equalized assessed value of the property which occurred subsequent
to the first valuation of the property after purchase by the owner. For
the purposes of this paragraph, owner's equity shall mean the sum of (i)
the purchase price of the property less the principal of any mortgage or
loan used to finance the purchase of the property, (ii) the cost of any
capital improvement for which the owner has not collected a surcharge
less the principal of any mortgage or loan used to finance said improve-
ment, (iii) any repayment of the principal of any mortgage or loan used
to finance the purchase of the property or any capital improvement for
which the owner has not collected a surcharge, and (iv) any increase in
the equalized assessed value of the property which occurred subsequent
to the first valuation of the property after purchase by the owner[.];
OR
(6) NOTWITHSTANDING PARAGRAPH THREE OF THIS SUBDIVISION THERE SHALL BE
NO ADJUSTMENT FOR ANY MAJOR CAPITAL IMPROVEMENT FUNDED IN ANY PART FROM
MONEYS PROVIDED BY THE NEW YORK STATE ENERGY RESEARCH AND DEVELOPMENT
AUTHORITY.
S 8. Paragraph 1 of subdivision g of section 26-405 of the administra-
tive code of the city of New York is amended by adding a new subpara-
graph (p) to read as follows:
(P) NOTWITHSTANDING SUBPARAGRAPH (G) OR (K) OF THIS PARAGRAPH, THERE
SHALL BE NO ADJUSTMENT FOR ANY MAJOR CAPITAL IMPROVEMENT OR FOR ANY
OTHER EXPENDITURES TO IMPROVE, RESTORE OR PRESERVE THE QUALITY OF A
STRUCTURE IF SUCH MAJOR CAPITAL IMPROVEMENT OR SUCH OTHER EXPENDITURE IS
FUNDED IN ANY PART FROM MONEYS PROVIDED BY THE NEW YORK STATE ENERGY
RESEARCH AND DEVELOPMENT AUTHORITY.
S 9. This act shall take effect immediately; provided that the amend-
ments to section 26-405 of the city rent and rehabilitation law made by
sections one, two and eight 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; provided that the amendments to section 26-511 of the rent stabili-
zation law of nineteen hundred sixty-nine made by sections three and
A. 6054--A 11
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 under section
26-520 of such law, as from time to time amended; provided that the
amendments to section 6 of the emergency tenant protection act of nine-
teen seventy-four made by sections five and seven 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 provided that the amend-
ments to section 4 of the emergency housing rent control law made by
section six 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.