S T A T E   O F   N E W   Y O R K
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                                   247

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  M.  of  A.  CASTRO, BARRON, STEVENSON, CRESPO, ROBINSON,
  TITUS -- Multi-Sponsored by -- M. of A. CLARK, COOK, GOTTFRIED, JACOBS
  -- 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 nineteen seventy-four and the emer-
  gency  housing  rent  control  law, in relation to requiring the state
  division of housing and community renewal to verify there are no hous-
  ing code violations prior to authorizing a  rent  increase  for  major
  capital improvements

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph 1 of subdivision  g  of  section  26-405  of  the
administrative  code  of the city of New York is amended by adding a new
subparagraph (p) to read as follows:
  (P) ADJUSTMENTS MADE PURSUANT TO SUBPARAGRAPH (G)  OF  THIS  PARAGRAPH
SHALL  BE  COLLECTIBLE  UPON  THE LANDLORD'S FILING OF A REPORT WITH THE
CITY RENT AGENCY, SUBJECT TO THE PROVISIONS OF SUBPARAGRAPH (E) OF PARA-
GRAPH TWO OF SUBDIVISION A OF THIS SECTION AND VERIFICATION BY THE  CITY
RENT  AGENCY,  IN  COLLABORATION  WITH LOCAL AUTHORITIES RESPONSIBLE FOR
INSPECTING BUILDINGS, THAT THE APPLICANT DOES NOT HAVE MORE THAN  THIRTY
CLASS A HOUSING CODE VIOLATIONS OR A CLASS B OR C HOUSING CODE VIOLATION
ON  THE  PROPERTY.  OUTSTANDING  HOUSING  CODE VIOLATIONS THAT ARE FOUND
SHALL BE CLEARED, CORRECTED OR ABATED BY THE LANDLORD  AND  VERIFIED  BY
THE  CITY  RENT  AGENCY  PRIOR TO AUTHORIZATION OF A RENT INCREASE UNDER
SUBPARAGRAPH (G) OF THIS PARAGRAPH.
  S 2. Paragraph 6 of subdivision c of section 26-511 of the administra-
tive code of the city of New York, as amended by chapter 116 of the laws
of 1997, is amended to read as follows:
  (6) provides criteria whereby the commissioner may act  upon  applica-
tions  by  owners  for  increases  in  excess  of the level of fair rent

