S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3974
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 29, 2021
                                ___________
 
 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 and  the
   emergency  tenant protection act of nineteen seventy-four, in relation
   to inspection of major capital improvements for which  rent  increases
   are  requested and in relation to extending the provisions of the rent
   stabilization law
 
   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  27 of part Q chapter 39 of the laws of 2019, is amended to read
 as follows:
   (g) There has been since July first, nineteen hundred seventy, a major
 capital improvement essential for the  preservation  energy  efficiency,
 functionality,  or infrastructure of the entire building, improvement of
 the structure including heating, windows, plumbing and roofing but shall
 not be for operational costs or unnecessary cosmetic  improvements.  The
 temporary  increase  based  upon  a major capital improvement under this
 subparagraph for any order of the commissioner issued after [the  effec-
 tive  date  of  the  chapter  of  the laws of two thousand nineteen that
 amended this subparagraph] JUNE 14, 2014 shall be in  an  amount  suffi-
 cient to amortize the cost of the improvements pursuant to this subpara-
 graph  [(g)] over a twelve-year period for buildings with thirty-five or
 fewer units or a twelve and one-half year period for buildings with more
 than thirty-five units, and shall be removed from  the  legal  regulated
 rent  thirty years from the date the increase became effective inclusive
 of any increases granted by the applicable rent guidelines board. Tempo-
 rary major capital improvement increases shall be  collectible  prospec-
 tively on the first day of the first month beginning sixty days from the
 date  of  mailing  notice  of  approval to the tenant. Such notice shall
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD07022-01-1

 A. 3974                             2
 
 disclose the total monthly increase in rent and the first month in which
 the tenant would be required to pay the temporary increase. An  approval
 for  a  temporary  major  capital improvement increase shall not include
 retroactive  payments.  The  collection of any increase shall not exceed
 two 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.  Upon vacancy, the landlord may add  any  remaining
 balance of the temporary major capital improvement increase to the legal
 regulated  rent.   NO LANDLORD SHALL DENY ACCESS TO A PROFESSIONAL ENGI-
 NEER LICENSED TO PRACTICE IN THE STATE  OF  NEW  YORK  OR  A  REGISTERED
 ARCHITECT  LICENSED  TO  PRACTICE  IN THE STATE OF NEW YORK HIRED BY ANY
 TENANT, TENANTS OR TENANT ASSOCIATION REPRESENTING TENANTS OF A MULTIPLE
 DWELLING OF  SIX  UNITS  OR  MORE  FOR  THE  PURPOSE  OF  CONDUCTING  AN
 INSPECTION  OF  A MAJOR CAPITAL IMPROVEMENT FOR WHICH AN APPLICATION FOR
 ADJUSTMENT OF MAXIMUM RENT HAS BEEN  FILED.  SUCH  INSPECTION  SHALL  BE
 CONDUCTED AFTER NOTICE TO THE LANDLORD AND DURING NORMAL BUSINESS HOURS.
 SUCH  TENANT  MAY  FILE  THE REPORT OF THE INSPECTION WITH THE CITY RENT
 AGENCY FOR CONSIDERATION  IN  THE  DETERMINATION  OF  SUCH  APPLICATION.
 Notwithstanding  any  other  provision of the law, for any renewal lease
 commencing on or after  June  14,  2019,  the  collection  of  any  rent
 increases  due  to  any  major capital improvements approved on or after
 June 16, 2012 and before June 16, 2019 shall not exceed two  percent  in
 any  year  for  any  tenant  in  occupancy on the date the major capital
 improvement was approved, or
   § 2. Paragraph 6 of subdivision c of section 26-511 of the administra-
 tive code of the city of New York, as separately amended by  section  12
 of  part  K  of chapter 36 and section 28 of part Q of chapter 39 of the
 laws of 2019, 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 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 a twelve-year period for a building with thir-

