Relates to tax abatement for rent regulated property occupied by certain senior citizens or low-income and moderate-income persons

Section 2 of the bill amends subdivision 2 of section 1 of chapter 274 of the laws of 1946, as amended by chapter 82 of the laws of 2003, to extend the period certain provisions of law will remain in force to June 15, 2019.

Section 3 of the bill amends section 2 of chapter 329 of the laws of 1963, as amended by chapter 82 of the laws of 2003, to extend the period certain provisions of law will remain in force to June 15, 2019.

Section 4 of the bill amends section 10 of chapter 555 of the laws of 1982, as amended by chapter 82 of the laws of 2003, to extend the period certain provisions of law will remain in force to June 15, 2019.

Section 5 of the bill amends section 4 of chapter 402 of the laws of 1983, as amended by chapter 82 of the laws of 2003, to extend the period certain provisions of law will remain in force to June 15, 2019.

Section 6 of the bill amends subdivision 6 of section 46 of chapter 116 of the laws of 1997, as amended by chapter 82 of the laws of 2003, to extend the period certain provisions of law will remain in force to June 15, 2019.

Section 7. Amends the section heading of section 467-b of the real property tax law (RPTL) to provide for a tax abatement for rent-controlled and rent regulated properties occupied by senior citizens, persons with disabilities or persons of low and moderate income.

Section 8. Amends paragraph b of subdivision 1 of section 467-b of the RPTL to add a person of low or moderate income to those heads of households entitled to the possession of or to the use or occupancy of dwelling units eligible for tax abatements granted under section 1 of this chapter and imposes upon those heads of households a requirement of residency in the dwelling contained in the rent increase exemption application for no less than two years prior to the date of the application.

Section 9. Amends paragraph a of subdivision 3 of section 467-b of the RPTL to provide that tax abatements shall be granted to dwelling units where the head of household who, on or after July 1, 2011, qualifies as a person of low or moderate income where the combined income of all members of the household does not exceed $45,000 for the previous income tax year.

Section 10. Amends the opening paragraph of subdivision m of section 26-405 of the administrative code of the city of New York to make all persons of limited means eligible for special rent adjustments.

Section 11. Amends subparagraphs (i) and (ii) of paragraph 2 of subdivision m of section 26-405 of the administrative code of the city of New York to: (i) exclude social security income benefits, supplemental security income or disability pensions or disability compensation benefits in determining eligibility for this tax abatement program and imposes a requirement of residency in the dwelling contained in the rent increase exemption application for no less than two years prior to the date of the application; (ii) provide that tax abatement benefits under this program shall be provided to households whose aggregate disposable income does not exceed $45,000 beginning on July 1, 2011.

Section 12. Amends paragraph 5 of subdivision m of section 26-405 of the administrative code of the city of New York to provide that a rent exemption order shall be issued to each tenant determined to be eligible by the NYC Department of Finance whose household income does not exceed $45,000.

Section 13. Amends subdivision d of section 26-406 of the administrative code of the city of New York to determine prior to the commencement of each fiscal year the total amount of taxes to be abated as a result of rent exemptions granted to eligible households.

Section 14. Amends the section heading of section 26-509 of the administrative code of the city of New York to provide that applications for rent increase exemptions and equivalent tax abatement for rent regulated properties shall be made by qualifying low and moderate income persons.

Section 15. Amends the opening paragraph of subdivision b of section 26-509 of the administrative code of the city of New York to provide for rent increase exemptions for low and moderate income persons as well as for eligible senior citizens and persons with disabilities.

Section 16. Amends subparagraphs(i) and (ii) of paragraph 2 of subdivision b of section 26-509 of the administrative code of the

city of New York to: (i) exclude social security income benefits, supplemental security income or disability pensions or disability compensation benefits in determining eligibility for this tax abatement program and imposes a requirement of residence in the dwelling contained in the rent increase exemption application for no less than two years prior to the date of the application,(ii) provide that tax abatement benefits under this program shall be provided to households whose aggregate disposable income does not exceed $45,000 beginning on July 1, 2011.

