Amd §§26-405 & 26-511, NYC Ad Cd; amd §6, Emerg Ten Prot Act of 1974; amd §4, Emerg Hous Rent Cont L
Requires the state division of housing and community renewal to verify there are no class B or C housing code violations or no more than 30 class A housing code violations on the property prior to authorizing a rent increase for major capital improvements for such property; provides that outstanding violations shall be corrected by the landlord and verified by the city rent agency prior to authorization of a rent increase.
STATE OF NEW YORK
________________________________________________________________________
4217
2025-2026 Regular Sessions
IN SENATE
February 3, 2025
___________
Introduced by Sens. PARKER, SEPULVEDA -- read twice and ordered printed,
and when printed to be committed to the Committee on Housing,
Construction and Community Development
AN ACT to amend the administrative code of the city of New York, the
emergency tenant protection act of nineteen seventy-four and the emer-
gency housing rent control law, in relation to requiring the state
division of housing and community renewal to verify there are no hous-
ing code violations prior to authorizing a rent increase 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. Paragraph 1 of subdivision g of section 26-405 of the
2 administrative code of the city of New York is amended by adding a new
3 subparagraph (p) to read as follows:
4 (p) Adjustments made pursuant to subparagraph (g) of this paragraph
5 shall be collectible upon the landlord's filing of a report with the
6 city rent agency, subject to the provisions of subparagraph (e) of para-
7 graph two of subdivision a of this section and verification by the city
8 rent agency, in collaboration with local authorities responsible for
9 inspecting buildings, that the applicant does not have more than thirty
10 class A housing code violations or a class B or C housing code violation
11 on the property. Outstanding housing code violations that are found
12 shall be cleared, corrected or abated by the landlord and verified by
13 the city rent agency prior to authorization of a rent increase under
14 subparagraph (g) of this paragraph.
15 § 2. Paragraph 6 of subdivision c of section 26-511 of the administra-
16 tive code of the city of New York, as separately amended by section 12
17 of part K of chapter 36 and section 28 of part Q of chapter 39 of the
18 laws of 2019, is amended to read as follows:
19 (6) provides criteria whereby the commissioner may act upon applica-
20 tions by owners for increases in excess of the level of fair rent
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07839-01-5
S. 4217 2
1 increase established under this law provided, however, that such crite-
2 ria shall provide (a) as to hardship applications, for a finding that
3 the level of fair rent increase is not sufficient to enable the owner to
4 maintain approximately the same average annual net income (which shall
5 be computed without regard to debt service, financing costs or manage-
6 ment fees) for the three year period ending on or within six months of
7 the date of an application pursuant to such criteria as compared with
8 annual net income, which prevailed on the average over the period nine-
9 teen hundred sixty-eight through nineteen hundred seventy, or for the
10 first three years of operation if the building was completed since nine-
11 teen hundred sixty-eight or for the first three fiscal years after a
12 transfer of title to a new owner provided the new owner can establish to
13 the satisfaction of the commissioner that [he or she] such new owner
14 acquired title to the building as a result of a bona fide sale of the
15 entire building and that the new owner is unable to obtain requisite
16 records for the fiscal years nineteen hundred sixty-eight through nine-
17 teen hundred seventy despite diligent efforts to obtain same from prede-
18 cessors in title and further provided that the new owner can provide
19 financial data covering a minimum of six years under [his or her] their
20 continuous and uninterrupted operation of the building to meet the three
21 year to three year comparative test periods herein provided; and (b) as
22 to completed building-wide major capital improvements, for a finding
23 that such improvements are deemed depreciable under the Internal Revenue
24 Code and that the cost is to be amortized over a twelve-year period for
25 a building with thirty-five or fewer housing accommodations, or a twelve
26 and one-half-year period for a building with more than thirty-five hous-
27 ing accommodations, for any determination issued by the division of
28 housing and community renewal after the effective date of the the chap-
29 ter of the laws of two thousand nineteen that amended this paragraph and
30 shall be removed from the legal regulated rent thirty years from the
31 date the increase became effective inclusive of any increases granted by
32 the applicable rent guidelines board. Temporary major capital improve-
33 ment increases shall be collectible prospectively on the first day of
34 the first month beginning sixty days from the date of mailing notice of
35 approval to the tenant. Such notice shall disclose the total monthly
36 increase in rent and the first month in which the tenant would be
37 required to pay the temporary increase. An approval for a temporary
38 major capital improvement increase shall not include retroactive
39 payments. The collection of any increase shall not exceed two percent in
40 any year from the effective date of the order granting the increase over
41 the rent set forth in the schedule of gross rents, with collectability
42 of any dollar excess above said sum to be spread forward in similar
43 increments and added to the rent as established or set in future years.
