Bill Text: NY A07308 | 2023-2024 | General Assembly | Introduced

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Bill Title: Eliminates rent increase for major capital improvements.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-01-03 - referred to housing [A07308 Detail]

Download: New_York-2023-A07308-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          7308

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                      May 17, 2023
                                       ___________

        Introduced by M. of A. ARDILA -- read once and referred to the Committee
          on Housing

        AN  ACT  eliminating rent increases based on major capital improvements;
          to amend chapter 274 of the laws of 1946, constituting  the  emergency
          housing rent control law, the emergency tenant protection act of nine-
          teen seventy-four and the administrative code of the city of New York,
          in  relation  to  eliminating  rent increases to pay for major capital
          improvements

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  Legislative  findings  and  declaration of emergency. The
     2  legislature hereby finds and declares that the serious public  emergency
     3  which  led  to the enactment of the existing laws regulating residential
     4  rents and evictions continues to exist. The  legislature  further  finds
     5  that a majority of households currently occupying housing accommodations
     6  subject  to  rent  laws  are  rent-burdened; that permanent increases in
     7  rents are no longer necessary to incentivize rental property  owners  to
     8  make,  or  to compensate landlords for, necessary major capital improve-
     9  ments; that publicly funded  tax  incentives  and  other  subsidies  are
    10  available  to  rental  property owners to support major capital improve-
    11  ments; that value from major  capital  improvements  accrues  to  rental
    12  property owners through increased property values and sale prices; that,
    13  due  to  market  conditions  in  localities subject to rent laws, rental
    14  property owners are already able to realize a reasonable return on their
    15  investments in major capital  improvements  through  increased  property
    16  values and sale prices alone; and that provisions for hardship increases
    17  under  existing rent laws already ensure that rental property owners are
    18  able to operate rent regulated housing without incurring  undue  losses.
    19  The  legislature further declares and finds that a substantial number of
    20  the rent increases previously granted  for  major  capital  improvements
    21  were  tainted  by  inflated costs, particularly in the last seven years;

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD05277-01-3
        A. 7308                             2

     1  that the provision of rent increases for major capital  improvements  in
     2  existing rent laws has resulted in exactions of unjust, unreasonable and
     3  oppressive rents, as well as profiteering, speculation and other disrup-
     4  tive  practices tending to produce tenant dislocation and threats to the
     5  public health, safety  and  general  welfare;  that  such  results  were
     6  contrary to the intent and purpose of the existing rent laws; that it is
     7  therefore  necessary to amend the rent laws to remove any provision of a
     8  rent increase based upon major capital  improvements;  and  that  it  is
     9  additionally necessary to repeal rent increases based upon major capital
    10  improvements that became effective within the previous seven years.
    11    §  2.  (a)  The  division of housing and community renewal, the "divi-
    12  sion", shall administer the elimination of  rent  increases  based  upon
    13  major  capital  improvements pursuant to this act. The division shall no
    14  longer grant rent increases on the basis of major  capital  improvements
    15  at  buildings  subject to rent regulation or rent stabilization pursuant
    16  to the emergency rent control law, the emergency tenant  protection  act
    17  and/or  the  administrative  code  of  the city of New York. All pending
    18  applications for rent increases based upon  major  capital  improvements
    19  shall  be denied, and the division shall issue orders disposing of pend-
    20  ing applications as necessary.
    21    (b) Any rent increase based upon major capital improvements previously
    22  ordered by the division, pursuant to the emergency rent control law, the
    23  emergency tenant protection act and/or the administrative  code  of  the
    24  city of New York, with an effective date within the seven years prior to
    25  the  effective  date of this act shall be repealed effective immediately
    26  unless the division finds a basis for limiting the  repeal  pursuant  to
    27  subdivision  (d)  of  this  section.  For  all affected housing accommo-
    28  dations, the division shall determine what the present legal rent  would
    29  be  for each such accommodation if the division had not ordered any rent
    30  increases based upon major capital improvements during the repeal  peri-
    31  od, and this amount shall be the proposed new legal rent.
    32    (c) Within 180 days of the effective date of this act, the division of
    33  housing  and  community  renewal  shall determine the proposed new legal
    34  rents for all affected housing accommodations  pursuant  to  subdivision
    35  (b)  of  this section and shall also provide written notification to all
    36  current owners and tenants of affected accommodations as to  the  amount
    37  of the proposed new legal rents, the basis for the department's determi-
    38  nation, and the time for each affected party to submit additional infor-
    39  mation  that  the  division  shall consider before issuing a final order
    40  determining the new legal rents, which shall not be less than  45  days.
    41  Unless  an owner of an affected building has submitted a timely applica-
    42  tion to the division for a limitation pursuant  to  subdivision  (d)  of
    43  this section, the division shall issue a final order determining the new
    44  legal  rents  for affected housing accommodations within 365 days of the
    45  effective date of this act.
    46    (d) (1) Within 90 days of receiving written  notice  of  proposed  new
    47  legal  rents  from  the  division  pursuant  to  subdivision (c) of this
    48  section, a building owner may apply to the commissioner of  housing  and
    49  community renewal for an order limiting the amount of the repeal of rent
    50  increases  under  this  act  based upon a finding by the commissioner of
    51  housing and community renewal that the proposed new legal rents are  not
    52  sufficient  to  enable the owner to maintain an annual gross rent income
    53  for such building which exceeds the annual operating  expenses  of  such
    54  building  by a sum equal to at least five percent of such gross rent. In
    55  buildings for which the commissioner of housing  and  community  renewal
    56  finds that the proposed new legal rents are not sufficient to enable the
        A. 7308                             3