Section 17. Amends subparagraph (ii) of paragraph 3 of subdivision b of Section 26-509 of the administrative code of the city of New York to provide that rent increase exemption orders granted to persons of low-income or moderate-income expire upon termination of occupancy.

Section 18. Amends the opening paragraph of section 26-504.1 of the administrative code of the city of New York to provide that housing accommodations which were subject to rent regulation prior to the receipt of tax benefits pursuant to section 489 of the RPTL shall he eligible for rent deregulation where such tax benefits which were received have been repaid to the city of New York and where such tax benefits to be received have been waived by the recipient.

Section 19. Amends subdivision (a) of section 26-504.2 of the administrative code of the city of New York to provide that housing accommodations which were subject to rent regulation prior to the receipt of tax benefits pursuant to section 489 of the RPTL shall be eligible for rent deregulation where such tax benefits which were received have been repaid to the city of New York and where such tax benefits to be received have been waived by the recipient.

Section 20. Amends section 489 of the Real property Tax Law to provide that tax benefits received pursuant to section 489 of the RPTL shall be repaid, and tax benefit to be received pursuant to such section 489 may be repaid, and tax benefits to be received pursuant to such section may be waived, where housing accommodations were subject to rent regulation immediately prior to the receipt of such benefits, thereby enabling such housing accommodations to be eligible for rent deregulation, and that repaid tax benefits are to be paid exclusively into the rent cap fund in the city treasury and allocated and expended solely for the purposes of providing tax abatements for persons of low and moderate income, and any excess monies accumulated as a result of repaid tax benefits will be used to provide housing assistance to persons considered to be homeless and in need of housing accommodations.

Section 21. Amends section 11-243 of the administrative code of the city of New YorK to provide that tax benefits received pursuant to such section may be repaid, and tax benefits to be received pursuant to such section may be waived, where housing accommodations were subject to rent regulation immediately prior to the receipt of such benefits, thereby enabling such housing accommodations to be eligible for rent deregulation and that repaid tax benefits are to be paid exclusively into the rent cap fund in the city treasury and allocated and expended solely for the purpose of providing tax abatements for persons of low and moderate income, and any excess

monies accumulated as a result of repaid tax benefits will be used to provide housing assistance to persons considered to be homeless and and in need of housing accommodations.

Section 22. Provides for the effective and expiration dates of various sections.

Justification

The economic crisis that is affecting all New Yorkers has hit the poor, working poor and working families the hardest. More than ever before, low and moderate-income families residing in rent-stabilized apartments are finding it increasingly difficult to pay their monthly rent. The existing safety net is narrow for tenants in this predicament and, consequently, leaves too many households unprotected. This legislation is intended to close these holes in the safety net and provide rent relief to the people who need it most - the poor and working families throughout the five boroughs of New York City. It would not cost the State or City a dollar, and would be funded by landlords.

Over the years, the State Legislature has acted responsibly in creating programs that insulate some of the most needy citizens (of rent-regulated apartments in the City of New York) against rent increases. These programs, such as the Senior Citizens Rent Increase Exemption program (SCRIE) and the Disability Rent Increase Exemption program (DRIE), serve its participants effectively by providing meaningful rent relief. These programs exempt eligible tenants from rent increases. However, eligibility for these programs is far too narrow. For example, existing law only protects those tenants who are sixty-two years of age and older (SCRIE) or tenants who are disabled (DRIE), who pay one-third or more of their income for rent and whose household income is less than $29,000 (SCRIE) or $27,780 (DRIE). Combined, SCRIE and DRIE protect less than 50,000 households of the more than one million rent-stabilized apartments in the City's five boroughs. It is quite apparent that these programs do not go far enough to protect countless thousands of other tenants who are equally in need of rent relief, namely the poor and working families.

This legislation would establish a new rent relief program to supersede the existing rent relief programs for rent-stabilized housing in the five boroughs. While it would maintain the eligibility requirement of a tenant paying one-third or more of their income for rent, it would increase the household income eligibility threshold to $45,000. Under the new income threshold, approximately 295,000 households in New York City's five boroughs, impacting close to 700,000 tenants, would become eligible for rent increase exemptions amounting to $100 million. Eligibility would no longer be based upon age or disability status after July 1, 2011.

