S. 1406 2
The legislature further declares and finds that a substantial number of
the rent increases previously granted for major capital improvements
were tainted by inflated costs, particularly in the last seven years;
that the provision of rent increases for major capital improvements in
existing rent laws has resulted in exactions of unjust, unreasonable and
oppressive rents, as well as profiteering, speculation and other disrup-
tive practices tending to produce tenant dislocation and threats to the
public health, safety and general welfare; that such results were
contrary to the intent and purpose of the existing rent laws; that it is
therefore necessary to amend the rent laws to remove any provision of a
rent increase based upon major capital improvements; and that it is
additionally necessary to repeal rent increases based upon major capital
improvements that became effective within the previous seven years.
§ 2. (a) The division of housing and community renewal, the "divi-
sion", shall administer the elimination of rent increases based upon
major capital improvements pursuant to this act. The division shall no
longer grant rent increases on the basis of major capital improvements
at buildings subject to rent regulation or rent stabilization pursuant
to the emergency rent control law, the emergency tenant protection act
and/or the administrative code of the city of New York. All pending
applications for rent increases based upon major capital improvements
shall be denied, and the division shall issue orders disposing of pend-
ing applications as necessary.
(b) Any rent increase based upon major capital improvements previously
ordered by the division, pursuant to the emergency rent control law, the
emergency tenant protection act and/or the administrative code of the
city of New York, with an effective date within the seven years prior to
the effective date of this act shall be repealed effective immediately
unless the division finds a basis for limiting the repeal pursuant to
subdivision (d) of this section. For all affected housing accommo-
dations, the division shall determine what the present legal rent would
be for each such accommodation if the division had not ordered any rent
increases based upon major capital improvements during the repeal peri-
od, and this amount shall be the proposed new legal rent.
(c) Within 180 days of the effective date of this act, the division of
housing and community renewal shall determine the proposed new legal
rents for all affected housing accommodations pursuant to subdivision
(b) of this section and shall also provide written notification to all
current owners and tenants of affected accommodations as to the amount
of the proposed new legal rents, the basis for the department's determi-
nation, and the time for each affected party to submit additional infor-
mation that the division shall consider before issuing a final order
determining the new legal rents, which shall not be less than 45 days.
Unless an owner of an affected building has submitted a timely applica-
tion to the division for a limitation pursuant to subdivision (d) of
this section, the division shall issue a final order determining the new
legal rents for affected housing accommodations within 365 days of the
effective date of this act.
(d) (1) Within 90 days of receiving written notice of proposed new
legal rents from the division pursuant to subdivision (c) of this
section, a building owner may apply to the commissioner of housing and
community renewal for an order limiting the amount of the repeal of rent
increases under this act based upon a finding by the commissioner of
housing and community renewal that the proposed new legal rents 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
S. 1406 3
building by a sum equal to at least five percent of such gross rent. In
buildings for which the commissioner of housing and community renewal
finds that the proposed new legal rents 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, the repeal amount of rent
increases based upon major capital improvements shall be limited to an
amount such that the annual operating expenses of the building do not
exceed ninety-five percent of the new proposed annual gross rent income
for such building.
(2) For the purposes of this subdivision, 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 noncapital repairs, insurance, parts
and supplies, management fees and other administrative costs and mort-
gage interest. For the purposes of this subdivision, 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 mort-
gage, security and other terms and conditions of the mortgage. For the
purposes of this subdivision, gross annual rent income for a building
shall include a rental value set by the commissioner of housing and
community renewal 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 commis-
sioner shall impute a rent consistent with other proposed new legal
rents in the building.
(e) The division shall require that owners refund any increase in a
tenant's security deposit amount collected in excess of a new legal rent
established under this act within thirty days of the department's issu-
ance of an order determining new legal rents. Such excess security
deposit amount may be refunded in the form of a rent credit applied
toward the affected tenant's next monthly rent payment, and affected
tenants are entitled to self-deduct the refund amount from future rent
payments.
(f) The new legal rent shall be the legal rent beginning on the date
rent is required to be paid next succeeding the issuance of a final
order determining new legal rents under this act.
