S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10988
 
                           I N  A S S E M B L Y
 
                               May 29, 2018
                                ___________
 
 Introduced by M. of A. MOSLEY -- read once and referred to the Committee
   on Cities
 
 AN  ACT  to  amend  the  administrative code of the city of New York, in
   relation to the regulation of commercial rents
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Title 26 of the administrative code of the city of New York
 is amended by adding a new chapter 21 to read as follows:
                                CHAPTER 21
                       COMMERCIAL RENT STABILIZATION
 
 SECTION 26-2101 SCOPE.
         26-2102 DEFINITIONS.
         26-2103 RENTAL GUIDELINES.
         26-2104 SECURITY DEPOSITS.
         26-2105 RETALIATION.
         26-2106 WAIVER.
         26-2107 MANNER OF SERVICE.
         26-2108 INCONSISTENCY WITH OTHER LAWS.
   § 26-2101 SCOPE. THIS CHAPTER SHALL APPLY ONLY TO ALL COMMERCIAL LEASE
 RENEWALS FOR COMMERCIAL PREMISES. ON ANY OCCASION WHEREIN A LANDLORD AND
 TENANT  ARE  REQUIRED  TO  NEGOTIATE  THE  TERMS  OF A LEASE RENEWAL FOR
 COMMERCIAL  USES  THE  PROVISIONS  OF  THIS  CHAPTER  SHALL  APPLY.  THE
 PROVISIONS  OF  THIS  CHAPTER  SHALL  APPLY  TO ANY LANDLORD AND CURRENT
 TENANT WHOSE LEASE EXPIRED ON OR AFTER JULY FIRST,  TWO  THOUSAND  EIGH-
 TEEN.
   § 26-2102 DEFINITIONS. AS USED IN THIS CHAPTER:
   A.  "COMMERCIAL  PREMISES" SHALL MEAN A BUILDING OR SPACE OCCUPIED FOR
 NON-RESIDENTIAL PURPOSES INCLUDING, BUT NOT LIMITED  TO,  MANUFACTURING,
 RETAIL, PROFESSIONAL SERVICES, OFFICES, ASSEMBLING, PROCESSING, CULTURAL
 AND  NOT-FOR-PROFIT  ENTITIES  THAT ARE PRESENT IN THE CITY OF NEW YORK,
 WHO HAVE A VALID COMMERCIAL LEASE.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD16116-01-8
              

