S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5659
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                              March 10, 2023
                                ___________
 
 Introduced  by  Sen.  RIVERA -- 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 nineteen seventy-four and the emer-
   gency housing rent control law, in relation  to  tenant  responses  to
   applications for a major capital improvement rent increase
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph 1 of subdivision  g  of  section  26-405  of  the
 administrative  code  of the city of New York is amended by adding a new
 subparagraph (g-1) to read as follows:
   (G-1) WHERE AN  APPLICATION  FOR  A  MAJOR  CAPITAL  IMPROVEMENT  RENT
 INCREASE  HAS  BEEN  FILED,  A TENANT SHALL HAVE ONE HUNDRED TWENTY DAYS
 FROM THE DATE OF MAILING OF A NOTICE OF A PROCEEDING IN WHICH TO  ANSWER
 OR  REPLY. THE CITY RENT AGENCY SHALL PROVIDE ANY RESPONDING TENANT WITH
 THE REASONS FOR THE CITY RENT AGENCY'S APPROVAL OR DENIAL OF SUCH APPLI-
 CATION; 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10017-01-3
              

 S. 5659                             2
 
 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
 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.    WHERE  AN
 APPLICATION  FOR  A  MAJOR  CAPITAL  IMPROVEMENT  RENT INCREASE HAS BEEN
 FILED, A TENANT SHALL HAVE ONE HUNDRED TWENTY  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 APPLICATION. Notwithstanding anything to the contrary contained
 herein, no hardship increase granted pursuant to this  paragraph  shall,
 S. 5659                             3
 
 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 indebt-
 edness 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  mort-
 gage  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 increments and added to the stabilized rent as established or
 set in future years;
   § 3. Subdivision d of section 6 of section 4 of  chapter  576  of  the
 laws  of 1974, constituting the emergency tenant protection act of nine-
 teen seventy-four, is amended by adding a new paragraph (3-b) to read as
 follows:
   (3-B) AN APPLICATION FOR A MAJOR CAPITAL IMPROVEMENT RENT INCREASE HAS
 BEEN FILED, A TENANT SHALL HAVE ONE HUNDRED TWENTY 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 APPLICATION; OR
   § 4. Subparagraph 7 of the second undesignated paragraph of  paragraph
 (a)  of  subdivision  4 of section 4 of chapter 274 of the laws of 1946,
 constituting the emergency  housing  rent  control  law,  as  separately
 amended  by  section 25 of part Q of chapter 39 and section 14 of part K
 of chapter 36 of the laws of 2019, is amended to read as follows:
   (7) there has been since March first, nineteen hundred fifty, 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;
 which for any order of the commissioner issued after the effective  date
 of  the  chapter  of the laws of two thousand nineteen that amended this
 paragraph the cost of such improvement shall be amortized 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 improve-
 ment 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
 S. 5659                             4

 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.
 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; provided, however, 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;  PROVIDED,
 HOWEVER,  WHERE  AN  APPLICATION  FOR  A  MAJOR CAPITAL IMPROVEMENT RENT
 INCREASE HAS BEEN FILED, A TENANT SHALL HAVE  ONE  HUNDRED  TWENTY  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 APPLICATION; or
   § 5. This act shall take effect on the ninetieth day  after  it  shall
 have become a law; provided that:
   (a)  the  amendments  to section 26-405 of the city rent and rehabili-
 tation 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
   (b) 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.