Relates to rent control and stabilization; tax; NYC community school district system; education standards; tax exemption for new multiple dwellings; New York property tax relief check and requirements (Parts)

Summary of provisions

Part A

Subpart A: Extends provisions associated with rent regulation for a period of six years

Subpart B: Increases the luxury decontrol threshold for rent regulated units in Manhattan to $2600 per month and disallows decontrol for such units based upon a rent guidelines board increase

Subpart C: Establishes a verification system to review those qualified to reside in rent regulated apartments

Subpart D: Codifies provisions associated with the establishment and authority of the Tenant Protection Unit

Subpart E: Increases maximum penalties associated with tenant harassment

Subpart F: Requires that the primary resident of a rent-regulated unit be a natural person.

Subpart G: Authorizes the City of New York to institute a tenant rent increase exemption program (TRIE), for tenants who pay over 50% of their income in rent and who reside within rent controlled, rent regulated, and within certain other types of housing incorporated under the private housing finance law.

Part B

Section one adds two new subdivisions to section 421-a of the Real Property Tax Law ("RPTL"). Notwithstanding the provisions of any other subdivision of section 421-a or of any general, special or local law to the contrary, new subdivision 16 would, in a city having a population of one million or more, set new 421-a eligibility requirements and benefit periods for multiple dwellings that commence construction after December 31, 2015 and on or before December 31, 2019, and that complete construction on or before December 31, 2023. Such multiple dwellings would be required to contain at least six dwelling units created through new construction or eligible conversion that are operated as rentals, or as a homeownership project outside the borough of Manhattan. Such multiple dwellings would need to provide affordable housing either onsite or offsite through one of three affordability options as rentals or a separate option for homeownership projects, in order to be eligible for thirty-five years of exemption from real property taxation, other than assessments for local improvements. Such multiple dwellings would receive a 100% exemption from real property taxation during the construction period for a maximum of three years, a 100% exemption from real property taxation for the first 25 years following completion, and, for the final 10 years of the exemption period, an exemption from real

property taxation equal to the percentage of affordable units included in such multiple dwelling. Such multiple dwellings would continue to pay taxes on the assessed value of the land and improvements during the tax year prior to commencement of construction, and all assessments for local improvements. The 421-a benefit would be reduced by the aggregate floor area of commercial, community facility and accessory use space, other than parking which is located not more than 23 feet above the curb level, in excess of 12% of the aggregate floor area.

The three affordability options available to rental type projects seeking the 421-a benefit would be: (a) not less than 10% of dwelling units affordable to those at or below 40% of area median income ("AMI"), not less than an additional 10% at or below 60% of AMI and not less than an additional 5% at or below 130% of AMI, with no governmental assistance other than tax exempt bond proceeds and 4% tax credits; (b) not less than 10% at or below 70% of AMI and not less than an additional 20% at or below 130% of AMI; and (c) not less than 30% at or below 130% of AMI, with no governmental assistance. The affordability option for homeownership projects would require that 25% of the units on average have an average assessed value of $75,000 or less. These affordability requirements for rentals would apply throughout the 421-a benefit period at both initial rental and upon vacancy. Such affordable units could not be rented on a temporary, transient or short-term basis, nor converted to cooperative or condominium ownership. Tenants below such maximum AMIs would be expressly allowed to occupy such affordable units. All rental dwelling units would have to be accessed through the same street entrances and lobbies, and no such entrance or lobby could serve some rental dwelling units to the exclusion of others. The affordable dwelling units in all of the three affordability options would remain rent stabilized until the first vacancy following the expiration of the 421-a benefits, even if such benefits are revoked. Unless preempted by other governmental requirements, such affordable units would be required to have a unit mix proportional to the market rate units, or at least 50% of the affordable units would be required to have two or more bedrooms and no more than 25% of the affordable units could have less than one bedroom.

Applicants for 421-a benefits would be required to provide prevailing wages for building service employees as required under current law. The fiscal officer would be authorized to enforce the prevailing wage requirement, and would be required to present evidence of any noncompliance to the department of housing preservation and development. If dwelling units existed on the site three years prior to commencement of construction, the number of affordable units provided must equal or exceed the number of such units that were removed or demolished. Concurrent exemptions or abatements are prohibited. The department of housing preservation and development would be authorized to permit the voluntary termination of 421-a benefits only in connection with the commencement of a new tax exemption pursuant to either RPTL section 420-c or the Private Housing Finance Law. The department of housing preservation and development could also terminate or revoke 421-a benefits for noncompliance with subdivision 16.

Applications would have to be filed within one year after completion, and the department of housing preservation and development would be authorized to require a filing fee of $3,000 per dwelling unit unless lesser fees are authorized pursuant to rule for governmentally-assisted projects. The department of housing preservation and development also could require by rule that applications be filed electronically. Additionally, rules would be required to be established for a certification program when dealing with on-site and offsite units, as well as the establishment of a working group to evaluate workforce related issues.

