NY State Senate Bill 2017-S7926

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
Mar 09, 2018	referred to housing, construction and community development

2017-S7926 (ACTIVE) - Details

See Assembly Version of this Bill:: A6971
Current Committee:: Senate Housing, Construction And Community Development
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 2019-2020 Legislative Session:: S3833, A6527

2017-S7926 (ACTIVE) - Summary

Provides that buildings in which more than 50% of the habitable units are not subject to rent control are ineligible to apply for major capital investment rent surcharges.

2017-S7926 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S7926

SPONSOR: SERRANO
 
TITLE OF BILL:  An act to amend the administrative code of the city of
New York, the emergency tenant protection act of 1974 and the emergency
housing rent control law, in relation to building eligibility for major
capital improvement rent surcharges

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill would protect affordable housing by prohibiting major capital
improvement (MCI) rent adjustments for any building in which more than
fifty percent of the habitable units are not subject to rent stabiliza-
tion or rent control.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends subparagraph (g) of paragraph 1 of subdivision g of
section 26-405 of the administrative code of the city of New York to
prohibit MCI rent adjustments for any building in which more than fifty
percent of the habitable units are not subject to rent stabilization or

rent control.

Section 2 amends paragraph 6-a of subdivision c of section 26-511 of the
administrative code of the city of New York to exclude the owner of any
building in which more than fifty percent of the habitable units are not
subject to rent stabilization or rent control from being granted a hard-
ship application.

Section 3 amends paragraph 3 of subdivision d of section 6 of section 4
of chapter 576 of the laws of 1974, constituting the emergency tenant
protection act of nineteen seventy-four to state that permissible build-
ings for MCIs are only those in which more than half of the habitable
units are subject to rent stabilization or rent control.

Section 4 amends subparagraph 7 of the second undesignated subparagraph
of paragraph (a) of subdivision 4 of section 4 of chapter 274 of the
laws of 1946, constituting the emergency housing rent control law to
prohibit MCI rent adjustments for any building in which more than fifty
percent of the habitable units are not subject to rent stabilization or
rent control.

Section 5 amends paragraph 5 of subdivision d of section 6 of section 4
of chapter 576 of the laws of 1974, constituting the emergency tenant
protection act of nineteen seventy-four to stipulate that eligibility
for alternatives to the hardship application are to extend only to
buildings in which more than half of the habitable units are subject to
rent stabilization or rent control. Section 6 is the effective date.

 
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):

N/A

 
JUSTIFICATION:

In New York City, protecting affordable housing has grown increasingly
difficult as vacant, formerly rent regulated units are rapidly being
deregulated. In an effort to protect rent regulated tenants from rent
increases this bill would put restrictions on a building's eligibility
to apply for major capital improvements (MCIs).  Currently, if a build-
ing is approved for an MCI, the only people legally subject to rent
increases from MCIs are rent stabilized and rent controlled tenants. The
rent increases that result from MCIs are permanent even after the cost
of the improvement is met, and often place a high burden on tenants
living in rent regulated units. What can often occur is a situation in
which the rent becomes too high for rent regulated tenants to afford,
which can force them to seek more affordable housing elsewhere. Once the
tenants have vacated the rent regulated unit, landlords can deregulate
the unit and list it at market rate. This bill would tighten the parame-
ters for buildings to apply for MCIs to protect rent stabilized and rent
controlled tenants from these permanent rent increases. To provide this
protection, this bill would prohibit any building which has less than
fifty percent of habitable units subject to rent stabilization or rent
control from receiving MCIs.

 
PRIOR LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2017-S7926 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7926
 
                             I N  S E N A T E
 
                               March 9, 2018
                                ___________
 
 Introduced  by  Sen. SERRANO -- 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 1974 and the emergency housing rent
   control law, in relation to building  eligibility  for  major  capital
   improvement rent surcharges
 
   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) There has been since July first, nineteen hundred seventy, a major
 capital  improvement required for the operation, preservation or mainte-
 nance 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]  THIRTY-FIVE  units[,];
 PROVIDED,  HOWEVER, THAT NO ADJUSTMENT SHALL BE ALLOWED FOR ANY BUILDING
 IN WHICH MORE THAN FIFTY PERCENT OF THE HABITABLE UNITS ARE NOT  SUBJECT
 TO RENT STABILIZATION OR RENT CONTROL, or
   §  2. Paragraph 6-a of subdivision c of section 26-511 of the adminis-
 trative code of the city of New York, is amended to read as follows:
   (6-a) provides criteria whereby as  an  alternative  to  the  hardship
 application  provided  under paragraph six of this subdivision owners of
 buildings acquired by the same owner or a related entity  owned  by  the
 same  principals  three years prior to the date of application may apply
 to the division for increases in  excess  of  the  level  of  applicable
 guideline increases established under this law based on a finding by the
 commissioner  that such guideline increases are not sufficient to enable
 the owner to maintain an annual gross  rent  income  for  such  building
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                       [ ] is old law to be omitted.
                                                            LBD10653-02-7

