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Bill No.: Summary Actions Committee&nbspVotes Floor&nbspVotes Memo Text LFIN Chamber&nbspVideo/Transcript S01020 Summary: BILL NO S01020C &nbsp SAME AS No Same As &nbsp SPONSOR JACKSON &nbsp COSPNSR &nbsp MLTSPNSR &nbsp Amd §§26-405 & 26-511, NYC Ad Cd; amd §6, Emerg Ten Prot Act of 1974; amd §4, Emerg Hous Rent Cont L &nbsp Requires thirty days notice be provided to tenants prior to the beginning of work on a major capital improvement.

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STATE OF NEW YORK ________________________________________________________________________

1020--C

2025-2026 Regular Sessions

IN SENATE

(Prefiled)

January 8, 2025 ___________

Introduced by Sen. JACKSON -- 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 -- recommitted to the Committee on Housing, Construction and Community Development in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said commit- tee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee

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 thirty days notice be provided to tenants prior to the beginning of work on a major capital improvement

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 ] part K of chapter thirty-six of the laws of two thou- 13 sand nineteen [ that amended this subparagraph ] shall be in an amount 14 sufficient to amortize the cost of the improvements pursuant to this

EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02943-04-6

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1 subparagraph (g) over a twelve-year period for buildings with thirty- 2 five or fewer units or a twelve and one-half year period for buildings 3 with more than thirty-five units, and shall be removed from the legal 4 regulated rent thirty years from the date the increase became effective 5 inclusive of any increases granted by the applicable rent guidelines 6 board. Temporary major capital improvement increases shall be collect- 7 ible prospectively on the first day of the first month beginning sixty 8 days from the date of mailing notice of approval to the tenant. Such 9 notice shall disclose the total monthly increase in rent and the first 10 month in which the tenant would be required to pay the temporary 11 increase. An approval for a temporary major capital improvement increase 12 shall not include retroactive payments. The collection of any increase 13 shall not exceed two percent in any year from the effective date of the 14 order granting the increase over the rent set forth in the schedule of 15 gross rents, with collectability of any dollar excess above said sum to 16 be spread forward in similar increments and added to the rent as estab- 17 lished or set in future years. Upon vacancy, the landlord may add any 18 remaining balance of the temporary major capital improvement increase to 19 the legal regulated rent. Notwithstanding any other provision of the 20 law, for any renewal lease commencing on or after June 14, 2019, the 21 collection of any rent increases due to any major capital improvements 22 approved on or after June 16, 2012 and before June 16, 2019 shall not 23 exceed two percent in any year for any tenant in occupancy on the date 24 the major capital improvement was approved . To be eligible for a tempo- 25 rary rent increase based upon a major capital improvement under this 26 subparagraph, thirty days notice shall be required to be provided to 27 tenants prior to the beginning of work on such major capital improve- 28 ment, provided, however, that such thirty days notice shall not be 29 required where the work constitutes emergency work as defined by the 30 local housing maintenance code, building code, or other applicable local 31 law or regulation, and where such emergency work is necessary to correct 32 an immediately hazardous condition or to prevent imminent danger to 33 life, health, or safety; provided further that in such cases the owner 34 shall provide notice to tenants as soon as permits for such emergency 35 work are pulled, or within seventy-two hours of the commencement of such 36 work, whichever occurs first, or 37 § 2. Paragraph 6 of subdivision c of section 26-511 of the administra- 38 tive code of the city of New York, as separately amended by section 12 39 of part K of chapter 36 and section 28 of part Q of chapter 39 of the 40 laws of 2019, is amended to read as follows: 41 (6) provides criteria whereby the commissioner may act upon applica- 42 tions by owners for increases in excess of the level of fair rent 43 increase established under this law provided, however, that such crite- 44 ria shall provide (a) as to hardship applications, for a finding that 45 the level of fair rent increase is not sufficient to enable the owner to 46 maintain approximately the same average annual net income (which shall 47 be computed without regard to debt service, financing costs or manage- 48 ment fees) for the three year period ending on or within six months of 49 the date of an application pursuant to such criteria as compared with 50 annual net income, which prevailed on the average over the period nine- 51 teen hundred sixty-eight through nineteen hundred seventy, or for the 52 first three years of operation if the building was completed since nine- 53 teen hundred sixty-eight or for the first three fiscal years after a 54 transfer of title to a new owner provided the new owner can establish to 55 the satisfaction of the commissioner that [ he or she ] such owner 56 acquired title to the building as a result of a bona fide sale of the

