Bill Text: NY A04255 | 2023-2024 | General Assembly | Introduced
Bill Title: Enacts the "New York city small business rent stabilization act" instituting a commercial rent control system in the city of New York; creates the commercial rent guidelines board.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-01-03 - referred to cities [A04255 Detail]
Download: New_York-2023-A04255-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 4255 2023-2024 Regular Sessions IN ASSEMBLY February 13, 2023 ___________ Introduced by M. of A. O'DONNELL -- read once and referred to the Committee on Cities AN ACT to amend the administrative code of the city of New York, in relation to enacting the "New York city small business rent stabiliza- tion act" The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Short title. This act shall be known and may be cited as 2 the "New York city small business rent stabilization act". 3 § 2. Title 22 of the administrative code of the city of New York is 4 amended by adding a new chapter 13 to read as follows: 5 CHAPTER 13 6 COMMERCIAL RENT STABILIZATION 7 § 22-1301 Application. This chapter applies to all commercial spaces 8 with a lease or other rental agreement that expires on or after July 9 first, two thousand twenty-three, whether or not such lease or rental 10 agreement was in effect on such date. This chapter shall apply only to 11 all commercial lease renewals for commercial premises. On any occasion 12 wherein a landlord and tenant are required to negotiate the terms of a 13 lease renewal for commercial uses such provisions of this chapter shall 14 apply. Such provisions of this chapter shall apply to any landlord and 15 current tenant whose lease expired on or after July first, two thousand 16 twenty-three. 17 § 22-1302 Definitions. As used in this chapter, the following terms 18 shall have the following meanings unless the context requires otherwise: 19 a. "Administering agency" shall mean any city agency, office, depart- 20 ment, division, bureau or institution of government, the expenses of 21 which are paid in whole or in part from the city treasury, as the mayor 22 shall designate or establish to implement the provisions of this chap- 23 ter. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD08988-01-3A. 4255 2 1 b. "At-will tenant" shall mean a tenant, subtenant, lessee, sublessee, 2 or any other persons lawfully entitled to use or occupy any commercial 3 premises without a written lease or other rental agreement, who has paid 4 rent to a landlord for at least six months. 5 c. "Board" shall mean the commercial rent guidelines board established 6 by subdivision a of section 22-1303 of this chapter. 7 d. "Chain business" shall mean an establishment that is part of a 8 group of establishments that share a common landlord or principal who 9 owns at least thirty percent of each establishment where such establish- 10 ments: 11 (1) engage in the same business; or 12 (2) operate pursuant to a franchise agreement with the same franchisor 13 as defined in section six hundred eighty-one of the general business 14 law. 15 e. "Commercial space" shall mean a space used or occupied for non-re- 16 sidential purposes pursuant to a valid commercial lease or other rental 17 agreement. Such term includes only retail stores, professional offices, 18 service offices or other offices of ten thousand square feet or less and 19 manufacturing establishments or art and/or cultural establishments of 20 twenty-five thousand square feet or less. Such term does not include a 21 building owned by: 22 (1) a non-profit entity where: 23 (i) more than fifty percent of building units are rent regulated; or 24 (ii) more than thirty percent of building units are below fair market 25 rent rate and are restricted income units; or 26 (2) a housing development fund corporation pursuant to article two or 27 eleven of the private housing finance law, including buildings used as 28 Mitchell-Lama housing and any other restricted income co-op housing. 29 f. "Commissioner" shall mean the head of the administering agency. 30 g. "Landlord" shall mean any owner, lessor, sublessor or other person 31 entitled to receive rent for the use or occupancy of any commercial 32 premises, or an agent thereof. 33 h. "Pass-along" shall mean any taxes, sewer, water or utility fee, or 34 operating charges apportioned to a tenant in connection with the use or 35 occupancy of any commercial space. 36 i. "Rent" shall mean any consideration, including but not limited to 37 pass-alongs, received by the landlord in connection with the use or 38 occupancy of any commercial space. 39 j. "Services" shall mean those facilities which enhance the use of the 40 commercial premises, including, but not limited to, repairs, mainte- 41 nance, painting, heat, hot and cold water, utilities, elevator service, 42 security devices and patrols, furnishings, storage, janitorial and land- 43 scaping services, refuse removal, insurance protection, parking spaces 44 and facilities in common areas of the building or parcel in which the 45 rental unit is located. 