STATE OF NEW YORK
________________________________________________________________________
2951
2023-2024 Regular Sessions
IN SENATE
January 26, 2023
___________
Introduced by Sen. RIVERA -- read twice and ordered printed, and when
printed to be committed to the Committee on Housing, Construction and
Community Development
AN ACT to amend the administrative code of the city of New York, in
relation to rent adjustments for major capital improvements
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 27 of part Q of chapter 39 of the laws of 2019, is amended to
4 read as follows:
5 (g) There has been since July first, nineteen hundred seventy, a major
6 capital improvement essential for the preservation energy efficiency,
7 functionality, or infrastructure of the entire building, improvement of
8 the structure including heating, windows, plumbing and roofing but shall
9 not be for operational costs or unnecessary cosmetic improvements. The
10 temporary increase based upon a major capital improvement under this
11 subparagraph for any order of the commissioner issued after the effec-
12 tive date of the chapter of the laws of two thousand nineteen that
13 amended this subparagraph shall be in an amount sufficient to amortize
14 the cost of the improvements pursuant to this subparagraph [(g)] over a
15 twelve-year period for buildings with thirty-five or fewer units or a
16 twelve and one-half year period for buildings with more than thirty-five
17 units, and shall be removed from the legal regulated rent thirty years
18 from the date the increase became effective inclusive of any increases
19 granted by the applicable rent guidelines board. Temporary major capital
20 improvement increases shall be collectible prospectively on the first
21 day of the first month beginning sixty days from the date of mailing
22 notice of approval to the tenant. Such notice shall disclose the total
23 monthly increase in rent and the first month in which the tenant would
24 be required to pay the temporary increase. An approval for a temporary
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD02900-01-3
S. 2951 2
1 major capital improvement increase shall not include retroactive
2 payments. The collection of any increase shall not exceed two percent in
3 any year from the effective date of the order granting the increase over
4 the rent set forth in the schedule of gross rents, with collectability
5 of any dollar excess above said sum to be spread forward in similar
6 increments and added to the rent as established or set in future years.
7 Upon vacancy, the landlord may add any remaining balance of the tempo-
8 rary major capital improvement increase to the legal regulated rent. A
9 rent adjustment for a major capital improvement may only be granted if
10 the owner or agent of the subject building first applies for and
11 receives benefits pursuant to section 11-243 of this code for the build-
12 ing for which they are seeking a major capital improvement for,
13 provided, however, an owner or agent of the subject building that is
14 denied benefits pursuant to section 11-243 of this code for reasons
15 unrelated to an untimely or improperly completed application shall still
16 be eligible to receive a rent adjustment for a major capital improve-
17 ment. Notwithstanding any other provision of the law, for any renewal
18 lease commencing on or after June 14, 2019, the collection of any rent
19 increases due to any major capital improvements approved on or after
20 June 16, 2012 and before June 16, 2019 shall not exceed two percent in
21 any year for any tenant in occupancy on the date the major capital
22 improvement was approved[,]; or
23 § 2. Paragraph 6 of subdivision c of section 26-511 of the administra-
24 tive code of the city of New York, as separately amended by section 12
25 of part K of chapter 36 and section 28 of part Q of chapter 39 of the
26 laws of 2019, is amended to read as follows:
27 (6) provides criteria whereby the commissioner may act upon applica-
28 tions by owners for increases in excess of the level of fair rent
29 increase established under this law provided, however, that such crite-
30 ria shall provide (a) as to hardship applications, for a finding that
31 the level of fair rent increase is not sufficient to enable the owner to
32 maintain approximately the same average annual net income (which shall
33 be computed without regard to debt service, financing costs or manage-
34 ment fees) for the three year period ending on or within six months of
35 the date of an application pursuant to such criteria as compared with
36 annual net income, which prevailed on the average over the period nine-
37 teen hundred sixty-eight through nineteen hundred seventy, or for the
38 first three years of operation if the building was completed since nine-
39 teen hundred sixty-eight or for the first three fiscal years after a
40 transfer of title to a new owner provided the new owner can establish to
41 the satisfaction of the commissioner that he or she acquired title to
42 the building as a result of a bona fide sale of the entire building and
43 that the new owner is unable to obtain requisite records for the fiscal
44 years nineteen hundred sixty-eight through nineteen hundred seventy
45 despite diligent efforts to obtain same from predecessors in title and
46 further provided that the new owner can provide financial data covering
47 a minimum of six years under his or her continuous and uninterrupted
48 operation of the building to meet the three year to three year compar-
49 ative test periods herein provided; and (b) as to completed building-
50 wide major capital improvements, for a finding that such improvements
51 are deemed depreciable under the Internal Revenue Code and that the cost
52 is to be amortized over a twelve-year period for a building with thir-
53 ty-five or fewer housing accommodations, or a twelve and one-half-year
54 period for a building with more than thirty-five housing accommodations,
55 for any determination issued by the division of housing and community
56 renewal after the effective date of the the chapter of the laws of two
S. 2951 3
1 thousand nineteen that amended this paragraph and shall be removed from
2 the legal regulated rent thirty years from the date the increase became
3 effective inclusive of any increases granted by the applicable rent
4 guidelines board. Temporary major capital improvement increases shall be
5 collectible prospectively on the first day of the first month beginning
6 sixty days from the date of mailing notice of approval to the tenant.
