NY State Senate Bill 2023-S9325

Senate Bill S9325

2023-2024 Legislative Session

Relates to requiring notice be provided to tenants prior to the beginning of work on a major capital improvement

download bill text pdf

Current Bill Status - In Senate Committee Housing, Construction And Community Development Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 13, 2024	referred to housing, construction and community development

2023-S9325 (ACTIVE) - Details

Current Committee:: Senate Housing, Construction And Community Development
Law Section:: New York City Administrative Code
Laws Affected:: Amd §§26-405 & 26-511, NYC Ad Cd; amd §6, Emerg Ten Prot Act of 1974; amd §4, Emerg Hous Rent Cont L

2023-S9325 (ACTIVE) - Summary

Requires notice be provided to tenants prior to the beginning of work on a major capital improvement.

2023-S9325 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S9325

SPONSOR: JACKSON
 
TITLE OF BILL:

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 requiring notice be
provided to tenants prior to the beginning of work on a major capital
improvement

 
PURPOSE:

Requires notice be provided to tenants prior to the beginning of work on
a major capital improvement.

 
SUMMARY OF PROVISIONS:

Section 1 amends Subparagraph (g) of paragraph 1 of subdivision g of
section 26-405 of the administrative code of the city of New York to be
eligible for a temporary rent increase based upon a major capital
improvement, notice shall be required to be provided to tenants prior to

the beginning of work on such major capital improvement.

Section 2 amends Paragraph 6 of subdivision c of section 26-511 of the
administrative code of the city of New York to do the same.

Section 3 amends Paragraph 3 of subdivision d of section 6 of section 4
of chapter 17 576 of the laws of 1974, constituting the emergency tenant
protection 18 act of nineteen seventy-four, to require the same.

Section 4 amends 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, to do the
same.

Section 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 rehabilitation law made by section one of this act
shall remain in full force and effect only as long as the public emer-
gency 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.

 
JUSTIFICATION:

Major Capital Improvements (MCIs) are building-wide improvements to
residential buildings, including systems such as boilers, windows, elec-
trical rewiring, plumbing, and roofs, in which landlords are permitted
to raise rents by 2% a year in buildings subject to rent stabilization
upon approval by the Department of Homes and Community Renewal. Current-
ly, building owners are required to notify tenants of an application for
an MCI rent increase, but they are not required to notify tenants prior
to the beginning of work on an MCI.

Mandating notice prior to commencing major capital improvements is
crucial for tenants' rights, accountability, and transparency.  Tenants
pay for MCIs through higher rents, therefore they deserve the right to
be informed before the work begins. Advance notice of MCIs will help
tenants prepare for disruptions, voice potential concerns, and ensure
that the work is necessary and reasonable.

 
LEGISLATIVE HISTORY:

New Legislation  
STATE AND LOCAL FISCAL IMPLICATIONS:

N/A

 
EFFECTIVE DATE:
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 rehabilitation 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 emer-
gency 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.

2023-S9325 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9325
 
                             I N  S E N A T E
 
                               May 13, 2024
                                ___________
 
 Introduced  by  Sen. JACKSON -- 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  requiring  notice  be
   provided  to tenants prior to the beginning of work on a major capital
   improvement
 
   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] PART K OF chapter THIRTY-SIX of the laws of two thou-
 sand  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  collect-
 ible  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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD14871-01-4
 S. 9325                             2
 
 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.  TO BE ELIGIBLE FOR A TEMPO-
 RARY RENT INCREASE BASED UPON A MAJOR  CAPITAL  IMPROVEMENT  UNDER  THIS
 SUBPARAGRAPH,  NOTICE  SHALL BE REQUIRED TO BE PROVIDED TO TENANTS PRIOR
 TO THE BEGINNING OF WORK ON SUCH MAJOR CAPITAL IMPROVEMENT, 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] PART K OF chapter  THIRTY-
 NINE  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  improve-
 ment  increases  shall  be collectible prospectively on the first day of
 S. 9325                             3
 
 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.
 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.   TO  BE  ELIGIBLE  FOR  A  TEMPORARY  RENT
 INCREASE  BASED  UPON  A MAJOR CAPITAL IMPROVEMENT UNDER THIS PARAGRAPH,
 NOTICE SHALL BE REQUIRED TO BE PROVIDED TO TENANTS PRIOR TO  THE  BEGIN-
 NING OF WORK ON SUCH MAJOR CAPITAL IMPROVEMENT. 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. 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;
   § 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
 S. 9325                             4
 
 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
 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. TO BE ELIGIBLE FOR A  TEMPO-
 RARY  RENT  INCREASE  BASED  UPON A MAJOR CAPITAL IMPROVEMENT UNDER THIS
 PARAGRAPH, NOTICE SHALL BE REQUIRED TO BE PROVIDED TO TENANTS  PRIOR  TO
 THE BEGINNING OF WORK ON SUCH MAJOR CAPITAL IMPROVEMENT, 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] PART K OF chapter THIRTY-SIX of the laws of two thousand  nine-
 teen [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. 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
 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
 S. 9325                             5
 
 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. 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, TO BE ELIGIBLE FOR
 A TEMPORARY RENT INCREASE BASED UPON A MAJOR CAPITAL  IMPROVEMENT  UNDER
 THIS  SUBPARAGRAPH,  NOTICE  SHALL BE REQUIRED TO BE PROVIDED TO TENANTS
 PRIOR TO THE BEGINNING  OF  WORK  ON  SUCH  MAJOR  CAPITAL  IMPROVEMENT;
 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 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.

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