S. 6043 2
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
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. THE DIVISION OF HOUSING
AND COMMUNITY RENEWAL SHALL REQUIRE THE SUBMISSION OF A REPORT BY LAND-
LORDS APPLYING FOR A RENT INCREASE FOR MAJOR CAPITAL IMPROVEMENTS PURSU-
ANT TO THIS PARAGRAPH AND SUBJECT TO VERIFICATION BY THE DIVISION OF
HOUSING AND COMMUNITY RENEWAL, IN COLLABORATION WITH LOCAL AUTHORITIES
RESPONSIBLE FOR INSPECTING BUILDINGS, CERTIFYING THAT THERE ARE NOT MORE
S. 6043 3
THAN THIRTY CLASS A HOUSING CODE VIOLATIONS NOR A CLASS B OR C HOUSING
CODE VIOLATION ON THE PROPERTY, PRIOR TO RECEIVING APPROVAL FOR SUCH
RENT INCREASE. 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 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 para-
graph 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 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 6 to read as
follows:
(6) ADJUSTMENTS MADE PURSUANT TO PARAGRAPH (3) OF THIS SUBDIVISION
SHALL BE COLLECTABLE UPON THE LANDLORD'S FILING OF A REPORT WITH THE
STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL AND SUBJECT TO VERIFICA-
TION BY THE STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, IN COLLAB-
ORATION WITH LOCAL AUTHORITIES RESPONSIBLE FOR INSPECTING BUILDINGS,
THAT THE APPLICANT DOES NOT HAVE MORE THAN THIRTY CLASS A HOUSING CODE
VIOLATIONS OR A CLASS B OR C HOUSING CODE VIOLATION ON THE PROPERTY.
OUTSTANDING HOUSING CODE VIOLATIONS THAT ARE FOUND SHALL BE CLEARED,
CORRECTED OR ABATED BY THE LANDLORD AND VERIFIED BY THE STATE DIVISION
OF HOUSING AND COMMUNITY RENEWAL PRIOR TO AUTHORIZATION OF A RENT
INCREASE UNDER PARAGRAPH (3) OF THIS SUBDIVISION.
§ 4. 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 amended by section 25 of part B
of chapter 97 of the laws of 2011, subparagraph 5 as amended by section
36 of part Q of chapter 39, subparagraph 7 as separately amended by
section 25 of part Q of chapter 39 and section 14 of part K of chapter
36 and subparagraph 8 as amended by section 8 of part K of chapter 36 of
the laws of 2019, is amended to read as follows:
No application for adjustment of maximum rent based upon a sales price
valuation shall be filed by the landlord under this subparagraph prior
to six months from the date of such sale of the property. In addition,
no adjustment ordered by the commission based upon such sales price
valuation shall be effective prior to one year from the date of such
sale. Where, however, the assessed valuation of the land exceeds four
S. 6043 4
times the assessed valuation of the buildings thereon, the commission
may determine a valuation of the property equal to five times the equal-
ized assessed valuation of the buildings, for the purposes of this
subparagraph. The commission may make a determination that the valuation
of the property is an amount different from such equalized assessed
valuation where there is a request for a reduction in such assessed
valuation currently pending; or where there has been a reduction in the
assessed valuation for the year next preceding the effective date of the
current assessed valuation in effect at the time of the filing of the
application. Net annual return shall be the amount by which the earned
income exceeds the operating expenses of the property, excluding mort-
gage interest and amortization, and excluding allowances for obsoles-
cence and reserves, but including an allowance for depreciation of two
per centum of the value of the buildings exclusive of the land, or the
amount shown for depreciation of the buildings in the latest required
federal income tax return, whichever is lower; provided, however, that
(1) no allowance for depreciation of the buildings shall be included
where the buildings have been fully depreciated for federal income tax
purposes or on the books of the owner; or (2) the landlord who owns no
more than four rental units within the state has not been fully compen-
sated by increases in rental income sufficient to offset unavoidable
increases in property taxes, fuel, utilities, insurance and repairs and
maintenance, excluding mortgage interest and amortization, and excluding
allowances for depreciation, obsolescence and reserves, which have
occurred since the federal date determining the maximum rent or the date
the property was acquired by the present owner, whichever is later; or
(3) the landlord operates a hotel or rooming house or owns a cooperative
apartment and has not been fully compensated by increases in rental
income from the controlled housing accommodations sufficient to offset
unavoidable increases in property taxes and other costs as are allocable
to such controlled housing accommodations, including costs of operation
of such hotel or rooming house, but excluding mortgage interest and
amortization, and excluding allowances for depreciation, obsolescence
and reserves, which have occurred since the federal date determining the
maximum rent or the date the landlord commenced the operation of the
property, whichever is later; or (4) the landlord and tenant voluntarily
enter into a valid written lease in good faith with respect to any hous-
ing accommodation, which lease provides for an increase in the maximum
rent not in excess of fifteen per centum and for a term of not less than
two years, except that where such lease provides for an increase in
excess of fifteen per centum, the increase shall be automatically
