STATE OF NEW YORK
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5495
2019-2020 Regular Sessions
IN ASSEMBLY
February 12, 2019
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Introduced by M. of A. DICKENS -- read once and referred to the Commit-
tee on Housing
AN ACT to amend the emergency tenant protection act of nineteen seven-
ty-four, in relation to eliminating rent increases for structures due
to major capital improvements
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraphs 3, 4 and 5 of subdivision d of section 6 of
2 section 4 of chapter 576 of the laws of 1974, constituting the emergency
3 tenant protection act of nineteen seventy-four, paragraph 3 as amended
4 by section 30 of part A of chapter 20 of the laws of 2015, paragraph 4
5 as amended by chapter 403 of the laws of 1983 and paragraph 5 as amended
6 by chapter 102 of the laws of 1984, are amended to read as follows:
7 (3) [there has been since January first, nineteen hundred seventy-four
8 a major capital improvement required for the operation, preservation or
9 maintenance of the structure. An adjustment under this paragraph shall
10 be in an amount sufficient to amortize the cost of the improvements
11 pursuant to this paragraph over an eight-year period for a building with
12 thirty-five or fewer housing accommodations, or a nine-year period for a
13 building with more than thirty-five housing accommodations, for any
14 determination issued by the division of housing and community renewal
15 after the effective date of the rent act of 2015, or
16 (4)] an owner by application to the state division of housing and
17 community renewal for increases in the rents in excess of the rent
18 adjustment authorized by the rent guidelines board under this act estab-
19 lishes a hardship, and the state division finds that the rate of rent
20 adjustment is not sufficient to enable the owner to maintain approxi-
21 mately the same ratio between operating expenses, including taxes and
22 labor costs but excluding debt service, financing costs, and management
23 fees, and gross rents which prevailed on the average over the immediate
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07899-01-9
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1 preceding five year period, or for the entire life of the building if
2 less than five years, or
3 [(5)] (4) as an alternative to the hardship application provided under
4 paragraph [four] three of this subdivision, owners of buildings acquired
5 by the same owner or a related entity owned by the same principals three
6 years prior to the date of application may apply to the division for
7 increases in excess of the level of applicable guideline increases
8 established under this law based on a finding by the commissioner that
9 such guideline increases are not sufficient to enable the owner to main-
10 tain an annual gross rent income for such building which exceeds the
11 annual operating expenses of such building by a sum equal to at least
12 five percent of such gross rent. For the purposes of this paragraph,
13 operating expenses shall consist of the actual, reasonable, costs of
14 fuel, labor, utilities, taxes, other than income or corporate franchise
15 taxes, fees, permits, necessary contracted services and non-capital
16 repairs, insurance, parts and supplies, management fees and other admin-
17 istrative costs and mortgage interest. For the purposes of this para-
18 graph, mortgage interest shall be deemed to mean interest on a bona fide
19 mortgage including an allocable portion of charges related thereto.
20 Criteria to be considered in determining a bona fide mortgage other than
21 an institutional mortgage shall include; condition of the property,
22 location of the property, the existing mortgage market at the time the
23 mortgage is placed, the term of the mortgage, the amortization rate, the
24 principal amount of the mortgage, security and other terms and condi-
25 tions of the mortgage. The commissioner shall set a rental value for any
26 unit occupied by the owner or a person related to the owner or unoccu-
27 pied at the owner's choice for more than one month at the last regulated
28 rent plus the minimum number of guidelines increases or, if no such
29 regulated rent existed or is known, the commissioner shall impute a rent
30 consistent with other rents in the building. The amount of hardship
31 increase shall be such as may be required to maintain the annual gross
32 rent income as provided by this paragraph. The division shall not grant
33 a hardship application under this paragraph or paragraph [four] three of
34 this subdivision for a period of three years subsequent to granting a
35 hardship application under the provisions of this paragraph. The
36 collection of any increase in the rent for any housing accommodation
37 pursuant to this paragraph shall not exceed six percent in any year from
38 the effective date of the order granting the increase over the rent set
39 forth in the schedule of gross rents, with collectability of any dollar
40 excess above said sum to be spread forward in similar increments and
41 added to the rent as established or set in future years. No application
42 shall be approved unless the owner's equity in such building exceeds
43 five percent of: (i) the arms length purchase price of the property;
44 (ii) the cost of any capital improvements for which the owner has not
45 collected a surcharge; (iii) any repayment of principal of any mortgage
46 or loan used to finance the purchase of the property or any capital
47 improvements for which the owner has not collected a surcharge; and (iv)
48 any increase in the equalized assessed value of the property which
49 occurred subsequent to the first valuation of the property after
50 purchase by the owner. For the purposes of this paragraph, owner's equi-
51 ty shall mean the sum of (i) the purchase price of the property less the
52 principal of any mortgage or loan used to finance the purchase of the
53 property, (ii) the cost of any capital improvement for which the owner
54 has not collected a surcharge less the principal of any mortgage or loan
55 used to finance said improvement, (iii) any repayment of the principal
56 of any mortgage or loan used to finance the purchase of the property or
A. 5495 3
1 any capital improvement for which the owner has not collected a
2 surcharge, and (iv) any increase in the equalized assessed value of the
3 property which occurred subsequent to the first valuation of the proper-
4 ty after purchase by the owner.
5 § 2. This act shall take effect immediately; provided that the amend-
6 ments to section 6 of the emergency tenant protection act of nineteen
7 seventy-four made by section one of this act shall expire on the same
8 date as such act expires and shall not affect the expiration of such act
9 as provided in section 17 of chapter 576 of the laws of 1974.