46 k. "Tenant" shall mean a tenant, subtenant, lessee, sublessee, or any 47 other persons lawfully entitled to use or occupy any commercial prem- 48 ises. 49 § 22-1303 Commercial rent guidelines board. a. There shall be a 50 commercial rent guidelines board consisting of nine members appointed by 51 the mayor as follows: 52 (1) One public member to serve as the chairperson of the board; 53 (2) Two members representing commercial tenants which are not chain 54 businesses; 55 (3) Two members representing commercial landlords; and 56 (4) Four public members.A. 4255 3 1 b. The members of the board, except the chairperson, shall serve stag- 2 gered terms of two years. Four members of the board originally 3 appointed, comprising one member representing tenants, one member 4 representing landlords and two public members, shall serve until January 5 first, two thousand twenty-six. The other members of the board 6 originally appointed, excluding the chairperson, shall serve until Janu- 7 ary first, two thousand twenty-seven. Thereafter, all members shall 8 serve two-year terms on the board until their successors have been 9 appointed and qualified, except the chairperson, who shall serve at the 10 pleasure of the mayor. 11 c. The mayor shall fill any vacancy that may occur in the same manner 12 as the original appointment. A member of the board, other than the 13 chairperson, may only be removed by the mayor for cause after an oppor- 14 tunity to be heard in person or by counsel, in the member's defense, 15 upon at least ten days written notice. 16 d. The chairperson shall be the chief administrative officer of the 17 board and shall have the authority to employ, assign and supervise the 18 members of the board and enter into contracts for consultant services. 19 The commissioner shall cooperate with the board and may assign personnel 20 and perform such services in connection with the duties of the board as 21 may reasonably be required by the chairperson. 22 e. The members of the board shall be compensated on a per diem basis 23 for no more than fifty days per year at a rate to be determined by the 24 commissioner, and the chairperson shall be compensated on a per diem 25 basis for no more than one hundred days per year at a rate to be deter- 26 mined by the commissioner. 27 f. The board shall establish initial guidelines for commercial rent 28 adjustments by the first of July next succeeding appointment of the last 29 member of the board. Thereafter, the board shall establish annual 30 guidelines to be filed in accordance with subdivision g of this section. 31 In determining whether to adjust rents for commercial spaces subject to 32 the commercial rent stabilization provisions of this chapter, the board 33 shall consider, among other things: 34 (1) The economic condition of the commercial real estate industry in 35 the community board district, including such factors as: 36 (i) commercial real estate taxes and sewer and water rates; 37 (ii) gross operating and maintenance costs, including but not limited 38 to insurance rates, governmental fees, fuel and labor costs; 39 (iii) costs and availability of financing, including effective rates 40 of interest; and 41 (iv) the overall supply of commercial spaces and overall vacancy 42 rates; 43 (2) Relevant data from the current and projected market values of 44 commercial rentals in the community board district; 45 (3) The socioeconomic and demographic changes in each community board 46 district based on the most recent available data, including but not 47 limited to changes in: 48 (i) the median income level; 49 (ii) education; 50 (iii) race; 51 (iv) ethnicity; and 52 (v) home ownership; and 53 (4) Any other relevant data available to the board. 54 g. Not later than July first of each year, the board shall file with 55 the city clerk its guidelines for the preceding calendar year, and shall 56 accompany such findings with a statement of the maximum rate or rates ofA. 4255 4 1 rent adjustment, if any, for all commercial spaces subject to the 2 provisions of this chapter authorized for leases or other rental agree- 3 ments commencing on the first of October next succeeding or within 4 twelve months thereafter. Such guidelines and statement shall be 5 published in the city record. 6 h. Prior to the annual adjustment of the level of rents provided for 7 under subdivision f of this section, the board shall hold at least two 8 public hearings for the purpose of collecting information relating to 9 all factors set forth in subdivision f of this section, and any other 10 relevant information as may be necessary for establishing the annual 11 adjustment guidelines. The board shall provide notice of the date, time 12 and location and a summary of the subject matter of the public hearings, 13 to be published in the city record daily for the period beginning eight 14 days prior to the hearing date, and at least once in one or more newspa- 15 pers of general circulation at least eight days immediately preceding 16 such hearing date. 17 i. Maximum rates of rent adjustment shall not be established more than 18 once annually for any commercial space subject to the provisions of this 19 chapter. Once established, no such rate shall, within the one-year peri- 20 od, be adjusted by any surcharge, supplementary adjustment or other 21 modification except as provided in section 22-1308 of this chapter. 