S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   1773
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 14, 2025
                                ___________
 
 Introduced  by  M.  of  A.  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.
                                                            LBD04635-01-5
              

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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] SUCH NEW OWNER
 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  nine-
 teen hundred seventy despite diligent efforts to obtain same from prede-
 cessors  in  title  and  further provided that the new owner can provide
 financial data covering a minimum of six years under [his or her]  THEIR
 continuous and uninterrupted operation of the building to meet the three
 year  to three year comparative 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 thirty-five or fewer housing accommodations, or a twelve
 and one-half-year period for a building with more than thirty-five hous-
 ing 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
 A. 1773                             3
 
 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.
 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. 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. 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, 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 ADJUST-
 MENT FOR A MAJOR CAPITAL IMPROVEMENT. Notwithstanding  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 commis-
 sioner, (iii) actual annual mortgage debt service (interest and  amorti-
 zation)  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  prin-
 cipal  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;
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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.