A04255 Summary:

Add Title 22 Chap 13 §§22-1301 - 22-1313, NYC Ad Cd
Enacts the "New York city small business rent stabilization act" instituting a commercial rent control system in the city of New York; creates the commercial rent guidelines board.
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A04255 Actions:

02/13/2023referred to cities
01/03/2024referred to cities
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A04255 Committee Votes:

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A04255 Floor Votes:

There are no votes for this bill in this legislative session.
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A04255 Text:

                STATE OF NEW YORK
                               2023-2024 Regular Sessions
                   IN ASSEMBLY
                                    February 13, 2023
        Introduced  by  M.  of  A.  O'DONNELL  --  read once and referred to the
          Committee on Cities
        AN ACT to amend the administrative code of the  city  of  New  York,  in
          relation to enacting the "New York city small business rent stabiliza-
          tion act"
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. Short title. This act shall be known and may  be  cited  as
     2  the "New York city small business rent stabilization act".
     3    §  2.  Title  22 of the administrative code of the city of New York is
     4  amended by adding a new chapter 13 to read as follows:
     5                                 CHAPTER 13
     6                        COMMERCIAL RENT STABILIZATION
     7    § 22-1301 Application. This chapter applies to all  commercial  spaces
     8  with  a  lease  or  other rental agreement that expires on or after July
     9  first, two thousand twenty-three, whether or not such  lease  or  rental
    10  agreement  was  in effect on such date. This chapter shall apply only to
    11  all commercial lease renewals for commercial premises. On  any  occasion
    12  wherein  a  landlord and tenant are required to negotiate the terms of a
    13  lease renewal for commercial uses such provisions of this chapter  shall
    14  apply.  Such  provisions of this chapter shall apply to any landlord and
    15  current tenant whose lease expired on or after July first, two  thousand
    16  twenty-three.
    17    §  22-1302  Definitions.  As used in this chapter, the following terms
    18  shall have the following meanings unless the context requires otherwise:
    19    a. "Administering agency" shall mean any city agency, office,  depart-
    20  ment,  division,  bureau  or  institution of government, the expenses of
    21  which are paid in whole or in part from the city treasury, as the  mayor
    22  shall  designate  or establish to implement the provisions of this chap-
    23  ter.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 4255                             2
     1    b. "At-will tenant" shall mean a tenant, subtenant, lessee, sublessee,
     2  or any other persons lawfully entitled to use or occupy  any  commercial
     3  premises without a written lease or other rental agreement, who has paid
     4  rent to a landlord for at least six months.
     5    c. "Board" shall mean the commercial rent guidelines board established
     6  by subdivision a of section 22-1303 of this chapter.
     7    d.  "Chain  business"  shall  mean  an establishment that is part of a
     8  group of establishments that share a common landlord  or  principal  who
     9  owns at least thirty percent of each establishment where such establish-
    10  ments:
    11    (1) engage in the same business; or
    12    (2) operate pursuant to a franchise agreement with the same franchisor
    13  as  defined  in  section  six hundred eighty-one of the general business
    14  law.
    15    e. "Commercial space" shall mean a space used or occupied for  non-re-
    16  sidential  purposes pursuant to a valid commercial lease or other rental
    17  agreement. Such term includes only retail stores, professional  offices,
    18  service offices or other offices of ten thousand square feet or less and
    19  manufacturing  establishments  or  art and/or cultural establishments of
    20  twenty-five thousand square feet or less. Such term does not  include  a
    21  building owned by:
    22    (1) a non-profit entity where:
    23    (i) more than fifty percent of building units are rent regulated; or
    24    (ii)  more than thirty percent of building units are below fair market
    25  rent rate and are restricted income units; or
    26    (2) a housing development fund corporation pursuant to article two  or
    27  eleven  of  the private housing finance law, including buildings used as
    28  Mitchell-Lama housing and any other restricted income co-op housing.
    29    f. "Commissioner" shall mean the head of the administering agency.
    30    g. "Landlord" shall mean any owner, lessor, sublessor or other  person
    31  entitled  to  receive  rent  for  the use or occupancy of any commercial
    32  premises, or an agent thereof.
    33    h. "Pass-along" shall mean any taxes, sewer, water or utility fee,  or
    34  operating  charges apportioned to a tenant in connection with the use or
    35  occupancy of any commercial space.
    36    i. "Rent" shall mean any consideration, including but not  limited  to
    37  pass-alongs,  received  by  the  landlord  in connection with the use or
    38  occupancy of any commercial space.
    39    j. "Services" shall mean those facilities which enhance the use of the
    40  commercial premises, including, but not  limited  to,  repairs,  mainte-
    41  nance,  painting, heat, hot and cold water, utilities, elevator service,
    42  security devices and patrols, furnishings, storage, janitorial and land-
    43  scaping services, refuse removal, insurance protection,  parking  spaces
    44  and  facilities  in  common areas of the building or parcel in which the
    45  rental unit is located.
    46    k. "Tenant" shall mean a tenant, subtenant, lessee, sublessee, or  any
    47  other  persons  lawfully  entitled to use or occupy any commercial prem-
    48  ises.
    49    § 22-1303 Commercial rent  guidelines  board.  a.  There  shall  be  a
    50  commercial rent guidelines board consisting of nine members appointed by
    51  the mayor as follows:
    52    (1) One public member to serve as the chairperson of the board;
    53    (2)  Two  members  representing commercial tenants which are not chain
    54  businesses;
    55    (3) Two members representing commercial landlords; and
    56    (4) Four public members.

