S T A T E   O F   N E W   Y O R K
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                                 4423--A

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                             March 19, 2015
                               ___________

Introduced  by Sens. KRUEGER, HOYLMAN -- 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 -- committee discharged, bill  amended,  ordered
  reprinted as amended and recommitted to said committee

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 approval of major  capi-
  tal improvement rent increases and in relation to extending the length
  of time over which major capital improvement expenses may be recovered

  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
section 31 of part A of chapter 20 of the laws of 2015,  is  amended  to
read as follows:
  (g) (I) COLLECTION OF SURCHARGES TO THE MAXIMUM RENT AUTHORIZED PURSU-
ANT  TO  ITEM  (II)  OF THIS SUBPARAGRAPH SHALL CEASE WHEN THE OWNER HAS
RECOVERED THE COST OF THE MAJOR CAPITAL IMPROVEMENT;
  (II) There has been since July  first,  nineteen  hundred  seventy,  a
major  capital  improvement [required for the operation, preservation or
maintenance of the structure. An adjustment under this subparagraph  (g)
for any order of the commissioner issued after the effective date of the
rent  act  of 2015 shall be in an amount sufficient to amortize the cost
of the improvements pursuant to this subparagraph (g) 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,]; PROVIDED THAT
THE COMMISSIONER FIRST FINDS THAT SUCH IMPROVEMENTS ARE DEEMED DEPRECIA-
BLE UNDER THE INTERNAL REVENUE CODE AND SUCH IMPROVEMENTS  ARE  REQUIRED
FOR  THE  OPERATION  OR PRESERVATION OF THE STRUCTURE. HOWEVER, NO MAJOR

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09355-02-6
              

S. 4423--A                          2

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-
tal  improvement  pursuant  to subparagraph (g) of this paragraph, other

S. 4423--A                          3

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
indebtedness referred to in subparagraph (iii) of this  paragraph.  Fair

S. 4423--A                          4

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-
TORILY  COMPLETED.  NO  MAJOR  CAPITAL  IMPROVEMENT  RENT INCREASE SHALL

S. 4423--A                          5

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
COMMUNITY  RENEWAL THAT SUCH WORK IS ESSENTIAL TO THE ALLEVIATION OF THE

S. 4423--A                          6

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
valuation currently pending; or where there has been a reduction in  the

S. 4423--A                          7

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
shall give written notice to  the  commission  of  any  such  adjustment

S. 4423--A                          8

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
MAXIMUM RENT. IT SHALL BE SEPARATELY DESIGNATED AND BILLED AS  SUCH  AND

S. 4423--A                          9

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-
pied  by the owner or a person related to the owner or unoccupied at the

S. 4423--A                         10

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
four of this act shall expire on the same date as such law  expires  and

S. 4423--A                         11

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.