Senate Bill S6852

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  6852--A
     Cal. No. 498
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               May 11, 2023
                                ___________
 
 Introduced by Sens. PARKER, JACKSON, SEPULVEDA -- read twice and ordered
   printed, and when printed to be committed to the Committee on Housing,
   Construction and Community Development -- recommitted to the Committee
   on  Housing, Construction and Community Development in accordance with
   Senate Rule 6, sec. 8  --  reported  favorably  from  said  committee,
   ordered  to  first  and  second  report,  ordered  to a third reading,
   amended and ordered reprinted, retaining its place  in  the  order  of
   third reading
 
 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  inspection  of  major
   capital  improvements  for  which  rent increases are requested and in
   relation to extending the provisions of the rent stabilization law
 
   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  27  of  part Q of chapter 39 of the laws of 2019, is amended to
 read as follows:
   (g) There has been since July first, nineteen hundred seventy, 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.  The
 temporary  increase  based  upon  a major capital improvement under this
 subparagraph for any order of the commissioner issued after [the  effec-
 tive  date  of  the  chapter  of  the laws of two thousand nineteen that
 amended this subparagraph] JUNE 14, 2019 shall be in  an  amount  suffi-
 cient to amortize the cost of the improvements pursuant to this subpara-
 graph  [(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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD07976-03-4
 S. 6852--A                          2
 
 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. Tempo-
 rary  major  capital improvement increases shall be collectible prospec-
 tively 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 temporary major capital improvement increase to the legal
 regulated  rent.   NO LANDLORD SHALL DENY ACCESS TO A PROFESSIONAL ENGI-
 NEER LICENSED TO PRACTICE IN THE STATE  OF  NEW  YORK  OR  A  REGISTERED
 ARCHITECT  LICENSED  TO  PRACTICE  IN THE STATE OF NEW YORK HIRED BY ANY
 TENANT, TENANTS OR  TENANT  ASSOCIATION  REPRESENTING  TENANTS  FOR  THE
 PURPOSE  OF  CONDUCTING AN INSPECTION OF A MAJOR CAPITAL IMPROVEMENT FOR
 WHICH AN APPLICATION FOR ADJUSTMENT OF MAXIMUM RENT HAS BEEN FILED. SUCH
 INSPECTION SHALL BE CONDUCTED AFTER NOTICE TO THE  LANDLORD  AND  DURING
 NORMAL BUSINESS HOURS. SUCH TENANT MAY FILE THE REPORT OF THE INSPECTION
 WITH THE CITY RENT AGENCY FOR CONSIDERATION IN THE DETERMINATION OF SUCH
 APPLICATION.  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
   § 2. 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:
   (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
 S. 6852--A                          3
 
 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] JUNE 14, 2019 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 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.  NO
 LANDLORD  SHALL DENY ACCESS TO A PROFESSIONAL ENGINEER LICENSED TO PRAC-
 TICE IN THE STATE OF NEW YORK OR  A  REGISTERED  ARCHITECT  LICENSED  TO
 PRACTICE IN THE STATE OF NEW YORK HIRED BY ANY TENANT, TENANTS OR TENANT
 ASSOCIATION  REPRESENTING  TENANTS  FOR  THE  PURPOSE  OF  CONDUCTING AN
 INSPECTION OF A MAJOR CAPITAL IMPROVEMENT FOR WHICH AN  APPLICATION  FOR
 ADJUSTMENT  OF  MAXIMUM  RENT  HAS  BEEN FILED. SUCH INSPECTION SHALL BE
 CONDUCTED AFTER NOTICE TO THE LANDLORD AND DURING NORMAL BUSINESS HOURS.
 SUCH TENANT MAY FILE THE REPORT OF THE INSPECTION WITH THE  STATE  DIVI-
 SION  OF HOUSING AND COMMUNITY RENEWAL FOR CONSIDERATION IN THE DETERMI-
 NATION OF SUCH APPLICATION. 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
 community renewal shall provide any responding tenant with  the  reasons
 for the division's approval or denial of such application. Notwithstand-
 ing  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-
 S. 6852--A                          4
 
 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;
   § 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 26 of part Q of
 chapter 39 of the laws of 2019, is 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]  JUNE  14,  2019.  Temporary  major capital improvement increases
 shall be collectable 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  improve-
 ment  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 temporary major capital improvement
 increase to the legal regulated rent.  NO LANDLORD SHALL DENY ACCESS  TO
 A PROFESSIONAL ENGINEER LICENSED TO PRACTICE IN THE STATE OF NEW YORK OR
 A  REGISTERED  ARCHITECT  LICENSED  TO PRACTICE IN THE STATE OF NEW YORK
 HIRED BY ANY TENANT, TENANTS OR TENANT ASSOCIATION REPRESENTING  TENANTS
 FOR  THE PURPOSE OF CONDUCTING AN INSPECTION OF A MAJOR CAPITAL IMPROVE-
 MENT FOR WHICH AN APPLICATION FOR ADJUSTMENT OF MAXIMUM  RENT  HAS  BEEN
 FILED.  SUCH  INSPECTION SHALL BE CONDUCTED AFTER NOTICE TO THE LANDLORD
 AND DURING NORMAL BUSINESS HOURS. SUCH TENANT MAY FILE THE REPORT OF THE
 INSPECTION WITH THE STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL  FOR
 CONSIDERATION  IN THE DETERMINATION OF SUCH APPLICATION. Notwithstanding
 any other provision of the law, the collection of any rent increases for
 any renewal lease commencing on or after June 14, 2019, due to any major
 capital improvements approved on or after June 16, 2012 and before  June
 S. 6852--A                          5
 
 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.    Subparagraph 7 of the second undesignated paragraph 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 sepa-
 rately amended  by section 14 of part K of chapter 36 and section 25  of
 part Q of chapter 39 of the laws of 2019, is amended to read as follows:
   (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] JUNE 14, 2019 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 thir-
 ty-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.    NO LANDLORD SHALL DENY ACCESS TO A PROFESSIONAL ENGINEER
 LICENSED TO PRACTICE IN THE STATE OF NEW YORK OR A REGISTERED  ARCHITECT
 LICENSED  TO  PRACTICE  IN  THE  STATE  OF NEW YORK HIRED BY ANY TENANT,
 TENANTS OR TENANT ASSOCIATION REPRESENTING TENANTS FOR  THE  PURPOSE  OF
 CONDUCTING  AN  INSPECTION  OF  A MAJOR CAPITAL IMPROVEMENT FOR WHICH AN
 APPLICATION  FOR  ADJUSTMENT  OF  MAXIMUM  RENT  HAS  BEEN  FILED.  SUCH
 INSPECTION  SHALL  BE  CONDUCTED AFTER NOTICE TO THE LANDLORD AND DURING
 NORMAL BUSINESS HOURS. SUCH TENANT MAY FILE THE REPORT OF THE INSPECTION
 WITH THE STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL  FOR  CONSIDER-
 ATION  IN  THE  DETERMINATION  OF  SUCH APPLICATION. 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 proceeding 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
   §  5.    This  act  shall take effect on the one hundred twentieth day
 after it shall have become a law; provided, however, that the amendments
 S. 6852--A                          6
 
 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 so
 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 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.  Effective immediately, the addition, amendment and/or  repeal
 of  any rule and regulation necessary for the implementation of this act
 on its effective date are authorized to be made on or before such date.