7 Such notice shall disclose the total monthly increase in rent and the
8 first month in which the tenant would be required to pay the temporary
9 increase. An approval for a temporary major capital improvement increase
10 shall not include retroactive payments. The collection of any increase
11 shall not exceed two percent in any year from the effective date of the
12 order granting the increase over the rent set forth in the schedule of
13 gross rents, with collectability of any dollar excess above said sum to
14 be spread forward in similar increments and added to the rent as estab-
15 lished or set in future years. Upon vacancy, the landlord may add any
16 remaining balance of the temporary major capital improvement increase to
17 the legal regulated rent. Notwithstanding any other provision of the
18 law, for any renewal lease commencing on or after June 14, 2019, the
19 collection of any rent increases due to any major capital improvements
20 approved on or after June 16, 2012 and before June 16, 2019 shall not
21 exceed two percent in any year for any tenant in occupancy on the date
22 the major capital improvement was approved or based upon cash purchase
23 price exclusive of interest or service charges. Where an application for
24 a temporary major capital improvement increase has been filed, a tenant
25 shall have sixty days from the date of mailing of a notice of a proceed-
26 ing in which to answer or reply. The state division of housing and
27 community renewal shall provide any responding tenant with the reasons
28 for the division's approval or denial of such application. A rent
29 adjustment for a major capital improvement may only be granted if the
30 owner or agent of the subject building first applies for and receives
31 benefits pursuant to section 11-243 of this code for the building for
32 which they are seeking a major capital improvement for, provided, howev-
33 er, an owner or agent of the subject building that is denied benefits
34 pursuant to section 11-243 of this code for reasons unrelated to an
35 untimely or improperly completed application shall still be eligible to
36 receive a rent adjustment for a major capital improvement. Notwithstand-
37 ing anything to the contrary contained herein, no hardship increase
38 granted pursuant to this paragraph shall, when added to the annual gross
39 rents, as determined by the commissioner, exceed the sum of, (i) the
40 annual operating expenses, (ii) an allowance for management services as
41 determined by the commissioner, (iii) actual annual mortgage debt
42 service (interest and amortization) on its indebtedness to a lending
43 institution, an insurance company, a retirement fund or welfare fund
44 which is operated under the supervision of the banking or insurance laws
45 of the state of New York or the United States, and (iv) eight and one-
46 half percent of that portion of the fair market value of the property
47 which exceeds the unpaid principal amount of the mortgage indebtedness
48 referred to in subparagraph (iii) of this paragraph. Fair market value
49 for the purposes of this paragraph shall be six times the annual gross
50 rent. The collection of any increase in the stabilized rent for any
51 apartment pursuant to this paragraph shall not exceed six percent in any
52 year from the effective date of the order granting the increase over the
53 rent set forth in the schedule of gross rents, with collectability of
54 any dollar excess above said sum to be spread forward in similar incre-
55 ments and added to the stabilized rent as established or set in future
56 years;
S. 2951 4
1 § 3. This act shall take effect immediately, provided, however that
2 the amendments to section 26-405 of the city rent and rehabilitation law
3 made by section one of this act shall remain in full force and effect
4 only so long as the public emergency requiring the regulation and
5 control of residential rents and evictions continues, as provided in
6 subdivision 3 of section 1 of the local emergency housing rent control
7 act; and provided, further, that the amendments to section 26-511 of the
8 rent stabilization law of nineteen hundred sixty-nine made by section
9 two of this act shall expire on the same date as such law expires and
10 shall not affect the expiration of such law as provided under section
11 26-520 of such law, as from time to time amended; and provided, further,
12 that the provisions of sections one and two of this act shall only apply
13 to those buildings that commence work on a major capital improvement 45
14 days or later than the effective date of this act.
