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A01297 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          1297
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 11, 2017
                                       ___________
 
        Introduced  by  M.  of A. KAVANAGH, DINOWITZ, ROSENTHAL, PERRY -- Multi-
          Sponsored by -- M. of A. FARRELL, GOTTFRIED -- read once and  referred
          to the Committee on Housing
 
        AN  ACT to amend the administrative code of the city of New York and the
          emergency tenant protection act of nineteen seventy-four, in  relation
          to hardship applications

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Paragraph 6-a of subdivision c of  section  26-511  of  the
     2  administrative  code  of  the  city  of  New  York is amended to read as
     3  follows:
     4    (6-a) provides criteria whereby as  an  alternative  to  the  hardship
     5  application  provided  under paragraph six of this subdivision owners of
     6  buildings acquired by the same owner or a related entity  owned  by  the
     7  same  principals  [three] six years prior to the date of application may
     8  apply to the division for increases in excess of the level of applicable
     9  guideline increases established under this law based on a finding by the
    10  commissioner that such guideline increases are not sufficient to  enable
    11  the  owner  to  maintain  an  annual gross rent income for such building
    12  which exceeds the annual operating expenses of such building  by  a  sum
    13  equal  to  at least five percent of such gross rent. For the purposes of
    14  this paragraph, operating expenses shall consist of the actual,  reason-
    15  able,  costs  of  fuel,  labor,  utilities,  taxes, other than income or
    16  corporate franchise taxes, fees, permits, necessary contracted  services
    17  and  non-capital repairs, insurance, parts and supplies, management fees
    18  and other administrative costs and mortgage interest. For  the  purposes
    19  of this paragraph, mortgage interest shall be deemed to mean interest on
    20  a  bona  fide mortgage including an allocable portion of charges related
    21  thereto. Criteria to be considered in determining a bona  fide  mortgage
    22  other  than  an  institutional  mortgage shall include; condition of the
    23  property, location of the property, the existing mortgage market at  the

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01449-01-7

        A. 1297                             2
 
     1  time  the mortgage is placed, the term of the mortgage, the amortization
     2  rate, the principal amount of the mortgage, security and other terms and
     3  conditions of the mortgage. The commissioner shall set  a  rental  value
     4  for  any  unit occupied by the owner or a person related to the owner or
     5  unoccupied at the owner's choice for more than one  month  at  the  last
     6  regulated rent plus the minimum number of guidelines increases or, if no
     7  such regulated rent existed or is known, the commissioner shall impute a
     8  rent consistent with other rents in the building. The amount of hardship
     9  increase  shall  be such as may be required to maintain the annual gross
    10  rent income as provided by this paragraph. The division shall not  grant
    11  a  hardship  application  under  this paragraph or paragraph six of this
    12  subdivision for a period of three years subsequent to granting  a  hard-
    13  ship  application under the provisions of this paragraph. The collection
    14  of any increase in the rent for any housing  accommodation  pursuant  to
    15  this  paragraph shall not exceed six percent in any year from the effec-
    16  tive date of the order granting the increase over the rent set forth  in
    17  the  schedule  of  gross rents, with collectability of any dollar excess
    18  above said sum to be spread forward in similar increments and  added  to
    19  the  rent as established or set in future years. No application shall be
    20  approved unless the owner's equity in such building exceeds five percent
    21  of: (i) the arms length purchase price of the property; (ii) the cost of
    22  any capital improvements  for  which  the  owner  has  not  collected  a
    23  surcharge; (iii) any repayment of principal of any mortgage or loan used
    24  to  finance the purchase of the property or any capital improvements for
    25  which the owner has not collected a surcharge and (iv) any  increase  in
    26  the  equalized  assessed value of the property which occurred subsequent
    27  to the first valuation of the property after purchase by the owner.  For
    28  the purposes of this paragraph, owner's equity shall mean the sum of (i)
    29  the purchase price of the property less the principal of any mortgage or
    30  loan  used to finance the purchase of the property, (ii) the cost of any
    31  capital improvement for which the owner has not  collected  a  surcharge
    32  less the principal of any mortgage or loan used to finance said improve-
    33  ment,  (iii) any repayment of the principal of any mortgage or loan used
    34  to finance the purchase of the property or any capital  improvement  for
    35  which  the owner has not collected a surcharge, and (iv) any increase in
    36  the equalized assessed value of the property which  occurred  subsequent
    37  to the first valuation of the property after purchase by the owner.
    38    § 2. Paragraph 5 of subdivision d of section 6 of section 4 of chapter
    39  576  of the laws of 1974 enacting the emergency tenant protection act of
    40  nineteen seventy-four, as amended by chapter 102 of the laws of 1984, is
    41  amended to read as follows:
    42    (5) as an alternative to the hardship application provided under para-
    43  graph four of this subdivision, owners of buildings acquired by the same
    44  owner or a related entity owned by the same principals [three] six years
    45  prior to the date of application may apply to the division for increases
    46  in excess of the level of  applicable  guideline  increases  established
    47  under  this  law based on a finding by the commissioner that such guide-
    48  line increases are not sufficient to enable the  owner  to  maintain  an
    49  annual  gross  rent  income  for  such building which exceeds the annual
    50  operating expenses of such building by a sum  equal  to  at  least  five
    51  percent  of such gross rent. For the purposes of this paragraph, operat-
    52  ing expenses shall consist of the actual,  reasonable,  costs  of  fuel,
    53  labor, utilities, taxes, other than income or corporate franchise taxes,
    54  fees,  permits,  necessary  contracted services and non-capital repairs,
    55  insurance, parts and supplies, management fees and other  administrative
    56  costs  and  mortgage interest. For the purposes of this paragraph, mort-