 A. 10988                            2
 
   B. "LANDLORD" SHALL MEAN ANY OWNER, LESSOR, SUBLESSOR OR OTHER  PERSON
 ENTITLED  TO  RECEIVE  RENT  FOR  THE USE OR OCCUPANCY OF ANY COMMERCIAL
 PREMISES, OR AN AGENT THEREOF.
   C.  "RENT"  SHALL  MEAN  ANY  AND ALL CONSIDERATION, INCLUDING BUT NOT
 LIMITED TO PASS-ALONGS, RECEIVED BY THE LANDLORD IN CONNECTION WITH  THE
 USE OR OCCUPANCY OF ANY COMMERCIAL PREMISES.
   D.  "TENANT"  SHALL  MEAN TENANT, SUBTENANT, LESSEE, SUBLESSEE, OR ANY
 OTHER PERSONS LAWFULLY ENTITLED TO USE OR OCCUPANCY  OF  ANY  COMMERCIAL
 PREMISES.
   §  26-2103 RENTAL GUIDELINES. A. THE RENT GUIDELINES BOARD ESTABLISHED
 PURSUANT TO SECTION 26-510 OF THIS TITLE SHALL ESTABLISH ANNUALLY GUIDE-
 LINES FOR THE MAXIMUM INCREASE IN RENT FOR  A  RENEWAL  OF  A  LEASE  OF
 COMMERCIAL PREMISES, AND IN DETERMINING SUCH MAXIMUM RENT INCREASE SHALL
 CONSIDER,  AMONG  OTHER THINGS (1) THE ECONOMIC CONDITION OF THE COMMER-
 CIAL REAL ESTATE INDUSTRY IN THE AFFECTED AREA INCLUDING SUCH FACTORS AS
 THE PREVAILING AND PROJECTED (I) REAL ESTATE TAXES AND SEWER  AND  WATER
 RATES,  (II)  GROSS  OPERATING  MAINTENANCE  COSTS  (INCLUDING INSURANCE
 RATES, GOVERNMENTAL FEES, COST OF FUEL AND LABOR COSTS), (III) COSTS AND
 AVAILABILITY OF FINANCING (INCLUDING EFFECTIVE RATES OF INTEREST),  (IV)
 OVER-ALL  SUPPLY  OF COMMERCIAL PREMISES AND OVER-ALL VACANCY RATES, (2)
 RELEVANT DATA FROM THE CURRENT AND PROJECTED COST OF  OPERATING  INDICES
 FOR  THE  AFFECTED AREA, (3) SUCH OTHER DATA AS MAY BE MADE AVAILABLE TO
 IT. NOT LATER THAN JULY FIRST OF EACH YEAR, THE  RENT  GUIDELINES  BOARD
 SHALL  FILE  WITH THE CITY CLERK ITS FINDINGS FOR THE PRECEDING CALENDAR
 YEAR, AND SHALL ACCOMPANY SUCH FINDINGS WITH A STATEMENT OF THE  MAXIMUM
 INCREASE  IN RENT FOR A RENEWAL OF A LEASE, IF ANY, FOR COMMERCIAL PREM-
 ISES SUBJECT TO THIS LAW, AUTHORIZED FOR LEASES OR OTHER  RENTAL  AGREE-
 MENTS  COMMENCING  ON  THE  NEXT  SUCCEEDING OCTOBER FIRST OR WITHIN THE
 TWELVE MONTHS THEREAFTER. SUCH FINDINGS AND STATEMENT SHALL BE PUBLISHED
 IN THE CITY RECORD.
   B. ALL LEASES OF A COMMERCIAL PREMISES MAY BE RENEWED AT THE OPTION OF
 A TENANT WHO DID NOT LOSE THE RIGHT TO RENEW A LEASE UNDER  THE  GROUNDS
 DESCRIBED IN SUBDIVISION C OF THIS SECTION.
   C.  A TENANT SHALL LOSE THE RIGHT OF RENEWAL AND A LANDLORD MAY REFUSE
 TO RENEW A LEASE ONLY ON THE FOLLOWING GROUNDS:
   (1) THE TENANT HAS PERSISTENTLY DELAYED RENT PAYMENTS  WITHOUT  CAUSE.
 FOR THE PURPOSE OF THIS SUBDIVISION, "CAUSE" IS DEFINED AS THE WITHHOLD-
 ING  OF  RENTAL  PAYMENTS BY THE TENANT DUE TO THE ALLEGED VIOLATIONS OF
 THE RENTAL AGREEMENT BY THE LANDLORD.  IN ORDER FOR THE LANDLORD  TO  BE
 EXCUSED  FROM  RENEWAL ON THIS GROUND, THE LANDLORD MUST HAVE SERVED THE
 TENANT AT LEAST THREE PRIOR NOTICES DURING THE TERM OF THE LEASE TO  THE
 TENANT  FOR DEMAND OF PAYMENT WITHIN THIRTY DAYS, AND THEN SHOW THAT THE
 LESSEE HAS NOT PAID WITHIN SUCH THIRTY DAY PERIOD.  THE  LANDLORD  SHALL
 NOT SERVE SUCH NOTICE UNLESS THE RENT PAYMENT WAS IN ARREARS FOR A MINI-
 MUM OF FIFTEEN DAYS;
   (2)  THE TENANT USES THE COMMERCIAL PREMISES IN A MANNER SUBSTANTIALLY
 DIFFERENT FROM THAT DESCRIBED IN THE LEASE;
   (3) THE TENANT CONDUCTS OR PERMITS ANY FORM OF ILLEGAL ACTIVITY ON THE
 PREMISES;
   (4) THE TENANT HAS SUBSTANTIALLY BREACHED ANY  SUBSTANTIVE  OBLIGATION
 UNDER THE CURRENT LEASE AND HAS FAILED TO CURE SUCH BREACH WITHIN THIRTY
 DAYS FOLLOWING WRITTEN NOTICE TO CURE BY THE LANDLORD;
   (5) UPON THE TERMINATION OF THE CURRENT TENANCY, THE LANDLORD INTENDS,
 IN  GOOD FAITH, TO DEMOLISH OR SUBSTANTIALLY RECONSTRUCT THE PREMISES OR
 A SUBSTANTIAL  PART  THEREOF,  OR  TO  CARRY  OUT  SUBSTANTIAL  WORK  OR
 CONSTRUCTION  ON  THE  COMMERCIAL  PREMISES  OR SUBSTANTIAL PART THEREOF

