S T A T E O F N E W Y O R K
________________________________________________________________________
11226
I N A S S E M B L Y
May 1, 2026
___________
Introduced by M. of A. FITZPATRICK -- read once and referred to the
Committee on Housing
AN ACT to amend the administrative code of the city of New York and the
emergency tenant protection act of nineteen seventy-four, in relation
to authorizing owners of certain condominium units to apply to raise
rents in excess of certain guidelines as an alternative to making a
hardship application
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraph 6-a of subdivision c of section 26-511 of the
administrative 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, OR OWNERS OF ONE OR MORE CONDOMINIUM UNITS IN A BUILDING,
acquired by the same owner or a related entity owned by the same princi-
pals three years prior to the date of application may apply to the divi-
sion for increases in excess of the level of applicable guideline
increases established under this law based on a finding by the commis-
sioner that such guideline increases are not sufficient to enable the
owner to maintain an annual gross rent income for such building OR
CONDOMINIUM UNIT which exceeds the annual operating expenses of such
building OR CONDOMINIUM UNIT by a sum equal to at least five percent of
such gross rent, WHICH FOR CONDOMINIUM UNITS SHALL BE BASED ON THE
LAWFULLY ALLOWABLE RENT FOR SUCH UNITS. For the purposes of this para-
graph, operating expenses shall consist of the actual, reasonable, costs
of fuel, labor, utilities, taxes, other than income or corporate fran-
chise taxes, fees, permits, necessary contracted services and non-capi-
tal repairs, insurance, parts and supplies, management fees and other
administrative costs and mortgage interest; PROVIDED, HOWEVER, THAT FOR
CONDOMINIUM UNITS OPERATING EXPENSES SHALL CONSIST OF ALL COSTS ATTRIB-
UTABLE TO SUCH UNITS, INCLUDING COMMON CHARGES AND ASSESSMENTS LEVIED BY
THE CONDOMINIUM ASSOCIATION FOR SUCH UNITS, TAXES, INSURANCE, NON-CAPI-
TAL REPAIRS AND MORTGAGE INTEREST. For the purposes of this paragraph,
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD15649-01-6
A. 11226 2
mortgage interest shall be deemed to mean interest on a bona fide mort-
gage 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 six of this
subdivision for a period of three years subsequent to granting a hard-
ship 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 effec-
tive 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 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 improve-
ment, (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.
§ 2. 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, OR OWNERS OF ONE OR
MORE CONDOMINIUM UNITS IN A BUILDING, 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 OR CONDOMINIUM UNIT which exceeds the annual
operating expenses of such building OR CONDOMINIUM UNIT by a sum equal
A. 11226 3
to at least five percent of such gross rent, WHICH FOR CONDOMINIUM UNITS
SHALL BE BASED ON THE LAWFULLY ALLOWABLE RENT FOR SUCH UNITS. 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;
PROVIDED, HOWEVER, THAT FOR CONDOMINIUM UNITS OPERATING EXPENSES SHALL
CONSIST OF ALL COSTS ATTRIBUTABLE TO SUCH UNITS, INCLUDING COMMON CHARG-
ES AND ASSESSMENTS LEVIED BY THE CONDOMINIUM ASSOCIATION FOR SUCH UNITS,
TAXES, INSURANCE, NON-CAPITAL REPAIRS 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
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.
§ 3. This act shall take effect immediately; provided that the amend-
ments to section 26-511 of chapter 4 of title 26 of the administrative
A. 11226 4
code of the city of New York made by section one 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.