S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5865

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                              March 7, 2013
                               ___________

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,  the
  emergency tenant protection act of nineteen seventy-four and the emer-
  gency  housing  rent  control law, in relation to limiting adjustments
  for major capital improvements where the improvement generates revenue
  for the landlord

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section  26-405 of the administrative code of the city of
New York is amended by adding a new subdivision n to read as follows:
  N. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN,  A  RENT
INCREASE SHALL BE PROHIBITED FOR A LANDLORD APPLYING FOR A RENT INCREASE
FOR  MAJOR  CAPITAL IMPROVEMENTS WHERE THE IMPROVEMENT GENERATES REVENUE
FOR THE LANDLORD.
  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-
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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09223-01-3
              

A. 5865                             2

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.    NOTWITHSTANDING
ANYTHING  TO  THE  CONTRARY  CONTAINED  HEREIN, A RENT INCREASE SHALL BE
PROHIBITED FOR A LANDLORD APPLYING FOR A RENT INCREASE FOR MAJOR CAPITAL
IMPROVEMENTS WHERE THE IMPROVEMENT GENERATES REVENUE FOR  THE  LANDLORD.
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 commissioner, (iii) actual annual mortgage
debt  service (interest and amortization) on its indebtedness to a lend-
ing 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;
  S  3.  Section  6  of  section  4  of chapter 576 of the laws of 1974,
constituting the emergency tenant protection act  of  nineteen  seventy-
four, is amended by adding a new subdivision h to read as follows:
  H.  NOTWITHSTANDING  ANYTHING TO THE CONTRARY CONTAINED HEREIN, A RENT
INCREASE SHALL BE PROHIBITED FOR A LANDLORD APPLYING FOR A RENT INCREASE
FOR MAJOR CAPITAL IMPROVEMENTS WHERE THE IMPROVEMENT  GENERATES  REVENUE
FOR THE LANDLORD.
  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-

A. 5865                             3

ized  assessed  valuation  of  the  buildings,  for the purposes of this
subparagraph.  The commission may make a determination  that  the  valu-
ation  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 proper-
ty,  excluding  mortgage interest and amortization, and excluding allow-
ances for obsolescence 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  build-
ings  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 compensated by increases in rental income sufficient to
offset unavoidable increases in property taxes, fuel, utilities,  insur-
ance  and repairs and maintenance, excluding mortgage interest and amor-
tization, 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 exclud-
ing  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 housing 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  land-
lord  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 furniture or furnishings provided in or
to a tenant's housing accommodation. The permanent increase in the maxi-
mum  rent  for the affected housing accommodation shall be one-fortieth,
in the case of a building with thirty-five  or  fewer  housing  accommo-
dations, or one-sixtieth, in the case of a building with more than thir-
ty-five  housing  accommodations  where  such  permanent  increase takes
effect on or after September twenty-fourth, two thousand eleven, of  the
total  cost  incurred  by the landlord in providing such modification or
increase in dwelling space, services, furniture, furnishings  or  equip-
ment,  including the cost of installation, but excluding finance charges

A. 5865                             4

provided further that an owner who is entitled to a rent increase pursu-
ant 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 furni-
ture or furnishings. The owner shall give written notice to the  commis-
sion  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
rehabilitation of the building 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  capi-
tal  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 accommo-
dations, other improvements made with the express consent of the tenants
in occupancy of at least seventy-five per  centum of the housing  accom-
modations, provided, however, 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  occu-
pants 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.   NOTWITHSTANDING
ANYTHING  TO THE CONTRARY CONTAINED HEREIN, ADJUSTMENTS SHALL BE PROHIB-
ITED FOR A LANDLORD APPLYING FOR  A  RENT  INCREASE  FOR  MAJOR  CAPITAL
IMPROVEMENTS WHERE THE IMPROVEMENT GENERATES REVENUE FOR THE LANDLORD.
  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 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;
  (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.