S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    275
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 9, 2019
                                ___________
 
 Introduced  by  M.  of  A. L. 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 applications for major
   capital improvement rent increases
 
   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, NO APPLICATION FOR A MAJOR CAPITAL  IMPROVEMENT  RENT
 INCREASE  SHALL  BE  APPROVED  BY  THE DIVISION OF HOUSING AND COMMUNITY
 RENEWAL UNLESS THE OWNER OF THE PROPERTY HAS FILED ALL COPIES OF PERMITS
 PERTAINING TO THE MAJOR CAPITAL IMPROVEMENT WORK WITH SUCH  APPLICATION.
 ANY  APPLICATION  SUBMITTED  WITH FRAUDULENT PERMITS OR WITHOUT REQUIRED
 PERMITS SHALL BE DENIED; or
   § 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:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD01572-01-9

 A. 275                              2
 
   (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
 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. THE DIVISION OF
 HOUSING  AND COMMUNITY RENEWAL SHALL REQUIRE THE SUBMISSION OF COPIES OF
 ALL PERMITS PERTAINING TO MAJOR CAPITAL IMPROVEMENT WORK WITH ANY APPLI-
 CATION FOR A MAJOR CAPITAL IMPROVEMENT RENT  INCREASE.  ANY  APPLICATION
 SUBMITTED  WITH  FRAUDULENT PERMITS OR WITHOUT REQUIRED PERMITS SHALL BE
 DENIED. 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 manage-
 ment 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 increments and added to the stabilized rent as established or
 set in future years;

 A. 275                              3
 
   § 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:
   (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. 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, HOWEVER,
 NO APPLICATION FOR A MAJOR CAPITAL IMPROVEMENT RENT  INCREASE  SHALL  BE
 APPROVED  BY  THE  DIVISION  OF HOUSING AND COMMUNITY RENEWAL UNLESS THE
 OWNER OF THE PROPERTY HAS FILED ALL COPIES OF PERMITS PERTAINING TO  THE
 MAJOR  CAPITAL  IMPROVEMENT  WORK WITH SUCH APPLICATION. ANY APPLICATION
 SUBMITTED WITH FRAUDULENT PERMITS OR WITHOUT REQUIRED PERMITS  SHALL  BE
 DENIED; or
   §  4. Subparagraph 7 of 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 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,  NO
 APPLICATION  FOR  A  MAJOR  CAPITAL  IMPROVEMENT  RENT INCREASE SHALL BE
 APPROVED BY THE DIVISION OF HOUSING AND  COMMUNITY  RENEWAL  UNLESS  THE
 OWNER  OF THE PROPERTY HAS FILED ALL COPIES OF PERMITS PERTAINING TO THE
 MAJOR CAPITAL IMPROVEMENT WORK WITH SUCH  APPLICATION.  ANY  APPLICATION
 SUBMITTED  WITH  FRAUDULENT PERMITS OR WITHOUT REQUIRED PERMITS SHALL BE
 DENIED; or
   § 5. This act shall take effect immediately; 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 the rent stabilization law of
 nineteen hundred sixty-nine 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, as  from  time
 to time amended;
   (c) the amendments 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 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

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 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.