 S. 7926                             2
 
 which  exceeds  the  annual operating expenses of such building by a sum
 equal to at least five percent of such gross rent. For the  purposes  of
 this  paragraph, operating expenses shall consist of the actual, reason-
 able,  costs  of  fuel,  labor,  utilities,  taxes, other than income or
 corporate franchise taxes, fees, permits, necessary contracted  services
 and  non-capital repairs, insurance, parts and supplies, management fees
 and other administrative costs and mortgage interest. For  the  purposes
 of this paragraph, mortgage interest shall be deemed to mean interest on
 a  bona  fide mortgage including an allocable portion of charges related
 thereto. Criteria to be considered in determining a bona  fide  mortgage
 other  than  an  institutional  mortgage shall include; condition of the
 property, location of the property, the existing mortgage market at  the
 time  the mortgage is placed, the term of the mortgage, the amortization
 rate, the principal amount of the mortgage, security and other terms and
 conditions of the mortgage. The commissioner shall set  a  rental  value
 for  any  unit occupied by the owner or a person related to the owner or
 unoccupied at the owner's choice for more than one  month  at  the  last
 regulated rent plus the minimum number of guidelines increases or, if no
 such regulated rent existed or is known, the commissioner shall impute a
 rent consistent with other rents in the building. The amount of hardship
 increase  shall  be such as may be required to maintain the annual gross
 rent income as provided by this paragraph. The division shall not  grant
 a  hardship  application  under  this paragraph or paragraph six of this
 subdivision for (I) a period of three years  subsequent  to  granting  a
 hardship  application  under the provisions of this paragraph OR (II) TO
 THE OWNER OF ANY BUILDING IN WHICH MORE THAN FIFTY PERCENT OF THE  HABI-
 TABLE  UNITS ARE NOT SUBJECT TO RENT STABILIZATION OR RENT CONTROL.  The
 collection of any increase in the rent  for  any  housing  accommodation
 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 rent as established or set in future years. No  application
 shall  be  approved  unless  the owner's equity in such building exceeds
 five percent of: (i) the arms length purchase  price  of  the  property;
 (ii)  the  cost  of any capital improvements for which the owner has not
 collected a surcharge; (iii) any repayment of principal of any  mortgage
 or  loan  used  to  finance  the purchase of the property or any capital
 improvements for which the owner has not collected a surcharge and  (iv)
 any  increase  in  the  equalized  assessed  value of the property which
 occurred subsequent  to  the  first  valuation  of  the  property  after
 purchase by the owner. For the purposes of this paragraph, owner's equi-
 ty shall mean the sum of (i) the purchase price of the property less the
 principal  of  any  mortgage or loan used to finance the purchase of the
 property, (ii) the cost of any capital improvement for which  the  owner
 has not collected a surcharge less the principal of any mortgage or loan
 used  to  finance said improvement, (iii) any repayment of the principal
 of any mortgage or loan used to finance the purchase of the property  or
 any  capital  improvement  for  which  the  owner  has  not  collected a
 surcharge, and (iv) any increase in the equalized assessed value of  the
 property which occurred subsequent to the first valuation of the proper-
 ty after purchase by the owner.
   § 3. Paragraph 3 of subdivision d of section 6 of section 4 of chapter
 576  of  the  laws of 1974, constituting the emergency tenant protection
 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:

