Amd S17, Chap 576 of 1974; rpld S2 sub 2 (n), amd Emerg Hous Ren Cont L, generally; amd S2, Chap 329 of 1963;
amd S10, Chap 555 of 1982; amd S4, Chap 402 of 1983; amd S46, Chap 116 of 1997; rpld S5 sub a 13, amd Emerg
Ten Prot Act of 1974, generally; rpld S26-504.2, S26-403 sub e 2 sub (k), S26-405 sub g 1 sub (l) & (n), amd
NYC Ad Cd, generally; amd S213-a, add S3012-c, CPLR; amd S241.05, add S241.03, Pen L; amd S235-e, RP L; amd
SS282-a & 284, Mult Dwell L; rpld S27 sub (h), Chap 4 of 2013
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7526
SPONSOR: Wright (MS) TITLE OF BILL:
An act to amend chapter 576 of the laws of 1974 amending the emergency
housing rent control law relating to the control of and stabilization of
rent in certain cases, the emergency housing rent control law, chapter
329 of the laws of 1963 amending the emergency housing rent control law
relating to recontrol of rents in Albany, chapter 555 of the laws of
1982 amending the general business law and the administrative code of
the city of New York relating to conversion of residential property to
cooperative or condominium ownership in the city of New York, chapter
402 of the laws of 1983 amending the general business law relating to
conversion of rental residential property to cooperative or condominium
ownership in certain municipalities in the counties of Nassau, Westches-
ter and Rockland and the rent regulation reform act of 1997, in relation
to extending the effectiveness thereof; to amend the administrative code
of the city of New York, the emergency tenant protection act of nineteen
seventy-four and the emergency housing rent control law, in relation to
the regulation of rents; to amend the emergency tenant protection act of
nineteen seventy-four, the emergency housing rent control law, and the
administrative code of the city of New York, in relation to deregulation
thresholds; to amend the administrative code of the city of New York,
the emergency tenant protection act of nineteen seventy-four and the
emergency housing rent control law, in relation to recovery of certain
housing accommodations by a landlord; to amend the administrative code
of the city of New York and the emergency tenant protection act of nine-
teen seventy-four, in relation to limiting rent increase after vacancy
of a housing accommodation; to amend the administrative code of the city
of New York and the emergency tenant protection act of nineteen seven-
ty-four, in relation to the declaration of emergencies for certain
rental housing accommodations; to amend the administrative code of the
city of New York, the emergency tenant protection act of nineteen seven-
ty-four and the emergency housing rent control law, in relation to
approval of major capital improvement rent increases and in relation to
extending the length of time over which major capital improvement
expenses may be recovered; to amend the administrative code of the city
of New York, in relation to waivers of rent adjustments; to amend the
administrative code of the city of New York, the emergency tenant
protection act of nineteen seventy-four and the emergency housing rent
control law, in relation to adjustment of maximum allowable rent; 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; to amend the emergency tenant protection act of nineteen
seventy-four, in relation to the declaration of housing emergencies for
rental housing accommodations located in buildings owned by certain
limited-profit housing companies; to amend the administrative code of
the city of New York, in relation to the filing of an overcharge
complaint; to amend the penal law, in relation to harassment of a rent
regulated tenant; to amend the civil practice law and rules, in relation
to residential rent overcharges; to amend the administrative code of the
city of New York and the emergency housing rent control law, in relation
to the establishment of rent adjustments; to amend the real property
law, in relation to the duty of a landlord to provide written receipts
and notification of non-payment of rent; to amend the multiple dwelling
law, in relation to coverage of interim multiple dwellings and owner
obligations; to amend the civil practice law and rules, in relation to
prerequisites and certificate of merit in an eviction proceeding and to
repeal subdivision (h) of section 27 of chapter 4 of the laws of 2013
amending the real property tax law relating to exemption from taxation
