NY State Senate Bill 2017-S3190

Senate Bill S3190

2017-2018 Legislative Session

Requires the cost of major capital improvements to be recovered through a monthly surcharge on rents

download bill text pdf

Archive: Last Bill Status - Stricken

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Feb 28, 2017	recommit, enacting clause stricken
Jan 20, 2017	referred to housing, construction and community development

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2017-S3190 (ACTIVE) - Details

Law Section:: New York City Administrative Code
Laws Affected:: Amd §§26-405 & 26-511, NYC Ad Cd; amd §6, Emerg Ten Prot Act of 1974; amd §4, Emerg Hous Rent Cont L
Versions Introduced in Other Legislative Sessions:: 2009-2010: S745
2011-2012: S523
2013-2014: S1493
2015-2016: S2830

2017-S3190 (ACTIVE) - Summary

Establishes a methodology for determining major capital improvements (MCI) rent surcharges; provides that such MCI shall be calculated as a rent surcharge and shall not become part of the base legal regulated rent by which rent increases are calculated, and requires the amount thereof to be separately designated and billed as such; codifies current practices regarding the annual 6% cap on MCI increases and the methodology for determining MCI surcharges based on the number of rooms; requires that rent surcharges authorized for major capital improvements shall cease when the cost of the improvement has been recovered.

2017-S3190 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S3190

 TITLE OF BILL :  An act to amend the administrative code of the city
of New York, the emergency tenant protection act of nineteen
seventy-four and the emergency housing rent control law, in relation
to extending the length of time over which major capital improvement
expenses may be recovered

 PURPOSE OR GENERAL IDEA OF THE BILL :

Expenses for major capital improvements in rental housing are
currently recovered over seven years in calculating the permissible
monthly rent increase. This bill codifies the MCI as a surcharge to
the legal regulated rent which is separately designated and billed as
such and mandates that the authorized surcharge for MCI's ceases after
the cost of the improvement is recouped.

 SUMMARY OF SPECIFIC PROVISIONS :

Establishes a methodology for determining MCI rent surcharges based on
seven years. MCI's are calculated as a rent surcharge and do not
become part of the base legal regulated rent by which rent increases
are calculated, and are separately designated and billed as such. The
legislation also codifies current practices regarding the annual 64
cap on MCI increases and the methodology for determining MCI
surcharges based on number of rooms. Furthermore, the bill would

require that the rent surcharges authorized for major capital
improvements cease when the cost of the improvement has been
recovered.

 JUSTIFICATION :

Since the actual cost of the improvement is recovered after seven
years of increased rent collection, this ruling means that tenants are
forced to continue to pay for improvements long after costs have been
fully recovered, and even after they have outlived their useful life.
In addition, most MCI's, such as window replacement or heating system
improvements, create energy savings that further increase the
profitability of MCI's. This bill seeks to balance the conflicting
concerns of maintaining affordable housing and insuring adequate
incentives for investment in MCI's in order to preserve and improve
our housing stock. Since the court permits MCI's to be collected in
perpetuity, landlords are allowed to recoup an amount well beyond
their actual costs and are ensured a reasonable return on their
investment.

 LEGISLATIVE HISTORY :

2009-2010:S.745-A/A.1928
2011-2012:S.523-A/A.2459-A
2013-2014:S.1493
2015-2016:S.2830

 FISCAL IMPACT :

None.

 EFFECTIVE DATE :
Immediately, with provisions.

2017-S3190 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3190
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             January 20, 2017
                                ___________
 
 Introduced by Sens. KRUEGER, AVELLA, BAILEY, HAMILTON, HOYLMAN, LATIMER,
   MONTGOMERY,  PARKER,  PERALTA,  PERKINS,  SERRANO, SQUADRON, STAVISKY,
   STEWART-COUSINS -- 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 extending the length of
   time over which major capital improvement expenses may be recovered
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subparagraph (g) of paragraph 1 of subdivision g of section
 26-405 of the administrative code of the city of New York, as amended by
 section  31  of part A of chapter 20 of the laws of 2015,  is amended to
 read as follows:
   (g) (I) COLLECTION OF SURCHARGES TO THE MAXIMUM RENT AUTHORIZED PURSU-
 ANT TO ITEM (II) OF THIS SUBPARAGRAPH SHALL CEASE  WHEN  THE  OWNER  HAS
 RECOVERED THE COST OF THE MAJOR CAPITAL IMPROVEMENT;
   (II)  There  has  been  since  July first, nineteen hundred seventy, a
 major capital improvement [required for the operation,  preservation  or
 maintenance  of the structure. An adjustment under this subparagraph (g)
 for any order of the commissioner issued after the effective date of the
 rent act of 2015 shall be in an amount sufficient to amortize  the  cost
 of the improvements pursuant to this subparagraph (g) 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,];  PROVIDED  THAT
 THE  COMMISSIONER  FINDS  THAT  SUCH IMPROVEMENTS ARE DEEMED DEPRECIABLE
 UNDER THE INTERNAL REVENUE CODE AND SUCH IMPROVEMENTS ARE  REQUIRED  FOR
 THE  OPERATION,  PRESERVATION  OR  MAINTENANCE  OF  THE  STRUCTURE.  THE
 INCREASE PERMITTED FOR SUCH CAPITAL IMPROVEMENT SHALL BE COLLECTED AS  A
 MONTHLY SURCHARGE TO THE MAXIMUM RENT. IT SHALL BE SEPARATELY DESIGNATED
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD08766-01-7