     1  owner  to  maintain  an annual gross rent income for such building which
     2  exceeds the annual operating expenses of such building by a sum equal to
     3  at least five percent of such gross rent,  the  repeal  amount  of  rent
     4  increases  based  upon major capital improvements shall be limited to an
     5  amount such that the annual operating expenses of the  building  do  not
     6  exceed  ninety-five percent of the new proposed annual gross rent income
     7  for such building.
     8    (2) For the purposes of this  subdivision,  operating  expenses  shall
     9  consist  of  the  actual,  reasonable,  costs of fuel, labor, utilities,
    10  taxes, other than income or corporate franchise  taxes,  fees,  permits,
    11  necessary  contracted  services and noncapital repairs, insurance, parts
    12  and supplies, management fees and other administrative costs  and  mort-
    13  gage  interest.  For the purposes of this subdivision, mortgage interest
    14  shall be deemed to mean interest on a bona fide  mortgage  including  an
    15  allocable  portion of charges related thereto. Criteria to be considered
    16  in determining a bona fide mortgage other than an institutional mortgage
    17  shall include: condition of the property, location of the property,  the
    18  existing mortgage market at the time the mortgage is placed, the term of
    19  the  mortgage,  the amortization rate, the principal amount of the mort-
    20  gage, security and other terms and conditions of the mortgage.  For  the
    21  purposes  of  this  subdivision, gross annual rent income for a building
    22  shall include a rental value set by  the  commissioner  of  housing  and
    23  community renewal for any unit occupied by the owner or a person related
    24  to the owner or unoccupied at the owner's choice for more than one month
    25  at  the  last  regulated  rent  plus  the  minimum  number of guidelines
    26  increases or, if no such regulated rent existed or is known, the commis-
    27  sioner shall impute a rent consistent  with  other  proposed  new  legal
    28  rents in the building.
    29    (e)  The  division  shall require that owners refund any increase in a
    30  tenant's security deposit amount collected in excess of a new legal rent
    31  established under this act within thirty days of the department's  issu-
    32  ance  of  an  order  determining  new  legal rents. Such excess security
    33  deposit amount may be refunded in the form  of  a  rent  credit  applied
    34  toward  the  affected  tenant's  next monthly rent payment, and affected
    35  tenants are entitled to self-deduct the refund amount from  future  rent
    36  payments.
    37    (f)  The  new legal rent shall be the legal rent beginning on the date
    38  rent is required to be paid next succeeding  the  issuance  of  a  final
    39  order determining new legal rents under this act.
    40    (g)  Any  lease agreement executed after the issuance of a final order
    41  determining new legal rents under this act shall be deemed  to  incorpo-
    42  rate the rent amounts and effective dates set forth in such order.
    43    (h)  Any  tenant  residing  in  an  affected housing accommodation may
    44  assert their entitlement to the repeal of prior rent  under  subdivision
    45  (b)  of this section, as a defense or counterclaim in any legal proceed-
    46  ing predicated upon a landlord's claim of default in the payment of rent
    47  pursuant to an agreement. Any court with jurisdiction over a  landlord's
    48  claim as to a tenant's default in the payment of rent shall also adjudi-
    49  cate  and  have  primary  jurisdiction  over the tenant's assertion of a
    50  defense or counterclaim under this provision if the department  has  not
    51  yet  issued  an order determining the new legal rent. A court order made
    52  under this subdivision shall not in any way be deemed to impair a build-
    53  ing owner's right or time to apply for a  limitation  under  subdivision
    54  (d) of this section.
        A. 7308                             4

