S T A T E O F N E W Y O R K
________________________________________________________________________
7926
I N S E N A T E
March 9, 2018
___________
Introduced by Sen. SERRANO -- read twice and ordered printed, and when
printed to be committed to the Committee on Housing, Construction and
Community Development
AN ACT to amend the administrative code of the city of New York, the
emergency tenant protection act of 1974 and the emergency housing rent
control law, in relation to building eligibility for major capital
improvement rent surcharges
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
period for buildings with more than [thiry-five] THIRTY-FIVE units[,];
PROVIDED, HOWEVER, THAT NO ADJUSTMENT SHALL BE ALLOWED FOR ANY BUILDING
IN WHICH MORE THAN FIFTY PERCENT OF THE HABITABLE UNITS ARE NOT SUBJECT
TO RENT STABILIZATION OR RENT CONTROL, or
§ 2. Paragraph 6-a of subdivision c of section 26-511 of the adminis-
trative code of the city of New York, is amended to read as follows:
(6-a) provides criteria whereby as an alternative to the hardship
application provided under paragraph six 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
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10653-02-7
S. 7926 2
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, reason-
able, costs of fuel, labor, utilities, taxes, other than income or
corporate franchise taxes, fees, permits, necessary contracted services
and non-capital repairs, insurance, 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 institutional 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 occupied 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 six of this
subdivision for (I) a period of three years subsequent to granting a
hardship application under the provisions of this paragraph OR (II) TO
THE OWNER OF ANY BUILDING IN WHICH MORE THAN FIFTY PERCENT OF THE HABI-
TABLE UNITS ARE NOT SUBJECT TO RENT STABILIZATION OR RENT CONTROL. 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 equi-
ty 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 improvement, (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 proper-
ty after purchase by the owner.
§ 3. 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:
S. 7926 3
(3) there has been since January first, nineteen hundred seventy-four
a major capital improvement required for the operation, preservation or
maintenance of the structure AND MORE THAN HALF OF THE HABITABLE UNITS
IN THE BUILDING ARE SUBJECT TO RENT STABILIZATION OR RENT CONTROL. 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, or
§ 4. Subparagraph 7 of the second undesignated subparagraph of para-
graph (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 32 of part A of chapter 20 of the laws of 2015, is amended to
read as follows:
(7) there has been since March first, nineteen hundred fifty, a major
capital improvement required for the operation, preservation or mainte-
nance 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] THIRTY-FIVE units[,]; PROVIDED, HOWEVER, THAT NO
ADJUSTMENT SHALL BE ALLOWED FOR ANY BUILDING IN WHICH MORE THAN FIFTY
PERCENT OF THE HABITABLE UNITS ARE NOT SUBJECT TO RENT STABILIZATION OR
RENT CONTROL, or
§ 5. 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 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 PROVIDED, THAT MORE THAN HALF OF THE HABITABLE UNITS IN
THE BUILDING ARE SUBJECT TO RENT STABILIZATION OR RENT CONTROL. For the
purposes of this paragraph, operating expenses shall consist of the
actual, reasonable, costs of fuel, labor, utilities, taxes, other than
income or corporate franchise taxes, fees, permits, necessary contracted
services and non-capital repairs, insurance, parts and supplies, manage-
ment 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 institutional mortgage shall include;
condition of the property, location of the property, the existing mort-
gage market at the time the mortgage is placed, the term of the mort-
gage, the amortization rate, the principal amount of the mortgage, secu-
rity and other terms and conditions of the mortgage. The commissioner
shall set a rental value for any unit occupied by the owner or a person
related to the owner or unoccupied at the owner's choice for more than
S. 7926 4
one month at the last regulated rent plus the minimum number of guide-
lines 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 application 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 estab-
lished 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 improvement,
(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.
§ 6. 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 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; and provided, further, that the amendments to section 26-511 of
chapter 4 of title 26 of the administrative code of the city of New York
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; and provided, further, that the amend-
ments to section 6 of the emergency tenant protection act of nineteen
seventy-four made by sections three and five 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;
and provided, further, that the amendments 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.