§ 10-b. Major capital improvements and individual apartment
improvements in rent regulated units. (a) Notwithstanding any other
provision of law to the contrary, the division of housing and community
renewal, the "division", shall promulgate rules and regulations
applicable to all rent regulated units that shall:

1. establish a schedule of reasonable costs for major capital
improvements, which shall set a ceiling for what can be recovered
through a temporary major capital improvement increase, based on the
type of improvement and its rate of depreciation;

2. establish the criteria for eligibility of a temporary major capital
improvement increase including the type of improvement, which shall be
essential for the preservation, energy efficiency, functionality or
infrastructure of the entire building, including heating, windows,
plumbing and roofing, but shall not be for operational costs or
unnecessary cosmetic improvements. Allowable improvements must
additionally be depreciable pursuant to the Internal Revenue Service,
other than for ordinary repairs, that directly or indirectly benefit all
tenants; and no increase shall be approved for group work done in
individual apartments that is otherwise not an improvement to an entire
building. Only such costs that are actual, reasonable, and verifiable
may be approved as a temporary major capital improvement increase;

3. require that any temporary major capital improvement increase
granted pursuant to these provisions be reduced by an amount equal to
(i) any governmental grant received by the landlord, where such grant
compensates the landlord for any improvements required by a city, state
or federal government, an agency or any granting governmental entity to
be expended for improvements and (ii) any insurance payment received by
the landlord where such insurance payment compensates the landlord for
any part of the costs of the improvements;

4. prohibit temporary major capital improvement increases for
buildings with outstanding hazardous or immediately hazardous violations
of the Uniform Fire Prevention and Building Code (Uniform Code), New
York City Fire Code, or New York City Building and Housing Maintenance
Codes, if applicable;

5. prohibit individual apartment improvement increases for housing
accommodations with outstanding hazardous or immediately hazardous
violations of the Uniform Fire Prevention and Building Code (Uniform
Code), New York City Fire Code, or New York City Building and Housing
Maintenance Codes, if applicable;

6. prohibit temporary major capital improvement increases for
buildings with thirty-five per centum or fewer rent-regulated units;

7. establish that temporary major capital improvement increases shall
be fixed to the unit and shall cease thirty years from the date the
increase became effective. Temporary major capital improvement increases
shall be added to the legal regulated rent as a temporary increase 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 local rent guidelines board;

8. establish that 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 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;

9. ensure that the application procedure for temporary major capital
improvement increases shall include an itemized list of work performed
and a description or explanation of the reason or purpose of such work;

10. provide, that where an application for a major capital improvement
rent 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;

11. establish a notification and documentation procedure for
individual apartment improvements that requires an itemized list of work
performed and a description or explanation of the reason or purpose of
such work, inclusive of photographic evidence documenting the condition
prior to and after the completion of the performed work. Provide for the
centralized electronic retention of such documentation and any other
supporting documentation to be made available in cases pertaining to the
adjustment of legal regulated rents; and

12. establish a form in the top six languages other than English
spoken in the state according to the latest available data from the U.S.
Bureau of Census for a temporary individual apartment improvement rent
increase for a tenant in occupancy which shall be used by landlords to
obtain written informed consent that shall include the estimated total
cost of the improvement and the estimated monthly rent increase. Such
form shall be completed and preserved in the centralized electronic
retention system to be operational by June 14, 2020. Nothing herein
shall relieve a landlord, lessor, or agent thereof of his or her duty to
retain proper documentation of all improvements performed or any rent
increases resulting from said improvements.

13. (i) where an owner combines two or more vacant housing
accommodations or combines a vacant housing accommodation with an
occupied housing accommodation, such initial rent for such new housing
accommodation shall be the combined legal rent for both previous housing
accommodations, subject to any applicable guideline increases and any
other increases authorized by this chapter including any individual
apartment improvement increases applicable for both housing
accommodations. If an owner combines a rent regulated accommodation with
an apartment not subject to rent regulation, the resulting apartment
shall be subject to this act. If an owner increases the area of an
apartment not subject to rent regulation by adding space that was
previously part of a rent regulated apartment, each apartment shall be
subject to this act.

(ii) where an owner substantially increases the outer dimension of a
vacant housing accommodation, such initial rent shall be the prior rent
of such housing accommodation, increased by a percentage that is equal
to the percentage increase in the dwelling space and such other
increases authorized by this act including any applicable guideline
increase and individual apartment improvement increase that could be
authorized for the unit prior to the alteration of the outer dimensions.

(iii) notwithstanding subparagraphs (i) and (ii) of this paragraph,
such increases may be denied based on the occurrence of such vacancy due
to harassment, fraud, or other acts of evasion which may require that
such rent be set in accordance with section twelve of this act.

(iv) where the vacant housing accommodations are combined, modified,
divided or the dimension of such housing accommodation otherwise altered
and these changes are being made pursuant to a preservation regulatory
agreement with a federal, state or local governmental agency or
instrumentality, the rent stabilized rents charged thereafter shall be
based on an initial rent set by such agency or instrumentality.

(v) where an owner substantially decreases the outer dimensions of a
vacant housing accommodation, such initial rent shall be the prior rent
of such housing accommodation, decreased by the same percentage the
square footage of the original apartment was decreased by and such other
increases authorized by this act including any applicable guideline
increase and individual apartment improvement increase that could be
authorized for the apartment prior to the alteration of the outer
dimensions.

(vi)(1) when an owner combines two or more rent regulated apartments,
the owner may use each of the previous apartments' remaining individual
apartment improvement allowances for the purposes of a temporary
individual apartment improvement rent increase. The owner shall
subsequently designate a surviving apartment for the purposes of
registration that has the same apartment number as one of the prior
apartments. If that prior apartment has any reimbursable individual
apartment improvement money remaining after the combination, that money
may be reimbursed for future individual apartment improvements
undertaken within the subsequent fifteen years following the
combination.

(2) in order for an owner to qualify for a temporary individual
apartment improvement rent increase when apartments are combined, the
requirements for an individual apartment improvement, including all
notification requirements under this act shall be met.

(vii) owners shall maintain the records and rent histories of all
combined apartments, both prior to and post combination, for the
purposes of rent setting, overcharge and all other proceedings to which
the records are applicable.

(b) The division shall establish an annual inspection and audit
process which shall review twenty-five percent of applications for a
temporary major capital improvement increase that have been submitted
and approved. Such process shall include individual inspections and
document review to ensure that owners complied with all obligations and
responsibilities under the law for temporary major capital improvement
increases. Inspections shall include in-person confirmation that such
improvements have been completed in such way as described in the
application.

(c) The division shall issue a notice to the landlord and all the
tenants sixty days prior to the end of the temporary major capital
improvement increase and shall include the initial approved increase and
the total amount to be removed from the legal regulated rent inclusive
of any increases granted by the applicable rent guidelines board.