 S. 3190                             2
 
 AND  BILLED  AS SUCH AND SHALL NOT BE COMPOUNDED BY ANY OTHER ADJUSTMENT
 TO THE MAXIMUM RENT. THE SURCHARGE ALLOCABLE TO EACH APARTMENT SHALL  BE
 AN  AMOUNT EQUAL TO THE COST OF THE IMPROVEMENT DIVIDED BY  EIGHTY-FOUR,
 DIVIDED  BY  THE NUMBER OF ROOMS IN THE BUILDING, AND THEN MULTIPLIED BY
 THE NUMBER OF ROOMS IN SUCH APARTMENT; PROVIDED THAT THE SURCHARGE ALLO-
 CABLE TO ANY APARTMENT IN ANY ONE YEAR MAY NOT EXCEED AN AMOUNT EQUAL TO
 SIX PERCENT OF THE MONTHLY RENT COLLECTED BY THE OWNER FOR  SUCH  APART-
 MENT AS SET FORTH IN THE SCHEDULE OF GROSS RENTS.  ANY EXCESS ABOVE SAID
 SIX  PERCENT SHALL BE CARRIED FORWARD AND COLLECTED IN FUTURE YEARS AS A
 FURTHER SURCHARGE NOT TO EXCEED AN ADDITIONAL SIX  PERCENT  IN  ANY  ONE
 YEAR  PERIOD  UNTIL  THE TOTAL SURCHARGE EQUALS THE AMOUNT IT WOULD HAVE
 BEEN IF THE AFOREMENTIONED SIX PERCENT LIMITATION DID NOT APPLY; or
   § 2. Subparagraph (k) of paragraph  1  of  subdivision  g  of  section
 26-405 of the administrative code of the city of New York, as amended by
 chapter 749 of the laws of 1990,  is amended to read as follows:
   (k)  The  landlord has incurred, since January first, nineteen hundred
 seventy, in connection with and in addition to a concurrent major  capi-
 tal  improvement  pursuant  to subparagraph (g) of this paragraph, other
 expenditures to improve, restore or preserve the quality of  the  struc-
 ture.  An  adjustment  under  this subparagraph shall be granted only if
 such improvements represent an expenditure equal to  at  least  ten  per
 centum of the total operating and maintenance expenses for the preceding
 year.  An adjustment under this subparagraph shall be in addition to any
 adjustment granted for the  concurrent  major  capital  improvement  and
 shall  be  [in an amount sufficient to amortize the cost of the improve-
 ments pursuant to this subparagraph over a seven-year    period]  IMPLE-
 MENTED IN THE SAME MANNER AS SUCH MAJOR CAPITAL IMPROVEMENT AS A FURTHER
 SURCHARGE TO THE MAXIMUM RENT.
   § 3. 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
 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

