Bill Text: NY A08051 | 2019-2020 | General Assembly | Introduced


Bill Title: Relates to establishing commercial rent regulation; establishes a right to renew leases and authorizes the rent guidelines board to establish maximum rents.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2020-01-08 - referred to cities [A08051 Detail]

Download: New_York-2019-A08051-Introduced.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                          8051

                               2019-2020 Regular Sessions

                   IN ASSEMBLY

                                      May 31, 2019
                                       ___________

        Introduced  by M. of A. EPSTEIN -- read once and referred to the Commit-
          tee on Cities

        AN ACT to amend the administrative code of the  city  of  New  York,  in
          relation to establishing commercial rent regulation

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

     1    Section 1. Title 22 of the administrative code of the city of New York
     2  is amended by adding a new chapter 12 to read as follows:
     3                                 CHAPTER 12
     4                         COMMERCIAL RENT REGULATION

     5    § 22-1201 Scope. This chapter shall apply to all leases for commercial
     6  premises. On any occasion wherein a landlord and tenant are required  to
     7  negotiate  the  terms  of  a lease for commercial uses the provisions of
     8  this chapter shall apply. The provisions of this chapter shall apply  to
     9  any  commercial  lease entered into on or after October first, two thou-
    10  sand twenty.
    11    § 22-1202 Definitions. a. "Commercial premises" shall mean a  building
    12  or space occupied for non-residential purposes including, but not limit-
    13  ed  to,  manufacturing, retail, professional services, offices, assembl-
    14  ing, processing, cultural and not-for-profit entities that  are  present
    15  in the city of New York, who have a valid commercial lease.
    16    b.  "Landlord" shall mean any owner, lessor, sublessor or other person
    17  entitled to receive rent for the use  or  occupancy  of  any  commercial
    18  premises, or an agent thereof.
    19    c. "Negotiation" shall mean the process of conferring with one another
    20  through conferences, discussions and compromise, to arrive at a mutually
    21  agreeable settlement.
    22    d.  "Rent"  shall  mean  any  and all consideration, including but not
    23  limited to pass-alongs, received by the landlord in connection with  the
    24  use or occupancy of any commercial premises.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11223-01-9

        A. 8051                             2

     1    e.  "Tenant"  shall  mean tenant, subtenant, lessee, sublessee, or any
     2  other persons lawfully entitled to use or occupancy  of  any  commercial
     3  premises.
     4    §  22-1203  Rental  guidelines.  a.  The  legal regulated rent for any
     5  vacancy lease of a commercial premises shall be established and  may  be
     6  increased by an amount promulgated by the rent guidelines board pursuant
     7  to  section  22-104  of this chapter. Such leases shall be for a minimum
     8  term of ten years, provided however, that at the  tenant's  option,  and
     9  with  the written approval of the landlord, a lease of shorter or longer
    10  duration may be selected.
    11    b. All leases of a commercial premises may be renewed at the option of
    12  a tenant who did not lose the right to renew a lease under  the  grounds
    13  described  in subdivision d of this section. The legal regulated rent to
    14  be paid for any lease renewal of a commercial premises may be  increased
    15  by  an  amount  promulgated  by  the  rent  guidelines board pursuant to
    16  section 22-104 of this chapter. Such lease renewals shall be for a mini-
    17  mum term of ten years, provided however, that at  the  tenant's  option,
    18  and  with  the  written  approval of the landlord, a lease of shorter or
    19  longer duration may be selected.
    20    c. No period of lease extension required by this chapter shall  extend
    21  beyond the landlord's lawful ability to rent the premises to the tenant,
    22  where such ability is limited by:
    23    (1) the obligation to rent the premises to a third party pursuant to a
    24  bona  fide  lease entered into prior to the effective date of this chap-
    25  ter;
    26    (2) the exercise by a third party of a bona fide option  to  rent  the
    27  premises provided that such option was given prior to the effective date
    28  of this chapter; or
    29    (3) any other lawful reason arising prior to such effective date.
    30    d.  A tenant shall lose the right of renewal and a landlord may refuse
    31  to renew a lease only on the following grounds:
    32    (1) The tenant has persistently delayed rent payments  without  cause.
    33  For the purpose of this subdivision, "cause" is defined as the withhold-
    34  ing  of  rental  payments by the tenant due to the alleged violations of
    35  the rental agreement by the landlord. In order for the  landlord  to  be
    36  excused  from  renewal on this ground, the landlord must have served the
    37  tenant at least three prior notices during the term of the lease to  the
    38  tenant  for demand of payment within thirty days, and then show that the
    39  lessee has not paid within such thirty day period.  The  landlord  shall
    40  not serve such notice unless the rent payment was in arrears for a mini-
    41  mum of fifteen days;
    42    (2)  The tenant uses the commercial premises in a manner substantially
    43  different from that described in the lease;
    44    (3) The tenant conducts or permits any form of illegal activity on the
    45  premises;
    46    (4) The tenant has substantially breached any  substantive  obligation
    47  under the current lease and has failed to cure such breach within thirty
    48  days following written notice to cure by the landlord;
    49    (5) Upon the termination of the current tenancy, the landlord intends,
    50  in  good faith, to demolish or substantially reconstruct the premises or
    51  a substantial  part  thereof,  or  to  carry  out  substantial  work  or
    52  construction  on  the  commercial  premises  or substantial part thereof
    53  which he or she could not reasonably do without obtaining possession  of
    54  the commercial premises.  The landlord shall notify the tenant of his or
    55  her decision to reoccupy the commercial premises at least one year prior
    56  to  the  termination  of the lease. In the event that the lessor fraudu-

