S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4769
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 23, 2023
                                ___________
 
 Introduced  by  M.  of  A. L. ROSENTHAL -- 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 27 of part Q of 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 shall be in an amount sufficient to amortize
 the cost of the improvements pursuant to this subparagraph [(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. 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

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02900-01-3
              

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 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.  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 BUILD-
 ING  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.  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-
 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 and shall be removed from
 A. 4769                             3
 
 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 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, 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 based upon  cash  purchase
 price exclusive of interest or service charges. Where an application 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 proceed-
 ing 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  application.  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, HOWEV-
 ER, 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. Notwithstand-
 ing  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
 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  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  incre-
 ments  and  added to the stabilized rent as established or set in future
 years;
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   § 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.