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD02216-01-3

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increase established under this law provided, however, that such  crite-
ria  shall  provide  (a) as to hardship applications, for a finding that
the level of fair rent increase is not sufficient to enable the owner to
maintain  approximately  the same average annual net income (which shall
be computed without regard to debt service, financing costs  or  manage-
ment  fees)  for the three year period ending on or within six months of
the date of an application pursuant to such criteria  as  compared  with
annual  net income, which prevailed on the average over the period nine-
teen hundred sixty-eight through nineteen hundred seventy,  or  for  the
first three years of operation if the building was completed since nine-
teen  hundred  sixty-eight  or  for the first three fiscal years after a
transfer of title to a new owner provided the new owner can establish to
the satisfaction of the commissioner that he or she  acquired  title  to
the  building as a result of a bona fide sale of the entire building and
that the new owner is unable to obtain requisite records for the  fiscal
years  nineteen  hundred  sixty-eight  through  nineteen hundred seventy
despite diligent efforts to obtain same from predecessors in  title  and
further  provided that the new owner can provide financial data covering
a minimum of six years under his or  her  continuous  and  uninterrupted
operation  of  the building to meet the three year to three year compar-
ative test periods herein provided; and (b) as  to  completed  building-
wide  major  capital  improvements, for a finding that such improvements
are deemed depreciable under the Internal Revenue Code and that the cost
is to be amortized over a seven-year period, based  upon  cash  purchase
price exclusive of interest or service charges.  THE DIVISION OF HOUSING
AND  COMMUNITY RENEWAL SHALL REQUIRE THE SUBMISSION OF A REPORT BY LAND-
LORDS APPLYING FOR A RENT INCREASE FOR MAJOR CAPITAL IMPROVEMENTS PURSU-
ANT TO THIS PARAGRAPH AND SUBJECT TO VERIFICATION  BY  THE  DIVISION  OF
HOUSING  AND  COMMUNITY RENEWAL, IN COLLABORATION WITH LOCAL AUTHORITIES
RESPONSIBLE FOR INSPECTING BUILDINGS, CERTIFYING THAT THERE ARE NOT MORE
THAN THIRTY CLASS A HOUSING CODE VIOLATIONS NOR A CLASS B OR  C  HOUSING
CODE  VIOLATION  ON  THE  PROPERTY, PRIOR TO RECEIVING APPROVAL FOR SUCH
RENT INCREASE. Notwithstanding anything to the contrary contained  here-
in,  no hardship increase granted pursuant to this paragraph shall, when
added to the annual gross rents,  as  determined  by  the  commissioner,
exceed  the sum of, (i) the annual operating expenses, (ii) an allowance
for management services as determined by the commissioner, (iii)  actual
annual  mortgage debt service (interest and amortization) on its indebt-
edness to a lending institution, an insurance company, a retirement fund
or welfare fund which is operated under the supervision of  the  banking
or  insurance  laws  of  the state of New York or the United States, and
(iv) eight and one-half percent of that portion of the fair market value
of the property which exceeds the unpaid principal amount of  the  mort-
gage  indebtedness  referred to in subparagraph (iii) of this paragraph.
Fair market value for the purposes of this paragraph shall be six  times
the  annual gross rent. The collection of any increase in the stabilized
rent for any apartment pursuant to this paragraph shall not  exceed  six
percent  in  any  year from the effective date of the order granting the
increase over the rent set forth in the schedule of  gross  rents,  with
collectability  of any dollar excess above said sum to be spread forward
in similar increments and added to the stabilized rent as established or
set in future years;
  S 3. Subdivision d of section 6 of section 4 of  chapter  576  of  the
laws  of 1974, constituting the emergency tenant protection act of nine-
teen seventy-four, is amended by adding a new paragraph  6  to  read  as
follows:

