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
________________________________________________________________________
6971
2017-2018 Regular Sessions
IN ASSEMBLY
March 28, 2017
___________
Introduced by M. of A. O'DONNELL -- 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
24 commissioner that such guideline increases are not sufficient to enable
25 the owner to maintain an annual gross rent income for such building
26 which exceeds the annual operating expenses of such building by a sum
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10653-02-7
A. 6971 2
1 equal to at least five percent of such gross rent. For the purposes of
2 this paragraph, operating expenses shall consist of the actual, reason-
3 able, costs of fuel, labor, utilities, taxes, other than income or
4 corporate franchise taxes, fees, permits, necessary contracted services
5 and non-capital repairs, insurance, parts and supplies, management fees
6 and other administrative costs and mortgage interest. For the purposes
7 of this paragraph, mortgage interest shall be deemed to mean interest on
8 a bona fide mortgage including an allocable portion of charges related
9 thereto. Criteria to be considered in determining a bona fide mortgage
10 other than an institutional mortgage shall include; condition of the
11 property, location of the property, the existing mortgage market at the
12 time the mortgage is placed, the term of the mortgage, the amortization
13 rate, the principal amount of the mortgage, security and other terms and
14 conditions of the mortgage. The commissioner shall set a rental value
15 for any unit occupied by the owner or a person related to the owner or
16 unoccupied at the owner's choice for more than one month at the last
17 regulated rent plus the minimum number of guidelines increases or, if no
18 such regulated rent existed or is known, the commissioner shall impute a
19 rent consistent with other rents in the building. The amount of hardship
20 increase shall be such as may be required to maintain the annual gross
21 rent income as provided by this paragraph. The division shall not grant
22 a hardship application under this paragraph or paragraph six of this
23 subdivision for (i) a period of three years subsequent to granting a
24 hardship application under the provisions of this paragraph or (ii) to
25 the owner of any building in which more than fifty percent of the habi-
26 table units are not subject to rent stabilization or rent control. The
27 collection of any increase in the rent for any housing accommodation
28 pursuant to this paragraph shall not exceed six percent in any year from
29 the effective date of the order granting the increase over the rent set
30 forth in the schedule of gross rents, with collectability of any dollar
31 excess above said sum to be spread forward in similar increments and
32 added to the rent as established or set in future years. No application
33 shall be approved unless the owner's equity in such building exceeds
34 five percent of: (i) the arms length purchase price of the property;
35 (ii) the cost of any capital improvements for which the owner has not
36 collected a surcharge; (iii) any repayment of principal of any mortgage
37 or loan used to finance the purchase of the property or any capital
38 improvements for which the owner has not collected a surcharge and (iv)
39 any increase in the equalized assessed value of the property which
40 occurred subsequent to the first valuation of the property after
41 purchase by the owner. For the purposes of this paragraph, owner's equi-
42 ty shall mean the sum of (i) the purchase price of the property less the
43 principal of any mortgage or loan used to finance the purchase of the
44 property, (ii) the cost of any capital improvement for which the owner
45 has not collected a surcharge less the principal of any mortgage or loan
46 used to finance said improvement, (iii) any repayment of the principal
47 of any mortgage or loan used to finance the purchase of the property or
48 any capital improvement for which the owner has not collected a
49 surcharge, and (iv) any increase in the equalized assessed value of the
50 property which occurred subsequent to the first valuation of the proper-
51 ty after purchase by the owner.
52 § 3. Paragraph 3 of subdivision d of section 6 of section 4 of chapter
53 576 of the laws of 1974, constituting the emergency tenant protection
54 act of nineteen seventy-four, as amended by section 30 of part A of
55 chapter 20 of the laws of 2015, is amended to read as follows:
A. 6971 3
1 (3) there has been since January first, nineteen hundred seventy-four
2 a major capital improvement required for the operation, preservation or
3 maintenance of the structure and more than half of the habitable units
4 in the building are subject to rent stabilization or rent control. An
5 adjustment under this paragraph shall be in an amount sufficient to
6 amortize the cost of the improvements pursuant to this paragraph over an
7 eight-year period for a building with thirty-five or fewer housing
8 accommodations, or a nine-year period for a building with more than
9 thirty-five housing accommodations, for any determination issued by the
10 division of housing and community renewal after the effective date of
11 the rent act of 2015, or
12 § 4. Subparagraph 7 of the second undesignated subparagraph of para-
13 graph (a) of subdivision 4 of section 4 of chapter 274 of the laws of
14 1946, constituting the emergency housing rent control law, as amended by
15 section 32 of part A of chapter 20 of the laws of 2015, is amended to
16 read as follows:
17 (7) there has been since March first, nineteen hundred fifty, a major
18 capital improvement required for the operation, preservation or mainte-
19 nance of the structure; which for any order of the commissioner issued
20 after the effective date of the rent act of 2015 the cost of such
21 improvement shall be amortized over an eight-year period for buildings
22 with thirty-five or fewer units or a nine year period for buildings with
23 more than [thiry-five] thirty-five units[,]; provided, however, that no
