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S02980 Summary:

S02980 Actions:

S02980 Committee Votes:

S02980 Floor Votes:

S02980 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         2980--C
            Cal. No. 747
 
                               2023-2024 Regular Sessions
 
                    IN SENATE
 
                                    January 26, 2023
                                       ___________
 
        Introduced  by  Sens. KAVANAGH, CLEARE, HOYLMAN-SIGAL, JACKSON, KRUEGER,
          MYRIE, RIVERA -- read twice and ordered printed, and when  printed  to
          be  committed  to the Committee on Housing, Construction and Community
          Development -- committee discharged, bill amended,  ordered  reprinted
          as  amended and recommitted to said committee -- committee discharged,
          bill amended, ordered reprinted as amended  and  recommitted  to  said
          committee  -- reported favorably from said committee, ordered to first
          and second report, ordered to a third  reading,  amended  and  ordered
          reprinted, retaining its place in the order of third reading
 
        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  establishing the  legal regulated rent for the  combination of two
          or more vacant  apartments;  to  amend  the  public  housing  law,  in
          relation  to  defining  permanently  vacated;  to  amend the emergency
          tenant  protection  act  of  nineteen  seventy-four,  in  relation  to
          exemptions  from  rent stabilization on the basis of substantial reha-
          bilitation; and to repeal paragraph (d) of subdivision 4 of section 14
          of the public housing law, in relation thereto  (Part  A);  to  define
          clearly  the  scope  of the fraud exception to the pre-HSTPA four-year
          rule for calculating rents (Part B); and to amend  the  administrative
          code  of  the city of New York, the emergency tenant protection act of
          nineteen seventy-four and the public housing law, in relation  to  the
          failure  of  owners  to  file  rent  registration  statements  and the
          enforcement powers  of  the  commissioner  of  housing  and  community
          renewal (Part C)
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. This act enacts into law components of legislation relating
     2  to rent regulation and  tenant  protection.  Each  component  is  wholly
     3  contained  within  a Part identified as Parts A through C. The effective
     4  date for each particular provision contained within  such  Part  is  set
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD07250-12-3
        S. 2980--C                          2
 
     1  forth  in  the  last  section of such Part. Any provision in any section
     2  contained within a Part, including the effective date of the Part, which
     3  makes reference to a section "of this act", when used in connection with
     4  that  particular  component,  shall  be  deemed to mean and refer to the
     5  corresponding section of the Part in which it is found. Section three of
     6  this act sets forth the general effective date of this act.

     7                                   PART A
 
     8    Section 1.  Subdivision c of section 26-511 of the administrative code
     9  of the city of New York is amended by adding a new paragraph 15 to  read
    10  as follows:
    11    (15)  (a)  where an owner combines two or more vacant housing accommo-
    12  dations or combines a vacant  housing  accommodation  with  an  occupied
    13  housing  accommodation,  such initial rent for such new housing accommo-
    14  dation shall be the combined legal rent for both previous housing accom-
    15  modations, subject to any applicable guideline increases and  any  other
    16  increases  authorized by this chapter including any individual apartment
    17  improvement increases applicable for both housing accommodations. If  an
    18  owner  combines  a  rent  regulated  accommodation with an apartment not
    19  subject to rent regulation, the resulting apartment shall be subject  to
    20  this chapter. If an owner increases the area of an apartment not subject
    21  to  rent  regulation  by adding space that was previously part of a rent
    22  regulated apartment, each apartment shall be subject to this chapter.
    23    (b) where an owner substantially increases the outer  dimension  of  a
    24  vacant  housing accommodation, such initial rent shall be the prior rent
    25  of such housing accommodation, increased by a percentage that  is  equal
    26  to  the  percentage  increase  in  the  dwelling  space  and  such other
    27  increases authorized by this chapter including any applicable  guideline
    28  increase  and  individual  apartment  improvement increase that could be
    29  authorized for the unit prior to the alteration of the outer dimensions.
    30    (c) notwithstanding subparagraphs (a) and (b) of this paragraph,  such
    31  increases  may  be denied based on the occurrence of such vacancy due to
    32  harassment, fraud, or other acts of evasion which may require that  such
    33  rent be set in accordance with section 26-516 of this title.
    34    (d)  where  the  vacant housing accommodations are combined, modified,
    35  divided or the dimension of such housing accommodation otherwise altered
    36  and these changes are being made pursuant to a  preservation  regulatory
    37  agreement  with a federal, state or local governmental agency or instru-
    38  mentality, the rent stabilized rents charged thereafter shall  be  based
    39  on  an initial rent set by such agency or instrumentality, provided such
    40  initial rent shall not be higher than if the initial rent was calculated
    41  in accordance with subparagraphs (a), (b), (e) or (f) of this paragraph.
    42    (e) where an owner substantially decreases the outer dimensions  of  a
    43  vacant  housing accommodation, such initial rent shall be the prior rent
    44  of such housing accommodation, decreased  by  the  same  percentage  the
    45  square footage of the original apartment was decreased by and such other
    46  increases  authorized by this chapter including any applicable guideline
    47  increase and individual apartment improvement  increase  that  could  be
    48  authorized for the apartment prior to the alteration of the outer dimen-
    49  sions.
    50    (f)(i)  when  an owner combines two or more rent regulated apartments,
    51  the owner may use each of the previous apartments' remaining  individual
    52  apartment  improvement  allowances for the purposes of a temporary indi-
    53  vidual apartment improvement rent increase. The owner shall subsequently
    54  designate a surviving apartment for the purposes  of  registration  that
        S. 2980--C                          3
 
