S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8011
 
                             I N  S E N A T E
 
                              January 5, 2024
                                ___________
 
 Introduced  by Sen. KAVANAGH -- read twice and ordered printed, and when
   printed to be committed to the Committee on Rules
 
 AN ACT to amend the administrative code of the city of New York and  the
   emergency  tenant protection act of nineteen seventy-four, in relation
   to establishing the legal regulated rent for the combination of two or
   more vacant apartments; to amend the emergency tenant  protection  act
   of nineteen seventy-four, in relation to exemptions from rent stabili-
   zation  on  the basis of substantial rehabilitation; to define clearly
   the scope of the fraud exception to the pre-HSTPA four-year  rule  for
   calculating  rents;  and  to  amend part B of a chapter of the laws of
   2023 relating to defining clearly the scope of the fraud exception  to
   the  pre-HSTPA  four-year  rule  for calculating rents, as proposed in
   legislative bills numbers S. 2980-C and  A.  6216-B,  in  relation  to
   claims of fraudulent schemes and determination relating thereto and in
   relation to the effectiveness thereof
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subparagraph (d)  of  paragraph  15  of  subdivision  c  of
 section  26-511  of  the administrative code of the city of New York, as
 added by part A of a chapter of the laws of 2023 amending  the  adminis-
 trative code of the city of New York and the emergency tenant protection
 act  of  nineteen  seventy-four relating to establishing the legal regu-
 lated rent for the combination of two  or  more  vacant  apartments,  as
 proposed  in  legislative  bills  numbers  S.  2980-C  and A. 6216-B, is
 amended to read as follows:
   (d) where the vacant housing accommodations  are  combined,  modified,
 divided or the dimension of such housing accommodation otherwise altered
 and  these  changes are being made pursuant to a preservation regulatory
 agreement with a federal, state or local governmental agency or  instru-
 mentality,  the  rent stabilized rents charged thereafter shall be based
 on an initial rent set by such agency or instrumentality[, provided such
 initial rent shall not be higher than if the initial rent was calculated
 in accordance with subparagraphs (a), (b), (e)  or  (f)  of  this  para-
 graph].
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD07250-13-4
 S. 8011                             2
 
   §  2.  Subparagraph (iv) of paragraph 13 of subdivision (a) of section
 10-b of section 4 of chapter 576 of the laws of 1974,  constituting  the
 emergency  tenant  protection  act of nineteen seventy-four, as added by
 part A of a chapter of the laws of 2023 amending the administrative code
 of the city of New York and the emergency tenant protection act of nine-
 teen  seventy-four relating to establishing the legal regulated rent for
 the combination of two or more vacant apartments, as proposed in  legis-
 lative  bills  numbers  S.  2980-C  and A. 6216-B, is amended to read as
 follows:
   (iv) where the vacant housing accommodations are  combined,  modified,
 divided or the dimension of such housing accommodation otherwise altered
 and  these  changes are being made pursuant to a preservation regulatory
 agreement with a federal, state or local governmental agency or  instru-
 mentality,  the  rent stabilized rents charged thereafter shall be based
 on an initial rent set by such agency or instrumentality[, provided such
 initial rent shall not be higher than if the initial rent was calculated
 in accordance with subparagraphs (i), (ii), (v) or (vi)  of  this  para-
 graph].
   § 3. Paragraph 5 of subdivision a of section 5 of section 4 of chapter
 576  of  the  laws of 1974, constituting the emergency tenant protection
 act of nineteen seventy-four, as amended by part A of a chapter  of  the
 laws  of  2023  amending the administrative code of the city of New York
 and the emergency tenant protection act of nineteen seventy-four  relat-
 ing  to establishing the legal regulated rent for the combination of two
 or more vacant apartments, as proposed in legislative bills  numbers  S.
 2980-C and A. 6216-B, is amended to read as follows:
   (5)   housing  accommodations  in  buildings  completed  or  buildings
 substantially rehabilitated as family units on or after  January  first,
 nineteen hundred seventy-four; provided that an owner claiming exemption
 from  rent  stabilization  on the basis of A substantial rehabilitation,
 WHERE THE WORK FOR SUCH REHABILITATION WAS INITIATED  ON  OR  AFTER  THE
 FIRST DAY OF JANUARY, TWO THOUSAND TWENTY-FOUR, shall seek approval from
 state  division  of housing and community renewal within one year of the
 completion of the  substantial  rehabilitation,  [or  for  any  building
 previously  alleged  to have been substantially rehabilitated before the
 effective date of the chapter of the laws of two  thousand  twenty-three
 that  amended this paragraph, within six months of such effective date,]
 and ultimately obtain such  approval,  which  shall  be  denied  on  the
 following grounds:
   (a)  the owner or its predecessors in interest have engaged in harass-
 ment of tenants in the  five  years  preceding  the  completion  of  the
 substantial rehabilitation;
   (b)  the  building  was not in a substandard or seriously deteriorated
 condition requiring substantial rehabilitation; OR
   (C) ANY ADDITIONAL GROUNDS AS SET FORTH BY REGULATION;
   § 4. Section 2 of part B of a chapter of the laws of 2023 relating  to
 defining clearly the scope of the fraud exception to the pre-HSTPA four-
 year  rule  for  calculating  rents,  as  proposed  in legislative bills
 numbers S. 2980-C and A. 6216-B, is amended, and a new  section  2-a  is
 added to read as follows:
   §  2.  [(a)] Nothing in this act, or the HSTPA, or prior law, shall be
 construed as restricting, impeding or diminishing the use of records  of
 any  age  or  type,  going  back  to  any date that may be relevant, for
 purposes of determining the status  of  any  apartment  under  the  rent
 stabilization law[;
 S. 8011                             3