44 Upon vacancy, the landlord may add any remaining balance of the tempo-
45 rary major capital improvement increase to the legal regulated rent.
46 Notwithstanding any other provision of the law, for any renewal lease
47 commencing on or after June 14, 2019, the collection of any rent
48 increases due to any major capital improvements approved on or after
49 June 16, 2012 and before June 16, 2019 shall not exceed two percent in
50 any year for any tenant in occupancy on the date the major capital
51 improvement was approved or based upon cash purchase price exclusive of
52 interest or service charges. The division of housing and community
53 renewal shall require the submission of a report by landlords applying
54 for a rent increase for major capital improvements pursuant to this
55 paragraph and subject to verification by the division of housing and
56 community renewal, in collaboration with local authorities responsible
S. 4217 3
1 for inspecting buildings, certifying that there are not more than thirty
2 class A housing code violations nor a class B or C housing code
3 violation on the property, prior to receiving approval for such rent
4 increase. Where an application for a temporary major capital improvement
5 increase has been filed, a tenant shall have sixty days from the date of
6 mailing of a notice of a proceeding in which to answer or reply. The
7 state division of housing and community renewal shall provide any
8 responding tenant with the reasons for the division's approval or denial
9 of such application. Notwithstanding anything to the contrary contained
10 herein, no hardship increase granted pursuant to this paragraph shall,
11 when added to the annual gross rents, as determined by the commissioner,
12 exceed the sum of, (i) the annual operating expenses, (ii) an allowance
13 for management services as determined by the commissioner, (iii) actual
14 annual mortgage debt service (interest and amortization) on its indebt-
15 edness to a lending institution, an insurance company, a retirement fund
16 or welfare fund which is operated under the supervision of the banking
17 or insurance laws of the state of New York or the United States, and
18 (iv) eight and one-half percent of that portion of the fair market value
19 of the property which exceeds the unpaid principal amount of the mort-
20 gage indebtedness referred to in subparagraph (iii) of this paragraph.
21 Fair market value for the purposes of this paragraph shall be six times
22 the annual gross rent. The collection of any increase in the stabilized
23 rent for any apartment pursuant to this paragraph shall not exceed six
24 percent in any year from the effective date of the order granting the
25 increase over the rent set forth in the schedule of gross rents, with
26 collectability of any dollar excess above said sum to be spread forward
27 in similar increments and added to the stabilized rent as established or
28 set in future years;
29 § 3. Subdivision d of section 6 of section 4 of chapter 576 of the
30 laws of 1974, constituting the emergency tenant protection act of nine-
31 teen seventy-four, is amended by adding a new paragraph 6 to read as
32 follows:
33 (6) adjustments made pursuant to paragraph (3) of this subdivision
34 shall be collectable upon the landlord's filing of a report with the
35 state division of housing and community renewal and subject to verifica-
36 tion by the state division of housing and community renewal, in collab-
37 oration with local authorities responsible for inspecting buildings,
38 that the applicant does not have more than thirty class A housing code
39 violations or a class B or C housing code violation on the property.
40 Outstanding housing code violations that are found shall be cleared,
41 corrected or abated by the landlord and verified by the state division
42 of housing and community renewal prior to authorization of a rent
43 increase under paragraph (3) of this subdivision.
