Relates to assessed valuation of property for purposes of adjustment of maximum rents

BILL NUMBER:S833

Title of bill

An act to amend the administrative code of the city of New York, in relation to assessed valuation of property for purposes of adjustment of maximum rents

Purpose

Clarifies the provision of the rent control law under which owners are entitled to "hardship" rent increases.

Summary of provisions

Section One amends clause 1 of subparagraph (a) of paragraph 1 of subdivision g of section 26-405 of the administrative code of the city of New York to state valuation shall be current equalized assessed valuation established by the city based upon the appropriate tax class ratio which is established pursuant to article twelve of the real property tax law.

Section Two provides that the provisions outlined in section One of the legislation shall be deemed to have been in full force and effect on or after September 30, 1997, and shall apply to any proceeding pending on the effective date of this act, or determined thereafter.

Section Three is the effective date.

Existing law

New Bill.

Justification

The proposed corrective amendment clarifies the provision of the rent control law under which owners are entitled to "hardship" rent increases.. The amendment clarifies that the measure of an owner I s return on investment (or "capital value") under the hardship formula is consistent with the measure of the owner's return on investment under the biennial MBR formula" The amendment is required to insure that there is an accurate rather than inflated measure of capital value.

The New York city council in 1997 enacted Local Law 73, which was effective September 30, 1997, to provide that "Capital value shall be equalized assessed valuation based upon the appropriate tax class ratio which is established pursuant to article twelve of the real property tax law." section 26-405 (a) (3) of the City Rent and Rehabilitation Act. Local Law 73 was upheld by the New York State Court of Appeals in city of New York v, DHCR, 97 NY2d 216 (2001).

In upholding Local Law 73, the Court of Appeals found that Article-12 represents a "more accurate" measure of capital value than Article 12-a because Article-12 takes into consideration the specific type of property while Article 12-a is based upon consideration of all property in the City of New York without regard to the type of property. Utilization of Article 12-a to measure capital value results in a gross overvaluation of property, an inflated return on investment and the finding of "hardship" where an owner is already

obtaining a fair rate of return. The amendment is necessary to insure that hardship applications do not lead to the unnecessary displacement of long-term rent controlled tenants, many of whom are elderly and/or disabled, on the basis of an overvaluation of an owner's property. This corrective amendment is deemed in full force and effect on or after September 30, 1997 so as to make the hardship provisions consistent with the Local Law 73.

Legislative history

2009: S.6255 (Duane), Died in Rules 2010: S.6255 (Duane), Died in Housing

Fiscal implications

Minimal.

Local fiscal implications

Minimal.

Effective date

This act shall take effect immediately: provided that the amendment to sections 26-405 of the city rent and rehabilitation law made by section one of this act shall remain in full force and effect only as long as the public emergency requiring the regulation and control of residential rents and evictions continues, as provided in subdivision 3 of section 1 of the local emergency housing rent control act.