Amd §§26-405 & 26-511, NYC Ad Cd; amd §6, Emerg Ten Prot Act of 1974; amd §4, Emerg Hous Rent Cont L
Provides that buildings in which more than 50% of the habitable units are not subject to rent control are ineligible to apply for major capital investment rent surcharges.
STATE OF NEW YORK
________________________________________________________________________
6527
2019-2020 Regular Sessions
IN ASSEMBLY
March 11, 2019
___________
Introduced by M. of A. O'DONNELL, BARRON -- read once and referred to
the Committee on Housing
AN ACT to amend the administrative code of the city of New York, the
emergency tenant protection act of 1974 and the emergency housing rent
control law, in relation to building eligibility for major capital
improvement rent surcharges
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subparagraph (g) of paragraph 1 of subdivision g of section
2 26-405 of the administrative code of the city of New York, as amended by
3 section 31 of part A of chapter 20 of the laws of 2015, is amended to
4 read as follows:
5 (g) There has been since July first, nineteen hundred seventy, a major
6 capital improvement required for the operation, preservation or mainte-
7 nance of the structure. An adjustment under this subparagraph (g) for
8 any order of the commissioner issued after the effective date of the
9 rent act of 2015 shall be in an amount sufficient to amortize the cost
10 of the improvements pursuant to this subparagraph (g) over an eight-year
11 period for buildings with thirty-five or fewer units or a nine year
12 period for buildings with more than [thiry-five] thirty-five units[,];
13 provided, however, that no adjustment shall be allowed for any building
14 in which more than fifty percent of the habitable units are not subject
15 to rent stabilization or rent control, or
16 § 2. Paragraph 6-a of subdivision c of section 26-511 of the adminis-
17 trative code of the city of New York is amended to read as follows:
18 (6-a) provides criteria whereby as an alternative to the hardship
19 application provided under paragraph six of this subdivision owners of
20 buildings acquired by the same owner or a related entity owned by the
21 same principals three years prior to the date of application may apply
22 to the division for increases in excess of the level of applicable
23 guideline increases established under this law based on a finding by the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03175-01-9
A. 6527 2
1 commissioner that such guideline increases are not sufficient to enable
2 the owner to maintain an annual gross rent income for such building
3 which exceeds the annual operating expenses of such building by a sum
4 equal to at least five percent of such gross rent. For the purposes of
5 this paragraph, operating expenses shall consist of the actual, reason-
6 able, costs of fuel, labor, utilities, taxes, other than income or
7 corporate franchise taxes, fees, permits, necessary contracted services
8 and non-capital repairs, insurance, parts and supplies, management fees
9 and other administrative costs and mortgage interest. For the purposes
10 of this paragraph, mortgage interest shall be deemed to mean interest on
11 a bona fide mortgage including an allocable portion of charges related
12 thereto. Criteria to be considered in determining a bona fide mortgage
13 other than an institutional mortgage shall include; condition of the
14 property, location of the property, the existing mortgage market at the
15 time the mortgage is placed, the term of the mortgage, the amortization
16 rate, the principal amount of the mortgage, security and other terms and
17 conditions of the mortgage. The commissioner shall set a rental value
18 for any unit occupied by the owner or a person related to the owner or
19 unoccupied at the owner's choice for more than one month at the last
20 regulated rent plus the minimum number of guidelines increases or, if no
21 such regulated rent existed or is known, the commissioner shall impute a
22 rent consistent with other rents in the building. The amount of hardship
23 increase shall be such as may be required to maintain the annual gross
24 rent income as provided by this paragraph. The division shall not grant
25 a hardship application under this paragraph or paragraph six of this
26 subdivision for (i) a period of three years subsequent to granting a
27 hardship application under the provisions of this paragraph or (ii) to
28 the owner of any building in which more than fifty percent of the habi-
29 table units are not subject to rent stabilization or rent control. The
30 collection of any increase in the rent for any housing accommodation
31 pursuant to this paragraph shall not exceed six percent in any year from