 S. 3190                             3

 is to be amortized over an eight-year period for a building  with  thir-
 ty-five  or  fewer  housing  accommodations, or a nine-year period for a
 building with more than  thirty-five  housing  accommodations,  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].  Notwithstand-
 ing  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 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 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;
   § 4. Subdivision c of section 26-511 of the administrative code of the
 city of New York is amended by adding two new paragraphs 6-b and 6-c  to
 read as follows:
   (6-B) PROVIDES CRITERIA WHEREBY THE COMMISSIONER MAY ACT UPON APPLICA-
 TION  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 AS TO COMPLETED BUILDING-WIDE MAJOR CAPITAL IMPROVE-
 MENTS, FOR A FINDING THAT SUCH IMPROVEMENTS ARE DEEMED DEPRECIABLE UNDER
 THE INTERNAL REVENUE CODE AND SUCH IMPROVEMENTS  ARE  REQUIRED  FOR  THE
 OPERATION,  PRESERVATION  OR  MAINTENANCE OF THE STRUCTURE. THE INCREASE
 PERMITTED FOR SUCH CAPITAL IMPROVEMENT SHALL BE COLLECTED AS  A  MONTHLY
 SURCHARGE TO THE LEGAL REGULATED RENT. IT SHALL BE SEPARATELY DESIGNATED
 AND  BILLED AS SUCH AND SHALL NOT BE COMPOUNDED BY ANY ANNUAL ADJUSTMENT
 OF THE LEVEL OF FAIR RENT PROVIDED FOR UNDER SUBDIVISION  B  OF  SECTION
 26-510  OF THIS LAW.  THE SURCHARGE ALLOCABLE TO EACH APARTMENT SHALL BE
 AN AMOUNT EQUAL TO THE COST OF THE IMPROVEMENT DIVIDED  BY  EIGHTY-FOUR,
 DIVIDED  BY  THE NUMBER OF ROOMS IN THE BUILDING, AND THEN MULTIPLIED BY
 THE NUMBER OF ROOMS IN SUCH APARTMENT; PROVIDED THAT THE SURCHARGE ALLO-
 CABLE TO ANY APARTMENT, IN ANY ONE YEAR MAY NOT EXCEED AN  AMOUNT  EQUAL
 TO  SIX  PERCENT  OF  THE  MONTHLY  RENT COLLECTED BY THE OWNER FOR SUCH
 APARTMENT AS SET FORTH IN THE SCHEDULE OF GROSS RENTS.  ANY EXCESS ABOVE
 SAID SIX PERCENT SHALL BE CARRIED FORWARD AND COLLECTED IN FUTURE  YEARS
 AS  A  FURTHER  SURCHARGE NOT TO EXCEED AN ADDITIONAL SIX PERCENT IN ANY
 ONE YEAR PERIOD UNTIL THE TOTAL SURCHARGE EQUALS  THE  AMOUNT  IT  WOULD
 HAVE BEEN IF THE AFOREMENTIONED SIX PERCENT LIMITATION DID NOT APPLY.
   (6-C)  COLLECTION  OF  SURCHARGES  IN EXCESS OF THE LEVEL OF FAIR RENT
 AUTHORIZED PURSUANT TO PARAGRAPH SIX-B OF THIS SUBDIVISION  SHALL  CEASE
 WHEN THE OWNER HAS RECOVERED THE COST OF THE MAJOR CAPITAL IMPROVEMENT.
   § 5. Paragraph 3 of subdivision d of section 6 of section 4 of chapter
 576  of  the  laws of 1974, constituting the emergency tenant protection

 S. 3190                             4
 
 act of nineteen seventy-four, as amended by section  30  of  part  A  of
 chapter 20 of the laws of 2015, is amended to read as follows:
   (3)  (I)  COLLECTION  OF SURCHARGES IN ADDITION TO THE LEGAL REGULATED
 RENT AUTHORIZED PURSUANT TO SUBPARAGRAPH (II) OF  THIS  PARAGRAPH  SHALL
 CEASE  WHEN  THE  OWNER  HAS  RECOVERED  THE  COST  OF THE MAJOR CAPITAL
 IMPROVEMENT;
   (II) there has been since January first, nineteen hundred seventy-four
 a major capital improvement [required for the operation, preservation or
 maintenance of the structure. An adjustment under this  paragraph  shall
 be  in  an  amount  sufficient  to amortize the cost of the improvements
 pursuant to this paragraph over an eight-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  accommodations,  for  any
 determination  issued  by  the division of housing and community renewal
 after the effective date of the rent act of 2015,];  PROVIDED  THAT  THE
 COMMISSIONER  FINDS  THAT SUCH IMPROVEMENTS ARE DEEMED DEPRECIABLE UNDER
 THE INTERNAL REVENUE CODE AND SUCH IMPROVEMENTS  ARE  REQUIRED  FOR  THE
 OPERATION,  PRESERVATION  OR MAINTENANCE OF THE STRUCTURE.  THE INCREASE
 PERMITTED FOR SUCH CAPITAL IMPROVEMENT SHALL BE COLLECTED AS  A  MONTHLY
 SURCHARGE TO THE LEGAL REGULATED RENT. IT SHALL BE SEPARATELY DESIGNATED
 AND  BILLED  AS  SUCH  AND  SHALL  NOT  BE COMPOUNDED BY ANY ANNUAL RENT
 ADJUSTMENT AUTHORIZED BY THE RENT GUIDELINES BOARD UNDER THIS  ACT.  THE
 SURCHARGE  ALLOCABLE  TO  EACH APARTMENT SHALL BE AN AMOUNT EQUAL TO THE
 COST OF THE IMPROVEMENT DIVIDED BY EIGHTY-FOUR, DIVIDED BY THE NUMBER OF
 ROOMS IN THE BUILDING, AND THEN MULTIPLIED BY THE  NUMBER  OF  ROOMS  IN
 SUCH  APARTMENT;  PROVIDED THAT THE SURCHARGE ALLOCABLE TO ANY APARTMENT
 IN ANY ONE YEAR MAY NOT EXCEED AN AMOUNT EQUAL TO  SIX  PERCENT  OF  THE
 MONTHLY  RENT  COLLECTED BY THE OWNER FOR SUCH APARTMENT AS SET FORTH IN
 THE SCHEDULE OF GROSS RENTS.  ANY EXCESS ABOVE SAID SIX PERCENT SHALL BE
 CARRIED FORWARD AND COLLECTED IN FUTURE YEARS AS A FURTHER SURCHARGE NOT
 TO EXCEED AN ADDITIONAL SIX PERCENT IN ANY ONE  YEAR  PERIOD  UNTIL  THE
 TOTAL  SURCHARGE  EQUALS  THE AMOUNT IT WOULD HAVE BEEN IF THE AFOREMEN-
 TIONED SIX PERCENT LIMITATION DID NOT APPLY, or
   § 6. 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, 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
 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-