     1  has  the  same  apartment number as one of the prior apartments. If that
     2  prior apartment has any reimbursable  individual  apartment  improvement
     3  money  remaining after the combination, that money may be reimbursed for
     4  future  individual  apartment  improvements undertaken within the subse-
     5  quent fifteen years following the combination.
     6    (ii) in order for an owner  to  qualify  for  a  temporary  individual
     7  apartment  improvement  rent  increase when apartments are combined, the
     8  requirements for an  individual  apartment  improvement,  including  all
     9  notification requirements under this chapter shall be met.
    10    (g)  owners  shall  maintain  the  records  and  rent histories of all
    11  combined apartments,  both  prior  to  and  post  combination,  for  the
    12  purposes  of rent setting, overcharge and all other proceedings to which
    13  the records are applicable.
    14    § 2. Subdivision (a) of section 10-b of section 4 of  chapter  576  of
    15  the  laws  of  1974, constituting the emergency tenant protection act of
    16  nineteen seventy-four, is amended by adding a new paragraph 13  to  read
    17  as follows:
    18    13.  (i)  where  an owner combines two or more vacant housing accommo-
    19  dations or combines a vacant  housing  accommodation  with  an  occupied
    20  housing  accommodation,  such initial rent for such new housing accommo-
    21  dation shall be the combined legal rent for both previous housing accom-
    22  modations, subject to any applicable guideline increases and  any  other
    23  increases  authorized by this chapter including any individual apartment
    24  improvement increases applicable for both housing accommodations. If  an
    25  owner  combines  a  rent  regulated  accommodation with an apartment not
    26  subject to rent regulation, the resulting apartment shall be subject  to
    27  this act.  If an owner increases the area of an apartment not subject to
    28  rent regulation by adding space that was previously part of a rent regu-
    29  lated apartment, each apartment shall be subject to this act.
    30    (ii)  where  an owner substantially increases the outer dimension of a
    31  vacant housing accommodation, such initial rent shall be the prior  rent
    32  of  such  housing accommodation, increased by a percentage that is equal
    33  to the  percentage  increase  in  the  dwelling  space  and  such  other
    34  increases  authorized  by  this  act  including any applicable guideline
    35  increase and individual apartment improvement  increase  that  could  be
    36  authorized for the unit prior to the alteration of the outer dimensions.
    37    (iii)  notwithstanding  subparagraphs  (i) and (ii) of this paragraph,
    38  such increases may be denied based on the occurrence of such vacancy due
    39  to harassment, fraud, or other acts of evasion which  may  require  that
    40  such rent be set in accordance with section twelve of this act.
    41    (iv)  where  the vacant housing accommodations are combined, modified,
    42  divided or the dimension of such housing accommodation otherwise altered
    43  and these changes are being made pursuant to a  preservation  regulatory
    44  agreement  with a federal, state or local governmental agency or instru-
    45  mentality, the rent stabilized rents charged thereafter shall  be  based
    46  on  an initial rent set by such agency or instrumentality, provided such
    47  initial rent shall not be higher than if the initial rent was calculated
    48  in accordance with subparagraphs (i), (ii), (v) or (vi)  of  this  para-
    49  graph.
    50    (v)  where  an owner substantially decreases the outer dimensions of a
    51  vacant housing accommodation, such initial rent shall be the prior  rent
    52  of  such  housing  accommodation,  decreased  by the same percentage the
    53  square footage of the original apartment was decreased by and such other
    54  increases authorized by this  act  including  any  applicable  guideline
    55  increase  and  individual  apartment  improvement increase that could be
        S. 2980--C                          4
 