22 § 22-1304 Stabilization provisions. a. Upon renewal of a lease for 23 commercial space, the rent charged for the first year of the new lease 24 shall not exceed the initial legal regulated rent or legal regulated 25 rent adjusted pursuant to section 22-1308 of this chapter until the end 26 of any lease or other rental agreement in effect on the effective date 27 of this chapter until such time as a different legal regulated rent 28 shall be authorized pursuant to guidelines adopted by the board estab- 29 lished under section 22-1303 of this chapter. No landlord subject to the 30 provisions of this chapter shall charge or collect any rent that exceeds 31 the initial legal regulated rent or legal regulated rent adjusted pursu- 32 ant to section 22-1308 of this chapter until the end of any lease or 33 other rental agreement in effect on the effective date of this chapter, 34 until such time as a different legal regulated rent has been authorized 35 pursuant to guidelines adopted by the board. For any lease exceeding one 36 year, the rent charged for any subsequent year shall not exceed the 37 legal regulated rent as authorized pursuant to the most recent guide- 38 lines adopted by the board. If the rent charged for the first year of 39 the new lease is less than the initial legal regulated rent or the legal 40 regulated rent adjusted pursuant to section 22-1308 of this chapter, the 41 rent charged for any subsequent year shall not exceed the first year's 42 rent adjusted by the rate authorized pursuant to the most recent guide- 43 lines adopted by the board. 44 b. The initial regulated rent for a commercial space subject to the 45 provisions of this chapter is the rent charged in the lease or other 46 rental agreement for such commercial space in effect on the effective 47 date of this chapter. 48 c. The initial regulated rent for a commercial space subject to the 49 provisions of this chapter, that is not subject to a lease or other 50 rental agreement on the effective date of this chapter, shall be the 51 rent charged in the first lease or other rental agreement for such 52 commercial space that becomes effective after the effective date of this 53 chapter, provided that such rent shall not include any pass-alongs. 54 However, if a claim alleging commercial tenant harassment pursuant to 55 chapter nine of this title is brought against a landlord by the previous 56 tenant as the means by which the vacancy was effected and such previousA. 4255 5 1 tenant's claim is upheld by a court of competent jurisdiction, such 2 landlord shall be liable for damages up to ten times the proposed new 3 lease's monthly rent or fifty thousand dollars, whichever is greater, to 4 be payable to the previous tenant, in addition to consequential damages 5 and any other remedy available at law or equity. 6 d. Upon a finding of commercial tenant harassment pursuant to chapter 7 nine of this title, the rent for the new tenant shall be no higher than 8 the rent that could have been charged to the previous tenant pursuant to 9 subdivision a of this section, retroactive to the beginning of the new 10 tenancy. All other terms and conditions of the lease shall conform to 11 the provisions of subdivision a of this section. 12 e. If a tenant is an at-will tenant, such tenant has the right to 13 request a written lease agreement that shall conform to the provisions 14 of subdivision a of this section and be a monthly rent equivalent to the 15 amount such tenant is paying at the time of such request. The landlord 16 of an at-will tenant shall provide a written lease offer within ninety 17 days of receiving such a request for a written lease. A landlord shall 18 only be able to refuse to provide a written lease or evict an at-will 19 tenant based on the provisions under section 22-1310 of this chapter, 20 except for the provision set forth in paragraph two of such subdivision. 21 § 22-1305 Enforcement and procedures. a. Subject to the conditions and 22 limitations of this section, any landlord who, upon the complaint of a 23 tenant, is found by the commissioner, after a reasonable opportunity to 24 be heard, to have collected an overcharge above the rent authorized for 25 a commercial space subject to the provisions of this chapter, is liable 26 to such tenant for a penalty equal to three times the amount of such 27 overcharge. If the landlord establishes, by a preponderance of the 28 evidence, that the overcharge was not intentional, the penalty shall be 29 the amount of the overcharge plus interest assessed from the initial 30 date of such overcharge. After a complaint of rent overcharge has been 31 filed and served on a landlord, the voluntary adjustment of the rent 32 and/or the voluntary tender of a refund of rent overcharges shall not be 33 considered by the commissioner as evidence that such overcharge was not 34 willful. 