Senate Bill S3770

                                
 
BILL NUMBER: S3770

SPONSOR: KAVANAGH
 
TITLE OF BILL:

An act to repeal paragraph 1 of subdivision d of section 6 of section 4
of the emergency tenant protection act of nineteen seventy-four, relat-
ing to individual apartment improvement rent increases; and to repeal
paragraph 13 of subdivision c of section 26-511 of the administrative
code of the city of New York, relating to individual apartment improve-
ment rent increases

 
PURPOSE:

To repeal the provisions allowing landlords to adjust rents in accord-
ance with the total cost incurred for individual apartment improvements
(IAIs).

 
SUMMARY OF PROVISIONS:

Section 1 repeals paragraph 1 of subdivision d of section 6 of section 4
              

of 2 chapter the emergency tenant protection act of nineteen seventy-
four, relating to IAIs.

Section 2 repeals paragraph 13 of subdivision c of section 26-511 of the
administrative code of the city of New York, relating to IAIs.

 
JUSTIFICATION:

The LAI increase allows a landlord to raise the rent on rent stabilized
apartment by passing the cost of physical improvements to the tenant by
raising the monthly rent an amount equal to 1/40th or 1/60th of the
total cost of the improvements depending upon the size of the building.
This increase can be taken in addition to any other rent increase to
which the landlord is statutorily entitled and it is permanently added
to the rent, even after the landlord has fully recouped the amount
claimed to be the cost of the improvement.

Landlords are able to use the increase to move the apartment above the
current decontrol threshold that allows them to permanently de-regulate
the apartment. To approach that threshold more quickly, landlords can
make improvements that exceed what otherwise would be considered a
reasonable cost. Although there are not absolutely clear government
records of the frequency with which these increases are used, it is
clear that rent regulated apartments are moving out of affordability at
a rate faster than statutory rent increases would allow.

The only present oversight mechanism is a tenant-initiated complaint.
The tenant may challenge the rent increase up to four years after the

Landlord asserts that they incurred the cost of improvements. Only then,
is a claimed IAI supported by adequate documentation.

IAI changes are not justified in a system that permits landlords to
raise rent at rates that far exceed the rates at which operations. And
capital improvement costs increase. They create problematic incentives
for landlords, and are difficult to monitor or verify.  This bill would
repeal the provisions that permit them.

 
FISCAL IMPACT ON THE STATE:

To be determined.

 
LEGISLATIVE HISTORY:

New bill.

 
EFFECTIVE DATE:
This act takes effect immediately.