32 the effective date of the order granting the increase over the rent set
33 forth in the schedule of gross rents, with collectability of any dollar
34 excess above said sum to be spread forward in similar increments and
35 added to the rent as established or set in future years. No application
36 shall be approved unless the owner's equity in such building exceeds
37 five percent of: (i) the arms length purchase price of the property;
38 (ii) the cost of any capital improvements for which the owner has not
39 collected a surcharge; (iii) any repayment of principal of any mortgage
40 or loan used to finance the purchase of the property or any capital
41 improvements for which the owner has not collected a surcharge and (iv)
42 any increase in the equalized assessed value of the property which
43 occurred subsequent to the first valuation of the property after
44 purchase by the owner. For the purposes of this paragraph, owner's equi-
45 ty shall mean the sum of (i) the purchase price of the property less the
46 principal of any mortgage or loan used to finance the purchase of the
47 property, (ii) the cost of any capital improvement for which the owner
48 has not collected a surcharge less the principal of any mortgage or loan
49 used to finance said improvement, (iii) any repayment of the principal
50 of any mortgage or loan used to finance the purchase of the property or
51 any capital improvement for which the owner has not collected a
52 surcharge, and (iv) any increase in the equalized assessed value of the
53 property which occurred subsequent to the first valuation of the proper-
54 ty after purchase by the owner.
55 § 3. Paragraph 3 of subdivision d of section 6 of section 4 of chapter
56 576 of the laws of 1974, constituting the emergency tenant protection
A. 6527 3
1 act of nineteen seventy-four, as amended by section 30 of part A of
2 chapter 20 of the laws of 2015, is amended to read as follows:
3 (3) there has been since January first, nineteen hundred seventy-four
4 a major capital improvement required for the operation, preservation or
5 maintenance of the structure and more than half of the habitable units
6 in the building are subject to rent stabilization or rent control. An
7 adjustment under this paragraph shall be in an amount sufficient to
8 amortize the cost of the improvements pursuant to this paragraph over an
9 eight-year period for a building with thirty-five or fewer housing
10 accommodations, or a nine-year period for a building with more than
11 thirty-five housing accommodations, for any determination issued by the
12 division of housing and community renewal after the effective date of
13 the rent act of 2015, or
14 § 4. Subparagraph 7 of the second undesignated subparagraph of para-
15 graph (a) of subdivision 4 of section 4 of chapter 274 of the laws of
16 1946, constituting the emergency housing rent control law, as amended by
17 section 32 of part A of chapter 20 of the laws of 2015, is amended to
18 read as follows:
19 (7) there has been since March first, nineteen hundred fifty, a major
20 capital improvement required for the operation, preservation or mainte-
21 nance of the structure; which for any order of the commissioner issued
22 after the effective date of the rent act of 2015 the cost of such
23 improvement shall be amortized over an eight-year period for buildings
24 with thirty-five or fewer units or a nine year period for buildings with
25 more than [thiry-five] thirty-five units[,]; provided, however, that no
26 adjustment shall be allowed for any building in which more than fifty
27 percent of the habitable units are not subject to rent stabilization or
28 rent control, or
29 § 5. Paragraph 5 of subdivision d of section 6 of section 4 of chapter
30 576 of the laws of 1974, constituting the emergency tenant protection
31 act of nineteen seventy-four, as amended by chapter 102 of the laws of
32 1984, is amended to read as follows:
33 (5) as an alternative to the hardship application provided under para-
34 graph four of this subdivision, owners of buildings acquired by the same
35 owner or a related entity owned by the same principals three years prior
36 to the date of application may apply to the division for increases in
37 excess of the level of applicable guideline increases established under
38 this law based on a finding by the commissioner that such guideline
39 increases are not sufficient to enable the owner to maintain an annual
40 gross rent income for such building which exceeds the annual operating
41 expenses of such building by a sum equal to at least five percent of
42 such gross rent provided, that more than half of the habitable units in
43 the building are subject to rent stabilization or rent control. For the
44 purposes of this paragraph, operating expenses shall consist of the