        A. 1297                             3
 
     1  gage interest shall be deemed to mean interest on a bona  fide  mortgage
     2  including  an allocable portion of charges related thereto.  Criteria to
     3  be considered in determining a bona fide mortgage other than an institu-
     4  tional  mortgage  shall  include; condition of the property, location of
     5  the property, the existing mortgage market at the time the  mortgage  is
     6  placed,  the  term of the mortgage, the amortization rate, the principal
     7  amount of the mortgage, security and other terms and conditions  of  the
     8  mortgage.  The  commissioner shall set a rental value for any unit occu-
     9  pied by the owner or a person related to the owner or unoccupied at  the
    10  owner's  choice  for more than one month at the last regulated rent plus
    11  the minimum number of guidelines increases or, if no such regulated rent
    12  existed or is known, the commissioner shall  impute  a  rent  consistent
    13  with  other rents in the building. The amount of hardship increase shall
    14  be such as may be required to maintain the annual gross rent  income  as
    15  provided  by  this  paragraph.  The  division shall not grant a hardship
    16  application under this paragraph or paragraph four of  this  subdivision
    17  for  a  period of three years subsequent to granting a hardship applica-
    18  tion under the provisions of  this  paragraph.  The  collection  of  any
    19  increase  in  the  rent  for  any housing accommodation pursuant to this
    20  paragraph shall not exceed six percent in any year  from  the  effective
    21  date  of  the order granting the increase over the rent set forth in the
    22  schedule of gross rents, with collectability of any dollar excess  above
    23  said  sum  to  be  spread forward in similar increments and added to the
    24  rent as established or set in future  years.  No  application  shall  be
    25  approved unless the owner's equity in such building exceeds five percent
    26  of: (i) the arms length purchase price of the property; (ii) the cost of
    27  any  capital  improvements  for  which  the  owner  has  not collected a
    28  surcharge; (iii) any repayment of principal of any mortgage or loan used
    29  to finance the purchase of the property or any capital improvements  for
    30  which  the owner has not collected a surcharge; and (iv) any increase in
    31  the equalized assessed value of the property which  occurred  subsequent
    32  to  the first valuation of the property after purchase by the owner. For
    33  the purposes of this paragraph, owner's equity shall mean the sum of (i)
    34  the purchase price of the property less the principal of any mortgage or
    35  loan used to finance the purchase of the property, (ii) the cost of  any
    36  capital  improvement  for  which the owner has not collected a surcharge
    37  less the principal of any mortgage or loan used to finance said improve-
    38  ment, (iii) any repayment of the principal of any mortgage or loan  used
    39  to  finance  the purchase of the property or any capital improvement for
    40  which the owner has not collected a surcharge, and (iv) any increase  in
    41  the  equalized  assessed value of the property which occurred subsequent
    42  to the first valuation of the property after purchase by the owner.
    43    § 3. This act shall take effect immediately; provided that the  amend-
    44  ments  to  section 26-511 of chapter 4 of title 26 of the administrative
    45  code of the city of New York made by  section  one  of  this  act  shall
    46  expire  on  the  same  date as such law expires and shall not affect the
    47  expiration of such law as provided under section 26-520 of such law; and
    48  provided that the amendments  to  section  6  of  the  emergency  tenant
    49  protection  act of nineteen seventy-four made by section two of this act
    50  shall expire on the same date as such act expires and shall  not  affect
    51  the  expiration  of such act as provided in section 17 of chapter 576 of
    52  the laws of 1974.
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