S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5743
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 15, 2017
                                ___________
 
 Introduced  by  M.  of  A.  CYMBROWITZ  -- 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
 section 31 of part A of chapter 20 of the laws of 2015,  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)]  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]   NINE-YEAR  period  for  buildings  with  more  than  thirty-five
 units[,]. 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 ADJUSTMENT FOR A  MAJOR  CAPITAL  IMPROVE-
 MENT; or
   § 2. 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:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD09577-01-7
              

 A. 5743                             2
 
   (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-
 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 an eight-year period for a building  with  thir-
 ty-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,  based  upon  cash
 purchase  price exclusive of interest or service charges. A RENT ADJUST-
 MENT 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   ADJUSTMENT  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 deter-
 mined by the commissioner, (iii) actual  annual  mortgage  debt  service
 (interest  and  amortization)  on its indebtedness to a lending institu-
 tion, 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 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

 A. 5743                             3
 
 any  dollar excess above said sum to be spread forward in similar incre-
 ments and added to the stabilized rent as established or set  in  future
 years;
   §  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
 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.