S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5495
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 12, 2019
                                ___________
 
 Introduced  by M. of A. DICKENS -- read once and referred to the Commit-
   tee on Housing
 
 AN ACT to amend the emergency tenant protection act of  nineteen  seven-
   ty-four,  in relation to eliminating rent increases for structures due
   to major capital improvements
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Paragraphs  3,  4  and 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, paragraph 3  as  amended
 by  section  30 of part A of chapter 20 of the laws of 2015, paragraph 4
 as amended by chapter 403 of the laws of 1983 and paragraph 5 as amended
 by chapter 102 of the laws of 1984, are amended to read as follows:
   (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. 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)]  an  owner  by  application  to the state division of housing and
 community renewal for increases in the  rents  in  excess  of  the  rent
 adjustment authorized by the rent guidelines board under this act estab-
 lishes  a  hardship,  and the state division finds that the rate of rent
 adjustment is not sufficient to enable the owner  to  maintain  approxi-
 mately  the  same  ratio between operating expenses, including taxes and
 labor costs but excluding debt service, financing costs, and  management
 fees,  and gross rents which prevailed on the average over the immediate
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD07899-01-9
              

 A. 5495                             2
 
 preceding five year period, or for the entire life of  the  building  if
 less than five years, or
   [(5)] (4) as an alternative to the hardship application provided under
 paragraph [four] THREE 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 main-
 tain 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, 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 admin-
 istrative costs and mortgage interest. For the purposes  of  this  para-
 graph, 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  condi-
 tions 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 unoccu-
 pied 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] THREE 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 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

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 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.
   §  2. This act shall take effect immediately; provided that the amend-
 ments to section 6 of the emergency tenant protection  act  of  nineteen
 seventy-four  made  by  section one 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.