(g) Any lease agreement executed after the issuance of a final order
determining new legal rents under this act shall be deemed to incorpo-
rate the rent amounts and effective dates set forth in such order.
(h) Any tenant residing in an affected housing accommodation may
assert their entitlement to the repeal of prior rent under subdivision
(b) of this section, as a defense or counterclaim in any legal proceed-
ing predicated upon a landlord's claim of default in the payment of rent
pursuant to an agreement. Any court with jurisdiction over a landlord's
claim as to a tenant's default in the payment of rent shall also adjudi-
cate and have primary jurisdiction over the tenant's assertion of a
defense or counterclaim under this provision if the department has not
yet issued an order determining the new legal rent. A court order made
under this subdivision shall not in any way be deemed to impair a build-
S. 1406 4
ing owner's right or time to apply for a limitation under subdivision
(d) of this section.
(i) All final orders issued by the department pursuant to subdivisions
(b), (c), and (d) of this section shall be subject to appeal pursuant to
existing procedures for administrative review before the division.
§ 3. Paragraph 2 of subdivision 3-a, subparagraphs 7, 8, 9 and 10 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, paragraph 2 of subdivision 3-a of section 4
and subparagraph 8 of the second undesignated paragraph of paragraph (a)
of subdivision 4 of section 4 as amended by section 8 of part K of chap-
ter 36 of the laws of 2019, subparagraphs 9 and 10 of the second undes-
ignated paragraph of paragraph (a) of subdivision 4 of section 4 as
amended by section 25 of part B of chapter 97 of the laws of 2011,
subparagraph 7 of the second undesignated paragraph of paragraph (a) of
subdivision 4 of section 4 as separately amended by section 25 of part Q
of chapter 39 of the laws of 2019 and section 14 of part K of chapter 36
of the laws of 2019, are amended to read as follows:
(2) the amount of increases in maximum rent authorized by order
because of increases in dwelling space, services, furniture, furnishings
or equipment [and the amount of the temporary increase authorized by
order because of a major capital improvement].
(7) [there has been since March first, nineteen hundred fifty, a major
capital improvement essential for the preservation, energy efficiency,
functionality, or infrastructure of the entire building, improvement of
the structure including heating, windows, plumbing and roofing, but
shall not be for operational costs or unnecessary cosmetic improvements;
which for any order of the commissioner issued after the effective date
of the chapter of the laws of two thousand nineteen that amended this
paragraph the cost of such improvement shall be amortized over a twelve-
year period for buildings with thirty-five or fewer units or a twelve
and one-half year period for buildings with more than thirty-five units,
and shall be removed from the legal regulated rent thirty years from the
date the increase became effective inclusive of any increases granted by
the applicable rent guidelines board. Temporary major capital improve-
ment increases shall be collectible prospectively on the first day of
the first month beginning sixty days from the date of mailing notice of
approval to the tenant. Such notice shall disclose the total monthly
increase in rent and the first month in which the tenant would be
required to pay the temporary increase. An approval for a temporary
major capital improvement increase shall not include retroactive
payments. The collection of any increase shall not exceed two 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.
Upon vacancy, the landlord may add any remaining balance of the tempo-
rary major capital improvement increase to the legal regulated rent.
Notwithstanding any other provision of the law, for any renewal lease
commencing on or after June 14, 2019, the collection of any rent
increases due to any major capital improvements approved on or after
June 16, 2012 and before June 16, 2019 shall not exceed two percent in
any year for any tenant in occupancy on the date the major capital
improvement was approved; provided, however, where an application for a
temporary major capital improvement increase has been filed, a tenant
shall have sixty days from the date of mailing of a notice of a proceed-
S. 1406 5
ing in which to answer or reply. The state division of housing and
community renewal shall provide any responding tenant with the reasons
for the division's approval or denial of such application; 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 informed 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 two per
centum unless the tenants have agreed to a higher percentage of
increase, as herein provided; [(9)] OR (8) 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)] (9)
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 substan-
tially similar housing accommodations.