45 actual, reasonable, costs of fuel, labor, utilities, taxes, other than
46 income or corporate franchise taxes, fees, permits, necessary contracted
47 services and non-capital repairs, insurance, parts and supplies, manage-
48 ment fees and other administrative costs and mortgage interest. For the
49 purposes of this paragraph, mortgage interest shall be deemed to mean
50 interest on a bona fide mortgage including an allocable portion of
51 charges related thereto. Criteria to be considered in determining a
52 bona fide mortgage other than an institutional mortgage shall include;
53 condition of the property, location of the property, the existing mort-
54 gage market at the time the mortgage is placed, the term of the mort-
55 gage, the amortization rate, the principal amount of the mortgage, secu-
56 rity and other terms and conditions of the mortgage. The commissioner
A. 6527 4
1 shall set a rental value for any unit occupied by the owner or a person
2 related to the owner or unoccupied at the owner's choice for more than
3 one month at the last regulated rent plus the minimum number of guide-
4 lines increases or, if no such regulated rent existed or is known, the
5 commissioner shall impute a rent consistent with other rents in the
6 building. The amount of hardship increase shall be such as may be
7 required to maintain the annual gross rent income as provided by this
8 paragraph. The division shall not grant a hardship application under
9 this paragraph or paragraph four of this subdivision for a period of
10 three years subsequent to granting a hardship application under the
11 provisions of this paragraph. The collection of any increase in the rent
12 for any housing accommodation pursuant to this paragraph shall not
13 exceed six percent in any year from the effective date of the order
14 granting the increase over the rent set forth in the schedule of gross
15 rents, with collectability of any dollar excess above said sum to be
16 spread forward in similar increments and added to the rent as estab-
17 lished or set in future years. No application shall be approved unless
18 the owner's equity in such building exceeds five percent of: (i) the
19 arms length purchase price of the property; (ii) the cost of any capital
20 improvements for which the owner has not collected a surcharge; (iii)
21 any repayment of principal of any mortgage or loan used to finance the
22 purchase of the property or any capital improvements for which the owner
23 has not collected a surcharge; and (iv) any increase in the equalized
24 assessed value of the property which occurred subsequent to the first
25 valuation of the property after purchase by the owner. For the purposes
26 of this paragraph, owner's equity shall mean the sum of (i) the purchase
27 price of the property less the principal of any mortgage or loan used to
28 finance the purchase of the property, (ii) the cost of any capital
29 improvement for which the owner has not collected a surcharge less the
30 principal of any mortgage or loan used to finance said improvement,
31 (iii) any repayment of the principal of any mortgage or loan used to
32 finance the purchase of the property or any capital improvement for
33 which the owner has not collected a surcharge, and (iv) any increase in
34 the equalized assessed value of the property which occurred subsequent
35 to the first valuation of the property after purchase by the owner.
36 § 6. This act shall take effect immediately; provided, however, that
37 the amendments to section 26-405 of the city rent and rehabilitation law
38 made by section one of this act shall remain in full force and effect
39 only as long as the public emergency requiring the regulation and
40 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 provided, further, that the amendments to section 26-511 of
43 chapter 4 of title 26 of the administrative code of the city of New York
44 made by section two of this act shall expire on the same date as such
45 law expires and shall not affect the expiration of such law as provided
46 under section 26-520 of such law; and provided, further, that the amend-
47 ments to section 6 of the emergency tenant protection act of nineteen
48 seventy-four made by sections three and five of this act shall expire on
49 the same date as such act expires and shall not affect the expiration of
50 such act as provided in section 17 of chapter 576 of the laws of 1974;
51 and provided, further, that the amendments to section 4 of the emergency
52 housing rent control law made by section four of this act shall expire
53 on the same date as such law expires and shall not affect the expiration
54 of such law as provided in subdivision 2 of section 1 of chapter 274 of
55 the laws of 1946.