        A. 8051                             3

     1  lently invokes this justification for a refusal to  renew  a  commercial
     2  lease,  the  defrauded  tenant  may  collect treble damages for any loss
     3  suffered as a result of such action;
     4    (6) The current tenancy was created by the subletting of the property,
     5  whereby  the  prime tenant did not notify the landlord by certified mail
     6  of the subtenant's existence and did not obtain the written  consent  of
     7  the  landlord. This ground is void if the landlord and tenant had agreed
     8  in the lease to allow subleasing rights without the consent of the land-
     9  lord and all obligations of the  prime  tenant  on  the  issue  were  in
    10  compliance;
    11    (7)  It  has  been  determined  by an agency with jurisdiction or by a
    12  civil court of competent jurisdiction that the tenant  is  a  gross  and
    13  persistent  violator  of  New  York  city tax laws, of any license obli-
    14  gations related to the use of the premises or of any laws of the city of
    15  New York;
    16    (8) Upon the termination of the current tenancy, the landlord  intends
    17  to  occupy  the  retail premises in order to carry out its own business,
    18  which cannot be the same type of business that  the  current  tenant  is
    19  operating,  unless  the  landlord  compensates the tenant at fair market
    20  value. The landlord shall notify the tenant of his or  her  decision  to
    21  reoccupy  the  premises  at  least  one hundred eighty days prior to the
    22  termination of the lease. In the event that  the  landlord  fraudulently
    23  invokes  this  justification  for a refusal to renew a commercial lease,
    24  the defrauded tenant may collect treble damages for any loss suffered as
    25  a result of such action.
    26    e. Where the landlord agrees to renew the lease of the current tenant,
    27  such landlord shall notify the tenant at least one hundred  eighty  days
    28  prior  to the expiration of the lease of his or her willingness to nego-
    29  tiate the renewal of the commercial lease agreement. If the landlord and
    30  tenant agree, they may at any time renegotiate a  new  lease,  with  any
    31  agreed  to terms and conditions, not inconsistent with the provisions of
    32  this chapter.
    33    § 22-1204 Rent guidelines board. a. The rent guidelines board,  estab-
    34  lished  pursuant  to section 26-510 of this code, shall establish annual
    35  guidelines for legal regulated rent for vacancy and renewal leases,  and
    36  in  determining  such amounts shall consider, among other things (1) the
    37  economic condition  of  the  commercial  real  estate  industry  in  the
    38  affected area including such factors as the prevailing and projected (i)
    39  real  estate taxes and sewer and water rates, (ii) gross operating main-
    40  tenance costs (including insurance rates,  governmental  fees,  cost  of
    41  fuel  and  labor  costs),  (iii)  costs  and  availability  of financing
    42  (including effective rates of interest), (iv) over-all supply of commer-
    43  cial premises and over-all vacancy rates, (2)  relevant  data  from  the
    44  current  and  projected  cost of leasing for the affected area, (3) such
    45  other data as may be made available to it.
    46    b. Beginning July first, two thousand twenty, and annually thereafter,
    47  the rent guidelines board shall file with the city  clerk  its  findings
    48  for  the preceding calendar year, and shall accompany such findings with
    49  a statement of the maximum rate or rates of rent for commercial premises
    50  subject to this law, authorized for leases or  commencing  on  the  next
    51  succeeding  October  first  or within the twelve months thereafter. Such
    52  findings and statement shall be published in the City Record.
    53    c. The rent guidelines board prior to the  annual  adjustment  of  the
    54  level of fair rents provided for under this section for commercial prem-
    55  ises  covered  by  this law, shall hold a public hearing or hearings for
    56  the purpose of collecting information relating to all factors set  forth

