Relates to rent regulation for certain high income tenants

BILL NUMBER:A9444 REPLACEMENT 1/11/10

Title of bill

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 rent regulation for certain high income tenants

General purpose

To clarify the fact that the luxury decontrol provisions of the law do not apply to apartments that are rent stabilized solely because they receive J-51 tax benefits from the city of New York.

Summary of specific provisions

This bill amends Sections 26-504.1 and 26-504.2 (a) of the Administrative Code of the city of New York and Section 5 (a)(12) of Section 4 of Chapter 576 of the Laws of 1974 (the Emergency Tenant Protection Act) to provide that apartments that become subject to rent stabilization "solely" because they are receiving real property tax benefits from the city of New York pursuant to Section 489 (J-51) or 421-a of the Real Property Tax Law are not eligible for the luxury decontrol provisions of the law.

Justification

Recently, the New York Court of Appeals in Roberts v. Tishman Speyer Properties issued an opinion wherein it restricted the ability of real property owners of rent regulated apartments in New York City to utilize the luxury decontrol provisions of the law to increase rents on apartments when these apartments are also receiving J-51 tax benefits for building-wide improvements from the city of New York. This decision runs contrary to a long standing interpretation of the statute by the state Division of Housing and Community Renewal in addition to its own regulations. The contrary interpretation by the court directly results from inartful drafting of the statue in 1993. This bill corrects the statute and would provide that rent stabilized apartments that attained the status "solely" by virtue of receiving J-51 benefits or 421A benefits (for new construction) are exempt from luxury decontrol. Thus, apartments that receive J-51 benefits but are also rent stabilized for other reasons (i.e. - built before 1974) remain subject to the luxury decontrol provisions of the law. Failure to correct the statute may lead to chaos in the residential real estate industry in New York City since the potential decrease in rent levels in affected luxury apartments would result in a loss of income which could potentially trigger a mortgage default for some property owners.

Fiscal implications

None to the state.

Legislative history

New Bill