Bill Text: NY A06527 | 2019-2020 | General Assembly | Introduced
Bill Title: Provides that buildings in which more than 50% of the habitable units are not subject to rent control are ineligible to apply for major capital investment rent surcharges.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2020-01-08 - referred to housing [A06527 Detail]
Download: New_York-2019-A06527-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 6527 2019-2020 Regular Sessions IN ASSEMBLY March 11, 2019 ___________ Introduced by M. of A. O'DONNELL, BARRON -- read once and referred to the Committee on Housing AN ACT to amend the administrative code of the city of New York, the emergency tenant protection act of 1974 and the emergency housing rent control law, in relation to building eligibility for major capital improvement rent surcharges The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subparagraph (g) of paragraph 1 of subdivision g of section 2 26-405 of the administrative code of the city of New York, as amended by 3 section 31 of part A of chapter 20 of the laws of 2015, is amended to 4 read as follows: 5 (g) There has been since July first, nineteen hundred seventy, a major 6 capital improvement required for the operation, preservation or mainte- 7 nance of the structure. An adjustment under this subparagraph (g) for 8 any order of the commissioner issued after the effective date of the 9 rent act of 2015 shall be in an amount sufficient to amortize the cost 10 of the improvements pursuant to this subparagraph (g) over an eight-year 11 period for buildings with thirty-five or fewer units or a nine year 12 period for buildings with more than [thiry-five] thirty-five units[,]; 13 provided, however, that no adjustment shall be allowed for any building 14 in which more than fifty percent of the habitable units are not subject 15 to rent stabilization or rent control, or 16 § 2. Paragraph 6-a of subdivision c of section 26-511 of the adminis- 17 trative code of the city of New York is amended to read as follows: 18 (6-a) provides criteria whereby as an alternative to the hardship 19 application provided under paragraph six of this subdivision owners of 20 buildings acquired by the same owner or a related entity owned by the 21 same principals three years prior to the date of application may apply 22 to the division for increases in excess of the level of applicable 23 guideline increases established under this law based on a finding by the EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD03175-01-9A. 6527 2 1 commissioner that such guideline increases are not sufficient to enable 2 the owner to maintain an annual gross rent income for such building 3 which exceeds the annual operating expenses of such building by a sum 4 equal to at least five percent of such gross rent. For the purposes of 5 this paragraph, operating expenses shall consist of the actual, reason- 6 able, costs of fuel, labor, utilities, taxes, other than income or 7 corporate franchise taxes, fees, permits, necessary contracted services 8 and non-capital repairs, insurance, parts and supplies, management fees 9 and other administrative costs and mortgage interest. For the purposes 10 of this paragraph, mortgage interest shall be deemed to mean interest on 11 a bona fide mortgage including an allocable portion of charges related 12 thereto. Criteria to be considered in determining a bona fide mortgage 13 other than an institutional mortgage shall include; condition of the 14 property, location of the property, the existing mortgage market at the 15 time the mortgage is placed, the term of the mortgage, the amortization 16 rate, the principal amount of the mortgage, security and other terms and 17 conditions of the mortgage. The commissioner shall set a rental value 18 for any unit occupied by the owner or a person related to the owner or 19 unoccupied at the owner's choice for more than one month at the last 20 regulated rent plus the minimum number of guidelines increases or, if no 21 such regulated rent existed or is known, the commissioner shall impute a 22 rent consistent with other rents in the building. The amount of hardship 23 increase shall be such as may be required to maintain the annual gross 24 rent income as provided by this paragraph. The division shall not grant 25 a hardship application under this paragraph or paragraph six of this 26 subdivision for (i) a period of three years subsequent to granting a 27 hardship application under the provisions of this paragraph or (ii) to 28 the owner of any building in which more than fifty percent of the habi- 29 table units are not subject to rent stabilization or rent control. The 30 collection of any increase in the rent for any housing accommodation 31 pursuant to this paragraph shall not exceed six percent in any year from 32 the