STATE OF NEW YORK
________________________________________________________________________
5566
2015-2016 Regular Sessions
IN ASSEMBLY
February 27, 2015
___________
Introduced by M. of A. KAVANAGH, DINOWITZ, ROSENTHAL, PERRY -- Multi-
Sponsored by -- M. of A. FARRELL, GOTTFRIED -- read once and referred
to the Committee on Housing
AN ACT 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
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 6-a of subdivision c of section 26-511 of the
2 administrative code of the city of New York is amended to read as
3 follows:
4 (6-a) provides criteria whereby as an alternative to the hardship
5 application provided under paragraph six of this subdivision owners of
6 buildings acquired by the same owner or a related entity owned by the
7 same principals [three] six years prior to the date of application may
8 apply to the division for increases in excess of the level of applicable
9 guideline increases established under this law based on a finding by the
10 commissioner that such guideline increases are not sufficient to enable
11 the owner to maintain an annual gross rent income for such building
12 which exceeds the annual operating expenses of such building by a sum
13 equal to at least five percent of such gross rent. For the purposes of
14 this paragraph, operating expenses shall consist of the actual, reason-
15 able, costs of fuel, labor, utilities, taxes, other than income or
16 corporate franchise taxes, fees, permits, necessary contracted services
17 and non-capital repairs, insurance, parts and supplies, management fees
18 and other administrative costs and mortgage interest. For the purposes
19 of this paragraph, mortgage interest shall be deemed to mean interest on
20 a bona fide mortgage including an allocable portion of charges related
21 thereto. Criteria to be considered in determining a bona fide mortgage
22 other than an institutional mortgage shall include; condition of the
23 property, location of the property, the existing mortgage market at the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD01889-01-5
A. 5566 2
1 time the mortgage is placed, the term of the mortgage, the amortization
2 rate, the principal amount of the mortgage, security and other terms and
3 conditions of the mortgage. The commissioner shall set a rental value
4 for any unit occupied by the owner or a person related to the owner or
5 unoccupied at the owner's choice for more than one month at the last
6 regulated rent plus the minimum number of guidelines increases or, if no
7 such regulated rent existed or is known, the commissioner shall impute a
8 rent consistent with other rents in the building. The amount of hardship
9 increase shall be such as may be required to maintain the annual gross
10 rent income as provided by this paragraph. The division shall not grant
11 a hardship application under this paragraph or paragraph six of this
12 subdivision for a period of three years subsequent to granting a hard-
13 ship application under the provisions of this paragraph. The collection
14 of any increase in the rent for any housing accommodation pursuant to
15 this paragraph shall not exceed six percent in any year from the effec-
16 tive date of the order granting the increase over the rent set forth in
17 the schedule of gross rents, with collectability of any dollar excess
18 above said sum to be spread forward in similar increments and added to
19 the rent as established or set in future years. No application shall be
20 approved unless the owner's equity in such building exceeds five percent
21 of: (i) the arms length purchase price of the property; (ii) the cost of
22 any capital improvements for which the owner has not collected a
23 surcharge; (iii) any repayment of principal of any mortgage or loan used
24 to finance the purchase of the property or any capital improvements for
25 which the owner has not collected a surcharge and (iv) any increase in
26 the equalized assessed value of the property which occurred subsequent
27 to the first valuation of the property after purchase by the owner. For
28 the purposes of this paragraph, owner's equity shall mean the sum of (i)
29 the purchase price of the property less the principal of any mortgage or
30 loan used to finance the purchase of the property, (ii) the cost of any
31 capital improvement for which the owner has not collected a surcharge
32 less the principal of any mortgage or loan used to finance said improve-
33 ment, (iii) any repayment of the principal of any mortgage or loan used
34 to finance the purchase of the property or any capital improvement for
35 which the owner has not collected a surcharge, and (iv) any increase in
36 the equalized assessed value of the property which occurred subsequent
37 to the first valuation of the property after purchase by the owner.