24 adjustment shall be allowed for any building in which more than fifty
25 percent of the habitable units are not subject to rent stabilization or
26 rent control, or
27 § 5. Paragraph 5 of subdivision d of section 6 of section 4 of chapter
28 576 of the laws of 1974, constituting the emergency tenant protection
29 act of nineteen seventy-four, as amended by chapter 102 of the laws of
30 1984, is amended to read as follows:
31 (5) as an alternative to the hardship application provided under para-
32 graph four of this subdivision, owners of buildings acquired by the same
33 owner or a related entity owned by the same principals three years prior
34 to the date of application may apply to the division for increases in
35 excess of the level of applicable guideline increases established under
36 this law based on a finding by the commissioner that such guideline
37 increases are not sufficient to enable the owner to maintain an annual
38 gross rent income for such building which exceeds the annual operating
39 expenses of such building by a sum equal to at least five percent of
40 such gross rent provided, that more than half of the habitable units in
41 the building are subject to rent stabilization or rent control. For the
42 purposes of this paragraph, operating expenses shall consist of the
43 actual, reasonable, costs of fuel, labor, utilities, taxes, other than
44 income or corporate franchise taxes, fees, permits, necessary contracted
45 services and non-capital repairs, insurance, parts and supplies, manage-
46 ment fees and other administrative costs and mortgage interest. For the
47 purposes of this paragraph, mortgage interest shall be deemed to mean
48 interest on a bona fide mortgage including an allocable portion of
49 charges related thereto. Criteria to be considered in determining a
50 bona fide mortgage other than an institutional mortgage shall include;
51 condition of the property, location of the property, the existing mort-
52 gage market at the time the mortgage is placed, the term of the mort-
53 gage, the amortization rate, the principal amount of the mortgage, secu-
54 rity and other terms and conditions of the mortgage. The commissioner
55 shall set a rental value for any unit occupied by the owner or a person
56 related to the owner or unoccupied at the owner's choice for more than
A. 6971 4
1 one month at the last regulated rent plus the minimum number of guide-
2 lines increases or, if no such regulated rent existed or is known, the
3 commissioner shall impute a rent consistent with other rents in the
4 building. The amount of hardship increase shall be such as may be
5 required to maintain the annual gross rent income as provided by this
6 paragraph. The division shall not grant a hardship application under
7 this paragraph or paragraph four of this subdivision for a period of
8 three years subsequent to granting a hardship application under the
9 provisions of this paragraph. The collection of any increase in the rent
10 for any housing accommodation pursuant to this paragraph shall not
11 exceed six percent in any year from the effective date of the order
12 granting the increase over the rent set forth in the schedule of gross
13 rents, with collectability of any dollar excess above said sum to be
14 spread forward in similar increments and added to the rent as estab-
15 lished or set in future years. No application shall be approved unless
16 the owner's equity in such building exceeds five percent of: (i) the
17 arms length purchase price of the property; (ii) the cost of any capital
18 improvements for which the owner has not collected a surcharge; (iii)
19 any repayment of principal of any mortgage or loan used to finance the
20 purchase of the property or any capital improvements for which the owner
21 has not collected a surcharge; and (iv) any increase in the equalized
22 assessed value of the property which occurred subsequent to the first
23 valuation of the property after purchase by the owner. For the purposes
24 of this paragraph, owner's equity shall mean the sum of (i) the purchase
25 price of the property less the principal of any mortgage or loan used to
26 finance the purchase of the property, (ii) the cost of any capital
27 improvement for which the owner has not collected a surcharge less the
28 principal of any mortgage or loan used to finance said improvement,
29 (iii) any repayment of the principal of any mortgage or loan used to
30 finance the purchase of the property or any capital improvement for
31 which the owner has not collected a surcharge, and (iv) any increase in
32 the equalized assessed value of the property which occurred subsequent
33 to the first valuation of the property after purchase by the owner.
34 § 6. This act shall take effect immediately; provided, however, that
35 the amendments to section 26-405 of the city rent and rehabilitation law
36 made by section one of this act shall remain in full force and effect
37 only as long as the public emergency requiring the regulation and
38 control of residential rents and evictions continues, as provided in
39 subdivision 3 of section 1 of the local emergency housing rent control
40 act; and provided, further, that the amendments to section 26-511 of
41 chapter 4 of title 26 of the administrative code of the city of New York
42 made by section two of this act shall expire on the same date as such
43 law expires and shall not affect the expiration of such law as provided
44 under section 26-520 of such law; and provided, further, that the amend-
45 ments to section 6 of the emergency tenant protection act of nineteen
46 seventy-four made by sections three and five of this act shall expire on
47 the same date as such act expires and shall not affect the expiration of
48 such act as provided in section 17 of chapter 576 of the laws of 1974;
49 and provided, further, that the amendments to section 4 of the emergency
50 housing rent control law made by section four of this act shall expire
51 on the same date as such law expires and shall not affect the expiration
52 of such law as provided in subdivision 2 of section 1 of chapter 274 of
53 the laws of 1946.