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1 entire building and that the new owner is unable to obtain requisite 2 records for the fiscal years nineteen hundred sixty-eight through nine- 3 teen hundred seventy despite diligent efforts to obtain same from prede- 4 cessors in title and further provided that the new owner can provide 5 financial data covering a minimum of six years under [ his or her ] such 6 owner's continuous and uninterrupted operation of the building to meet 7 the three year to three year comparative test periods herein provided; 8 and (b) as to completed building-wide major capital improvements, for a 9 finding that such improvements are deemed depreciable under the Internal 10 Revenue Code and that the cost is to be amortized over a twelve-year 11 period for a building with thirty-five or fewer housing accommodations, 12 or a twelve and one-half-year period for a building with more than thir- 13 ty-five housing accommodations, for any determination issued by the 14 division of housing and community renewal after the effective date of 15 [ the the ] part K of chapter thirty-nine of the laws of two thousand 16 nineteen [ that amended this paragraph ] and shall be removed from the 17 legal regulated rent thirty years from the date the increase became 18 effective inclusive of any increases granted by the applicable rent 19 guidelines board. Temporary major capital improvement increases shall be 20 collectible prospectively on the first day of the first month beginning 21 sixty days from the date of mailing notice of approval to the tenant. 22 Such notice shall disclose the total monthly increase in rent and the 23 first month in which the tenant would be required to pay the temporary 24 increase. An approval for a temporary major capital improvement increase 25 shall not include retroactive payments. The collection of any increase 26 shall not exceed two percent in any year from the effective date of the 27 order granting the increase over the rent set forth in the schedule of 28 gross rents, with collectability of any dollar excess above said sum to 29 be spread forward in similar increments and added to the rent as estab- 30 lished or set in future years. Upon vacancy, the landlord may add any 31 remaining balance of the temporary major capital improvement increase to 32 the legal regulated rent. Notwithstanding any other provision of the 33 law, for any renewal lease commencing on or after June 14, 2019, the 34 collection of any rent increases due to any major capital improvements 35 approved on or after June 16, 2012 and before June 16, 2019 shall not 36 exceed two percent in any year for any tenant in occupancy on the date 37 the major capital improvement was approved or based upon cash purchase 38 price exclusive of interest or service charges. To be eligible for a 39 temporary rent increase based upon a major capital improvement under 40 this paragraph, thirty days notice shall be required to be provided to 41 tenants prior to the beginning of work on such major capital improve- 42 ment, provided, however, that such thirty days notice shall not be 43 required where the work constitutes emergency work as defined by the 44 local housing maintenance code, building code, or other applicable local 45 law or regulation, and where such emergency work is necessary to correct 46 an immediately hazardous condition or to prevent imminent danger to 47 life, health, or safety; provided further that in such cases the owner 48 shall provide notice to tenants as soon as permits for such emergency 49 work are pulled, or within seventy-two hours of the commencement of such 50 work, whichever occurs first. Where an application for a temporary major 51 capital improvement increase has been filed, a tenant shall have sixty 52 days from the date of mailing of a notice of a proceeding in which to 53 answer or reply. The state division of housing and community renewal 54 shall provide any responding tenant with the reasons for the division's 55 approval or denial of such application. Notwithstanding anything to the 56 contrary contained herein, no hardship increase granted pursuant to this