to alterations and improvements to multiple dwellings to eliminate fire
and health hazards, relating thereto; and to repeal paragraph (n) of
subdivision 2 of section 2 of chapter 274 of the laws of 1946, consti-
tuting the emergency housing rent control law, paragraph 13 of subdivi-
sion a of section 5 of section 4 of chapter 576 of the laws of 1974,
constituting the emergency tenant protection act, subparagraph (k) of
paragraph 2 of subdivision e of section 26-403 and subparagraphs (l) and
(n) of paragraph 1 of subdivision g of section 26-405 of the administra-
tive code of the city of New York and section 26-504.2 of the adminis-
trative code of the city of New York related thereto
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to extend the various provisions of the Rent
Stabilization and Rent Control Laws and the General Business Law relat-
ing to the conversion of residential property to cooperative or condo-
minium ownership, for an additional four years, until June 15, 2019. The
bill is also intended to enhance tenant protections for rent regulated
tenants. It addresses issues including: preferential rent, civil penal-
ties, tenant harassment, vacancy decontrol, income and rent deregulation
thresholds, landlord recovery of apartments, vacancy increases, expanded
coverage for former project-based Section 8 and Mitchell-Lama develop-
ments, major capital improvement rent increases, individual apartment
improvement rent increases, eligibility for an alternative hardship rent
adjustment, rental overcharge complaint examination, rent increases for
rent controlled tenants, receipts, notification of non-payment, and
certification of court filings. Additionally, it allows owners and
tenants to continue to apply for coverage under the loft law and makes
related provisions of Chapter 4 of the Laws of 2013, which relate to the
loft law, permanent.
SUMMARY OF SPECIFIC PROVISIONS:
* Sections one through six would extend rent regulation provisions and
General Business Law provisions pertaining to cooperative and condomin-
ium conversion for an additional four years, from June 15, 2015 until
June 15, 2019.
* Sections seven and eight would prohibit owners from adjusting the
preferential rent upon renewing a tenant's lease. An increase in the
preferential rent upon vacancy would be prohibited if the vacancy was
caused by a landlord's violation of the warranty of habitability.
* Sections nine through fourteen would increase civil penalties for
tenant harassment. A violation of an order of the Division of Housing
and Community Renewal (DHCR) would result in a civil penalty of at least
$1,000, but not more than $2,000, for the first offense; and at least
$2,000, but not more than $4,000, for each subsequent offense. Harass-
ment of a tenant to obtain vacancy of his or her housing accommodation
would result in a civil penalty of at least $2,000, but not more than
$5,000, for the first offense; and at least $10,000, but not more than
$15,000, for each subsequent offense, or for a violation consisting of
conduct directed at the tenants of more than one housing accommodation.
* Sections fifteen through twenty-one would repeal provisions of New
York State and New York City laws that remove units from rent stabiliza-
tion or rent control upon vacancy when the legal regulated rent is
$2,500 or more. Additionally, the bill would reregulate certain units
that were deregulated pursuant to vacancy decontrol prior to December
31, 2014.
* Sections twenty-two through twenty-five would address high-income/high
rent deregulation by increasing the income threshold from $200,000 to
$225,000, and increasing the monthly rental threshold from $2,500 to
$3,500.
* Sections twenty-six through twenty-nine would permit a landlord to
recover only one housing accommodation as a primary residence, either:
for his or her own personal use and occupancy, or for the use and occu-
pancy of the landlord's immediate family. The bill would prohibit such a
recovery if a tenant has occupied an apartment for fifteen or more
years.
* Sections thirty and thirty-one would reduce, from 20% to 7.5%, the
amount by which rent may be increased upon vacancy.
* Sections thirty-two and thirty-three would include former federal
Section 8 projects in the category of housing covered by rent regulation
laws, even if such projects were constructed after 1974. The section
would apply only to former federal Section 8 projects whose contracts
are no longer in effect after the effective date.