 A. 10988                            3
 
 WHICH HE OR SHE COULD NOT REASONABLY DO WITHOUT OBTAINING POSSESSION  OF
 THE  COMMERCIAL PREMISES. THE LANDLORD SHALL NOTIFY THE TENANT OF HIS OR
 HER DECISION TO REOCCUPY THE COMMERCIAL PREMISES AT LEAST ONE YEAR PRIOR
 TO  THE  TERMINATION  OF THE LEASE. IN THE EVENT THAT THE LESSOR FRAUDU-
 LENTLY INVOKES THIS JUSTIFICATION FOR A REFUSAL TO  RENEW  A  COMMERCIAL
 LEASE,  THE  DEFRAUDED  TENANT  MAY  COLLECT TREBLE DAMAGES FOR ANY LOSS
 SUFFERED AS A RESULT OF SUCH ACTION;
   (6) THE CURRENT TENANCY WAS CREATED BY THE SUBLETTING OF THE PROPERTY,
 WHEREBY THE PRIME TENANT DID NOT NOTIFY THE LANDLORD BY  CERTIFIED  MAIL
 OF  THE  SUBTENANT'S EXISTENCE AND DID NOT OBTAIN THE WRITTEN CONSENT OF
 THE LANDLORD. THIS GROUND IS VOID IF THE LANDLORD AND TENANT HAD  AGREED
 IN THE LEASE TO ALLOW SUBLEASING RIGHTS WITHOUT THE CONSENT OF THE LAND-
 LORD  AND  ALL  OBLIGATIONS  OF  THE  PRIME TENANT ON THE ISSUE, WERE IN
 COMPLIANCE;
   (7) IT HAS BEEN DETERMINED BY THE RENT GUIDELINES BOARD OR BY A  CIVIL
 COURT  OF COMPETENT JURISDICTION THAT THE TENANT IS A GROSS AND PERSIST-
 ENT VIOLATOR OF NEW YORK CITY  TAX  LAWS,  OF  ANY  LICENSE  OBLIGATIONS
 RELATED  TO  THE  USE  OF THE PREMISES OR OF ANY LAWS OF THE CITY OF NEW
 YORK;
   (8) UPON THE TERMINATION OF THE CURRENT TENANCY, THE LANDLORD  INTENDS
 TO  OCCUPY  THE  RETAIL PREMISES IN ORDER TO CARRY OUT ITS OWN BUSINESS,
 WHICH CANNOT BE THE SAME TYPE OF BUSINESS THAT  THE  CURRENT  TENANT  IS
 OPERATING,  UNLESS  THE  LANDLORD  COMPENSATES THE TENANT AT FAIR MARKET
 VALUE AS DETERMINED BY AN ARBITRATOR AS RESTITUTION FOR THE LOSS OF SUCH
 TENANT'S BUSINESS. THE LANDLORD SHALL NOTIFY THE TENANT OF  HIS  OR  HER
 DECISION TO REOCCUPY THE PREMISES AT LEAST ONE HUNDRED EIGHTY DAYS PRIOR
 TO  THE TERMINATION OF THE LEASE. IN THE EVENT THAT THE LANDLORD FRAUDU-
 LENTLY INVOKES THIS JUSTIFICATION FOR A REFUSAL TO  RENEW  A  COMMERCIAL
 LEASE,  THE  DEFRAUDED  TENANT  MAY  COLLECT TREBLE DAMAGES FOR ANY LOSS
 SUFFERED AS A RESULT OF SUCH ACTION.
   § 26-2104 SECURITY DEPOSITS. SECURITY DEPOSITS  SHALL  NOT  EXCEED  AN