     1    (i) All final orders issued by the department pursuant to subdivisions
     2  (b), (c), and (d) of this section shall be subject to appeal pursuant to
     3  existing procedures for administrative review before the division.
     4    §  3.  Paragraph 2 of subdivision 3-a, subparagraphs 7, 8, 9 and 10 of
     5  the second undesignated paragraph of paragraph (a) of subdivision  4  of
     6  section 4 of chapter 274 of the laws of 1946, constituting the emergency
     7  housing  rent  control  law, paragraph 2 of subdivision 3-a of section 4
     8  and subparagraph 8 of the second undesignated paragraph of paragraph (a)
     9  of subdivision 4 of section 4 as amended by section 8 of part K of chap-
    10  ter 36 of the laws of 2019, subparagraphs 9 and 10 of the second  undes-
    11  ignated  paragraph  of  paragraph  (a)  of subdivision 4 of section 4 as
    12  amended by section 25 of part B of chapter  97  of  the  laws  of  2011,
    13  subparagraph  7 of the second undesignated paragraph of paragraph (a) of
    14  subdivision 4 of section 4 as separately amended by section 25 of part Q
    15  of chapter 39 of the laws of 2019 and section 14 of part K of chapter 36
    16  of the laws of 2019, are amended to read as follows:
    17    (2) the amount of  increases  in  maximum  rent  authorized  by  order
    18  because of increases in dwelling space, services, furniture, furnishings
    19  or  equipment  [and  the  amount of the temporary increase authorized by
    20  order because of a major capital improvement].
    21    (7) [there has been since March first, nineteen hundred fifty, a major
    22  capital improvement essential for the preservation,  energy  efficiency,
    23  functionality,  or infrastructure of the entire building, improvement of
    24  the structure including heating,  windows,  plumbing  and  roofing,  but
    25  shall not be for operational costs or unnecessary cosmetic improvements;
    26  which  for any order of the commissioner issued after the effective date
    27  of the chapter of the laws of two thousand nineteen  that  amended  this
    28  paragraph the cost of such improvement shall be amortized over a twelve-
    29  year  period  for  buildings with thirty-five or fewer units or a twelve
    30  and one-half year period for buildings with more than thirty-five units,
    31  and shall be removed from the legal regulated rent thirty years from the
    32  date the increase became effective inclusive of any increases granted by
    33  the applicable rent guidelines board. Temporary major  capital  improve-
    34  ment  increases  shall  be collectible prospectively on the first day of
    35  the first month beginning sixty days from the date of mailing notice  of
    36  approval  to  the  tenant.  Such notice shall disclose the total monthly
    37  increase in rent and the first  month  in  which  the  tenant  would  be
    38  required  to  pay  the  temporary  increase. An approval for a temporary
    39  major  capital  improvement  increase  shall  not  include   retroactive
    40  payments. The collection of any increase shall not exceed two percent in
    41  any year from the effective date of the order granting the increase over
    42  the  rent  set forth in the schedule of gross rents, with collectability
    43  of any dollar excess above said sum to  be  spread  forward  in  similar
    44  increments  and added to the rent as established or set in future years.
    45  Upon vacancy, the landlord may add any remaining balance of  the  tempo-
    46  rary  major  capital  improvement  increase to the legal regulated rent.
    47  Notwithstanding any other provision of the law, for  any  renewal  lease
    48  commencing  on  or  after  June  14,  2019,  the  collection of any rent
    49  increases due to any major capital improvements  approved  on  or  after
    50  June  16,  2012 and before June 16, 2019 shall not exceed two percent in
    51  any year for any tenant in occupancy  on  the  date  the  major  capital
    52  improvement  was approved; provided, however, where an application for a
    53  temporary major capital improvement increase has been  filed,  a  tenant
    54  shall have sixty days from the date of mailing of a notice of a proceed-
    55  ing  in  which  to  answer  or  reply. The state division of housing and
    56  community renewal shall provide any responding tenant with  the  reasons
        A. 7308                             5

