NY State Senate Bill 2017-S5945

Senate Bill S5945

2017-2018 Legislative Session

Prohibits the collection of rent arrearages accruing prior to the date of approval of an application for an adjustment in the legal regulated rent based upon a major capital improvement

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Archive: Last Bill Status - In Senate Committee Housing, Construction And Community Development Committee

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
Jan 03, 2018	referred to housing, construction and community development
May 08, 2017	referred to housing, construction and community development

co-Sponsors

2017-S5945 (ACTIVE) - Details

Current Committee:: Senate Housing, Construction And Community Development
Law Section:: Emergency Tenant Protection Act of 1974
Laws Affected:: Amd §6, Emerg Ten Prot Act of 1974; amd §4, Emerg Hous Rent Cont L; amd §§26-512 & 26-405, NYC Ad Cd
Versions Introduced in Other Legislative Sessions:: 2019-2020: S2180
2021-2022: S3341
2023-2024: S1101

2017-S5945 (ACTIVE) - Summary

Prohibits the collection of rent arrearages accruing prior to the date of approval of an application for an adjustment in the legal regulated rent based upon a major capital improvement.

2017-S5945 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S5945

 TITLE OF BILL :

An act to amend chapter 576 of the laws of 1974 constituting the
emergency tenant protection act of nineteen seventy-four, the
administrative code of the city of New York and the emergency housing
rent control law, in relation to prohibiting the collection of rent
arrearages accruing prior to the date of approval of an application
for an adjustment in the legal regulated rent based upon a major
capital improvement

 PURPOSE OR GENERAL IDEA OF BILL :

This bill prohibits the temporary retroactive rent increase or
surcharge prior to the approval of the MCI application for rent
stabilized apartments. Under current law, landlords are entitled to
collect a retroactive surcharge, which is the amount owed between the
effective date and the collectable date of the DHCR order granting the
MCI. If the application is approved, in addition to the increase
becoming a part of the tenants' base rent, the landlord is entitled to
collect the increase retroactively, between the "effective date" and
"collectable date," in the form of a temporary surcharge. The rent
increase (the surcharge and the base rent increase) cannot be
collected from the tenants until the application is approved, so the
surcharge is collected temporarily in addition to the increased base

rent after the collectable date. This bill would bring rent stabilized
apartments in line with rent controlled apartments, eliminating the
retroactive temporary surcharge and allowing landlords to begin
collecting the increased base rent upon the collectable date or the
date the application is approved.

 SUMMARY OF SPECIFIC PROVISIONS :

Section 1 amends section 6 of section 4 of chapter 576 of the laws of
1974 by adding a new subdivision prohibiting any adjustment in the
legal regulated rent based upon a major capital improvement until the
date of approval of the application.

Section 2 amends the administrative code of the city of New York by
adding a new subdivision prohibiting any adjustment in the legal
regulated rent based upon a major capital improvement until the date
of approval of the application.

Section 3 amends paragraph (a) of subdivision 4 of section 4 of
chapter 274 of the laws of 1946 by prohibiting any adjustment in the
legal regulated rent based upon a major capital improvement until the
date of approval of the application.

Section 4 amends the administrative code of the city of New York by
adding a new subdivision prohibiting any adjustment in the legal
regulated rent based upon a major capital improvement until the date
of approval of the application.

Section 5 establishes the effective date.

 JUSTIFICATION :

Under current law, in addition to the cost of a MCI becoming part of
the tenants' base rent, the landlord is entitled to collect a
temporary retroactive surcharge, which is the amount owed between the
effective date and the collectable date of the DHCR order granting the
MCI. This bill will eliminate the undue burden created by the combined
effect of the permanence of the increase and the retroactive temporary
surcharge by eliminating the temporary surcharge. This will create
consistency between rent stabilized and rent controlled apartments,
eliminating the retroactive temporary surcharge and allowing landlords
to begin collecting the increased base rent upon the collectable date
or the date the application is approved.

 PRIOR LEGISLATIVE HISTORY :

2013-14: A.9776 (Mayer)- Referred to Housing
2015-16: A.1970A (Mayer) - Advanced to third reading

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
This act shall take effect immediately, except the amendments to
section 4 of the emergency tenant protection act shall expire on the
date the act expires, the amendments to section 26-512 of the NYCRR
shall expire on the date the law expires and the amendments to section
4 of the emergency housing rent control law shall expire on the date
the law expires.