effective date of the order granting the increase over the rent set 33 forth in the schedule of gross rents, with collectability of any dollar 34 excess above said sum to be spread forward in similar increments and 35 added to the rent as established or set in future years. No application 36 shall be approved unless the owner's equity in such building exceeds 37 five percent of: (i) the arms length purchase price of the property; 38 (ii) the cost of any capital improvements for which the owner has not 39 collected a surcharge; (iii) any repayment of principal of any mortgage 40 or loan used to finance the purchase of the property or any capital 41 improvements for which the owner has not collected a surcharge and (iv) 42 any increase in the equalized assessed value of the property which 43 occurred subsequent to the first valuation of the property after 44 purchase by the owner. For the purposes of this paragraph, owner's equi- 45 ty shall mean the sum of (i) the purchase price of the property less the 46 principal of any mortgage or loan used to finance the purchase of the 47 property, (ii) the cost of any capital improvement for which the owner 48 has not collected a surcharge less the principal of any mortgage or loan 49 used to finance said improvement, (iii) any repayment of the principal 50 of any mortgage or loan used to finance the purchase of the property or 51 any capital improvement for which the owner has not collected a 52 surcharge, and (iv) any increase in the equalized assessed value of the 53 property which occurred subsequent to the first valuation of the proper- 54 ty after purchase by the owner. 55 § 3. Paragraph 3 of subdivision d of section 6 of section 4 of chapter 56 576 of the laws of 1974, constituting the emergency tenant protectionA. 6527 3 1 act of nineteen seventy-four, as amended by section 30 of part A of 2 chapter 20 of the laws of 2015, is amended to read as follows: 3 (3) there has been since January first, nineteen hundred seventy-four 4 a major capital improvement required for the operation, preservation or 5 maintenance of the structure and more than half of the habitable units 6 in the building are subject to rent stabilization or rent control. An 7 adjustment under this paragraph shall be in an amount sufficient to 8 amortize the cost of the improvements pursuant to this paragraph over an 9 eight-year period for a building with thirty-five or fewer housing 10 accommodations, or a nine-year period for a building with more than 11 thirty-five housing accommodations, for any determination issued by the 12 division of housing and community renewal after the effective date of 13 the rent act of 2015, or 14 § 4. Subparagraph 7 of the second undesignated subparagraph of para- 15 graph (a) of subdivision 4 of section 4 of chapter 274 of the laws of 16 1946, constituting the emergency housing rent control law, as amended by 17 section 32 of part A of chapter 20 of the laws of 2015, is amended to 18 read as follows: 19 (7) there has been since March first, nineteen hundred fifty, a major 20 capital improvement required for the operation, preservation or mainte- 21 nance of the structure; which for any order of the commissioner issued 22 after the effective date of the rent act of 2015 the cost of such 23 improvement shall be amortized over an eight-year period for buildings 24 with thirty-five or fewer units or a nine year period for buildings with 25 more than [thiry-five] thirty-five units[,]; provided, however, that no 26 adjustment shall be allowed for any building in which more than fifty 27 percent of the habitable units are not subject to rent stabilization or 28 rent control, or 29 § 5. Paragraph 5 of subdivision d of section 6 of section 4 of chapter 30 576 of the laws of 1974, constituting the emergency tenant protection 31 act of nineteen seventy-four, as amended by chapter 102 of the laws of 32 1984, is amended to read as follows: 33 (5) as an alternative to the hardship application provided under para- 34 graph four of this subdivision, owners of buildings acquired by the same 35 owner or a related entity owned by the same principals three years prior 36 to the date of application may apply to the division for increases in 37 excess of the level of applicable guideline increases established under 38 this law based on a finding by the commissioner that such guideline 39 increases are not sufficient to enable the owner to maintain an annual 40 gross rent income for such building which exceeds the annual operating 41 expenses of such building by a sum equal to at least five percent of 42 such gross rent provided, that more than half of the habitable units in 43 the building are subject to rent stabilization or rent control. For the 44 purposes of this paragraph, operating expenses shall consist of the 45 actual, reasonable, costs