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1 paragraph shall, when added to the annual gross rents, as determined by 2 the commissioner, exceed the sum of, (i) the annual operating expenses, 3 (ii) an allowance for management services as determined by the commis- 4 sioner, (iii) actual annual mortgage debt service (interest and amorti- 5 zation) on its indebtedness to a lending institution, an insurance 6 company, a retirement fund or welfare fund which is operated under the 7 supervision of the banking or insurance laws of the state of New York or 8 the United States, and (iv) eight and one-half percent of that portion 9 of the fair market value of the property which exceeds the unpaid prin- 10 cipal amount of the mortgage indebtedness referred to in subparagraph 11 (iii) of this paragraph. Fair market value for the purposes of this 12 paragraph shall be six times the annual gross rent. The collection of 13 any increase in the stabilized rent for any apartment pursuant to this 14 paragraph shall not exceed six percent in any year from the effective 15 date of the order granting the increase over the rent set forth in the 16 schedule of gross rents, with collectability of any dollar excess above 17 said sum to be spread forward in similar increments and added to the 18 stabilized rent as established or set in future years; 19 § 3. Paragraph 3 of subdivision d of section 6 of section 4 of chapter 20 576 of the laws of 1974, constituting the emergency tenant protection 21 act of nineteen seventy-four, as amended by section 26 of part Q of 22 chapter 39 of the laws of 2019, is amended to read as follows: 23 (3) there has been since January first, nineteen hundred seventy-four 24 a major capital improvement essential for the preservation, energy effi- 25 ciency, functionality, or infrastructure of the entire building, 26 improvement of the structure including heating, windows, plumbing and 27 roofing, but shall not be for operation costs or unnecessary cosmetic 28 improvements. An adjustment under this paragraph shall be in an amount 29 sufficient to amortize the cost of the improvements pursuant to this 30 paragraph over a twelve-year period for a building with thirty-five or 31 fewer housing accommodations, or a twelve and one-half period for a 32 building with more than thirty-five housing accommodations and shall be 33 removed from the legal regulated rent thirty years from the date the 34 increase became effective inclusive of any increases granted by the 35 applicable rent guidelines board, for any determination issued by the 36 division of housing and community renewal after the effective date of 37 the chapter of the laws of two thousand nineteen that amended this para- 38 graph. Temporary major capital improvement increases shall be collecta- 39 ble prospectively on the first day of the first month beginning sixty 40 days from the date of mailing notice of approval to the tenant. Such 41 notice shall disclose the total monthly increase in rent and the first 42 month in which the tenant would be required to pay the temporary 43 increase. An approval for a temporary major capital improvement increase 44 shall not include retroactive payments. The collection of any increase 45 shall not exceed two percent in any year from the effective date of the 46 order granting the increase over the rent set forth in the schedule of 47 gross rents, with collectability of any dollar excess above said sum to 48 be spread forward in similar increments and added to the rent as estab- 49 lished or set in future years. Upon vacancy, the landlord may add any 50 remaining balance of the temporary major capital improvement increase to 51 the legal regulated rent. Notwithstanding any other provision of the 52 law, the collection of any rent increases for any renewal lease commenc- 53 ing on or after June 14, 2019, due to any major capital improvements 54 approved on or after June 16, 2012 and before June 16, 2019 shall not 55 exceed two percent in any year for any tenant in occupancy on the date 56 the major capital improvement was approved . To be eligible for a tempo-