   (b)  With  respect  to  the  calculation of legal rents for the period
 either prior to or subsequent to June 14, 2019, an owner shall be deemed
 to have committed fraud if the owner shall  have  committed  a  material
 breach  of  any  duty, arising under statutory, administrative or common
 law, to disclose truthfully to any tenant, government agency or judicial
 or administrative tribunal, the rent, regulatory status, or lease infor-
 mation,  for  purposes  of claiming an unlawful rent or claiming to have
 deregulated an apartment, whether or not the owner's  conduct  would  be
 considered  fraud under the common law, and whether or not a complaining
 tenant specifically relied on untruthful  or  misleading  statements  in
 registrations,  leases,  or other documents. The following conduct shall
 be presumed to have been the product of such  fraud:  (1)  the  unlawful
 deregulation  of  any  apartment, including such deregulation as results
 from claiming an unlawful increase such as would have brought  the  rent
 over the deregulation threshold that existed under prior law, unless the
 landlord  can  prove  good faith reliance on a directive or ruling by an
 administrative agency or court; or (2) beginning October 1, 2011,  fail-
 ing to register, as rent stabilized, any apartment in a building receiv-
 ing  J-51 or 421-a benefits.] OR FOR SUCH OTHER PURPOSES PERMITTED UNDER
 LAW OR THE REGULATIONS OF THE NEW YORK STATE  DIVISION  OF  HOUSING  AND
 COMMUNITY RENEWAL.
   §  2-A.  WHEN A COLORABLE CLAIM THAT AN OWNER HAS ENGAGED IN A FRAUDU-
 LENT SCHEME TO DEREGULATE A  UNIT  IS  PROPERLY  RAISED  AS  PART  OF  A
 PROCEEDING  BEFORE  A COURT OF COMPETENT JURISDICTION OR THE STATE DIVI-
 SION OF HOUSING AND COMMUNITY RENEWAL, A COURT OF COMPETENT JURISDICTION
 OR THE STATE DIVISION OF HOUSING AND COMMUNITY  RENEWAL  SHALL  ISSUE  A
 DETERMINATION  AS TO WHETHER THE OWNER KNOWINGLY ENGAGED IN SUCH FRAUDU-
 LENT SCHEME AFTER A CONSIDERATION OF THE TOTALITY OF THE  CIRCUMSTANCES.
 IN  MAKING  SUCH DETERMINATION, THE COURT OR THE DIVISION SHALL CONSIDER
 ALL OF THE RELEVANT FACTS AND ALL APPLICABLE  STATUTORY  AND  REGULATORY
 LAW AND CONTROLLING AUTHORITIES, PROVIDED THAT THERE NEED NOT BE A FIND-
 ING  THAT ALL OF THE ELEMENTS OF COMMON LAW FRAUD, INCLUDING EVIDENCE OF
 A MISREPRESENTATION OF MATERIAL FACT, FALSITY,  SCIENTER,  RELIANCE  AND
 INJURY,  WERE  SATISFIED IN ORDER TO MAKE A DETERMINATION THAT A FRAUDU-
 LENT SCHEME TO DEREGULATE A UNIT WAS COMMITTED IF THE  TOTALITY  OF  THE
 CIRCUMSTANCES NONETHELESS INDICATE THAT SUCH FRAUDULENT SCHEME TO DEREG-
 ULATE A UNIT WAS COMMITTED.
   § 5.  Section 3 of part B of a chapter of the laws of 2023 relating to
 defining clearly the scope of the fraud exception to the pre-HSTPA four-
 year  rule  for  calculating  rents,  as  proposed  in legislative bills
 numbers S. 2980-C and A. 6216-B, is amended to read as follows:
   § 3. This act shall take effect immediately AND  SHALL  APPLY  TO  ANY
 ACTION  OR  PROCEEDING  IN  ANY  COURT  OR ANY APPLICATION, COMPLAINT OR
 PROCEEDING BEFORE AN ADMINISTRATIVE AGENCY ON THE EFFECTIVE DATE OF THIS
 ACT.
   § 6. This act shall take effect immediately;  provided,  however  that
 sections  one,  two, and three of this act shall take effect on the same
 date and in the same manner as part A of a chapter of the laws  of  2023
 amending  the  administrative code of the city of New York and the emer-
 gency tenant protection act of nineteen seventy-four relating to  estab-
 lishing  the  legal  regulated  rent  for the combination of two or more
 vacant apartments, as proposed in legislative bills  numbers  S.  2980-C
 and  A.  6216-B,  takes  effect;  and  provided  further,  however, that
 sections four and five of this act shall take effect on  the  same  date
 and in the same manner as part B of a chapter of the laws of 2023 relat-
 ing  to  defining  clearly  the  scope  of  the  fraud  exception to the
 S. 8011                             4
 
 pre-HSTPA four-year rule for calculating rents, as proposed in  legisla-
 tive  bills  numbers S. 2980-C and A. 6216-B, takes effect; and provided
 further, however, that 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 one of this act shall expire  on  the  same  date  as  such  law
 expires  and  shall not affect the expiration of such law provided under
 section 26-520 of such law.