Bill Text: NY A06971 | 2017-2018 | General Assembly | Introduced
Bill Title: 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.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2018-01-03 - ordered to third reading cal.486 [A06971 Detail]
Download: New_York-2017-A06971-Introduced.html
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. LBD10653-02-7A. 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 thanA. 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.