A. 247                              3

  (6)  ADJUSTMENTS  MADE  PURSUANT  TO PARAGRAPH (3) OF THIS SUBDIVISION
SHALL BE COLLECTABLE UPON THE LANDLORD'S FILING OF  A  REPORT  WITH  THE
STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL AND SUBJECT TO VERIFICA-
TION  BY THE STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, IN COLLAB-
ORATION  WITH  LOCAL  AUTHORITIES  RESPONSIBLE FOR INSPECTING BUILDINGS,
THAT THE APPLICANT DOES NOT HAVE MORE THAN THIRTY CLASS A  HOUSING  CODE
VIOLATIONS  OR  A  CLASS  B OR C HOUSING CODE VIOLATION ON THE PROPERTY.
OUTSTANDING HOUSING CODE VIOLATIONS THAT ARE  FOUND  SHALL  BE  CLEARED,
CORRECTED  OR  ABATED BY THE LANDLORD AND VERIFIED BY THE STATE DIVISION
OF HOUSING AND COMMUNITY  RENEWAL  PRIOR  TO  AUTHORIZATION  OF  A  RENT
INCREASE UNDER PARAGRAPH (3) OF THIS SUBDIVISION.
  S 4. The second undesignated paragraph of paragraph (a) of subdivision
4  of  section  4  of  chapter 274 of the laws of 1946, constituting the
emergency housing rent control law, as amended by section 25 of  part  B
of chapter 97 of the laws of 2011, is amended to read as follows:
  No application for adjustment of maximum rent based upon a sales price
valuation  shall  be filed by the landlord under this subparagraph prior
to six months from the date of such sale of the property.  In  addition,
no  adjustment  ordered  by  the  commission based upon such sales price
valuation shall be effective prior to one year from  the  date  of  such
sale.  Where,  however,  the assessed valuation of the land exceeds four
times the assessed valuation of the buildings  thereon,  the  commission
may determine a valuation of the property equal to five times the equal-
ized  assessed  valuation  of  the  buildings,  for the purposes of this
subparagraph. The commission may make a determination that the valuation
of the property is an amount  different  from  such  equalized  assessed
valuation  where  there  is  a  request for a reduction in such assessed
valuation currently pending; or where there has been a reduction in  the
assessed valuation for the year next preceding the effective date of the
current  assessed  valuation  in effect at the time of the filing of the
application. Net annual return shall be the amount by which  the  earned
income  exceeds  the operating expenses of the property, excluding mort-
gage interest and amortization, and excluding  allowances  for  obsoles-
cence  and  reserves, but including an allowance for depreciation of two
per centum of the value of the buildings exclusive of the land,  or  the
amount  shown  for  depreciation of the buildings in the latest required
federal income tax return, whichever is lower; provided,  however,  that
(1)  no  allowance  for  depreciation of the buildings shall be included
where the buildings have been fully depreciated for federal  income  tax
purposes  or  on the books of the owner; or (2) the landlord who owns no
more than four rental units within the state has not been fully  compen-
sated  by  increases  in  rental income sufficient to offset unavoidable
increases in property taxes, fuel, utilities, insurance and repairs  and
maintenance, excluding mortgage interest and amortization, and excluding
allowances  for  depreciation,  obsolescence  and  reserves,  which have
occurred since the federal date determining the maximum rent or the date
the property was acquired by the present owner, whichever is  later;  or
(3) the landlord operates a hotel or rooming house or owns a cooperative
apartment  and  has  not  been  fully compensated by increases in rental
income from the controlled housing accommodations sufficient  to  offset
unavoidable increases in property taxes and other costs as are allocable
to  such controlled housing accommodations, including costs of operation
of such hotel or rooming house,  but  excluding  mortgage  interest  and
amortization,  and  excluding  allowances for depreciation, obsolescence
and reserves, which have occurred since the federal date determining the
maximum rent or the date the landlord commenced  the  operation  of  the