2017-S5945 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5945
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                                May 8, 2017
                                ___________
 
 Introduced  by  Sen.  BAILEY -- read twice and ordered printed, and when
   printed to be committed to the Committee on Housing, Construction  and
   Community Development
 
 AN  ACT  to amend chapter 576 of the laws of 1974 constituting the emer-
   gency tenant protection act of nineteen seventy-four, the  administra-
   tive  code  of  the  city  of  New York and the emergency housing rent
   control law, in relation to prohibiting the collection of rent arrear-
   ages accruing prior to the date of approval of an application  for  an
   adjustment  in  the  legal  regulated  rent based upon a major capital
   improvement
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  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  ANY PROVISION OF LAW OR RULE OR REGULATION TO THE
 CONTRARY, ANY ADJUSTMENT IN THE LEGAL REGULATED RENT BASED UPON A  MAJOR
 CAPITAL  IMPROVEMENT SHALL BE EFFECTIVE UPON APPROVAL OF THE APPLICATION
 THEREFOR. NO INCREASE MAY BE COLLECTED FOR THE PERIOD OF TIME  PRIOR  TO
 THE DATE OF APPROVAL OF THE APPLICATION.
   § 2. Section 26-512 of the administrative code of the city of New York
 is amended by adding a new subdivision g to read as follows:
   G.  NOTWITHSTANDING  ANY PROVISION OF LAW OR RULE OR REGULATION TO THE
 CONTRARY, ANY ADJUSTMENT IN THE LEGAL REGULATED RENT BASED UPON A  MAJOR
 CAPITAL  IMPROVEMENT SHALL BE EFFECTIVE UPON APPROVAL OF THE APPLICATION
 THEREFOR. NO INCREASE MAY BE COLLECTED FOR THE PERIOD OF TIME  PRIOR  TO
 THE DATE OF APPROVAL OF THE APPLICATION.
   §  3.   The second undesignated paragraph of paragraph (a) of subdivi-
 sion 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD02497-03-7

 S. 5945                             2
 
 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  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

 S. 5945                             3
 
 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
 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] THIRTY-FIVE units, 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, 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
 occupants 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;  OR  (11)
 NOTWITHSTANDING  ANY  PROVISION  OF  LAW  OR  RULE  OR REGULATION TO THE
 CONTRARY, ANY ADJUSTMENT IN THE LEGAL REGULATED RENT BASED UPON A  MAJOR
 CAPITAL  IMPROVEMENT SHALL BE EFFECTIVE UPON APPROVAL OF THE APPLICATION
 THEREFOR. NO INCREASE MAY BE COLLECTED FOR THE PERIOD OF TIME  PRIOR  TO
 THE DATE OF APPROVAL OF THE APPLICATION.
   § 4. Paragraph 1 of subdivision g of section 26-405 of the administra-
 tive  code  of  the city of New York is amended by adding a new subpara-
 graph (p) to read as follows:
   (P) NOTWITHSTANDING ANY PROVISION OF LAW OR RULE OR REGULATION TO  THE
 CONTRARY,  ANY ADJUSTMENT IN THE LEGAL REGULATED RENT BASED UPON A MAJOR
 CAPITAL IMPROVEMENT SHALL BE EFFECTIVE UPON APPROVAL OF THE  APPLICATION
 THEREFOR.  NO  INCREASE MAY BE COLLECTED FOR THE PERIOD OF TIME PRIOR TO
 THE DATE OF APPROVAL OF THE APPLICATION.

 S. 5945                             4
 
   § 5. This act shall take effect immediately; provided that:
   a.  the amendments to section 4 of the emergency tenant protection act
 of nineteen seventy-four made by section one 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;
   b. the amendments to section 26-512 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 amendments to section 4 of the emergency housing  rent  control
 law  made  by section three 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; and
   d. the amendments to section 26-405 of the  city  rent  and  rehabili-
 tation  law  made by section four 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.

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Senate Bill S5945

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Sponsored By

Jamaal T. Bailey