S. 1020--C 5

1 rary rent increase based upon a major capital improvement under this 2 paragraph, thirty days notice shall be required to be provided to 3 tenants prior to the beginning of work on such major capital 4 improvement , provided, however, that such thirty days notice shall not 5 be required where the work constitutes emergency work as defined by the 6 local housing maintenance code, building code, or other applicable local 7 law or regulation, and where such emergency work is necessary to correct 8 an immediately hazardous condition or to prevent imminent danger to 9 life, health, or safety; provided further that in such cases the owner 10 shall provide notice to tenants as soon as permits for such emergency 11 work are pulled, or within seventy-two hours of the commencement of such 12 work, whichever occurs first, or 13 § 4. Subparagraph 7 of the second undesignated paragraph of paragraph 14 (a) of subdivision 4 of section 4 of chapter 274 of the laws of 1946, 15 constituting the emergency housing rent control law, as separately 16 amended by section 25 of part Q of chapter 39 and section 14 of part K 17 of chapter 36 of the laws of 2019, is amended to read as follows: 18 (7) there has been since March first, nineteen hundred fifty, a major 19 capital improvement essential for the preservation, energy efficiency, 20 functionality, or infrastructure of the entire building, improvement of 21 the structure including heating, windows, plumbing and roofing, but 22 shall not be for operational costs or unnecessary cosmetic improvements; 23 which for any order of the commissioner issued after the effective date 24 of [ the ] part K of chapter thirty-six of the laws of two thousand nine- 25 teen [ that amended this paragraph ] the cost of such improvement shall be 26 amortized over a twelve-year period for buildings with thirty-five or 27 fewer units or a twelve and one-half year period for buildings with more 28 than thirty-five units, and shall be removed from the legal regulated 29 rent thirty years from the date the increase became effective inclusive 30 of any increases granted by the applicable rent guidelines board. Tempo- 31 rary major capital improvement increases shall be collectible prospec- 32 tively on the first day of the first month beginning sixty days from the 33 date of mailing notice of approval to the tenant. Such notice shall 34 disclose the total monthly increase in rent and the first month in which 35 the tenant would be required to pay the temporary increase. An approval 36 for a temporary major capital improvement increase shall not include 37 retroactive payments. The collection of any increase shall not exceed 38 two percent in any year from the effective date of the order granting 39 the increase over the rent set forth in the schedule of gross rents, 40 with collectability of any dollar excess above said sum to be spread 41 forward in similar increments and added to the rent as established or 42 set in future years. Upon vacancy, the landlord may add any remaining 43 balance of the temporary major capital improvement increase to the legal 44 regulated rent. Notwithstanding any other provision of the law, for any 45 renewal lease commencing on or after June 14, 2019, the collection of 46 any rent increases due to any major capital improvements approved on or 47 after June 16, 2012 and before June 16, 2019 shall not exceed two 48 percent in any year for any tenant in occupancy on the date the major 49 capital improvement was approved; provided, however, to be eligible for 50 a temporary rent increase based upon a major capital improvement under 51 this subparagraph, thirty days notice shall be required to be provided 52 to tenants prior to the beginning of work on such major capital improve- 53 ment; provided, however, that such thirty days notice shall not be 54 required where the work constitutes emergency work as defined by the 55 local housing maintenance code, building code, or other applicable local 56 law or regulation, and where such emergency work is necessary to correct

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1 an immediately hazardous condition or to prevent imminent danger to 2 life, health, or safety; provided further that in such cases the owner 3 shall provide notice to tenants as soon as permits for such emergency 4 work are pulled, or within seventy-two hours of the commencement of such 5 work, whichever occurs first; provided, however, where an application 6 for a temporary major capital improvement increase has been filed, a 7 tenant shall have sixty days from the date of mailing of a notice of a 8 proceeding in which to answer or reply. The state division of housing 9 and community renewal shall provide any responding tenant with the 10 reasons for the division's approval or denial of such application; or 11 § 5. This act shall take effect on the ninetieth day after it shall 12 have become a law; provided that: 13 (a) the amendments to section 26-405 of the city rent and rehabili- 14 tation law made by section one of this act shall remain in full force 15 and effect only as long as the public emergency requiring the regulation 16 and control of residential rents and evictions continues, as provided in 17 subdivision 3 of section 1 of the local emergency housing rent control 18 act; and 19 (b) the amendments to section 26-511 of chapter 4 of title 26 of the 20 administrative code of the city of New York made by section two of this 21 act shall expire on the same date as such law expires and shall not 22 affect the expiration of such law as provided under section 26-520 of 23 such law.

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