 S. 3190                             5
 
 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
 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

 S. 3190                             6
 
 of  the  property  or  appreciably prolongs its life, excluding ordinary
 repairs,  maintenance  and  replacements;  or  (7)  (I)  COLLECTION   OF
 SURCHARGES  TO THE MAXIMUM RENT AUTHORIZED PURSUANT TO ITEM (II) OF THIS
 CLAUSE  SHALL  CEASE  WHEN THE OWNER HAS RECOVERED THE COST OF THE MAJOR
 CAPITAL IMPROVEMENT; (II) there has been  since  March  first,  nineteen
 hundred  fifty, a major capital 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,]; PROVIDED THAT  THE  COMMIS-
 SIONER  FINDS  THAT  SUCH  IMPROVEMENTS ARE DEEMED DEPRECIABLE UNDER THE
 INTERNAL REVENUE CODE AND SUCH IMPROVEMENTS ARE REQUIRED FOR THE  OPERA-
 TION, PRESERVATION OR MAINTENANCE OF THE STRUCTURE. THE INCREASE PERMIT-
 TED  FOR  SUCH  CAPITAL  IMPROVEMENT  SHALL  BE  COLLECTED  AS A MONTHLY
 SURCHARGE TO THE MAXIMUM RENT. IT SHALL  BE  SEPARATELY  DESIGNATED  AND
 BILLED  AS  SUCH  AND SHALL NOT BE COMPOUNDED BY ANY OTHER ADJUSTMENT TO
 THE MAXIMUM RENT. THE SURCHARGE ALLOCABLE TO EACH APARTMENT SHALL BE  AN
 AMOUNT  EQUAL  TO  THE  COST OF THE IMPROVEMENT DIVIDED BY  EIGHTY-FOUR,
 DIVIDED BY THE NUMBER OF ROOMS IN THE BUILDING, AND THEN  MULTIPLIED  BY
 THE NUMBER OF ROOMS IN SUCH APARTMENT; PROVIDED THAT THE SURCHARGE ALLO-
 CABLE TO ANY APARTMENT IN ANY ONE YEAR MAY NOT EXCEED AN AMOUNT EQUAL TO
 SIX  PERCENT  OF THE MONTHLY RENT COLLECTED BY THE OWNER FOR SUCH APART-
 MENT AS SET FORTH IN THE SCHEDULE OF GROSS RENTS.  ANY EXCESS ABOVE SAID
 SIX PERCENT SHALL BE CARRIED FORWARD AND COLLECTED IN FUTURE YEARS AS  A
 FURTHER  SURCHARGE  NOT  TO  EXCEED AN ADDITIONAL SIX PERCENT IN ANY ONE
 YEAR PERIOD UNTIL THE TOTAL SURCHARGE EQUALS THE AMOUNT  IT  WOULD  HAVE
 BEEN  IF THE AFOREMENTIONED SIX PERCENT LIMITATION DID NOT APPLY; 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.
   §  7. This act shall take effect immediately; provided that the amend-
 ments to section 26-405 of the city rent and rehabilitation law made  by
 sections  one  and two of this act shall remain in full force and effect
 only so 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;  and  provided further that the amendments to section 26-511 of the
 rent stabilization law of nineteen hundred sixty-nine made  by  sections
 three  and  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
 under  section  26-520  of  such  law, as from time to time amended; and
 provided further that the amendment to section 6 of the emergency tenant

 S. 3190                             7
 
 protection act of nineteen seventy-four made by section five 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 further provided
 that the amendment to section 4 of the emergency  housing  rent  control
 law  made  by  section  six 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.

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