* Sections thirty-four through forty-six would establish that rental
increases associated with major capital improvements (MCIs) are to be
surcharges to the legal regulated rent, and therefore must be separately
designated and billed as such. The authorized surcharge for MCIs would
cease after the cost of improvements is recovered. When calculating the
surcharge, the cost of the MCI would be reduced by any grant provided
therefor by the New York State Energy Research and Development Authority
(NYSERA). The bill would also require that MCI rent adjustments be
offset by 100% of the total annual tax abatement benefits and any tax
abatement benefits that were received prior to such adjustments,
provided that they are the result of participation in the J-51 program.
* These sections would also reduce the rent increase amount that a land-
lord could collect, for a building, from 1/40th to 1/84th of the cost of
individual apartment improvements (IAIs). The bill would establish that
rental increases associated with IAIs are to be surcharges to the legal
regulated rent. The authorized surcharge for IAIs would cease after the
cost of improvements is recovered. The bill would require DHCR to issue
a schedule of reasonable costs (based on regional costs), within 120
days of the bill's enactment, for upgrades and improvements that may be
claimed as a basis for an adjustment of rent. Landlords would be
required to file an explanation of how the vacancy rent was computed
with DHCR, along with all documents necessary to support the collection
of such increase, within 30 days of a tenant signing a vacancy lease.
DHCR would then issue an order approving or disapproving such increase
in whole or in part. No increase would be permitted if MICR determines
that the owner has outstanding hazardous violations or is not maintain-
ing all required building-wide services.
* Sections forty-seven and forty-eight would increase the current owner-
ship period, from three years to six years, for an owner to be eligible
apply for an alternative hardship exemption.
* Section forty-nine would bring into rent regulation, buildings that
were owned by a Mitchell-Lama limited-profit housing company, where the
company has voluntarily dissolved, regardless of the building's initial
occupancy date. The section would apply only to Mitchell-Lama buildings
whose limited-profit housing company dissolved after the effective date
of this bill.
* Sections fifty through fifty-six would provide that when considering
cases of fraud and/or outstanding orders issued by DHCR, a court or
hearing officer may consider evidence based on circumstances that
occurred more than four years prior to the filing of an overcharge
complaint. These sections would also allow a court or DHCR to consider,
in determining the legal regulated rent, any year where a landlord has
not timely filed an annual rent registration statement as required by
law. An owner or a landlord would be required to, upon the offering of a
lease to prospective tenant, provide such tenant with the documentation,
the scope of which would be determined by DHCR, used to support any
allowable increases in the legal regulated rent during the previous four
years.
* Sections fifty-seven and fifty-eight would establish the crime of
second-degree harassment of a rent-regulated tenant. An owner would be
guilty of second-degree harassment of a rent-regulated tenant when they
intentionally impair the habitability of a housing accommodation, or
create or maintain a condition, which endangers the safety or health of
a tenant, with the intent to cause the tenant to vacate. Second-degree
harassment of a rent-regulated tenant would be a class A misdemeanor.
* Sections fifty-nine through sixty-one would require DHCR to cap the
percentage rent increase available to owners of rent controlled apart-
ments at a rate equal to the average of the last five years of the Rent
Guidelines Board adjustments for one-year renewal leases.
* Section sixty-two would require a lessor, or any agent of the lessor
authorized to receive rent, to provide the lessee with a written receipt
upon the payment of rent for residential purposes in the form of cash,
or any instrument other than the personal check of the lessee. The writ-
ten receipt must contain the date of payment, the amount, the identity
of the premises and period for which paid, and the signature and title
of the person receiving the rent. If a request is made by a lessee for a
written receipt upon the payment of rent in the form of a personal
check, such request shall remain in effect for the duration of such
lessee's tenancy. If a payment of rent is made directly to a lessor or
its agent, a lessee would receive a written receipt immediately. If a
payment of rent is made indirectly to a lessor or its agent, a lessee
would receive a written receipt within ten business days of the receipt
of payment. If a lessor or its agent does not receive payment for rent
within ten business days of the date specified in the lease agreement,
such lessor or agent would be required to send the lessee a written
notice, within two business days, indicating such failure to receive
such rent payment. Failure of a lessor or its agent to provide a lessee
with a written notice of non-payment of rent may be used as an affirma-
tive defense by the lessee in an eviction proceeding based on the non-
payment of rent.
