S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6521
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              March 19, 2021
                                ___________
 
 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  26 of part Q of chapter 39 of the laws of 2019, 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 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. Temporary major capital improvement increases shall be  collecta-
 ble  prospectively  on  the first day of the first month beginning sixty
 days from the date of mailing notice of approval to the  tenant.    Such

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

                                                            LBD03731-01-1

 A. 6521                             2

 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 estab-
 lished 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.  Notwithstanding any other provision of the
 law, the collection of any rent increases for any renewal lease commenc-
 ing 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 improvement was approved, 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
 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. 6521                             3
 
 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
 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.