     1  for the division's approval or denial of such application; or (8)] there
     2  has  been  since  March  first,  nineteen  hundred  fifty, in structures
     3  containing more than four  housing  accommodations,  other  improvements
     4  made with the express informed consent of the tenants in occupancy of at
     5  least  seventy-five  per centum of the housing accommodations, provided,
     6  however, that no adjustment  granted  hereunder  shall  exceed  two  per
     7  centum  unless  the  tenants  have  agreed  to  a  higher  percentage of
     8  increase, as herein provided; [(9)] or (8) there has been,  since  March
     9  first, nineteen hundred fifty, a subletting without written consent from
    10  the landlord or an increase in the number of adult occupants who are not
    11  members  of the immediate family of the tenant, and the landlord has not
    12  been compensated therefor by adjustment of the maximum rent by lease  or
    13  order  of  the  commission or pursuant to the federal act; or [(10)] (9)
    14  the presence of unique or peculiar  circumstances  materially  affecting
    15  the  maximum  rent has resulted in a maximum rent which is substantially
    16  lower than the rents generally prevailing in the same area for  substan-
    17  tially similar housing accommodations.
    18    § 4. Paragraphs 3, 4, and 5 of subdivision d of section 6 of section 4
    19  of  chapter  576  of the laws of 1974, constituting the emergency tenant
    20  protection act of nineteen seventy-four, paragraph 3 of subdivision d as
    21  amended by section 26 of part Q of chapter 39 of the laws of 2019, para-
    22  graph 4 of subdivision d as amended by chapter 403 of the laws of  1983,
    23  paragraph  5  of  subdivision d as amended by chapter 102 of the laws of
    24  1984, are amended to read as follows:
    25    (3) [there has been since January first, nineteen hundred seventy-four
    26  a major capital improvement essential for the preservation, energy effi-
    27  ciency,  functionality,  or  infrastructure  of  the  entire   building,
    28  improvement  of  the  structure including heating, windows, plumbing and
    29  roofing, but shall not be for operation costs  or  unnecessary  cosmetic
    30  improvements.  An  adjustment under this paragraph shall be in an amount
    31  sufficient to amortize the cost of the  improvements  pursuant  to  this
    32  paragraph  over  a twelve-year period for a building with thirty-five or
    33  fewer housing accommodations, or a twelve  and  one-half  period  for  a
    34  building  with more than thirty-five housing accommodations and shall be
    35  removed from the legal regulated rent thirty years  from  the  date  the
    36  increase  became  effective  inclusive  of  any increases granted by the
    37  applicable rent guidelines board, for any determination  issued  by  the
    38  division  of  housing  and community renewal after the effective date of
    39  the chapter of the laws of two thousand nineteen that amended this para-
    40  graph. Temporary major capital improvement increases shall be  collecta-
    41  ble  prospectively  on  the first day of the first month beginning sixty
    42  days from the date of mailing notice of approval to the  tenant.    Such
    43  notice  shall  disclose the total monthly increase in rent and the first
    44  month in which the  tenant  would  be  required  to  pay  the  temporary
    45  increase. An approval for a temporary major capital improvement increase
    46  shall  not  include retroactive payments. The collection of any increase
    47  shall not exceed two percent in any year from the effective date of  the
    48  order  granting  the increase over the rent set forth in the schedule of
    49  gross rents, with collectability of any dollar excess above said sum  to
    50  be  spread forward in similar increments and added to the rent as estab-
    51  lished or set in future years. Upon vacancy, the landlord  may  add  any
    52  remaining balance of the temporary major capital improvement increase to
    53  the  legal  regulated  rent.  Notwithstanding any other provision of the
    54  law, the collection of any rent increases for any renewal lease commenc-
    55  ing on or after June 14, 2019, due to  any  major  capital  improvements
    56  approved  on  or  after June 16, 2012 and before June 16, 2019 shall not
        A. 7308                             6

     1  exceed two percent in any year for any tenant in occupancy on  the  date
     2  the major capital improvement was approved, or
     3    (4)]  an  owner  by  application  to the state division of housing and
     4  community renewal for increases in the  rents  in  excess  of  the  rent
     5  adjustment authorized by the rent guidelines board under this act estab-
     6  lishes  a  hardship,  and the state division finds that the rate of rent
     7  adjustment is not sufficient to enable the owner  to  maintain  approxi-
     8  mately  the  same  ratio between operating expenses, including taxes and
     9  labor costs but excluding debt service, financing costs, and  management
    10  fees,  and gross rents which prevailed on the average over the immediate
    11  preceding five year period, or for the entire life of  the  building  if
    12  less than five years, or
    13    [(5)] (4) as an alternative to the hardship application provided under
    14  paragraph [four] three of this subdivision, owners of buildings acquired
    15  by the same owner or a related entity owned by the same principals three
    16  years  prior  to  the  date of application may apply to the division for
    17  increases in excess of  the  level  of  applicable  guideline  increases
    18  established  under  this law based on a finding by the commissioner that
    19  such guideline increases are not sufficient to enable the owner to main-
    20  tain an annual gross rent income for such  building  which  exceeds  the
    21  annual  operating  expenses  of such building by a sum equal to at least
    22  five percent of such gross rent. For the  purposes  of  this  paragraph,
    23  operating  expenses  shall  consist  of the actual, reasonable, costs of
    24  fuel, labor, utilities, taxes, other than income or corporate  franchise
    25  taxes,  fees,  permits,  necessary  contracted  services and non-capital
    26  repairs, insurance, parts and supplies, management fees and other admin-
    27  istrative costs and mortgage interest. For the purposes  of  this  para-
    28  graph, mortgage interest shall be deemed to mean interest on a bona fide
    29  mortgage  including  an  allocable  portion  of charges related thereto.
    30  Criteria to be considered in determining a bona fide mortgage other than
    31  an institutional mortgage shall  include;  condition  of  the  property,
    32  location  of  the property, the existing mortgage market at the time the
    33  mortgage is placed, the term of the mortgage, the amortization rate, the
    34  principal amount of the mortgage, security and other  terms  and  condi-
    35  tions of the mortgage. The commissioner shall set a rental value for any
    36  unit  occupied  by the owner or a person related to the owner or unoccu-
    37  pied at the owner's choice for more than one month at the last regulated
    38  rent plus the minimum number of guidelines  increases  or,  if  no  such
    39  regulated rent existed or is known, the commissioner shall impute a rent
    40  consistent  with  other  rents  in  the building. The amount of hardship
    41  increase shall be such as may be required to maintain the  annual  gross
    42  rent  income as provided by this paragraph. The division shall not grant
    43  a hardship application under this paragraph or paragraph [four] three of
    44  this subdivision for a period of three years subsequent  to  granting  a
    45  hardship  application  under  the  provisions  of  this  paragraph.  The
    46  collection of any increase in the rent  for  any  housing  accommodation
    47  pursuant to this paragraph shall not exceed six percent in any year from
    48  the  effective date of the order granting the increase over the rent set
    49  forth in the schedule of gross rents, with collectability of any  dollar
    50  excess  above  said  sum  to be spread forward in similar increments and
    51  added to the rent as established or set in future years. No  application
    52  shall  be  approved  unless  the owner's equity in such building exceeds
    53  five percent of: (i) the arms length purchase  price  of  the  property;
    54  (ii)  the  cost  of any capital improvements for which the owner has not
    55  collected a surcharge; (iii) any repayment of principal of any  mortgage
    56  or  loan  used  to  finance  the purchase of the property or any capital
        A. 7308                             7