§ 4. Paragraphs 3, 4, and 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, paragraph 3 of subdivision d as
amended by section 26 of part Q of chapter 39 of the laws of 2019, para-
graph 4 of subdivision d as amended by chapter 403 of the laws of 1983,
paragraph 5 of subdivision d as amended by chapter 102 of the laws of
1984, are amended to read as follows:
(3) [there has been since January first, nineteen hundred seventy-four
a major capital improvement essential for the preservation, energy effi-
ciency, functionality, or infrastructure of the entire building,
improvement of the structure including heating, windows, plumbing and
roofing, but shall not be for operation costs or unnecessary cosmetic
improvements. An adjustment under this paragraph shall be in an amount
sufficient to amortize the cost of the improvements pursuant to this
paragraph over a twelve-year period for a building with thirty-five or
fewer housing accommodations, or a twelve and one-half period for a
building with more than thirty-five housing accommodations and shall be
removed from the legal regulated rent thirty years from the date the
increase became effective inclusive of any increases granted by the
applicable rent guidelines board, for any determination issued by the
division of housing and community renewal after the effective date of
the chapter of the laws of two thousand nineteen that amended this para-
graph. Temporary major capital improvement increases shall be collecta-
ble prospectively on the first day of the first month beginning sixty
days from the date of mailing notice of approval to the tenant. Such
notice shall disclose the total monthly increase in rent and the first
month in which the tenant would be required to pay the temporary
increase. An approval for a temporary major capital improvement increase
shall not include retroactive payments. The collection of any increase
shall not exceed two 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. Upon vacancy, the landlord may add any
remaining balance of the temporary major capital improvement increase to
the legal regulated rent. Notwithstanding any other provision of the
law, the collection of any rent increases for any renewal lease commenc-
S. 1406 6
ing on or after June 14, 2019, due to any major capital improvements
approved on or after June 16, 2012 and before June 16, 2019 shall not
exceed two percent in any year for any tenant in occupancy on the date
the major capital improvement was approved, or
(4)] an owner by application to the state division of housing and
community renewal for increases in the rents in excess of the rent
adjustment authorized by the rent guidelines board under this act estab-
lishes a hardship, and the state division finds that the rate of rent
adjustment is not sufficient to enable the owner to maintain approxi-
mately the same ratio between operating expenses, including taxes and
labor costs but excluding debt service, financing costs, and management
fees, and gross rents which prevailed on the average over the immediate
preceding five year period, or for the entire life of the building if
less than five years, or
[(5)] (4) as an alternative to the hardship application provided under
paragraph [four] THREE 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 main-
tain 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. 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, management fees and other admin-
istrative costs and mortgage interest. For the purposes of this para-
graph, 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 condi-
tions 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 unoccu-
pied 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 [four] THREE 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 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
S. 1406 7
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.
§ 5. Subparagraphs (g), (h), (i), (j), (k), (m) and (o) of paragraph 1
of subdivision g of section 26-405 of the administrative code of the
city of New York, subparagraph (g) as amended by section 27 of part Q of
chapter 39 of the laws of 2019, subparagraph (k) as amended by chapter
749 of the laws of 1990, are amended to read as follows:
(g) [There has been since July first, nineteen hundred seventy, a
major capital improvement essential for the preservation energy effi-
ciency, functionality, or infrastructure of the entire building,
improvement of the structure including heating, windows, plumbing and
roofing but shall not be for operational costs or unnecessary cosmetic
improvements. The temporary increase based upon a major capital improve-
ment under this subparagraph for any order of the commissioner issued
after the effective date of the chapter of the laws of two thousand
nineteen that amended this subparagraph shall be in an amount sufficient
to amortize the cost of the improvements pursuant to this subparagraph
(g) over a twelve-year period for buildings with thirty-five or fewer
units or a twelve and one-half year period for buildings with more than
thirty-five units, and shall be removed from the legal regulated rent
thirty years from the date the increase became effective inclusive of
any increases granted by the applicable rent guidelines board. Temporary
major capital improvement increases shall be collectible prospectively