        A. 4255                             3
     1    b. The members of the board, except the chairperson, shall serve stag-
     2  gered  terms  of  two  years.  Four  members  of  the  board  originally
     3  appointed,  comprising  one  member  representing  tenants,  one  member
     4  representing landlords and two public members, shall serve until January
     5  first,   two  thousand  twenty-six.  The  other  members  of  the  board
     6  originally appointed, excluding the chairperson, shall serve until Janu-
     7  ary first, two thousand twenty-seven.   Thereafter,  all  members  shall
     8  serve  two-year  terms  on  the  board  until their successors have been
     9  appointed and qualified, except the chairperson, who shall serve at  the
    10  pleasure of the mayor.
    11    c.  The mayor shall fill any vacancy that may occur in the same manner
    12  as the original appointment. A member  of  the  board,  other  than  the
    13  chairperson,  may only be removed by the mayor for cause after an oppor-
    14  tunity to be heard in person or by counsel,  in  the  member's  defense,
    15  upon at least ten days written notice.
    16    d.  The  chairperson  shall be the chief administrative officer of the
    17  board and shall have the authority to employ, assign and  supervise  the
    18  members  of  the board and enter into contracts for consultant services.
    19  The commissioner shall cooperate with the board and may assign personnel
    20  and perform such services in connection with the duties of the board  as
    21  may reasonably be required by the chairperson.
    22    e.  The  members of the board shall be compensated on a per diem basis
    23  for no more than fifty days per year at a rate to be determined  by  the
    24  commissioner,  and  the  chairperson  shall be compensated on a per diem
    25  basis for no more than one hundred days per year at a rate to be  deter-
    26  mined by the commissioner.
    27    f.  The  board  shall establish initial guidelines for commercial rent
    28  adjustments by the first of July next succeeding appointment of the last
    29  member of the board.   Thereafter,  the  board  shall  establish  annual
    30  guidelines to be filed in accordance with subdivision g of this section.
    31  In  determining whether to adjust rents for commercial spaces subject to
    32  the commercial rent stabilization provisions of this chapter, the  board
    33  shall consider, among other things:
    34    (1)  The  economic condition of the commercial real estate industry in
    35  the community board district, including such factors as:
    36    (i) commercial real estate taxes and sewer and water rates;
    37    (ii) gross operating and maintenance costs, including but not  limited
    38  to insurance rates, governmental fees, fuel and labor costs;
    39    (iii)  costs  and availability of financing, including effective rates
    40  of interest; and
    41    (iv) the overall supply  of  commercial  spaces  and  overall  vacancy
    42  rates;
    43    (2)  Relevant  data  from  the  current and projected market values of
    44  commercial rentals in the community board district;
    45    (3) The socioeconomic and demographic changes in each community  board
    46  district  based  on  the  most  recent available data, including but not
    47  limited to changes in:
    48    (i) the median income level;
    49    (ii) education;
    50    (iii) race;
    51    (iv) ethnicity; and
    52    (v) home ownership; and
    53    (4) Any other relevant data available to the board.
    54    g. Not later than July first of each year, the board shall  file  with
    55  the city clerk its guidelines for the preceding calendar year, and shall
    56  accompany such findings with a statement of the maximum rate or rates of