44 § 4. The second undesignated paragraph of paragraph (a) of subdivision
45 4 of section 4 of chapter 274 of the laws of 1946, constituting the
46 emergency housing rent control law, as amended by section 25 of part B
47 of chapter 97 of the laws of 2011, subparagraph 5 as amended by section
48 7 of part FF of chapter 56 of the laws of 2024, subparagraph 7 as sepa-
49 rately amended by section 25 of part Q of chapter 39 and section 14 of
50 part K of chapter 36 and subparagraph 8 as amended by section 8 of part
51 K of chapter 36 of the laws of 2019, is amended to read as follows:
52 No application for adjustment of maximum rent based upon a sales price
53 valuation shall be filed by the landlord under this subparagraph prior
54 to six months from the date of such sale of the property. In addition,
55 no adjustment ordered by the commission based upon such sales price
56 valuation shall be effective prior to one year from the date of such
S. 4217 4
1 sale. Where, however, the assessed valuation of the land exceeds four
2 times the assessed valuation of the buildings thereon, the commission
3 may determine a valuation of the property equal to five times the equal-
4 ized assessed valuation of the buildings, for the purposes of this
5 subparagraph. The commission may make a determination that the valuation
6 of the property is an amount different from such equalized assessed
7 valuation where there is a request for a reduction in such assessed
8 valuation currently pending; or where there has been a reduction in the
9 assessed valuation for the year next preceding the effective date of the
10 current assessed valuation in effect at the time of the filing of the
11 application. Net annual return shall be the amount by which the earned
12 income exceeds the operating expenses of the property, excluding mort-
13 gage interest and amortization, and excluding allowances for obsoles-
14 cence and reserves, but including an allowance for depreciation of two
15 per centum of the value of the buildings exclusive of the land, or the
16 amount shown for depreciation of the buildings in the latest required
17 federal income tax return, whichever is lower; provided, however, that
18 (1) no allowance for depreciation of the buildings shall be included
19 where the buildings have been fully depreciated for federal income tax
20 purposes or on the books of the owner; or (2) the landlord who owns no
21 more than four rental units within the state has not been fully compen-
22 sated by increases in rental income sufficient to offset unavoidable
23 increases in property taxes, fuel, utilities, insurance and repairs and
24 maintenance, excluding mortgage interest and amortization, and excluding
25 allowances for depreciation, obsolescence and reserves, which have
26 occurred since the federal date determining the maximum rent or the date
27 the property was acquired by the present owner, whichever is later; or
28 (3) the landlord operates a hotel or rooming house or owns a cooperative
29 apartment and has not been fully compensated by increases in rental
30 income from the controlled housing accommodations sufficient to offset
31 unavoidable increases in property taxes and other costs as are allocable
32 to such controlled housing accommodations, including costs of operation
33 of such hotel or rooming house, but excluding mortgage interest and
34 amortization, and excluding allowances for depreciation, obsolescence
35 and reserves, which have occurred since the federal date determining the
36 maximum rent or the date the landlord commenced the operation of the
37 property, whichever is later; or (4) the landlord and tenant voluntarily
38 enter into a valid written lease in good faith with respect to any hous-
39 ing accommodation, which lease provides for an increase in the maximum
40 rent not in excess of fifteen per centum and for a term of not less than
41 two years, except that where such lease provides for an increase in
42 excess of fifteen per centum, the increase shall be automatically
43 reduced to fifteen per centum; or (5) the landlord and tenant by mutual
44 voluntary written informed agreement agree to a substantial increase or
45 decrease in dwelling space, furniture, furnishings or equipment provided
46 in the housing accommodations; provided that an owner shall be entitled
47 to a rent increase where there has been a substantial modification or
48 increase of dwelling space, or installation of new equipment or improve-
49 ments or new furniture or furnishings provided in or to a tenant's hous-
50 ing accommodation. The increase in the maximum rent for the affected
51 housing accommodation shall be one-one hundred sixty-eighth, in the case
52 of a building with thirty-five or fewer housing accommodations, or one-
53 one hundred eightieth, in the case of a building with more than thirty-
54 five housing accommodations where such increase takes effect on or after
55 the effective date of the chapter of the laws of two thousand nineteen
56 that amended this subparagraph, of the total actual cost incurred by the
S. 4217 5
1 landlord up to thirty thousand dollars in providing such reasonable and
2 verifiable modification or increase in dwelling space, furniture,
3 furnishings, or equipment, including the cost of installation but
4 excluding finance charges and any costs that exceed reasonable costs
5 established by rules and regulations promulgated by the division of
6 housing and community renewal. Such rules and regulations shall include:
7 (i) requirements for work to be done by licensed contractors and a
8 prohibition on common ownership between the landlord and the contractor
9 or vendor; and (ii) a requirement that the owner resolve within the
10 dwelling space all outstanding hazardous or immediately hazardous
11 violations of the uniform fire prevention and building code (Uniform
12 Code), New York city fire code, or New York city building and housing
13 maintenance codes, if applicable. Provided further that an owner who is
14 entitled to a rent increase pursuant to this clause shall not be enti-
15 tled to a further rent increase based upon the installation of similar