     1  authorized for the apartment prior to the alteration of the outer dimen-
     2  sions.
     3    (vi)(1)  when an owner combines two or more rent regulated apartments,
     4  the owner may use each of the previous apartments' remaining  individual
     5  apartment  improvement  allowances for the purposes of a temporary indi-
     6  vidual apartment improvement rent increase. The owner shall subsequently
     7  designate a surviving apartment for the purposes  of  registration  that
     8  has  the  same  apartment number as one of the prior apartments. If that
     9  prior apartment has any reimbursable  individual  apartment  improvement
    10  money  remaining after the combination, that money may be reimbursed for
    11  future individual apartment improvements undertaken  within  the  subse-
    12  quent fifteen years following the combination.
    13    (2) in order for an owner to qualify for a temporary individual apart-
    14  ment  improvement  rent  increase  when  apartments  are  combined,  the
    15  requirements for an  individual  apartment  improvement,  including  all
    16  notification requirements under this act shall be met.
    17    (vii)  owners  shall  maintain  the  records and rent histories of all
    18  combined apartments,  both  prior  to  and  post  combination,  for  the
    19  purposes  of rent setting, overcharge and all other proceedings to which
    20  the records are applicable.
    21    § 3. The opening paragraph  of  paragraph  (a)  of  subdivision  4  of
    22  section  14  of  the  public housing law, as added by chapter 116 of the
    23  laws of 1997, is amended to read as follows:
    24    that unless otherwise prohibited by occupancy restrictions based  upon
    25  income  limitations pursuant to federal, state or local law, regulations
    26  or other requirements  of  governmental  agencies,  any  member  of  the
    27  tenant's  family, as defined in paragraph (c) of this subdivision, shall
    28  succeed to the rights of a tenant under such acts  and  laws  where  the
    29  tenant has permanently vacated the housing accommodation and such family
    30  member  has  resided  with  the tenant in the housing accommodation as a
    31  primary residence for a period of no less than two years, or where  such
    32  person is a "senior citizen" or a "disabled person," as defined in para-
    33  graph  (c)  of  this subdivision, for a period of no less than one year,
    34  immediately prior to the permanent vacating of the housing accommodation
    35  by the tenant, or from the inception of the tenancy or  commencement  of
    36  the  relationship,  if  for less than such periods.  For the purposes of
    37  this paragraph, "permanently vacated"  shall  mean  the  date  when  the
    38  tenant of record permanently stops residing in the housing accommodation
    39  regardless  of subsequent contacts with the unit or the signing of lease
    40  renewals or continuation  of  rent  payments.  The  minimum  periods  of
    41  required  residency set forth in this subdivision shall not be deemed to
    42  be interrupted by any period during which the "family member"  temporar-
    43  ily relocates because he or she:
    44    § 4.  Paragraph (d) of subdivision 4 of section 14 of the public hous-
    45  ing law is REPEALED.
    46    § 5. Paragraph 5 of subdivision a of section 5 of section 4 of chapter
    47  576  of  the  laws of 1974, constituting the emergency tenant protection
    48  act of nineteen seventy-four, is amended to read as follows:
    49    (5)  housing  accommodations  in  buildings  completed  or   buildings
    50  substantially  rehabilitated  as family units on or after January first,
    51  nineteen hundred seventy-four; provided that an owner claiming exemption
    52  from rent stabilization on the basis of substantial rehabilitation shall
    53  seek approval from state division of housing and community renewal with-
    54  in one year of the completion of the substantial rehabilitation, or  for
    55  any building previously alleged to have been substantially rehabilitated
    56  before  the  effective  date  of the chapter of the laws of two thousand
        S. 2980--C                          5
 
     1  twenty-three that amended this paragraph,  within  six  months  of  such
     2  effective  date,  and  ultimately  obtain  such approval, which shall be
     3  denied on the following grounds:
     4    (a)  the owner or its predecessors in interest have engaged in harass-
     5  ment of tenants in the  five  years  preceding  the  completion  of  the
     6  substantial rehabilitation;
     7    (b)  the  building  was not in a substandard or seriously deteriorated
     8  condition requiring substantial rehabilitation;
     9    § 6. This act shall take effect immediately and  shall  apply  to  all
    10  pending proceedings on and after such date; provided that the amendments
    11  to section 26-511 of chapter 4 of title 26 of the administrative code of
    12  the city of New York made by section one of this act shall expire on the
    13  same  date  as  such  law expires and shall not affect the expiration of
    14  such law as provided under section 26-520 of such law.
 