        A. 4255                             4
     1  rent  adjustment,  if  any,  for  all  commercial  spaces subject to the
     2  provisions of this chapter authorized for leases or other rental  agree-
     3  ments  commencing  on  the  first  of  October next succeeding or within
     4  twelve  months  thereafter.    Such  guidelines  and  statement shall be
     5  published in the city record.
     6    h. Prior to the annual adjustment of the level of rents  provided  for
     7  under  subdivision  f of this section, the board shall hold at least two
     8  public hearings for the purpose of collecting  information  relating  to
     9  all  factors  set  forth in subdivision f of this section, and any other
    10  relevant information as may be necessary  for  establishing  the  annual
    11  adjustment  guidelines. The board shall provide notice of the date, time
    12  and location and a summary of the subject matter of the public hearings,
    13  to be published in the city record daily for the period beginning  eight
    14  days prior to the hearing date, and at least once in one or more newspa-
    15  pers  of  general  circulation at least eight days immediately preceding
    16  such hearing date.
    17    i. Maximum rates of rent adjustment shall not be established more than
    18  once annually for any commercial space subject to the provisions of this
    19  chapter. Once established, no such rate shall, within the one-year peri-
    20  od, be adjusted by any  surcharge,  supplementary  adjustment  or  other
    21  modification except as provided in section 22-1308 of this chapter.
    22    §  22-1304  Stabilization  provisions.  a. Upon renewal of a lease for
    23  commercial space, the rent charged for the first year of the  new  lease
    24  shall  not  exceed  the  initial legal regulated rent or legal regulated
    25  rent adjusted pursuant to section 22-1308 of this chapter until the  end
    26  of  any  lease or other rental agreement in effect on the effective date
    27  of this chapter until such time as  a  different  legal  regulated  rent
    28  shall  be  authorized pursuant to guidelines adopted by the board estab-
    29  lished under section 22-1303 of this chapter. No landlord subject to the
    30  provisions of this chapter shall charge or collect any rent that exceeds
    31  the initial legal regulated rent or legal regulated rent adjusted pursu-
    32  ant to section 22-1308 of this chapter until the end  of  any  lease  or
    33  other  rental agreement in effect on the effective date of this chapter,
    34  until such time as a different legal regulated rent has been  authorized
    35  pursuant to guidelines adopted by the board. For any lease exceeding one
    36  year,  the  rent  charged  for  any subsequent year shall not exceed the
    37  legal regulated rent as authorized pursuant to the  most  recent  guide-
    38  lines  adopted  by  the board. If the rent charged for the first year of
    39  the new lease is less than the initial legal regulated rent or the legal
    40  regulated rent adjusted pursuant to section 22-1308 of this chapter, the
    41  rent charged for any subsequent year shall not exceed the  first  year's
    42  rent  adjusted by the rate authorized pursuant to the most recent guide-
    43  lines adopted by the board.
    44    b. The initial regulated rent for a commercial space  subject  to  the
    45  provisions  of  this  chapter  is the rent charged in the lease or other
    46  rental agreement for such commercial space in effect  on  the  effective
    47  date of this chapter.
    48    c.  The  initial  regulated rent for a commercial space subject to the
    49  provisions of this chapter, that is not subject  to  a  lease  or  other
    50  rental  agreement  on  the  effective date of this chapter, shall be the
    51  rent charged in the first lease  or  other  rental  agreement  for  such
    52  commercial space that becomes effective after the effective date of this
    53  chapter,  provided  that  such  rent  shall not include any pass-alongs.
    54  However, if a claim alleging commercial tenant  harassment  pursuant  to
    55  chapter nine of this title is brought against a landlord by the previous
    56  tenant  as the means by which the vacancy was effected and such previous