35 b. The legal regulated rent for purposes of determining an overcharge 36 is the rent indicated in the annual registration statement filed and 37 served upon the tenant six years prior to the most recent registration 38 statement, or, if more recently filed, the initial registration state- 39 ment plus, for each case, any subsequent lawful increases and adjust- 40 ments. The commissioner, in investigating complaints of overcharge and 41 in determining legal regulated rent, shall consider all available rent 42 history which is reasonably necessary to make such determinations. As to 43 complaints filed within ninety days of the initial registration of a 44 commercial space, the legal regulated rent is deemed to be the rent 45 charged on the date six years prior to the date of the initial registra- 46 tion of the commercial space or, if the commercial space was subject to 47 this chapter for less than six years, the initial legal regulated rent 48 plus, in each case, any lawful increases and adjustments. Where the rent 49 charged on the date six years prior to the date of the initial registra- 50 tion of the commercial space cannot be established, such rent shall be 51 established by the commissioner based on, among other things, the 52 factors set forth in paragraph one of subdivision f of section 22-1303 53 of this chapter. 54 c. Complaints under this section may be filed with the commissioner at 55 any time, however any recovery of overcharge penalties shall be limited 56 to the six years preceding the complaint.A. 4255 6 1 d. A landlord found to have overcharged a tenant may be assessed the 2 reasonable costs and attorneys' fees of any necessary proceeding and 3 interest from the initial date of the overcharge at the rate of interest 4 payable on a judgment pursuant to section five thousand four of the 5 civil practice laws and rules. 6 e. A tenant may, upon the expiration of the period in which the land- 7 lord may institute a proceeding pursuant to article seventy-eight of the 8 civil practice law and rules, file and enforce an order of the commis- 9 sioner awarding penalties in the same manner as a judgment. 10 f. The commissioner shall promulgate all rules and regulations neces- 11 sary for the implementation of this section. 12 § 22-1306 Rent registration. Each landlord of a commercial space 13 subject to the provisions of this chapter shall register such space with 14 the administering agency within one hundred twenty days of the effective 15 date of this chapter using forms prescribed by the commissioner. The 16 information to be provided on such forms shall include the following: 17 a. The name and address of the building or group of buildings or 18 development in which such commercial space is located and the tenant 19 thereof; 20 b. The number of commercial spaces belonging to such landlord in the 21 building or group of buildings or development in which such commercial 22 space is located; 23 c. The number of commercial spaces in such building or group of build- 24 ings or development subject to the provisions of this chapter; 25 d. The rent for the commercial space charged on the registration date; 26 and 27 e. The square footage of each commercial space named pursuant to 28 subdivision a of this section. 29 § 22-1307 Fees. a. The department of finance shall collect from the 30 landlord of each commercial space registered pursuant to section 22-1306 31 of this chapter an annual fee in the amount of one hundred dollars for 32 each commercial space subject to this chapter, in order to defray costs 33 incurred in administering this chapter. 34 b. Failure to pay the fee imposed by subdivision a of this section 35 shall constitute a charge due to the city. All such fees due to the city 36 constitute a debt recoverable from the landlord and the city may 37 commence an action or proceeding, file a lien upon the building or take 38 any other lawful action for the recovery of such fees. 39 § 22-1308 Application for adjustment of initial rent. Notwithstanding 40 any other provision of this chapter, a tenant or landlord may, within 41 sixty days of the effective date of this chapter or the commencement of 42 the first tenancy thereafter, whichever is later, file with the commis- 43 sioner an application for adjustment of the initial legal regulated rent 44 for such commercial space. The commissioner may adjust such initial 45 legal regulated rent upon a finding that the presence of extraordinary 46 circumstances materially affecting the initial legal regulated rent has 47 resulted in a rent which is substantially different from the rents 48 generally prevailing in the same area for substantially similar commer- 49 cial spaces. 50 § 22-1309 Manner of service. All papers and notices which, pursuant to 51 the terms of section 22-1310 of this chapter are required to be served, 52 shall be served by a process server, or shall be sent by first-class 53 mail and certified mail, return receipt requested or by any express mail 54 service. 55 § 22-1310 Rental guidelines. a. All leases of a commercial premises 56 may be renewed at the option of a tenant who did not lose the right toA. 4255 7 1 renew a lease under the grounds described in subdivision d of this 2 section. Such lease renewals shall be for a minimum term of ten years, 3 provided however, that at the tenant's option, and with the written 4 approval of the landlord, a lease of shorter or longer duration may be 5 selected. 