Extends provisions of rent control law

Sections 2-6 and 8 extend the construction period tax benefit from three years to six years for projects that had commenced construction between January 1, 2007 and June 30, 2009,

Section 7 makes a conforming amendment for converted multiple dwellings.

Section 9 defines how taxes are assessed for converted multiple dwell- ings.

Section 10 states that the land upon which takes place the construction of a converted multiple dwelling shall be deemed under-utilized thirty six months prior to the commencement of such construction and shall not be subject to any site requirements now existing or hereafter created by any local law or any rule or regulation promulgated by the local housing agency.

Sections 11 and 15 amend definition of construction commencement under the 421-a program to state that construction shall be deemed "commenced" when excavation or alteration has begun in good faith on the basis of approved "architectural and structural" plans instead of "construction" plans.

Section 12 restores tax exemption benefits for projects in high density zoning districts of FAR 15 or more which commenced on or after October 1, 1993.

Section 13 includes annual costs for ground lease or net lease in the costs for continuing maintenance and operation of the multiple dwelling in the formula for setting initial rents.

Section 14 Exempts zoning districts of FAR 15 or more from geographic exclusion areas.

Section 16 extends the affordability requirements for low income units and continues the requirement that the market rate units remain in rent regulations in exchange for a reduction in real estate taxes on the property to twelve percent of the property's annual "shelter rent" - ("shelter rent" means the total rents received from occupants of a multiple dwelling less the cost of providing to the occupants electric- ity, gas, heat and other utilities).

Section 17 prevents New York City from altering by local legislation the tax benefits provided in Section 16.

Section 18 extends the expiration date of the emergency tenant protection act of 1974 from June 15, 2011 to June 15, 2019.

Section 19 of the bill extends the emergency housing rent control law which provides for rent control outside the city of New York from June 15, 2011 to June 15, 2019.

Section 20 of the bill amends the law providing for rent control for the city of Albany by extending the law from June 15, 2011 to June 15, 2019.

Section 21 of the bill extends the laws regulating the conversion of rental buildings to cooperative or condominium ownership in New York City from June 15, 2011 to June 15, 2019.

Section 22 of the bill extends the law regulating the conversion of rental buildings to cooperative or condominium ownership in Nassau, Westchester and Rockland counties from June 15, 2011 to June 15, 2019.

Section 23 of the bill extends certain provisions of the rent regulation reform act of 1997 from June 15, 2011 to June 15, 2019.

Reasons for support

The 421-a program has been primarily responsible for encouraging the construction of new housing in New York City since 1971. Since 1985, the 421-a program has also been responsible for gener- ating affordable units both in Manhattan and the outer boroughs. The proposed legislation will ensure that the 421-a program continues to fulfill this mission and provides additional incentives to the real estate industry to kick start stalled construction projects.

The bill recognizes that some existing projects may need additional time to be completed due to the downturn in the economy and the unavailabili- ty of construction financing necessary for the completion of such projects. Those projects that were commenced between January 1, 2007 - June 30, 2009 will have an additional three years to complete construction before the construction period tax, benefits expire. While those buildings which commenced construction between July 1, 2008 and June 30, 2009 are afforded an additional three years to complete construction, such buildings are otherwise fully subject to the amend- ments to the 421-a program that became effective on July 1, 2008.

Another method to jumpstart housing production is to encourage the conversion of non-residential buildings to residential use. The 421(g) program revitalized Lower Manhattan by transforming obsolete commercial buildings into new residential units. There are non-residential build- ings throughout the city that could be converted to residential use with the aid of this tax exemption program. Such conversions would create jobs, generate tax revenue and improve the quality of life of neighbor- hoods.

Given the demand for affordable housing and the cost and difficulty to produce affordable housing, the bill contains an amendment that would give the owner of a 421-a 80/20 project the option to keep the market rate units in rent stabilization and the low income units affordable in exchange for a cap on the building's taxes. Presently, the requirement to keep the low income units affordable and the market rate units under rent regulations ends when the tax exemption benefit expires. This proposed cap on the taxes paid by the project would be at 12 percent of the building's gross income.

Residential development (market rate and affordable) is as critical to the city's economic recovery as the recovery of the housing market around the country is to our national economic well-being. These amend- ments would have an immediate beneficial impact on new housing production, job creation and on city and state revenue.

Key provisions of the laws regulating rent and cooperative and condomin- ium conversions are set to expire on June 15, 2011. This bill also extends those expiration dates to June 15, 2019 which will ensure stability by extending existing laws and protections for both tenants and owners in the real estate market.

Effective date

Immediately.