     1  improvements for which the owner has not collected a surcharge; and (iv)
     2  any increase in the equalized  assessed  value  of  the  property  which
     3  occurred  subsequent  to  the  first  valuation  of  the  property after
     4  purchase by the owner. For the purposes of this paragraph, owner's equi-
     5  ty shall mean the sum of (i) the purchase price of the property less the
     6  principal  of  any  mortgage or loan used to finance the purchase of the
     7  property, (ii) the cost of any capital improvement for which  the  owner
     8  has not collected a surcharge less the principal of any mortgage or loan
     9  used  to  finance said improvement, (iii) any repayment of the principal
    10  of any mortgage or loan used to finance the purchase of the property  or
    11  any  capital  improvement  for  which  the  owner  has  not  collected a
    12  surcharge, and (iv) any increase in the equalized assessed value of  the
    13  property which occurred subsequent to the first valuation of the proper-
    14  ty after purchase by the owner.
    15    § 5. Subparagraphs (g), (h), (i), (j), (k), (m) and (o) of paragraph 1
    16  of  subdivision  g  of  section 26-405 of the administrative code of the
    17  city of New York, subparagraph (g) as amended by section 27 of part Q of
    18  chapter 39 of the laws of 2019, subparagraph (k) as amended  by  chapter
    19  749 of the laws of 1990, are amended to read as follows:
    20    (g)  [There  has  been  since  July first, nineteen hundred seventy, a
    21  major capital improvement essential for the  preservation  energy  effi-
    22  ciency,   functionality,  or  infrastructure  of  the  entire  building,
    23  improvement of the structure including heating,  windows,  plumbing  and
    24  roofing  but  shall not be for operational costs or unnecessary cosmetic
    25  improvements. The temporary increase based upon a major capital improve-
    26  ment under this subparagraph for any order of  the  commissioner  issued
    27  after  the  effective  date  of  the chapter of the laws of two thousand
    28  nineteen that amended this subparagraph shall be in an amount sufficient
    29  to amortize the cost of the improvements pursuant to  this  subparagraph
    30  (g)  over  a  twelve-year period for buildings with thirty-five or fewer
    31  units or a twelve and one-half year period for buildings with more  than
    32  thirty-five  units,  and  shall be removed from the legal regulated rent
    33  thirty years from the date the increase became  effective  inclusive  of
    34  any increases granted by the applicable rent guidelines board. Temporary
    35  major  capital  improvement increases shall be collectible prospectively
    36  on the first day of the first month beginning sixty days from  the  date
    37  of  mailing notice of approval to the tenant. Such notice shall disclose
    38  the total monthly increase in rent and the  first  month  in  which  the
    39  tenant  would be required to pay the temporary increase. An approval for
    40  a temporary major capital improvement increase shall not include  retro-
    41  active  payments.  The  collection  of any increase shall not exceed two
    42  percent in any year from the effective date of the  order  granting  the
    43  increase  over  the  rent set forth in the schedule of gross rents, with
    44  collectability of any dollar excess above said sum to be spread  forward
    45  in  similar  increments  and  added to the rent as established or set in
    46  future years.  Upon vacancy, the landlord may add any remaining  balance
    47  of  the  temporary major capital improvement increase to the legal regu-
    48  lated rent. Notwithstanding any other provision  of  the  law,  for  any
    49  renewal  lease  commencing  on or after June 14, 2019, the collection of
    50  any rent increases due to any major capital improvements approved on  or
    51  after  June  16,  2012  and  before  June  16, 2019 shall not exceed two
    52  percent in any year for any tenant in occupancy on the  date  the  major
    53  capital improvement was approved, or
    54    (h) There have been since March first, nineteen hundred fifty-nine, in
    55  structures  containing  more  than  four  housing  accommodations, other
    56  improvements made with the express consent of the tenants  in  occupancy
        A. 7308                             8