        A. 4255                             5
     1  tenant's claim is upheld by a  court  of  competent  jurisdiction,  such
     2  landlord  shall  be  liable for damages up to ten times the proposed new
     3  lease's monthly rent or fifty thousand dollars, whichever is greater, to
     4  be  payable to the previous tenant, in addition to consequential damages
     5  and any other remedy available at law or equity.
     6    d. Upon a finding of commercial tenant harassment pursuant to  chapter
     7  nine  of this title, the rent for the new tenant shall be no higher than
     8  the rent that could have been charged to the previous tenant pursuant to
     9  subdivision a of this section, retroactive to the beginning of  the  new
    10  tenancy.  All  other  terms and conditions of the lease shall conform to
    11  the provisions of subdivision a of this section.
    12    e. If a tenant is an at-will tenant, such  tenant  has  the  right  to
    13  request  a  written lease agreement that shall conform to the provisions
    14  of subdivision a of this section and be a monthly rent equivalent to the
    15  amount such tenant is paying at the time of such request.  The  landlord
    16  of  an  at-will tenant shall provide a written lease offer within ninety
    17  days of receiving such a request for a written lease. A  landlord  shall
    18  only  be  able  to refuse to provide a written lease or evict an at-will
    19  tenant based on the provisions under section 22-1310  of  this  chapter,
    20  except for the provision set forth in paragraph two of such subdivision.
    21    § 22-1305 Enforcement and procedures. a. Subject to the conditions and
    22  limitations  of  this section, any landlord who, upon the complaint of a
    23  tenant, is found by the commissioner, after a reasonable opportunity  to
    24  be  heard, to have collected an overcharge above the rent authorized for
    25  a commercial space subject to the provisions of this chapter, is  liable
    26  to  such  tenant  for  a penalty equal to three times the amount of such
    27  overcharge. If the landlord  establishes,  by  a  preponderance  of  the
    28  evidence,  that the overcharge was not intentional, the penalty shall be
    29  the amount of the overcharge plus interest  assessed  from  the  initial
    30  date  of  such overcharge. After a complaint of rent overcharge has been
    31  filed and served on a landlord, the voluntary  adjustment  of  the  rent
    32  and/or the voluntary tender of a refund of rent overcharges shall not be
    33  considered  by the commissioner as evidence that such overcharge was not
    34  willful.
    35    b. The legal regulated rent for purposes of determining an  overcharge
    36  is  the  rent  indicated  in the annual registration statement filed and
    37  served upon the tenant six years prior to the most  recent  registration
    38  statement,  or,  if more recently filed, the initial registration state-
    39  ment plus, for each case, any subsequent lawful  increases  and  adjust-
    40  ments.  The  commissioner, in investigating complaints of overcharge and
    41  in determining legal regulated rent, shall consider all  available  rent
    42  history which is reasonably necessary to make such determinations. As to
    43  complaints  filed  within  ninety  days of the initial registration of a
    44  commercial space, the legal regulated rent is  deemed  to  be  the  rent
    45  charged on the date six years prior to the date of the initial registra-
    46  tion  of the commercial space or, if the commercial space was subject to
    47  this chapter for less than six years, the initial legal  regulated  rent
    48  plus, in each case, any lawful increases and adjustments. Where the rent
    49  charged on the date six years prior to the date of the initial registra-
    50  tion  of  the commercial space cannot be established, such rent shall be
    51  established by the  commissioner  based  on,  among  other  things,  the
    52  factors  set  forth in paragraph one of subdivision f of section 22-1303
    53  of this chapter.
    54    c. Complaints under this section may be filed with the commissioner at
    55  any time, however any recovery of overcharge penalties shall be  limited
    56  to the six years preceding the complaint.