A. 247                              4

property, whichever is later; or (4) the landlord and tenant voluntarily
enter into a valid written lease in good faith with respect to any hous-
ing  accommodation,  which lease provides for an increase in the maximum
rent not in excess of fifteen per centum and for a term of not less than
two  years,  except  that  where  such lease provides for an increase in
excess of fifteen  per  centum,  the  increase  shall  be  automatically
reduced  to fifteen per centum; or (5) the landlord and tenant by mutual
voluntary written agreement agree to a substantial increase or  decrease
in dwelling space or a change in the services, furniture, furnishings or
equipment provided in the housing accommodations; provided that an owner
shall  be entitled to a rent increase where there has been a substantial
modification or increase  of  dwelling  space  or  an  increase  in  the
services, or installation of new equipment or improvements or new furni-
ture  or furnishings provided in or to a tenant's housing accommodation.
The permanent increase in the maximum  rent  for  the  affected  housing
accommodation  shall  be  one-fortieth,  in  the case of a building with
thirty-five or fewer housing accommodations,  or  one-sixtieth,  in  the
case  of  a  building  with more than thirty-five housing accommodations
where such permanent increase takes effect on or after  September  twen-
ty-fourth,  two thousand eleven, of the total cost incurred by the land-
lord in providing such  modification  or  increase  in  dwelling  space,
services,  furniture,  furnishings  or  equipment, including the cost of
installation, but excluding finance charges  provided  further  that  an
owner  who  is entitled to a rent increase pursuant to this clause shall
not be entitled to a further rent increase based upon  the  installation
of  similar equipment, or new furniture or furnishings within the useful
life of such new equipment, or new furniture or furnishings.  The  owner
shall  give  written  notice  to  the  commission of any such adjustment
pursuant to this clause; or (6) there has been, since March first, nine-
teen hundred fifty, an increase in  the  rental  value  of  the  housing
accommodations as a result of a substantial rehabilitation of the build-
ing  or housing accommodation therein which materially adds to the value
of the property or appreciably prolongs  its  life,  excluding  ordinary
repairs, maintenance and replacements; or (7) there has been since March
first,  nineteen hundred fifty, a major capital improvement required for
the operation, preservation or maintenance  of  the  structure;  or  (8)
there  has been since March first, nineteen hundred fifty, in structures
containing more than four  housing  accommodations,  other  improvements
made  with  the  express consent of the tenants in occupancy of at least
seventy-five per centum of the housing accommodations, provided,  howev-
er, that no adjustment granted hereunder shall exceed fifteen per centum
unless  the  tenants  have agreed to a higher percentage of increase, as
herein provided; or (9) there has  been,  since  March  first,  nineteen
hundred fifty, a subletting without written consent from the landlord or
an  increase in the number of adult occupants who are not members of the
immediate family of the tenant, and the landlord has  not  been  compen-
sated  therefor  by  adjustment of the maximum rent by lease or order of
the commission or pursuant to the federal act; or (10) the  presence  of
unique  or  peculiar circumstances materially affecting the maximum rent
has resulted in a maximum rent which is  substantially  lower  than  the
rents  generally  prevailing  in the same area for substantially similar
housing accommodations.  ADJUSTMENTS MADE PURSUANT TO  SUBPARAGRAPH  (7)
OF  THIS  PARAGRAPH SHALL BE COLLECTIBLE UPON THE LANDLORD'S FILING OF A
REPORT WITH THE COMMISSION AND SUBJECT TO VERIFICATION  BY  THE  COMMIS-
SION, IN COLLABORATION WITH LOCAL AUTHORITIES RESPONSIBLE FOR INSPECTING
BUILDINGS,  THAT  THE  APPLICANT DOES NOT HAVE MORE THAN  THIRTY CLASS A

A. 247                              5

HOUSING CODE VIOLATIONS OR A CLASS B OR C HOUSING CODE VIOLATION ON  THE
PROPERTY.  OUTSTANDING  HOUSING  CODE VIOLATIONS THAT ARE FOUND SHALL BE
CLEARED, CORRECTED OR ABATED BY THE LANDLORD AND VERIFIED BY THE COMMIS-
SION PRIOR TO AUTHORIZATION OF A RENT INCREASE UNDER SUBPARAGRAPH (7) OF
THIS PARAGRAPH.
  S  5.  This  act  shall take effect on the sixtieth day after it shall
have become a law; provided that:
  (a) the amendments to section 26-405 of the city  rent  and  rehabili-
tation  law  made  by section one of this act shall remain in full force
and effect only as long as the public emergency requiring the regulation
and control of residential rents and evictions continues, as provided in
subdivision 3 of section 1 of the local emergency housing  rent  control
act;
  (b)  the amendments to section 26-511 of the rent stabilization law of
nineteen hundred sixty-nine made by section two of this act shall expire
on the same date as such law expires and shall not affect the expiration
of such law as provided under section 26-520 of such law, as  from  time
to time amended;
  (c)  the amendment to section 6 of the emergency tenant protection act
of nineteen seventy-four made by section three of this act shall  expire
on the same date as such act expires and shall not affect the expiration
of  such  act  as  provided  in section 17 of chapter 576 of the laws of
1974, as from time to time amended; and
  (d) the amendment to section 4 of the emergency housing  rent  control
law  made  by  section four of this act shall expire on the same date as
such law expires and shall not affect the  expiration  of  such  law  as
provided  in  subdivision  2  of section 1 of chapter 274 of the laws of
1946.