of fuel, labor, utilities, taxes, other than 46 income or corporate franchise taxes, fees, permits, necessary contracted 47 services and non-capital repairs, insurance, parts and supplies, manage- 48 ment fees and other administrative costs and mortgage interest. For the 49 purposes of this paragraph, mortgage interest shall be deemed to mean 50 interest on a bona fide mortgage including an allocable portion of 51 charges related thereto. Criteria to be considered in determining a 52 bona fide mortgage other than an institutional mortgage shall include; 53 condition of the property, location of the property, the existing mort- 54 gage market at the time the mortgage is placed, the term of the mort- 55 gage, the amortization rate, the principal amount of the mortgage, secu- 56 rity and other terms and conditions of the mortgage. The commissionerA. 6527 4 1 shall set a rental value for any unit occupied by the owner or a person 2 related to the owner or unoccupied at the owner's choice for more than 3 one month at the last regulated rent plus the minimum number of guide- 4 lines increases or, if no such regulated rent existed or is known, the 5 commissioner shall impute a rent consistent with other rents in the 6 building. The amount of hardship increase shall be such as may be 7 required to maintain the annual gross rent income as provided by this 8 paragraph. The division shall not grant a hardship application under 9 this paragraph or paragraph four of this subdivision for a period of 10 three years subsequent to granting a hardship application under the 11 provisions of this paragraph. The collection of any increase in the rent 12 for any housing accommodation pursuant to this paragraph shall not 13 exceed six percent in any year from the effective date of the order 14 granting the increase over the rent set forth in the schedule of gross 15 rents, with collectability of any dollar excess above said sum to be 16 spread forward in similar increments and added to the rent as estab- 17 lished or set in future years. No application shall be approved unless 18 the owner's equity in such building exceeds five percent of: (i) the 19 arms length purchase price of the property; (ii) the cost of any capital 20 improvements for which the owner has not collected a surcharge; (iii) 21 any repayment of principal of any mortgage or loan used to finance the 22 purchase of the property or any capital improvements for which the owner 23 has not collected a surcharge; and (iv) any increase in the equalized 24 assessed value of the property which occurred subsequent to the first 25 valuation of the property after purchase by the owner. For the purposes 26 of this paragraph, owner's equity shall mean the sum of (i) the purchase 27 price of the property less the principal of any mortgage or loan used to 28 finance the purchase of the property, (ii) the cost of any capital 29 improvement for which the owner has not collected a surcharge less the 30 principal of any mortgage or loan used to finance said improvement, 31 (iii) any repayment of the principal of any mortgage or loan used to 32 finance the purchase of the property or any capital improvement for 33 which the owner has not collected a surcharge, and (iv) any increase in 34 the equalized assessed value of the property which occurred subsequent 35 to the first valuation of the property after purchase by the owner. 36 § 6. This act shall take effect immediately; provided, however, that 37 the amendments to section 26-405 of the city rent and rehabilitation law 38 made by section one of this act shall remain in full force and effect 39 only as long as the public emergency requiring the regulation and 40 control of residential rents and evictions continues, as provided in 41 subdivision 3 of section 1 of the local emergency housing rent control 42 act; and provided, further, that the amendments to section 26-511 of 43 chapter 4 of title 26 of the administrative code of the city of New York 44 made by section two of this act shall expire on the same date as such 45 law expires and shall not affect the expiration of such law as provided 46 under section 26-520 of such law; and provided, further, that the amend- 47 ments to section 6 of the emergency tenant protection act of nineteen 48 seventy-four made by sections three and five of this act shall expire on 49 the same date as such act expires and shall not affect the expiration of 50 such act as provided in section 17 of chapter 576 of the laws of 1974; 51 and provided, further, that the amendments to section 4 of the emergency 52 housing rent control law made by section four of this act shall expire 53 on the same date as such law expires and shall not affect the expiration 54 of such law as provided in subdivision 2 of section 1 of chapter 274 of 55 the laws of 1946.