The recent decision by the Court of Appeals in the case of Roberts v. Tishman Speyer Properties created the opportunity to fund this new rent freeze program. In their decision, the Court of Appeals concluded that landlords who had collected J-51 tax benefits after 1993 while simultaneously deregulating units, had done so improperly. While over 80,000 apartments have been deregulated throughout the City by landlords since 1993, the Citizens Housing and Planning Council estimates that between 19,000 and 37,000 are in buildings

that have received J-51 tax benefits. Thus, according to the Court of Appeals, these units were de-regulated improperly. However the Court of Appeals specifically declined to rule on two major aspects of this issue, namely, (1) whether its decision applied retroactively and (2) whether the four-year statute of limitations on rent overcharges applied to these claims and, if so, in what manner. The Court's failure to provide guidance on these questions has opened the door to many more years of litigation between tenants and owners, placing burdens upon both the courts and the State Division of Housing and Community Renewal.

This legislation addresses the Court's acknowledgement that if its decision created "unacceptable burdens," relief from those burdens was a matter for the State Legislature. It not only eliminates the uncertainty caused by the Court's decision but it would also protect the City's real estate tax revenue base as well as tenants in buildings facing foreclosure by providing a remedy to the Court decision's looming devastating impact. This legislation is intended to provide that relief, but only under the following prescribed conditions:

Landlords would be obligated to return to the City all of the J-51 tax benefits they received for their buildings and waive any future benefits that would otherwise be due to them within two years of the effective date of this statute. In the past decade, approximately $1. 7 billion in J-51 tax exemptions and tax abatements have been received by property owners, with hundreds of millions of dollars in benefits due and payable in the upcoming years.

No State or City financial commitment would be required for this legislation. The funding source for the rent freeze program would come from landlords (as described in the previous paragraph) and from the waiving of future J-51 tax benefits. By making such payments to the City, these landlords would be providing the financial underpinnings for a rent increase exemption program that would provide relief to 212,000 households, or approximately 600,000 tenants, that have difficulties paying their rent each month. This represents assistance for an unprecedented 30% of households in the rent-stabilized apartment system throughout the five boroughs - 88,000 households in Brooklyn, 70,000 in Manhattan, 69,000 in the Bronx, 68,000 in Queens and 2,000 in Staten Island.

While the City treasury would be the receiver of the repaid J-51 tax exemptions, this legislation strictly prohibits any disbursement of these funds to any program other than the tax abatement for rent-controlled and regulated properties occupied by persons and families of low to moderate income. Essentially, the City will administer this program in the same manner that both DRIE and SCRIE programs are currently being implemented. Since the City will be responsible for allocations and expenditures of the rent cap fund, the City will be required to calculate the revenues needed to full) fund the rent freeze program for a minimum of ten years. In the event an excess of revenue is generated to fund the rent freeze program, the City is then authorized to transfer the excess funds to provide housing assistance to those persons who are homeless and in need of housing. All accounting from the rent cap fund and excess spending

proposals will be submitted to the state legislature on a yearly basis and will be subject to approval by the state legislature.

In addition, key provisions of the law regulating rent and other aspects of the rental housing market are set to expire on June 15, 2011. The various rent law provisions have historically been extended for eight years. Therefore, this bill extends also those expiration dates until 2019, ensuring the same rent laws through the duration of the five year rent freeze program.

Legislative history

New Bill.

Fiscal implications

Approximately $2 billion in J-51 benefits have been issued to date. It is anticipated that approximately 40% of owners of J-51 properties will participate in the program generating about $800 million in payments. Additionally New York City will gain about $80 million annually as a result of not having to provide J-51 abatements to those properties in the future. These revenues will be sufficient to fund the program if all 212,000 eligible households participate. It is estimated that the cost of this program over five years with 100% participation would be $9 million.

Effective date

Provides that this act shall take effect immediately and describes the expiration dates of various sections.