     1  of  at  least  seventy-five  per  centum  of the housing accommodations;
     2  provided, however, that whenever the city  rent  agency  has  determined
     3  that  the improvements proposed were part of a plan designed for overall
     4  improvement  of the structure or increases in services, it may authorize
     5  increases in maximum rents for all housing accommodations affected  upon
     6  the  express  consent  of the tenants in occupancy of at least fifty-one
     7  per centum of the housing accommodations, and provided further  that  no
     8  adjustment  granted hereunder shall exceed fifteen per centum unless the
     9  tenants have agreed to  a  higher  percentage  of  increase,  as  herein
    10  provided; or
    11    (i)] There has been, since March first, nineteen hundred fifty-nine, a
    12  subletting  without  written consent from the landlord or an increase in
    13  the number of adult occupants who are not members of the immediate fami-
    14  ly of the tenant, and the landlord has not been compensated therefor  by
    15  adjustment of the maximum rent by lease or order of the city rent agency
    16  or pursuant to the state rent act or the federal act; or
    17    [(j)]  (h) The presence of unique or peculiar circumstances materially
    18  affecting the maximum rent has resulted  in  a  maximum  rent  which  is
    19  substantially lower than the rents generally prevailing in the same area
    20  for substantially similar housing accommodations.
    21    [(k)  The landlord has incurred, since January first, nineteen hundred
    22  seventy, in connection with and in addition to a concurrent major  capi-
    23  tal  improvement  pursuant  to subparagraph (g) of this paragraph, other
    24  expenditures to improve, restore or preserve the quality of  the  struc-
    25  ture.  An  adjustment  under  this subparagraph shall be granted only if
    26  such improvements represent an expenditure equal to  at  least  ten  per
    27  centum of the total operating and maintenance expenses for the preceding
    28  year.  An adjustment under this subparagraph shall be in addition to any
    29  adjustment granted for the  concurrent  major  capital  improvement  and
    30  shall  be  in  an amount sufficient to amortize the cost of the improve-
    31  ments pursuant to this subparagraph over a seven-year period.]
    32    [(m)] (i) Where the rehabilitation or improvement of  sub-standard  or
    33  deteriorated  housing  accommodations  has been financed under a govern-
    34  mental program providing assistance through loans, loan insurance or tax
    35  abatement or has been undertaken under  another  rehabilitation  program
    36  not so financed but approved by the commissioner.
    37    [(o)]  (j)  (1) There has been an increase in heating and heating fuel
    38  expenditures in a property resulting from a city-wide  rise  in  heating
    39  fuel  costs such that the verifiable expenditures for heating or heating
    40  fuel in a property for nineteen hundred seventy-four exceeds the verifi-
    41  able expenditures for such  heating  or  heating  fuel  during  nineteen
    42  hundred seventy-three.
    43    (2) To obtain a rental adjustment pursuant to this subparagraph [(o)],
    44  the  landlord  must  certify that he or she is presently maintaining all
    45  essential services required to be furnished with respect to the  housing
    46  accommodations  covered  by  such certification, and that he or she will
    47  continue to so maintain such essential services for the  period  of  any
    48  such adjustment.
    49    (3) To obtain a rental adjustment pursuant to this subparagraph [(o)],
    50  the  landlord must certify on information and belief that he or she will
    51  not be earning an amount in excess of the statutory return specified  in
    52  subparagraph  (a)  of  this  paragraph  [one  of  subdivision  g of this
    53  section] after collection of such rental adjustment, with respect to the
    54  building or buildings serviced by a single heating plant; and where  the
    55  building,  or  buildings  serviced  by  a single heating plant, contains
    56  forty-nine or fewer housing accommodations, the  landlord  must  certify
        A. 7308                             9