        A. 8051                             4

     1  in  subdivision  a  of this section.  Notice of the date, time, location
     2  and summary of subject matter for the public hearing or  hearings  shall
     3  be  published  in  the  City  Record daily for a period of not less than
     4  eight days and at least once in one or more newspapers of general circu-
     5  lation  at  least eight days immediately preceding each hearing date, at
     6  the expense of the city of New York, and the hearing shall be  open  for
     7  testimony  from  any  individual,  group,  association or representative
     8  thereof who wants to testify.
     9    d. Maximum rates of rent shall not be established more than once annu-
    10  ally for any commercial premises within the board's  jurisdiction.  Once
    11  established, no such rate shall, within the one-year period, be adjusted
    12  by any surcharge, supplementary adjustment or other modification.
    13    §  22-1205  Security  deposits.  Security deposits shall not exceed an
    14  amount equal to two months rent. All security deposits shall  be  placed
    15  in  escrow  in  an  interest-bearing account at a federally insured bank
    16  located in New York state. The tenant shall be notified  in  writing  of
    17  the  location of such escrow account. Interest paid on the account shall
    18  be paid in full to the tenant upon termination of the lease.  The amount
    19  of interest paid to the tenant shall equal the  interest  paid  by  such
    20  federally  insured  bank less one percent for the landlord's administra-
    21  tive costs.
    22    § 22-1206 Retaliation. No landlord shall in any way retaliate  against
    23  any  tenant  for  the tenant's assertion or exercise of any rights under
    24  this chapter. Any such retaliation may subject the landlord  to  a  suit
    25  for actual and punitive damages, injunctive relief, and attorney's fees.
    26    §  22-1207  Waiver.  No  provision  in any lease, rental agreement, or
    27  agreement made in connection therewith which waives  or  diminishes  any
    28  right of tenant under this chapter is valid.
    29    §  22-1208  Inconsistency  with other laws. In the event of any incon-
    30  sistency with any other laws of the city of New  York,  this  law  shall
    31  take precedence.
    32    § 2. Severability. If any clause, sentence, paragraph, section or part
    33  of  this act shall be adjudged by any court of competent jurisdiction to
    34  be invalid and after exhaustion of  all  further  judicial  review,  the
    35  judgment  shall  not affect, impair or invalidate the remainder thereof,
    36  but shall be confined in its operation to the  clause,  sentence,  para-
    37  graph,  section or part of this act directly involved in the controversy
    38  in which the judgment shall have been rendered.
    39    § 3. This act shall take effect on the ninetieth day  after  it  shall
    40  have  become a law. Effective immediately the addition, amendment and/or
    41  repeal of any rule or regulation necessary  for  the  implementation  of
    42  this  act  on its effective date are authorized to be made and completed
    43  on or before such effective date.
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