 S. 7926                             3
 
   (3)  there has been since January first, nineteen hundred seventy-four
 a major capital improvement required for the operation, preservation  or
 maintenance  of  the structure AND MORE THAN HALF OF THE HABITABLE UNITS
 IN THE BUILDING ARE SUBJECT TO RENT STABILIZATION OR RENT CONTROL.    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, or
   § 4. Subparagraph 7 of the second undesignated subparagraph  of  para-
 graph  (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 32 of part A of chapter 20 of the laws of 2015,  is  amended  to
 read as follows:
   (7)  there has been since March first, nineteen hundred fifty, a major
 capital improvement required for the operation, preservation or  mainte-
 nance  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[,]; PROVIDED, HOWEVER, THAT  NO
 ADJUSTMENT  SHALL  BE  ALLOWED FOR ANY BUILDING IN WHICH MORE THAN FIFTY
 PERCENT OF THE HABITABLE UNITS ARE NOT SUBJECT TO RENT STABILIZATION  OR
 RENT CONTROL, or
   § 5. Paragraph 5 of subdivision d of section 6 of section 4 of chapter
 576  of  the  laws of 1974, constituting the emergency tenant protection
 act of nineteen seventy-four, as amended by chapter 102 of the  laws  of
 1984, is amended to read as follows:
   (5) as an alternative to the hardship application provided under para-
 graph four of this subdivision, owners of buildings acquired by the same
 owner or a related entity owned by the same principals three years prior
 to  the  date  of application may apply to the division for increases in
 excess of the level of applicable guideline increases established  under
 this  law  based  on  a  finding by the commissioner that such guideline
 increases are not sufficient to enable the owner to maintain  an  annual
 gross  rent  income for such building which exceeds the annual operating
 expenses of such building by a sum equal to at  least  five  percent  of
 such  gross rent PROVIDED, THAT MORE THAN HALF OF THE HABITABLE UNITS IN
 THE BUILDING ARE SUBJECT TO RENT STABILIZATION OR RENT CONTROL. For  the
 purposes  of  this  paragraph,  operating  expenses shall consist of the
 actual, reasonable, costs of fuel, labor, utilities, taxes,  other  than
 income or corporate franchise taxes, fees, permits, necessary contracted
 services and non-capital repairs, insurance, parts and supplies, manage-
 ment  fees and other administrative costs and mortgage interest. For the
 purposes of this paragraph, mortgage interest shall be  deemed  to  mean
 interest  on  a  bona  fide  mortgage  including an allocable portion of
 charges related thereto.   Criteria to be considered  in  determining  a
 bona  fide  mortgage other than an institutional mortgage shall include;
 condition of the property, location of the property, the existing  mort-
 gage  market  at  the time the mortgage is placed, the term of the mort-
 gage, the amortization rate, the principal amount of the mortgage, secu-
 rity and other terms and conditions of the  mortgage.  The  commissioner
 shall  set a rental value for any unit occupied by the owner or a person
 related to the owner or unoccupied at the owner's choice for  more  than

 S. 7926                             4
 
 one  month  at the last regulated rent plus the minimum number of guide-
 lines increases or, if no such regulated rent existed or is  known,  the
 commissioner  shall  impute  a  rent  consistent with other rents in the
 building.  The  amount  of  hardship  increase  shall  be such as may be
 required to maintain the annual gross rent income as  provided  by  this
 paragraph.  The  division  shall  not grant a hardship application under
 this paragraph or paragraph four of this subdivision  for  a  period  of
 three  years  subsequent  to  granting  a hardship application under the
 provisions of this paragraph. The collection of any increase in the rent
 for any housing accommodation  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  rent  as  estab-
 lished  or  set in future years. No application shall be approved unless
 the owner's equity in such building exceeds five  percent  of:  (i)  the
 arms length purchase price of the property; (ii) the cost of any capital
 improvements  for  which  the owner has not collected a surcharge; (iii)
 any repayment of principal of any mortgage or loan used to  finance  the
 purchase of the property or any capital improvements for which the owner
 has  not  collected  a surcharge; and (iv) any increase in the equalized
 assessed value of the property which occurred subsequent  to  the  first
 valuation  of the property after purchase by the owner. For the purposes
 of this paragraph, owner's equity shall mean the sum of (i) the purchase
 price of the property less the principal of any mortgage or loan used to
 finance the purchase of the property,  (ii)  the  cost  of  any  capital
 improvement  for  which the owner has not collected a surcharge less the
 principal of any mortgage or loan  used  to  finance  said  improvement,
 (iii)  any  repayment  of  the principal of any mortgage or loan used to
 finance the purchase of the property  or  any  capital  improvement  for
 which  the owner has not collected a surcharge, and (iv) any increase in
 the equalized assessed value of the property which  occurred  subsequent
 to the first valuation of the property after purchase by the owner.
   §  6.  This act shall take effect immediately; provided, however, that
 the amendments to section 26-405 of the city rent and rehabilitation 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; and provided, further, that 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; and provided, further, that the amend-
 ments  to  section  6 of the emergency tenant protection act of nineteen
 seventy-four made by sections three and 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;
 and provided, further, that the amendments 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.

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Senate Bill S7926

Sponsored By

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

2017-S7926 (ACTIVE) - Details

2017-S7926 (ACTIVE) - Summary

2017-S7926 (ACTIVE) - Sponsor Memo

2017-S7926 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S7926

Share this bill

Sponsored By

Jose M. Serrano

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

2017-S7926 (ACTIVE) - Details

2017-S7926 (ACTIVE) - Summary

2017-S7926 (ACTIVE) - Sponsor Memo

2017-S7926 (ACTIVE) - Bill Text download pdf

Comments