     1  that  the  amount expended directly for heating or heating fuel in nine-
     2  teen hundred seventy-four equalled or exceeded ten per cent of the total
     3  rental income which  was  derived  from  the  property  during  nineteen
     4  hundred  seventy-four; and, where the building, or buildings serviced by
     5  a single heating plant, contains fifty or  more  housing  accommodations
     6  the  landlord must certify that the amount expended directly for heating
     7  or heating fuel in nineteen hundred seventy-four  equalled  or  exceeded
     8  seven  and  one-half  percentum  of  the  total  rental income which was
     9  derived from the property during nineteen hundred seventy-four.
    10    (4) The total rental adjustments for a property  to  be  allocated  or
    11  deemed  allocated  pursuant  to this subparagraph [(o)] shall not exceed
    12  one-half of the gross amount by which the total verifiable  expenditures
    13  for  heating  or  heating fuel for nineteen hundred seventy-four exceeds
    14  the total verifiable expenditures for such heating or heating  fuel  for
    15  nineteen hundred seventy-three.
    16    (5)  Such  total rental adjustments shall be allocated or deemed allo-
    17  cated pursuant to this subparagraph [(o)] to all housing  accommodations
    18  subject to this chapter, to all other housing accommodations, and to all
    19  commercial,  professional  and  similar facilities in or associated with
    20  the property in a manner to be determined by the  agency.  In  no  event
    21  shall any adjustment in maximum rent pursuant to this subparagraph [(o)]
    22  for  any housing accommodations subject to this chapter exceed a monthly
    23  increase of two dollars per room, as defined by item eight below. In any
    24  apartment containing five or more rooms, any increase shall  not  exceed
    25  the total of nine dollars.
    26    (6) Any adjustment pursuant to this subparagraph [(o)] shall be effec-
    27  tive  for  all or part of the period July first, nineteen hundred seven-
    28  ty-five  through  June  thirtieth,  nineteen  hundred  seventy-six.  Any
    29  adjustment  pursuant  to this subparagraph shall automatically expire no
    30  later than June thirtieth, nineteen hundred seventy-six.
    31    (7) The rental increases provided for herein shall  be  effective  and
    32  collectible upon the landlord's filing a report with the agency on forms
    33  prescribed  by  the agency and upon giving such notice to the tenants as
    34  the agency shall prescribe, subject to adjustments  upon  order  of  the
    35  agency.
    36    (8)  In  determining  the  amount  of  an  adjustment allocation of an
    37  adjustment pursuant to  this  subparagraph  [(o)],  only  living  rooms,
    38  kitchens  over fifty-nine square feet in area, dining rooms and bedrooms
    39  shall be considered rooms; bathrooms, foyers, and kitchenettes shall not
    40  be considered rooms.
    41    § 6. Subdivision a of section 26-407 of the administrative code of the
    42  city of New York is amended to read as follows:
    43    a. Notwithstanding any provisions of  this  chapter,  any  labor  cost
    44  pass-along  rent  increase requested of, or received from, any tenant on
    45  or after July first, nineteen  hundred  seventy-two[,  pursuant  to  the
    46  provisions  of  subparagraph  (1)  of  paragraph one of subdivision g of
    47  section 26-405 of this title,] shall not exceed the maximum rent adjust-
    48  ment as provided under this chapter after the  effective  date  of  this
    49  section.
    50    § 7. Paragraph 6 of subdivision c of section 26-511 of the administra-
    51  tive code of the city of New York as separately amended by section 12 of
    52  part  K of chapter 36 and section 28 of part Q of chapter 39 of the laws
    53  of 2019, is amended to read as follows:
    54    (6) provides criteria whereby the commissioner may act  upon  applica-
    55  tions  by  owners  for  increases  in  excess  of the level of fair rent
    56  increase established under this law provided, however, that such  crite-
        A. 7308                            10