on the first day of the first month beginning sixty days from the date
of mailing notice of approval to the tenant. Such notice shall disclose
the total monthly increase in rent and the first month in which the
tenant would be required to pay the temporary increase. An approval for
a temporary major capital improvement increase shall not include retro-
active payments. The collection of any increase shall not exceed two
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. Upon vacancy, the landlord may add any remaining balance
of the temporary major capital improvement increase to the legal regu-
lated rent. Notwithstanding any other provision of the law, for any
renewal lease commencing on or after June 14, 2019, the collection of
any rent increases due to any major capital improvements approved on or
after June 16, 2012 and before June 16, 2019 shall not exceed two
percent in any year for any tenant in occupancy on the date the major
capital improvement was approved, or
S. 1406 8
(h) There have been since March first, nineteen hundred fifty-nine, 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 whenever the city rent agency has determined
that the improvements proposed were part of a plan designed for overall
improvement of the structure or increases in services, it may authorize
increases in maximum rents for all housing accommodations affected upon
the express consent of the tenants in occupancy of at least fifty-one
per centum of the housing accommodations, and provided further 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
(i)] There has been, since March first, nineteen hundred fifty-nine, a
subletting without written consent from the landlord or an increase in
the number of adult occupants who are not members of the immediate fami-
ly of the tenant, and the landlord has not been compensated therefor by
adjustment of the maximum rent by lease or order of the city rent agency
or pursuant to the state rent act or the federal act; or
[(j)] (H) 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.
[(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.]
[(m)] (I) Where the rehabilitation or improvement of sub-standard or
deteriorated housing accommodations has been financed under a govern-
mental program providing assistance through loans, loan insurance or tax
abatement or has been undertaken under another rehabilitation program
not so financed but approved by the commissioner.
[(o)] (J) (1) There has been an increase in heating and heating fuel
expenditures in a property resulting from a city-wide rise in heating
fuel costs such that the verifiable expenditures for heating or heating
fuel in a property for nineteen hundred seventy-four exceeds the verifi-
able expenditures for such heating or heating fuel during nineteen
hundred seventy-three.
(2) To obtain a rental adjustment pursuant to this subparagraph [(o)],
the landlord must certify that he or she is presently maintaining all
essential services required to be furnished with respect to the housing
accommodations covered by such certification, and that he or she will
continue to so maintain such essential services for the period of any
such adjustment.
(3) To obtain a rental adjustment pursuant to this subparagraph [(o)],
the landlord must certify on information and belief that he or she will
not be earning an amount in excess of the statutory return specified in
subparagraph (a) of THIS paragraph [one of subdivision g of this
section] after collection of such rental adjustment, with respect to the
S. 1406 9
building or buildings serviced by a single heating plant; and where the
building, or buildings serviced by a single heating plant, contains
forty-nine or fewer housing accommodations, the landlord must certify
that the amount expended directly for heating or heating fuel in nine-
teen hundred seventy-four equalled or exceeded ten per cent of the total
rental income which was derived from the property during nineteen
hundred seventy-four; and, where the building, or buildings serviced by
a single heating plant, contains fifty or more housing accommodations
the landlord must certify that the amount expended directly for heating
or heating fuel in nineteen hundred seventy-four equalled or exceeded
seven and one-half percentum of the total rental income which was
derived from the property during nineteen hundred seventy-four.
(4) The total rental adjustments for a property to be allocated or
deemed allocated pursuant to this subparagraph [(o)] shall not exceed
one-half of the gross amount by which the total verifiable expenditures
for heating or heating fuel for nineteen hundred seventy-four exceeds
the total verifiable expenditures for such heating or heating fuel for
nineteen hundred seventy-three.
(5) Such total rental adjustments shall be allocated or deemed allo-
cated pursuant to this subparagraph [(o)] to all housing accommodations
subject to this chapter, to all other housing accommodations, and to all
commercial, professional and similar facilities in or associated with
the property in a manner to be determined by the agency. In no event
shall any adjustment in maximum rent pursuant to this subparagraph [(o)]
for any housing accommodations subject to this chapter exceed a monthly
increase of two dollars per room, as defined by item eight below. In any
apartment containing five or more rooms, any increase shall not exceed
the total of nine dollars.