* Section sixty-three and sixty-four would remove the six month time
limit under which applications for registration as an interim multiple
dwelling or for coverage of residential units must occur. It would also
make changes to the law necessary to implement continued enrollment.
* Section sixty-five would make permanent provisions of chapter 4 of the
Laws of 2013 pertaining to lofts. This included: the reduction of mini-
mum unit size required to be covered; the prohibition of coverage on
units in a building with hazardous activities that are continuing on the
date of submission for coverage; the reduction in the percent of rent
increases allowed for coming into various stages of compliance for fire
and safety standards; and allowing the Loft Board to make cases by case
determination on incompatible uses in the building.
* Section sixty-six would require the filing of a certificate of merit
in any eviction proceeding or in any action to reregulate a rent-regu-
lated unit.
* Section sixty-seven would establish an immediate effective date.
JUSTIFICATION:
Rent Regulation Laws Rent Control and Rent Stabilization in New York
State provide protection to approximately 2.5 million tenants across the
State. In 2014, there were over 1.05 million rent-regulated units in New
York City, representing almost 50% of the City's entire rental stock.
The basis for rent regulation is a housing emergency, defined as a
vacancy rate below 5%. According to the Housing and Vacancy Survey
(HVS), conducted by the U.S. Census Bureau every three years, the vacan-
cy rate in New York City and some surrounding counties has consistently
remained under 5%. Two of the most recent reports showed a vacancy rate
in New York City of 2.91% in 2008 and 3.12% in 2011. Initial findings
for the 2014 HVS report demonstrate a City-wide rental vacancy rate of
3.45% during the period between February 2014 and May 2014.
As the vacancy rate in New York City and some surrounding counties has
consistently remained under 5% since the State's first rent regulation
laws were enacted after World War II, it is essential for the State to
build stronger and more effective protections for tenants during this
chronic housing shortage. For rent regulation laws to continue to
protect tenants and keep housing affordable, rent laws must be strength-
ened and deregulation-causing loopholes closed. For example, there is
no oversight or approval mechanism for individual apartment improvement
(IAI) increases, and the increase can be made in addition to any other
rent increase to which the landlord is statutorily entitled. Because the
IAI occurs in a vacant apartment, a new tenant has no way of knowing
what the rent should be, and if work allegedly done justifies the
increase.
Building owners are also currently allowed to increase the amount of
rent based on major capital improvements (MCIs) to their buildings on a
schedule to recover all costs within a seven year period. However,
tenants have been forced to continue to pay for MCIs long after its
costs have been recovered. This bill seeks to balance the conflicting
concerns of maintaining affordable housing and insuring adequate incen-
tives for investment in MCIs in order to preserve and improve our hous-
ing stock.
With the shortage of housing in New York City and its surrounding areas,
vacancy decontrol only further erodes the stock of rent-regulated hous-
ing. Vacancy decontrol can be an incentive for owners of rental housing
to withhold services and use forms of harassment to cause rent-regulated
tenants to vacate their units. In some instances, renovation costs have
been inflated, or even falsified, in order to drive apartment rents to
the $2,500 threshold for deregulation upon vacancy. There is an urgent
need to repeal these statutory provisions, in order to preserve afforda-
ble housing in New York City and protect low- and middle-income fami-
lies.
In addition to the aforementioned, this bill would make several other
significant changes to address losses to rent-regulated housing and
strengthen the rent laws in order to protect tenants and support New
York communities. This bill is an important step in guaranteeing that
the residents of New York can access quality and safe affordable hous-
ing.
PRIOR LEGISLATIVE HISTORY:
New legislation.
FISCAL IMPLICATIONS:
None to the State.