reduced to fifteen per centum; or (5) the landlord and tenant by mutual
voluntary written informed agreement agree to a substantial increase or
decrease in dwelling space, furniture, furnishings or equipment provided
in the housing accommodations; provided that an owner shall be entitled
to a rent increase where there has been a substantial modification or
increase of dwelling space, or installation of new equipment or improve-
ments or new furniture or furnishings provided in or to a tenant's hous-
ing accommodation. The temporary increase in the maximum rent for the
affected housing accommodation shall be one-one hundred sixty-eighth, in
the case of a building with thirty-five or fewer housing accommodations,
or one-one hundred eightieth, in the case of a building with more than
thirty-five housing accommodations where such increase takes effect on
or after the effective date of the chapter of the laws of two thousand
nineteen that amended this subparagraph, of the total actual cost
incurred by the landlord up to fifteen thousand dollars in providing
S. 6043 5
such reasonable and verifiable modification or increase in dwelling
space, furniture, furnishings, or equipment, including the cost of
installation but excluding finance charges and any costs that exceed
reasonable costs established by rules and regulations promulgated by the
division of housing and community renewal. Such rules and regulations
shall include: (i) requirements for work to be done by licensed
contractors and a prohibition on common ownership between the landlord
and the contractor or vendor; and (ii) a requirement that the owner
resolve within the dwelling space all outstanding hazardous or imme-
diately hazardous violations of the uniform fire prevention and building
code (Uniform Code), New York city fire code, or New York city building
and housing maintenance codes, if applicable. Provided further that an
owner who is entitled to a rent increase pursuant to this clause shall
not be entitled to a further rent increase based upon the installation
of similar equipment, or new furniture or furnishings within the useful
life of such new equipment, or new furniture or furnishings. Provided
further that the recoverable costs incurred by the landlord, pursuant to
this subparagraph, shall be limited to an aggregate cost of fifteen
thousand dollars that may be expended on no more than three separate
individual apartment improvements in a fifteen year period beginning
with the first individual apartment improvement on or after June four-
teenth, two thousand nineteen. Provided further that increases to the
legal regulated rent pursuant to this paragraph 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. The owner shall give written notice to the commission
of any such adjustment pursuant to this clause; or (6) there has been,
since March first, nineteen hundred fifty, an increase in the rental
value of the housing accommodations as a result of a substantial reha-
bilitation of the building or housing accommodation therein which mate-
rially adds to the value of the property or appreciably prolongs its
life, excluding ordinary repairs, maintenance and replacements; or (7)
there has been since March first, nineteen hundred fifty, a major capi-
tal improvement essential for the preservation, energy efficiency, func-
tionality, 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 peri-
od 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
increments and added to the rent as established or set in future years.
S. 6043 6
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; or (8) there
has been since March first, nineteen hundred fifty, in structures
containing more than four housing accommodations, other improvements
made with the express informed consent of the tenants in occupancy of at
least seventy-five per centum of the housing accommodations, provided,
however, that no adjustment granted hereunder shall exceed two per
centum unless the tenants have agreed to a higher percentage of
increase, as herein provided; OR (9) there has been, since March first,
nineteen hundred fifty, a subletting without written consent from the
landlord or an increase in the number of adult occupants who are not
members of the immediate family of the tenant, and the landlord has not
been compensated therefor by adjustment of the maximum rent by lease or
order of the commission or pursuant to the federal act; or (10) the
presence of unique or peculiar circumstances materially affecting the
maximum rent has resulted in a maximum rent which is substantially lower
than the rents generally prevailing in the same area for substantially
similar housing accommodations. ADJUSTMENTS MADE PURSUANT TO SUBPARA-
GRAPH (7) OF THIS PARAGRAPH SHALL BE COLLECTIBLE UPON THE LANDLORD'S
FILING OF A REPORT WITH THE COMMISSION AND SUBJECT TO VERIFICATION BY
THE COMMISSION, IN COLLABORATION WITH LOCAL AUTHORITIES RESPONSIBLE FOR
INSPECTING BUILDINGS, THAT THE APPLICANT DOES NOT HAVE MORE THAN THIRTY
CLASS A HOUSING CODE VIOLATIONS OR A CLASS B OR C HOUSING CODE VIOLATION
ON THE PROPERTY. OUTSTANDING HOUSING CODE VIOLATIONS THAT ARE FOUND
SHALL BE CLEARED, CORRECTED OR ABATED BY THE LANDLORD AND VERIFIED BY
THE COMMISSION PRIOR TO AUTHORIZATION OF A RENT INCREASE UNDER SUBPARA-
GRAPH (7) OF THIS PARAGRAPH.
§ 5. This act shall take effect on the sixtieth 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 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.