        A. 4255                             6
     1    d.  A  landlord found to have overcharged a tenant may be assessed the
     2  reasonable costs and attorneys' fees of  any  necessary  proceeding  and
     3  interest from the initial date of the overcharge at the rate of interest
     4  payable  on  a  judgment  pursuant  to section five thousand four of the
     5  civil practice laws and rules.
     6    e.  A tenant may, upon the expiration of the period in which the land-
     7  lord may institute a proceeding pursuant to article seventy-eight of the
     8  civil practice law and rules, file and enforce an order of  the  commis-
     9  sioner awarding penalties in the same manner as a judgment.
    10    f.  The commissioner shall promulgate all rules and regulations neces-
    11  sary for the implementation of this section.
    12    § 22-1306 Rent registration.  Each  landlord  of  a  commercial  space
    13  subject to the provisions of this chapter shall register such space with
    14  the administering agency within one hundred twenty days of the effective
    15  date  of  this  chapter  using forms prescribed by the commissioner. The
    16  information to be provided on such forms shall include the following:
    17    a. The name and address of the  building  or  group  of  buildings  or
    18  development  in  which  such  commercial space is located and the tenant
    19  thereof;
    20    b. The number of commercial spaces belonging to such landlord  in  the
    21  building  or  group of buildings or development in which such commercial
    22  space is located;
    23    c. The number of commercial spaces in such building or group of build-
    24  ings or development subject to the provisions of this chapter;
    25    d. The rent for the commercial space charged on the registration date;
    26  and
    27    e. The square footage of  each  commercial  space  named  pursuant  to
    28  subdivision a of this section.
    29    §  22-1307  Fees.  a. The department of finance shall collect from the
    30  landlord of each commercial space registered pursuant to section 22-1306
    31  of this chapter an annual fee in the amount of one hundred  dollars  for
    32  each  commercial space subject to this chapter, in order to defray costs
    33  incurred in administering this chapter.
    34    b. Failure to pay the fee imposed by subdivision  a  of  this  section
    35  shall constitute a charge due to the city. All such fees due to the city
    36  constitute  a  debt  recoverable  from  the  landlord  and  the city may
    37  commence an action or proceeding, file a lien upon the building or  take
    38  any other lawful action for the recovery of such fees.
    39    § 22-1308 Application for adjustment of initial rent.  Notwithstanding
    40  any  other  provision  of this chapter, a tenant or landlord may, within
    41  sixty days of the effective date of this chapter or the commencement  of
    42  the  first tenancy thereafter, whichever is later, file with the commis-
    43  sioner an application for adjustment of the initial legal regulated rent
    44  for such commercial space. The  commissioner  may  adjust  such  initial
    45  legal  regulated  rent upon a finding that the presence of extraordinary
    46  circumstances materially affecting the initial legal regulated rent  has
    47  resulted  in  a  rent  which  is  substantially different from the rents
    48  generally prevailing in the same area for substantially similar  commer-
    49  cial spaces.
    50    § 22-1309 Manner of service. All papers and notices which, pursuant to
    51  the  terms of section 22-1310 of this chapter are required to be served,
    52  shall be served by a process server, or shall  be  sent  by  first-class
    53  mail and certified mail, return receipt requested or by any express mail
    54  service.
    55    §  22-1310  Rental  guidelines. a. All leases of a commercial premises
    56  may be renewed at the option of a tenant who did not lose the  right  to

