S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4948
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 6, 2017
                                ___________
 
 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.
   § 2. Paragraph 6 of subdivision c of section 26-511 of the administra-
 tive code of the city of New York, as amended by section 29 of part A of
 chapter 20 of the laws of 2015, 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.
              

                                                            LBD05328-01-7

 A. 4948                             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  [an  eight-year] A SEVEN-YEAR period [for a
 building with thirty-five or fewer housing accommodations,  or  a  nine-
 year  period  for a building with more than thirty-five housing accommo-
 dations, for any determination issued by the  division  of  housing  and
 community  renewal  after  the  effective date of the rent act of 2015],
 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  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;
   §  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.
   § 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 and subparagraph 7 as amended by
 section 32 of part A of chapter 20 of the laws of 2015,  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

 A. 4948                             3
 
 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  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-

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 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
 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; [which for any order of the commissioner issued after
 the effective date of the rent act of 2015 the cost of such  improvement
 shall  be amortized over an eight-year period for buildings with thirty-
 five or fewer units or a nine year period for buildings with  more  than
 thiry-five  units,]  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.
   § 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;

 A. 4948                             5
 
   (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.