(6) Any adjustment pursuant to this subparagraph [(o)] shall be effec-
tive for all or part of the period July first, nineteen hundred seven-
ty-five through June thirtieth, nineteen hundred seventy-six. Any
adjustment pursuant to this subparagraph shall automatically expire no
later than June thirtieth, nineteen hundred seventy-six.
(7) The rental increases provided for herein shall be effective and
collectible upon the landlord's filing a report with the agency on forms
prescribed by the agency and upon giving such notice to the tenants as
the agency shall prescribe, subject to adjustments upon order of the
agency.
(8) In determining the amount of an adjustment allocation of an
adjustment pursuant to this subparagraph [(o)], only living rooms,
kitchens over fifty-nine square feet in area, dining rooms and bedrooms
shall be considered rooms; bathrooms, foyers, and kitchenettes shall not
be considered rooms.
§ 6. Subdivision a of section 26-407 of the administrative code of the
city of New York is amended to read as follows:
a. Notwithstanding any provisions of this chapter, any labor cost
pass-along rent increase requested of, or received from, any tenant on
or after July first, nineteen hundred seventy-two[, pursuant to the
provisions of subparagraph (1) of paragraph one of subdivision g of
section 26-405 of this title,] shall not exceed the maximum rent adjust-
ment as provided under this chapter after the effective date of this
section.
§ 7. Paragraph 6 of subdivision c of section 26-511 of the administra-
tive code of the city of New York as separately amended by section 12 of
part K of chapter 36 and section 28 of part Q of chapter 39 of the laws
of 2019, is amended to read as follows:
S. 1406 10
(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 a twelve-year period for a building with thir-
ty-five or fewer housing accommodations, or a twelve and one-half-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 the chapter of the laws of two
thousand nineteen that amended this paragraph and shall be removed from
the legal regulated rent thirty years from the date the increase became
effective inclusive of any increases granted by the applicable rent
guidelines board. Temporary major capital improvement increases shall be
collectible prospectively on the first day of the first month beginning
sixty days from the date of mailing notice of approval to the tenant.
Such notice shall disclose the total monthly increase in rent and the
first month in which the tenant would be required to pay the temporary
increase. An approval for a temporary major capital improvement increase
shall not include retroactive payments. The collection of any increase
shall not exceed two 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. Upon vacancy, the landlord may add any
remaining balance of the temporary major capital improvement increase to
the legal regulated rent. Notwithstanding any other provision of the
law, for any renewal lease commencing on or after June 14, 2019, the
collection of any rent increases due to any major capital improvements
approved on or after June 16, 2012 and before June 16, 2019 shall not
exceed two percent in any year for any tenant in occupancy on the date
the major capital improvement was approved or based upon cash purchase
price exclusive of interest or service charges. Where an application for
a temporary major capital improvement increase has been filed, a tenant
shall have sixty days from the date of mailing of a notice of a proceed-
ing in which to answer or reply. The state division of housing and
S. 1406 11
community renewal shall provide any responding tenant with the reasons
for the division's approval or denial of such application.] Notwith-
standing 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;
§ 8. If any clause, sentence, paragraph, subdivision, section or part
of this act shall be adjudged by any court of competent jurisdiction to
be invalid, such judgment shall not affect, impair, or invalidate the
remainder thereof, but shall be confined in its operation to the clause,
sentence, paragraph, subdivision, section or part thereof directly
involved in the controversy in which such judgment shall have been
rendered. It is hereby declared to be the intent of the legislature that
this act would have been enacted even if such invalid provisions had not
been included herein. It is further declared to be the intent of the
legislature that this act would have been enacted even if subdivisions
(b), (c), (d), (e), (f), (g), (h), and (i) of section two of this act
had not been included herein.
§ 9. This act shall take effect immediately; provided:
(a) 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 seven 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
(b) that the amendments to sections 26-405 and 26-407 of the city rent
and rehabilitation law made by sections five and six 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 emer-
gency housing rent control act.
(c) Effective immediately, the addition, amendment and/or repeal of
any rule or regulation necessary for the implementation of this act on
its effective date are authorized to be made and completed on or before
such effective date.
