S T A T E O F N E W Y O R K
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2830
2013-2014 Regular Sessions
I N S E N A T E
January 24, 2013
___________
Introduced by Sen. PARKER -- 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 the state
division of housing and community renewal to verify there are no hous-
ing code violations prior to authorizing a rent increase for major
capital improvements
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 (p) to read as follows:
(P) ADJUSTMENTS MADE PURSUANT TO SUBPARAGRAPH (G) OF THIS PARAGRAPH
SHALL BE COLLECTIBLE UPON THE LANDLORD'S FILING OF A REPORT WITH THE
CITY RENT AGENCY, SUBJECT TO THE PROVISIONS OF SUBPARAGRAPH (E) OF PARA-
GRAPH TWO OF SUBDIVISION A OF THIS SECTION AND VERIFICATION BY THE CITY
RENT AGENCY, 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 CITY RENT AGENCY PRIOR TO AUTHORIZATION OF A RENT INCREASE UNDER
SUBPARAGRAPH (G) OF THIS PARAGRAPH.
S 2. Paragraph 6 of subdivision c of section 26-511 of the administra-
tive code of the city of New York, as amended by chapter 116 of the laws
of 1997, 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-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02216-01-3
S. 2830 2
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 seven-year period, 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
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. Notwithstanding anything to the contrary contained here-
in, 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 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;
S 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:
S. 2830 3
(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.
S 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, 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
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
S. 2830 4
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 agreement agree to a substantial increase or decrease
in dwelling space or a change in the services, 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 an increase in the
services, or installation of new equipment or improvements or new furni-
ture or furnishings provided in or to a tenant's housing accommodation.
The permanent increase in the maximum rent for the affected housing
accommodation shall be one-fortieth, in the case of a building with
thirty-five or fewer housing accommodations, or one-sixtieth, in the
case of a building with more than thirty-five housing accommodations
where such permanent increase takes effect on or after September twen-
ty-fourth, two thousand eleven, of the total cost incurred by the land-
lord in providing such modification or increase in dwelling space,
services, furniture, furnishings or equipment, including the cost of
installation, but excluding finance charges 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. 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, nine-
teen hundred fifty, an increase in the rental value of the housing
accommodations as a result of a substantial rehabilitation of the build-
ing or housing accommodation therein which materially 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 capital improvement required for
the operation, preservation or maintenance of the structure; 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 consent of the tenants in occupancy of at least
seventy-five per centum of the housing accommodations, provided, howev-
er, that no adjustment granted hereunder shall exceed fifteen 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 compen-
sated 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 SUBPARAGRAPH (7)
OF THIS PARAGRAPH SHALL BE COLLECTIBLE UPON THE LANDLORD'S FILING OF A
REPORT WITH THE COMMISSION AND SUBJECT TO VERIFICATION BY THE COMMIS-
SION, IN COLLABORATION WITH LOCAL AUTHORITIES RESPONSIBLE FOR INSPECTING
BUILDINGS, THAT THE APPLICANT DOES NOT HAVE MORE THAN THIRTY CLASS A
S. 2830 5
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 COMMIS-
SION PRIOR TO AUTHORIZATION OF A RENT INCREASE UNDER SUBPARAGRAPH (7) OF
THIS PARAGRAPH.
S 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;
(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;
(c) the amendment to section 6 of the emergency tenant protection act
of nineteen seventy-four made by section three of this act shall expire
on the same date as such act expires and shall not affect the expiration
of such act as provided in section 17 of chapter 576 of the laws of
1974, as from time to time amended; and
(d) the amendment to section 4 of the emergency housing rent control
law made by section four of this act shall expire on the same date as
such law expires and shall not affect the expiration of such law as
provided in subdivision 2 of section 1 of chapter 274 of the laws of
1946.