6 b. No period of lease extension required by this chapter shall extend 7 beyond the landlord's lawful ability to rent the premises to the tenant, 8 where such ability is limited by: 9 (1) the obligation to rent the premises to a third party pursuant to a 10 bona fide lease entered into prior to the effective date of this chap- 11 ter; 12 (2) the exercise by a third party of a bona fide option to rent the 13 premises provided that such option was given prior to the effective date 14 of this chapter; or 15 (3) any other lawful reason arising prior to such effective date. 16 c. A tenant shall lose the right of renewal and a landlord may refuse 17 to renew a lease only on the following grounds: 18 (1) The tenant has persistently delayed rent payments without cause. 19 For the purpose of this subdivision, "cause" is defined as the withhold- 20 ing of rental payments by the tenant due to the alleged violations of 21 the rental agreement by the landlord. In order for the landlord to be 22 excused from renewal on this ground, the landlord must have served the 23 tenant at least three prior notices during the term of the lease for 24 demand of payment within thirty days, and then show that such lessee has 25 not paid within such thirty-day period. The landlord shall not serve 26 such notice unless the rent payment was in arrears for a minimum of 27 fifteen days; 28 (2) The tenant uses the commercial premises in a manner substantially 29 different from that described in the lease; 30 (3) The tenant conducts or permits any form of illegal activity on the 31 premises; 32 (4) The tenant has substantially breached any substantive obligation 33 under the current lease and has failed to cure such breach within thirty 34 days following written notice to cure by the landlord; 35 (5) Upon the termination of the current tenancy, the landlord intends, 36 in good faith, to demolish or substantially reconstruct the premises or 37 a substantial part thereof, or to carry out substantial work or 38 construction on the commercial premises or substantial part thereof 39 which he or she could not reasonably do without obtaining possession of 40 the commercial premises. The landlord shall notify the tenant of his or 41 her decision to reoccupy the commercial premises at least one year prior 42 to the termination of the lease. In the event that the lessor fraudu- 43 lently invokes this justification for a refusal to renew a commercial 44 lease, the defrauded tenant may collect treble damages for any loss 45 suffered as a result of such action; 46 (6) The current tenancy was created by the subletting of the property, 47 whereby the prime tenant did not notify the landlord by certified mail 48 of the subtenant's existence and did not obtain the written consent of 49 the landlord. This ground is void if the landlord and tenant had agreed 50 in the lease to allow subleasing rights without the consent of the land- 51 lord and all obligations of the prime tenant on the issue, were in 52 compliance; 53 (7) It has been determined by the administering agency or by a civil 54 court of competent jurisdiction that the tenant is a gross and persist- 55 ent violator of New York city tax laws, of any license obligationsA. 4255 8 1 related to the use of the premises or of any laws of the city of New 2 York; or 3 (8) Upon the termination of the current tenancy, the landlord intends 4 to occupy the retail premises in order to carry out its own business, 5 which cannot be the same type of business that the current tenant is 6 operating. The landlord shall notify the tenant of his or her decision 7 to reoccupy the premises at least one hundred eighty days prior to the 8 termination of the lease. In the event that the landlord fraudulently 9 invokes this justification for a refusal to renew a commercial lease, 10 the defrauded tenant may collect treble damages for any loss suffered as 11 a result of such action. 12 § 22-1311 Retaliation. No landlord shall in any way retaliate against 13 any tenant for the tenant's assertion or exercise of any rights under 14 this chapter. Any such retaliation may subject the landlord to a suit 15 for actual and punitive damages, injunctive relief, and attorneys' fees. 16 § 22-1312 Waiver. No provision in any lease, rental agreement, or 17 agreement made in connection therewith which waives or diminishes any 18 tenant's rights under this chapter is valid. 19 § 22-1313 Inconsistency with other laws. If any provision of this 20 chapter is inconsistent with, in conflict with, or contrary to any other 21 provisions of law, such provision of this chapter shall prevail over 22 such other provision. 23 § 3. Severability. If any clause, sentence, paragraph, section or part 24 of this act shall be adjudged by any court of competent jurisdiction to 25 be invalid and after exhaustion of all further judicial review, the 26 judgment shall not affect, impair or invalidate the remainder thereof, 27 but shall be confined in its operation to the clause, sentence, para- 28 graph, section or part of this act directly involved in the controversy 29 in which the judgment shall have been rendered. 30 § 4. This act shall take effect on the thirtieth day after it shall 31 have become a law. Effective immediately, the addition, amendment 32 and/or repeal of any rule or regulation necessary for the implementation 33 of this act on its effective date are authorized to be made and 34 completed on or before such effective date.