Amd §§6 & 8, rpld §10-b, §6 sub d ¶3-a, Emerg Ten Prot Act of 1974; rpld §8-a, amd §4, Emerg Hous Rent Cont
L; amd §§26-511, 26-405 & 26-517.1, rpld §§26-511.1 & 26-405.1, NYC Ad Cd; rpld Part K §17, Chap 36 of 2019
Relates to permitting certain rent increases for capital improvements to rent regulated buildings and apartments.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5624
SPONSOR: Fitzpatrick (MS) TITLE OF BILL:
An act to amend the emergency tenant protection act of nineteen seven-
ty-four, the emergency housing rent control law, and the administrative
code of the city of New York, in relation to rent increases in certain
cases; to repeal certain provisions of 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 relating to improve-
ments in rent regulated buildings and units; and to repeal section 17 of
part K of chapter 36 of the laws of 2019 enacting the Housing Stability
and Tenant Protection act of 2019 relating to the use of certain reven-
ues
PURPOSE OR GENERAL IDEA OF BILL:
To repeal changes made to the rent regulation laws by the Housing
Stability and Tenant Protection Act of 2019 with respect to the calcu-
lation of rent adjustments following a property owner undertaking a
major capital improvement or an individual apartment improvement.
SUMMARY OF PROVISIONS:
This bill amends Sections 405(g)(1)(g) and 26511(c)(6) of the Adminis-
trative Code of the City of New York, amends Section 6(d)(3) of the
Emergency Tenant Protection Act, and repeals Section 26-405.1 and
26.511.1 of the Administrative Code of the City of New York.
Section 10-6 of the ETPA to eliminate provisions that provide that any
rent increases for building - wide major capital improvements for rent
controlled apartments and rent stabilized apartments both in New York
City and statewide, be collected as a temporary increase to the legal
regulated rent for a period of 30 years. Instead, such rent increases
would become part of the base rent.
The bill further provides that every increase for major capital improve-
ments shall be amortized over an 8-year period (now 11 years) for build-
ings with 35 or fewer units and a 9-year period (now 12.5 years) for
buildings with more than 35 units. The increase allowable to any apart-
ment in any one year, though, could not exceed 6% (now 2%) of the month-
ly rent. Any excess above the 6% could be carried forward and collected
in future years as a further surcharge not to exceed an additional 6%.
The bill further repeals the provision that no major capital rent
increase could be approved by DHCR for any building with 35% or fewer
rent regulated units. It also repeals the requirement that DHCR estab-
lish an annual inspection and audit process which must review 25% of all
applications which must include individual inspections and document
review to ensure-that owners complied with all
obligations/responsibilities.
The bill further amends Section 26-405(5) of the NYC Administrative
Code, Section 26-511(c) of such law, Section 6(d) of the Emergency
Tenant Protection Act and Section 4(4) of the Emergency Housing Rent
Control-Law, to provide that any increase in the base rent of a rent
stabilized or rent controlled apartment based upon a substantial
increase in dwelling space or a change in the furniture, furnishings, or
equipment provided in the apartment would be equal to 1/40th for build-
ings with 35 or fewer units and 1/60th for buildings with 36 or more
units (rather than 11168th or 1/180th) of the total cost incurred by the
owner excluding financial charges. The bill also repeals provisions
providing that the recoverable costs incurred by the owner could not
exceed $15,000 that could be expended on no more than three separate
individual apartment improvements in a 15-year period. In addition, it
repeals the provision that the aforementioned rent increases would also
have to be removed from the base rent 30 years after they become effec-
tive. The bill further repeals the requirement that DHCR would also have
to establish a documentation procedure for individual apartment improve-
ments that requires an itemized list of work performed with an explana-
tion of the reason/purpose of such work along with photographic evidence
documenting the before and after condition of the project.
Finally, the bill amends both the NYC Administrative Code and the Emer-
gency Tenant Protection Act to reduce the regulatory fee assessed owners
of rent regulated apartments from $20 per unit to $10 per unit.
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):
JUSTIFICATION:
The Housing Stability and Tenant Protection Act of 2019 severely
restricted the ability of owners of rent regulated buildings to under-
take major capital improvements to their properties and to modernize
individual apartments when vacant. Not only did the act deem any
improvement a temporary surcharge, but also reduced the allowable rent
increase from MCI's to 2% a year and placed a $15,000 cap on individual
apartment improvements over a three-year time frame. Allowing for
continued capital investment in buildings has resulted in a dilapidation
rate of only 0.2% in New York City which is especially significant since
71% of the city's rent stabilization housing stock was built prior to
1947. The changes made in 2019 will now result in the decreased ability
of an owner to invest in one's property in order to prevent deteri-
oration and improve the operational efficiency of the building. In addi-
tion, owners will be less likely to invest in new kitchens or bathrooms
when apartments become vacant or to undertake expensive lead paint, mold
or asbestos remediation. This bill, thus, would reverse the negative
changes made to the rent regulation laws concerning major capital
improvements and individual apartment improvements and provide once
again the financial incentives necessary for building owners to invest
in their properties.
PRIOR LEGISLATIVE HISTORY:
2022/2021: A.6194 Referred to Housing Committee.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
Minimal loss of revenue to DHCR.
EFFECTIVE DATE:
Immediately.