 A. 3974                             3
 
 ty-five or fewer housing accommodations, or a twelve  and  one-half-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 the chapter of the laws of two
 thousand nineteen that amended this paragraph] JUNE 14, 2019  and  shall
 be  removed from the legal regulated rent thirty years from the date the
 increase became effective inclusive of  any  increases  granted  by  the
 applicable  rent  guidelines  board. Temporary major capital improvement
 increases shall be collectible prospectively on the  first  day  of  the
 first  month  beginning  sixty  days  from the date of mailing notice of
 approval to the tenant. Such notice shall  disclose  the  total  monthly
 increase  in  rent  and  the  first  month  in which the tenant would be
 required to pay the temporary increase.  An  approval  for  a  temporary
 major   capital  improvement  increase  shall  not  include  retroactive
 payments. The collection of any increase shall not exceed two 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.
 Upon  vacancy,  the landlord may add any remaining balance of the tempo-
 rary major capital improvement increase to the legal regulated rent.  NO
 LANDLORD SHALL DENY ACCESS TO A PROFESSIONAL ENGINEER LICENSED TO  PRAC-
 TICE  IN  THE  STATE  OF  NEW YORK OR A REGISTERED ARCHITECT LICENSED TO
 PRACTICE IN THE STATE OF NEW YORK HIRED BY ANY TENANT, TENANTS OR TENANT
 ASSOCIATION REPRESENTING TENANTS OF A MULTIPLE DWELLING OF SIX UNITS  OR
 MORE  FOR  THE  PURPOSE  OF  CONDUCTING AN INSPECTION OF A MAJOR CAPITAL
 IMPROVEMENT FOR WHICH AN APPLICATION FOR ADJUSTMENT OF MAXIMUM RENT  HAS
 BEEN FILED. SUCH INSPECTION SHALL BE CONDUCTED AFTER NOTICE TO THE LAND-
 LORD  AND  DURING NORMAL BUSINESS HOURS. SUCH TENANT MAY FILE THE REPORT
 OF THE INSPECTION WITH THE CITY RENT AGENCY  FOR  CONSIDERATION  IN  THE
 DETERMINATION  OF  SUCH APPLICATION. Notwithstanding any other provision
 of the law, for any renewal lease commencing on or after June 14,  2019,
 the  collection  of any rent increases due to any major capital improve-
 ments approved on or after June 16, 2012 and before June 16, 2019  shall
 not  exceed  two  percent in any year for any tenant in occupancy on the
 date the major capital improvement  was  approved  or  based  upon  cash
 purchase price exclusive of interest or service charges. Where an appli-
 cation  for  a  temporary  major  capital  improvement increase has been
 filed, a tenant shall have sixty days from the  date  of  mailing  of  a
 notice  of  a proceeding in which to answer or reply. The state division
 of housing and community renewal shall  provide  any  responding  tenant
 with  the reasons for the division's approval or denial of such applica-
 tion. 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
 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

 A. 3974                             4
 
 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;
   § 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 26 of part Q of
 chapter 39 of the laws of 2019, is amended to read as follows:
   (3) there has been since January first, nineteen hundred  seventy-four
 a major capital improvement essential for the preservation, energy effi-
 ciency,   functionality,  or  infrastructure  of  the  entire  building,
 improvement of the structure including heating,  windows,  plumbing  and
 roofing,  but  shall  not be for operation costs or unnecessary cosmetic
 improvements. An adjustment under this paragraph shall be in  an  amount
 sufficient  to  amortize  the  cost of the improvements pursuant to this
 paragraph over a twelve-year period for a building with  thirty-five  or
 fewer  housing  accommodations,  or  a  twelve and one-half period for a
 building with more than thirty-five housing accommodations and shall  be
 removed  from  the  legal  regulated rent thirty years from the date the
 increase became effective inclusive of  any  increases  granted  by  the
 applicable  rent  guidelines  board, for any determination issued by the
 division of housing and community renewal after [the effective  date  of
 the chapter of the laws of two thousand nineteen that amended this para-
 graph]  JUNE  14,  2019.  Temporary  major capital improvement increases
 shall be collectable prospectively on the first day of the  first  month
 beginning  sixty days from the date of mailing notice of approval to the
 tenant.  Such notice shall disclose the total monthly increase  in  rent
 and  the  first  month  in which the tenant would be required to pay the
 temporary increase. An approval for a temporary major  capital  improve-
 ment  increase shall not include retroactive payments. The collection of
 any increase shall not exceed two 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. Upon vacancy, the landlord
 may add any remaining balance of the temporary major capital improvement
 increase to the legal regulated rent.  NO LANDLORD SHALL DENY ACCESS  TO
 A PROFESSIONAL ENGINEER LICENSED TO PRACTICE IN THE STATE OF NEW YORK OR
 A  REGISTERED  ARCHITECT  LICENSED  TO PRACTICE IN THE STATE OF NEW YORK
 HIRED BY ANY TENANT, TENANTS OR TENANT ASSOCIATION REPRESENTING  TENANTS
 OF  A MULTIPLE DWELLING OF SIX UNITS OR MORE FOR THE PURPOSE OF CONDUCT-
 ING AN INSPECTION OF A MAJOR CAPITAL IMPROVEMENT FOR WHICH  AN  APPLICA-
 TION  FOR  ADJUSTMENT  OF  MAXIMUM  RENT HAS BEEN FILED. SUCH INSPECTION
 SHALL BE CONDUCTED AFTER NOTICE TO THE LANDLORD AND DURING NORMAL  BUSI-
 NESS  HOURS.  SUCH TENANT MAY FILE THE REPORT OF THE INSPECTION WITH THE
 CITY RENT AGENCY FOR CONSIDERATION IN THE DETERMINATION OF SUCH APPLICA-
 TION. Notwithstanding any other provision of the law, the collection  of
 any rent increases for any renewal lease commencing on or after June 14,
 2019,  due  to  any major capital improvements approved on or after June
 16, 2012 and before June 16, 2019 shall not exceed two  percent  in  any
 year  for any tenant in occupancy on the date the major capital improve-
 ment was approved, or
   § 4. This act shall take effect on the one hundred twentieth day after
 it shall have become a law, provided  that  the  amendments  to  section

 A. 3974                             5
 
 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.  Effective
 immediately, the addition, amendment and/or repeal of any rule and regu-
 lation necessary for the implementation of this  act  on  its  effective
 date are authorized to be made on or before such date.