        A. 4255                             7
     1  renew  a  lease  under  the  grounds  described in subdivision d of this
     2  section. Such lease renewals shall be for a minimum term of  ten  years,
     3  provided  however,  that  at  the  tenant's option, and with the written
     4  approval  of  the landlord, a lease of shorter or longer duration may be
     5  selected.
     6    b. No period of lease extension required by this chapter shall  extend
     7  beyond the landlord's lawful ability to rent the premises to the tenant,
     8  where such ability is limited by:
     9    (1) the obligation to rent the premises to a third party pursuant to a
    10  bona  fide  lease entered into prior to the effective date of this chap-
    11  ter;
    12    (2) the exercise by a third party of a bona fide option  to  rent  the
    13  premises provided that such option was given prior to the effective date
    14  of this chapter; or
    15    (3) any other lawful reason arising prior to such effective date.
    16    c.  A tenant shall lose the right of renewal and a landlord may refuse
    17  to renew a lease only on the following grounds:
    18    (1) The tenant has persistently delayed rent payments  without  cause.
    19  For the purpose of this subdivision, "cause" is defined as the withhold-
    20  ing  of  rental  payments by the tenant due to the alleged violations of
    21  the rental agreement by the landlord. In order for the  landlord  to  be
    22  excused  from  renewal on this ground, the landlord must have served the
    23  tenant at least three prior notices during the term  of  the  lease  for
    24  demand of payment within thirty days, and then show that such lessee has
    25  not  paid  within  such  thirty-day period. The landlord shall not serve
    26  such notice unless the rent payment was in  arrears  for  a  minimum  of
    27  fifteen days;
    28    (2)  The tenant uses the commercial premises in a manner substantially
    29  different from that described in the lease;
    30    (3) The tenant conducts or permits any form of illegal activity on the
    31  premises;
    32    (4) The tenant has substantially breached any  substantive  obligation
    33  under the current lease and has failed to cure such breach within thirty
    34  days following written notice to cure by the landlord;
    35    (5) Upon the termination of the current tenancy, the landlord intends,
    36  in  good faith, to demolish or substantially reconstruct the premises or
    37  a substantial  part  thereof,  or  to  carry  out  substantial  work  or
    38  construction  on  the  commercial  premises  or substantial part thereof
    39  which he or she could not reasonably do without obtaining possession  of
    40  the  commercial premises. The landlord shall notify the tenant of his or
    41  her decision to reoccupy the commercial premises at least one year prior
    42  to the termination of the lease. In the event that  the  lessor  fraudu-
    43  lently  invokes  this  justification for a refusal to renew a commercial
    44  lease, the defrauded tenant may collect  treble  damages  for  any  loss
    45  suffered as a result of such action;
    46    (6) The current tenancy was created by the subletting of the property,
    47  whereby  the  prime tenant did not notify the landlord by certified mail
    48  of the subtenant's existence and did not obtain the written  consent  of
    49  the  landlord. This ground is void if the landlord and tenant had agreed
    50  in the lease to allow subleasing rights without the consent of the land-
    51  lord and all obligations of the prime  tenant  on  the  issue,  were  in
    52  compliance;
    53    (7)  It  has been determined by the administering agency or by a civil
    54  court of competent jurisdiction that the tenant is a gross and  persist-
    55  ent  violator  of  New  York  city  tax laws, of any license obligations

        A. 4255                             8
     1  related to the use of the premises or of any laws of  the  city  of  New
     2  York; or
     3    (8)  Upon the termination of the current tenancy, the landlord intends
     4  to occupy the retail premises in order to carry out  its  own  business,
     5  which  cannot  be  the  same type of business that the current tenant is
     6  operating.  The landlord shall notify the tenant of his or her  decision
     7  to  reoccupy  the premises at least one hundred eighty days prior to the
     8  termination of the lease. In the event that  the  landlord  fraudulently
     9  invokes  this  justification  for a refusal to renew a commercial lease,
    10  the defrauded tenant may collect treble damages for any loss suffered as
    11  a result of such action.
    12    § 22-1311 Retaliation. No landlord shall in any way retaliate  against
    13  any  tenant  for  the tenant's assertion or exercise of any rights under
    14  this chapter. Any such retaliation may subject the landlord  to  a  suit
    15  for actual and punitive damages, injunctive relief, and attorneys' fees.
    16    §  22-1312  Waiver.  No  provision  in any lease, rental agreement, or
    17  agreement made in connection therewith which waives  or  diminishes  any
    18  tenant's rights under this chapter is valid.
    19    §  22-1313  Inconsistency  with  other  laws. If any provision of this
    20  chapter is inconsistent with, in conflict with, or contrary to any other
    21  provisions of law, such provision of this  chapter  shall  prevail  over
    22  such other provision.
    23    § 3. Severability. If any clause, sentence, paragraph, section or part
    24  of  this act shall be adjudged by any court of competent jurisdiction to
    25  be invalid and after exhaustion of  all  further  judicial  review,  the
    26  judgment  shall  not affect, impair or invalidate the remainder thereof,
    27  but shall be confined in its operation to the  clause,  sentence,  para-
    28  graph,  section or part of this act directly involved in the controversy
    29  in which the judgment shall have been rendered.
    30    § 4. This act shall take effect on the thirtieth day  after  it  shall
    31  have  become  a  law.    Effective  immediately, the addition, amendment
    32  and/or repeal of any rule or regulation necessary for the implementation
    33  of this act on  its  effective  date  are  authorized  to  be  made  and
    34  completed on or before such effective date.
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