 AMOUNT  EQUAL  TO TWO MONTHS RENT. ALL SECURITY DEPOSITS SHALL BE PLACED
 IN ESCROW IN AN INTEREST-BEARING ACCOUNT AT  A  FEDERALLY  INSURED  BANK
 LOCATED  IN  NEW  YORK STATE. THE TENANT SHALL BE NOTIFIED IN WRITING OF
 THE LOCATION OF SUCH ESCROW ACCOUNT. INTEREST PAID ON THE ACCOUNT  SHALL
 BE  PAID IN FULL TO THE TENANT UPON TERMINATION OF THE LEASE. THE AMOUNT
 OF INTEREST PAID TO THE TENANT SHALL EQUAL THE  INTEREST  PAID  BY  SUCH
 FEDERALLY  INSURED  BANK LESS ONE PERCENT FOR THE LANDLORD'S ADMINISTRA-
 TIVE COSTS.
   § 26-2105 RETALIATION. NO LANDLORD SHALL IN ANY WAY RETALIATE  AGAINST
 ANY  TENANT  FOR  THE TENANT'S ASSERTION OR EXERCISE OF ANY RIGHTS UNDER
 THIS CHAPTER. ANY SUCH RETALIATION MAY SUBJECT THE LANDLORD  TO  A  SUIT
 FOR ACTUAL AND PUNITIVE DAMAGES, INJUNCTIVE RELIEF, AND ATTORNEY'S FEES.
   §  26-2106  WAIVER.  NO  PROVISION  IN ANY LEASE, RENTAL AGREEMENT, OR
 AGREEMENT MADE IN CONNECTION THEREWITH WHICH WAIVES  OR  DIMINISHES  ANY
 RIGHT OF TENANT UNDER THIS CHAPTER IS VALID.
   §  26-2107  MANNER  OF  SERVICE.  ALL PAPERS AND NOTICES WHICH, BY THE
 TERMS OF THIS CHAPTER ARE REQUIRED TO BE SERVED, SHALL BE  SERVED  BY  A
 PROCESS SERVER, OR SHALL BE SENT BY FIRST CLASS MAIL AND CERTIFIED MAIL,
 RETURN RECEIPT REQUESTED OR BY ANY EXPRESS MAIL SERVICE.
   §  26-2108  INCONSISTENCY  WITH OTHER LAWS. IN THE EVENT OF ANY INCON-
 SISTENCY WITH ANY OTHER LAWS OF THE CITY OF NEW  YORK,  THIS  LAW  SHALL
 TAKE PRECEDENCE.
   § 2. Severability. If any clause, sentence, paragraph, section or part
 of  this act shall be adjudged by any court of competent jurisdiction to
 be invalid and after exhaustion of  all  further  judicial  review,  the

 A. 10988                            4
 
 judgment  shall  not affect, impair or invalidate the remainder thereof,
 but shall be confined in its operation to the  clause,  sentence,  para-
 graph,  section or part of this act directly involved in the controversy
 in which the judgment shall have been rendered.
   § 3. This act shall take effect on the one hundred eightieth day after
 it shall have become a law.