     1  ria  shall provide [(a)] as to hardship applications, for a finding that
     2  the level of fair rent increase is not sufficient to enable the owner to
     3  maintain approximately the same average annual net income  (which  shall
     4  be  computed  without regard to debt service, financing costs or manage-
     5  ment fees) for the three year period ending on or within six  months  of
     6  the  date  of  an application pursuant to such criteria as compared with
     7  annual net income, which prevailed on the average over the period  nine-
     8  teen  hundred  sixty-eight  through nineteen hundred seventy, or for the
     9  first three years of operation if the building was completed since nine-
    10  teen hundred sixty-eight or for the first three  fiscal  years  after  a
    11  transfer of title to a new owner provided the new owner can establish to
    12  the  satisfaction  of  the commissioner that he or she acquired title to
    13  the building as a result of a bona fide sale of the entire building  and
    14  that  the new owner is unable to obtain requisite records for the fiscal
    15  years nineteen hundred  sixty-eight  through  nineteen  hundred  seventy
    16  despite  diligent  efforts to obtain same from predecessors in title and
    17  further provided that the new owner can provide financial data  covering
    18  a  minimum  of  six  years under his or her continuous and uninterrupted
    19  operation of the building to meet the three year to three  year  compar-
    20  ative  test  periods herein provided[; and (b) as to completed building-
    21  wide major capital improvements, for a finding  that  such  improvements
    22  are deemed depreciable under the Internal Revenue Code and that the cost
    23  is  to  be amortized over a twelve-year period for a building with thir-
    24  ty-five or fewer housing accommodations, or a twelve  and  one-half-year
    25  period for a building with more than thirty-five housing accommodations,
    26  for  any  determination  issued by the division of housing and community
    27  renewal after the effective date of the the chapter of the laws  of  two
    28  thousand  nineteen that amended this paragraph and shall be removed from
    29  the legal regulated rent thirty years from the date the increase  became
    30  effective  inclusive  of  any  increases  granted by the applicable rent
    31  guidelines board. Temporary major capital improvement increases shall be
    32  collectible prospectively on the first day of the first month  beginning
    33  sixty  days  from  the date of mailing notice of approval to the tenant.
    34  Such notice shall disclose the total monthly increase in  rent  and  the
    35  first  month  in which the tenant would be required to pay the temporary
    36  increase. An approval for a temporary major capital improvement increase
    37  shall not include retroactive payments. The collection of  any  increase
    38  shall  not exceed two percent in any year from the effective date of the
    39  order granting the increase over the rent set forth in the  schedule  of
    40  gross  rents, with collectability of any dollar excess above said sum to
    41  be spread forward in similar increments and added to the rent as  estab-
    42  lished  or  set in future years.  Upon vacancy, the landlord may add any
    43  remaining balance of the temporary major capital improvement increase to
    44  the legal regulated rent. Notwithstanding any  other  provision  of  the
    45  law,  for  any  renewal  lease commencing on or after June 14, 2019, the
    46  collection of any rent increases due to any major  capital  improvements
    47  approved  on  or  after June 16, 2012 and before June 16, 2019 shall not
    48  exceed two percent in any year for any tenant in occupancy on  the  date
    49  the  major  capital improvement was approved or based upon cash purchase
    50  price exclusive of interest or service charges. Where an application for
    51  a temporary major capital improvement increase has been filed, a  tenant
    52  shall have sixty days from the date of mailing of a notice of a proceed-
    53  ing  in  which  to  answer  or  reply. The state division of housing and
    54  community renewal shall provide any responding tenant with  the  reasons
    55  for  the  division's  approval  or denial of such application.] Notwith-
    56  standing anything to the contrary contained herein, no hardship increase
        A. 7308                            11

     1  granted pursuant to this paragraph shall, when added to the annual gross
     2  rents, as determined by the commissioner, exceed the  sum  of,  (i)  the
     3  annual  operating expenses, (ii) an allowance for management services as
     4  determined  by  the  commissioner,  (iii)  actual  annual  mortgage debt
     5  service (interest and amortization) on its  indebtedness  to  a  lending
     6  institution,  an  insurance  company,  a retirement fund or welfare fund
     7  which is operated under the supervision of the banking or insurance laws
     8  of the state of New York or the United States, and (iv) eight  and  one-
     9  half  percent  of  that portion of the fair market value of the property
    10  which exceeds the unpaid principal amount of the  mortgage  indebtedness
    11  referred  to  in subparagraph (iii) of this paragraph. Fair market value
    12  for the purposes of this paragraph shall be six times the  annual  gross
    13  rent.  The  collection  of  any  increase in the stabilized rent for any
    14  apartment pursuant to this paragraph shall not exceed six percent in any
    15  year from the effective date of the order granting the increase over the
    16  rent set forth in the schedule of gross rents,  with  collectability  of
    17  any  dollar excess above said sum to be spread forward in similar incre-
    18  ments and added to the stabilized rent as established or set  in  future
    19  years;
    20    §  8. If any clause, sentence, paragraph, subdivision, section or part
    21  of this act shall be adjudged by any court of competent jurisdiction  to
    22  be  invalid,  such  judgment shall not affect, impair, or invalidate the
    23  remainder thereof, but shall be confined in its operation to the clause,
    24  sentence, paragraph,  subdivision,  section  or  part  thereof  directly
    25  involved  in  the  controversy  in  which  such judgment shall have been
    26  rendered. It is hereby declared to be the intent of the legislature that
    27  this act would have been enacted even if such invalid provisions had not
    28  been included herein. It is further declared to be  the  intent  of  the
    29  legislature  that  this act would have been enacted even if subdivisions
    30  (b), (c), (d), (e), (f), (g), (h), and (i) of section two  of  this  act
    31  had not been included herein.
    32    § 9. This act shall take effect immediately; provided:
    33    (a)  that the amendments to section 26-511 of chapter 4 of title 26 of
    34  the administrative code of the city of New York made by section seven of
    35  this act shall expire on the same date as such law expires and shall not
    36  affect the expiration of such law as provided under  section  26-520  of
    37  such law; and
    38    (b) that the amendments to sections 26-405 and 26-407 of the city rent
    39  and  rehabilitation  law made by sections five and six of this act shall
    40  remain in full force and effect only as long  as  the  public  emergency
    41  requiring  the regulation and control of residential rents and evictions
    42  continues, as provided in subdivision 3 of section 1 of the local  emer-
    43  gency housing rent control act.
    44    (c)  Effective  immediately,  the addition, amendment and/or repeal of
    45  any rule or regulation necessary for the implementation of this  act  on
    46  its  effective date are authorized to be made and completed on or before
    47  such effective date.