    15                                   PART B
 
    16    Section 1. Legislative findings.  The  legislature  hereby  finds  and
    17  declares  that  in  light  of  court decisions arising under the Housing
    18  Stability and Tenant Protection Act of 2019  (HSTPA),  including  Regina
    19  Metro  v.  DHCR, it is public policy that the legislature define clearly
    20  the scope of the fraud exception to the  pre-HSTPA  four-year  rule  for
    21  calculating  rents which remains unsettled and the subject of litigation
    22  where courts have diverged from the controlling authority of Thornton v.
    23  Baron and Grimm v. DHCR to impose a common law fraud  standard  that  is
    24  not  found  in  these  cases  and is inconsistent with the intent of the
    25  legislature to discourage and penalize fraud against the rent regulatory
    26  system itself, as well as against individual tenants, and it  is  there-
    27  fore  public  policy  that  the legislature codify, without expanding or
    28  reducing the liability of landlords under pre-HSTPA  law,  the  standard
    29  for applying that exception.
    30    §  2.  (a)  Nothing  in this act, or the HSTPA, or prior law, shall be
    31  construed as restricting, impeding or diminishing the use of records  of
    32  any  age  or  type,  going  back  to  any date that may be relevant, for
    33  purposes of determining the status  of  any  apartment  under  the  rent
    34  stabilization law;
    35    (b)  With  respect  to  the  calculation of legal rents for the period
    36  either prior to or subsequent to June 14, 2019, an owner shall be deemed
    37  to have committed fraud if the owner shall  have  committed  a  material
    38  breach  of  any  duty, arising under statutory, administrative or common
    39  law, to disclose truthfully to any tenant, government agency or judicial
    40  or administrative tribunal, the rent, regulatory status, or lease infor-
    41  mation, for purposes of claiming an unlawful rent or  claiming  to  have
    42  deregulated  an  apartment,  whether or not the owner's conduct would be
    43  considered fraud under the common law, and whether or not a  complaining
    44  tenant  specifically  relied  on  untruthful or misleading statements in
    45  registrations, leases, or other documents. The following  conduct  shall
    46  be  presumed  to  have  been the product of such fraud: (1) the unlawful
    47  deregulation of any apartment, including such  deregulation  as  results
    48  from  claiming  an unlawful increase such as would have brought the rent
    49  over the deregulation threshold that existed under prior law, unless the
    50  landlord can prove good faith reliance on a directive or  ruling  by  an
    51  administrative  agency or court; or (2) beginning October 1, 2011, fail-
    52  ing to register, as rent stabilized, any apartment in a building receiv-
    53  ing J-51 or 421-a benefits.
    54    § 3. This act shall take effect immediately.
        S. 2980--C                          6
 