38 § 2. Paragraph 5 of subdivision d of section 6 of section 4 of chapter
39 576 of the laws of 1974 enacting the emergency tenant protection act of
40 nineteen seventy-four, as amended by chapter 102 of the laws of 1984, is
41 amended to read as follows:
42 (5) as an alternative to the hardship application provided under para-
43 graph four of this subdivision, owners of buildings acquired by the same
44 owner or a related entity owned by the same principals [three] six years
45 prior to the date of application may apply to the division for increases
46 in excess of the level of applicable guideline increases established
47 under this law based on a finding by the commissioner that such guide-
48 line increases are not sufficient to enable the owner to maintain an
49 annual gross rent income for such building which exceeds the annual
50 operating expenses of such building by a sum equal to at least five
51 percent of such gross rent. For the purposes of this paragraph, operat-
52 ing expenses shall consist of the actual, reasonable, costs of fuel,
53 labor, utilities, taxes, other than income or corporate franchise taxes,
54 fees, permits, necessary contracted services and non-capital repairs,
55 insurance, parts and supplies, management fees and other administrative
56 costs and mortgage interest. For the purposes of this paragraph, mort-
A. 5566 3
1 gage interest shall be deemed to mean interest on a bona fide mortgage
2 including an allocable portion of charges related thereto. Criteria to
3 be considered in determining a bona fide mortgage other than an institu-
4 tional mortgage shall include; condition of the property, location of
5 the property, the existing mortgage market at the time the mortgage is
6 placed, the term of the mortgage, the amortization rate, the principal
7 amount of the mortgage, security and other terms and conditions of the
8 mortgage. The commissioner shall set a rental value for any unit occu-
9 pied by the owner or a person related to the owner or unoccupied at the
10 owner's choice for more than one month at the last regulated rent plus
11 the minimum number of guidelines increases or, if no such regulated rent
12 existed or is known, the commissioner shall impute a rent consistent
13 with other rents in the building. The amount of hardship increase shall
14 be such as may be required to maintain the annual gross rent income as
15 provided by this paragraph. The division shall not grant a hardship
16 application under this paragraph or paragraph four of this subdivision
17 for a period of three years subsequent to granting a hardship applica-
18 tion under the provisions of this paragraph. The collection of any
19 increase in the rent for any housing accommodation pursuant to this
20 paragraph shall not exceed six percent in any year from the effective
21 date of the order granting the increase over the rent set forth in the
22 schedule of gross rents, with collectability of any dollar excess above
23 said sum to be spread forward in similar increments and added to the
24 rent as established or set in future years. No application shall be
25 approved unless the owner's equity in such building exceeds five percent
26 of: (i) the arms length purchase price of the property; (ii) the cost of
27 any capital improvements for which the owner has not collected a
28 surcharge; (iii) any repayment of principal of any mortgage or loan used
29 to finance the purchase of the property or any capital improvements for
30 which the owner has not collected a surcharge; and (iv) any increase in
31 the equalized assessed value of the property which occurred subsequent
32 to the first valuation of the property after purchase by the owner. For
33 the purposes of this paragraph, owner's equity shall mean the sum of (i)
34 the purchase price of the property less the principal of any mortgage or
35 loan used to finance the purchase of the property, (ii) the cost of any
36 capital improvement for which the owner has not collected a surcharge
37 less the principal of any mortgage or loan used to finance said improve-
38 ment, (iii) any repayment of the principal of any mortgage or loan used
39 to finance the purchase of the property or any capital improvement for
40 which the owner has not collected a surcharge, and (iv) any increase in
41 the equalized assessed value of the property which occurred subsequent
42 to the first valuation of the property after purchase by the owner.
43 § 3. This act shall take effect immediately; provided that the amend-
44 ments to section 26-511 of chapter 4 of title 26 of the administrative
45 code of the city of New York made by section one of this act shall
46 expire on the same date as such law expires and shall not affect the
47 expiration of such law as provided under section 26-520 of such law; and
48 provided that the amendments to section 6 of the emergency tenant
49 protection act of nineteen seventy-four made by section two of this act
50 shall expire on the same date as such act expires and shall not affect
51 the expiration of such act as provided in section 17 of chapter 576 of
52 the laws of 1974.