16 equipment, or new furniture or furnishings within the useful life of
17 such new equipment, or new furniture or furnishings. Provided further
18 that the recoverable costs incurred by the landlord, pursuant to this
19 subparagraph, shall be limited to an aggregate cost of thirty thousand
20 dollars in a fifteen year period beginning with the first individual
21 apartment improvement on or after June fourteenth, two thousand nine-
22 teen. The owner shall give written notice to the commission of any such
23 adjustment pursuant to this clause; or (6) there has been, since March
24 first, nineteen hundred fifty, an increase in the rental value of the
25 housing accommodations as a result of a substantial rehabilitation of
26 the building or housing accommodation therein which materially adds to
27 the value of the property or appreciably prolongs its life, excluding
28 ordinary repairs, maintenance and replacements; or (7) there has been
29 since March first, nineteen hundred fifty, a major capital improvement
30 essential for the preservation, energy efficiency, functionality, or
31 infrastructure of the entire building, improvement of the structure
32 including heating, windows, plumbing and roofing, but shall not be for
33 operational costs or unnecessary cosmetic improvements; which for any
34 order of the commissioner issued after the effective date of the chapter
35 of the laws of two thousand nineteen that amended this paragraph the
36 cost of such improvement shall be amortized over a twelve-year period
37 for buildings with thirty-five or fewer units or a twelve and one-half
38 year period for buildings with more than thirty-five units, and shall be
39 removed from the legal regulated rent thirty years from the date the
40 increase became effective inclusive of any increases granted by the
41 applicable rent guidelines board. Temporary major capital improvement
42 increases shall be collectible prospectively on the first day of the
43 first month beginning sixty days from the date of mailing notice of
44 approval to the tenant. Such notice shall disclose the total monthly
45 increase in rent and the first month in which the tenant would be
46 required to pay the temporary increase. An approval for a temporary
47 major capital improvement increase shall not include retroactive
48 payments. The collection of any increase shall not exceed two percent in
49 any year from the effective date of the order granting the increase over
50 the rent set forth in the schedule of gross rents, with collectability
51 of any dollar excess above said sum to be spread forward in similar
52 increments and added to the rent as established or set in future years.
53 Upon vacancy, the landlord may add any remaining balance of the tempo-
54 rary major capital improvement increase to the legal regulated rent.
55 Notwithstanding any other provision of the law, for any renewal lease
56 commencing on or after June 14, 2019, the collection of any rent
S. 4217 6
1 increases due to any major capital improvements approved on or after
2 June 16, 2012 and before June 16, 2019 shall not exceed two percent in
3 any year for any tenant in occupancy on the date the major capital
4 improvement was approved; provided, however, where an application for a
5 temporary major capital improvement increase has been filed, a tenant
6 shall have sixty days from the date of mailing of a notice of a proceed-
7 ing in which to answer or reply. The state division of housing and
8 community renewal shall provide any responding tenant with the reasons
9 for the division's approval or denial of such application; or (8) there
10 has been since March first, nineteen hundred fifty, in structures
11 containing more than four housing accommodations, other improvements
12 made with the express informed consent of the tenants in occupancy of at
13 least seventy-five per centum of the housing accommodations, provided,
14 however, that no adjustment granted hereunder shall exceed two per
15 centum unless the tenants have agreed to a higher percentage of
16 increase, as herein provided; or (9) there has been, since March first,
17 nineteen hundred fifty, a subletting without written consent from the
18 landlord or an increase in the number of adult occupants who are not
19 members of the immediate family of the tenant, and the landlord has not
20 been compensated therefor by adjustment of the maximum rent by lease or
21 order of the commission or pursuant to the federal act; or (10) the
22 presence of unique or peculiar circumstances materially affecting the
23 maximum rent has resulted in a maximum rent which is substantially lower
24 than the rents generally prevailing in the same area for substantially
25 similar housing accommodations. Adjustments made pursuant to subpara-
26 graph (7) of this paragraph shall be collectible upon the landlord's
27 filing of a report with the commission and subject to verification by
28 the commission, in collaboration with local authorities responsible for
29 inspecting buildings, that the applicant does not have more than thirty
30 class A housing code violations or a class B or C housing code violation
31 on the property. Outstanding housing code violations that are found
32 shall be cleared, corrected or abated by the landlord and verified by
33 the commission prior to authorization of a rent increase under subpara-
34 graph (7) of this paragraph.
35 § 5. This act shall take effect on the sixtieth day after it shall
36 have become a law; provided that:
37 (a) the amendments to section 26-405 of the city rent and rehabili-
38 tation law made by section one of this act shall remain in full force
39 and effect only as long as the public emergency requiring the regulation
40 and control of residential rents and evictions continues, as provided in
41 subdivision 3 of section 1 of the local emergency housing rent control
42 act; and
43 (b) the amendments to section 26-511 of the rent stabilization law of
44 nineteen hundred sixty-nine made by section two of this act shall expire
45 on the same date as such law expires and shall not affect the expiration
46 of such law as provided under section 26-520 of such law, as from time
47 to time amended.