     1                                   PART C
 
     2    Section  1. Subdivision e of section 26-517 of the administrative code
     3  of the city of New York, as amended by chapter 253 of the laws of  1993,
     4  is amended to read as follows:
     5    e.  The  failure  to  file  a proper and timely initial or annual rent
     6  registration statement shall, until such time as  such  registration  is
     7  filed,  bar  an owner from applying for or collecting any rent in excess
     8  of the legal regulated rent in effect on the date of the last  preceding
     9  registration  statement  or  if  no such statements have been filed, the
    10  legal regulated rent in effect on the date  that  the  housing  accommo-
    11  dation  became subject to the registration requirements of this section.
    12  The filing of a late registration shall result in the prospective elimi-
    13  nation of such sanctions and provided that increases in the legal  regu-
    14  lated rent were lawful except for the failure to file a timely registra-
    15  tion,  the  owner,  upon  the service and filing of a late registration,
    16  shall not be found to have collected an overcharge at any time prior  to
    17  the filing of the late registration. [If such late registration is filed
    18  subsequent  to the filing of an overcharge complaint, the owner shall be
    19  assessed a late filing surcharge for each late registration in an amount
    20  equal to fifty percent of the timely rent registration fee.] In addition
    21  to all other requirements set forth in this subdivision, in the event  a
    22  timely  rent  registration  is not filed and after notice of such delin-
    23  quency is provided by  the  state  division  of  housing  and  community
    24  renewal  to  the  owner  in  the form of electronic mail and mail to the
    25  address listed in the owner's most recent  registration  statement,  the
    26  owner  shall  be  subject to a fine of five hundred dollars per unregis-
    27  tered unit for each month the registration is delinquent.  Such  a  fine
    28  shall  be  imposed  by  order,  and  such order imposing a fine shall be
    29  deemed a final determination for the purposes of judicial  review.  Such
    30  fine  may, upon the expiration of the period for seeking review pursuant
    31  to article seventy-eight of the civil practice law and rules, be docket-
    32  ed and enforced in the manner of a judgment of the supreme court by  the
    33  state division of housing and community renewal.
    34    §  2. Subdivision e of section 12-a of section 4 of chapter 576 of the
    35  laws of 1974 constituting the emergency tenant protection act  of  nine-
    36  teen  seventy-four,  as  amended  by chapter 253 of the laws of 1993, is
    37  amended to read as follows:
    38    e. The failure to file a proper and  timely  initial  or  annual  rent
    39  registration  statement  shall,  until such time as such registration is
    40  filed, bar an owner from applying for or collecting any rent  in  excess
    41  of  the legal regulated rent in effect on the date of the last preceding
    42  registration statement or if no such statements  have  been  filed,  the
    43  legal  regulated  rent  in  effect on the date that the housing accommo-
    44  dation became subject to the registration requirements of this  section.
    45  The filing of a late registration shall result in the prospective elimi-
    46  nation  of such sanctions and provided that increases in the legal regu-
    47  lated rent were lawful except for the failure to file a timely registra-
    48  tion, the owner, upon the service and filing  of  a  late  registration,
    49  shall  not be found to have collected an overcharge at any time prior to
    50  the filing of the late registration. [If such late registration is filed
    51  subsequent to the filing of an overcharge complaint, the owner shall  be
    52  assessed a late filing surcharge for each late registration in an amount
    53  equal to fifty percent of the timely rent registration fee.] In addition
    54  to  all other requirements set forth in this subdivision, in the event a
    55  timely rent registration is not filed and after notice  of  such  delin-
        S. 2980--C                          7
 
     1  quency  is  provided by the division of housing and community renewal to
     2  the owner in the form of electronic mail and mail to the address  listed
     3  in  the  owner's  most recent registration statement, the owner shall be
     4  subject to a fine of five hundred dollars per unregistered unit for each
     5  month  the  registration  is delinquent. Such a fine shall be imposed by
     6  order, and such order imposing a fine shall be deemed a  final  determi-
     7  nation  for  the  purposes  of  judicial review. Such fine may, upon the
     8  expiration of the period for seeking review pursuant to  article  seven-
     9  ty-eight  of  the civil practice law and rules, be docketed and enforced
    10  in the manner of a judgment of the supreme  court  by  the  division  of
    11  housing and community renewal.
    12    §  3. Subdivision 1 of section 14 of the public housing law is amended
    13  by adding a new paragraph (x) to read as follows:
    14    (x) enforce the emergency tenant protection act of  nineteen  seventy-
    15  four,  the emergency housing rent control law, the local emergency hous-
    16  ing rent control act, the rent stabilization law of nineteen  sixty-nine
    17  and  any  regulations,  rules  and policies enacted pursuant thereto, in
    18  addition to any other laws, rules or regulations related to housing that
    19  is financed, administered, overseen or otherwise regulated by the agency
    20  or its related entities which constitute component parts  of  the  divi-
    21  sion;  such  enforcement authority shall include, but not be limited to,
    22  all of the powers granted by the other provisions of  this  subdivision,
    23  the  statutes,  rules,  regulations  and  other  documents governing the
    24  administration of housing by the division, and,  where  applicable,  the
    25  power to issue orders.
    26    §  4. This act shall take effect immediately, provided that the amend-
    27  ments to section 26-517 of chapter 4 of title 26 of  the  administrative
    28  code  of  the  city  of  New  York made by section one of this act shall
    29  expire on the same date as such law expires and  shall  not  affect  the
    30  expiration of such law as provided under section 26-520 of such law.
    31    § 2. Severability. If any clause, sentence, paragraph, section or part
    32  of  this act shall be adjudged by any court of competent jurisdiction to
    33  be invalid and after exhaustion of  all  further  judicial  review,  the
    34  judgment  shall not affect, impair, or invalidate the remainder thereof,
    35  but shall be confined in its operation to the  clause,  sentence,  para-
    36  graph,  section or part of this act directly involved in the controversy
    37  in which the judgment shall have been rendered.
    38    § 3. This act shall take effect immediately  provided,  however,  that
    39  the  applicable effective date of Parts A through C of this act shall be
    40  as specifically set forth in the last section of such Parts.