A city having a population of one million or more would not be authorized to enact a local law to restrict, limit or condition the eligibility for or scope or amount of 421-a benefits in any manner. The provisions of New York City Administrative Code sections 11-245 and 11-245.1 enacted before the effective date of subdivision 16 would not restrict, limit or condition the eligibility for or the scope or amount of 421-a benefits authorized by subdivision 16. Finally, a rental project that commences construction prior to December 31, 2015 that has not received 421-a benefits before subdivision 16 becomes effective may opt to receive 421-a benefits pursuant to subdivision 16.

Notwithstanding the provisions of any other subdivision of section 421-a or of any general, special or local law to the contrary, new subdivision 17 would, in a city having a population of one million or more, provide an extended 421-a benefit option to projects that commenced construction prior to July 1, 2008, and received a 20-year or 25-year tax exemption under section 421-a prior to the effective date of this act by making at least 20% of the units affordable to families of low and moderate income, provided that all residential tax lots operate as rental housing. For an additional 15 years of extended benefit in the case of a 20-year benefit property or for an additional 10 years in the case of a 25-year benefit property, not less than 20% of the dwelling units would have to be affordable to those with household incomes at or below an average of 80% of AMI, with not less than an additional 5% at or below 130% of AMI. These affordability requirements would apply throughout the extended benefit period at both initial rental and upon vacancy. In exchange for extended affordability, projects would receive a 50% exemption from real property taxation, other than assessments for local improvements, for this extended benefit period. Such projects would continue to pay the same real property taxes they were paying during their 20-year or 25-year benefit period on the assessed value of land and improvements during the tax year preceding the commencement of construction of such projects. Any extended benefit would be reduced by the percentage of aggregate floor area occupied by commercial, community facility, parking and accessory use space exceeding 12% of the aggregate floor area. A restrictive declaration executed by all parties in interest.would be recorded against the real property.

Affordable units could not be rented on a temporary, transient or short-term basis, nor converted to cooperative or condominium ownership. Tenants below maximum AMIs would be allowed to occupy such affordable units. Affordable units would remain rent stabilized during the extended benefit period, even if the extended benefit is terminated or revoked. Furthermore, tenants in occupancy after the

extended benefit period could remain as rent stabilized tenants for the duration of their occupancy.

Applicants for the extended benefit would be required to provide prevailing wages for building service employees as similarly required under current law. The fiscal officer would be authorized to enforce the prevailing wage requirement, and would be required to present evidence of any noncompliance to the department of housing preservation and development. Concurrent exemptions or abatements would be prohibited. The department of housing preservation and development would be authorized to permit the voluntary termination of 421-a benefits in connection with a new tax exemption pursuant to either RPTL section 420-c or the Private Housing Finance Law. The department of housing preservation and development could also terminate or revoke the extended benefit for noncompliance with subdivision 17.

Applications for this extended benefit would be required to be filed on or before the later of December 31, 2016, or 18 months after the 20-year or 25-year benefit period expires. A filing fee of $3000 per dwelling unit would be required in connection with any application. The department of housing preservation and development also would be authorized to require by rule that applications be filed electronically. A city having a population of one million or more would not be authorized to enact a local law to restrict, limit or condition the eligibility for or scope or amount of the extended benefit in any manner. The provisions of New York City Administrative Code sections 11-245 and 11-245.1 enacted before the effective date of subdivision 17 would not restrict, limit or condition the eligibility for or the scope or amount of the extended benefit authorized by subdivision 17.

Sections two and three amend RPTL sections 421-a(2)(a)(iv)(A) and 421- a(2)(c)(ii), respectively, to provide that the existing 421-a tax exemption program would continue to apply to new multiple dwellings that commence construction on or before December 31, 2015, provided that such multiple dwellings receive their first temporary or permanent certificates of occupancy covering all residential areas on or before December 31, 2019. Solely for these purposes, and notwithstanding any local law to the contrary, "commence" would be defined as the date upon which excavation and construction of initial footings and foundations lawfully begins in good faith or, for an eligible conversion, the date upon which the actual construction of the conversion, alteration or improvement of the pre-existing building or structure lawfully begins in good faith.

Section four amends subdivision 2 of RPTL section 421-a by adding a new paragraph (j) authorizing the local housing agency to permit voluntary termination of benefits under the existing 421-a program in connection with a new tax exemption pursuant to either RPTL Section 420-c or the Private Housing Finance Law.

Sections five and six amend subdivision 3 of RPTL section 421-a by authorizing the local housing agency to promulgate rules requiring that applications be filed electronically.

Sections seven and eight amend subdivision 6 of RPTL section 421-a to provide that the current requirements for 421-a tax benefits in the Greenpoint Williamsburg Waterfront Exclusion Area would continue to apply to buildings where (a) the real property containing such building was identified in a covered project agreement executed and recorded on or before December 31, 2015, and such agreement was not thereafter amended to include additional real property; (b) at least one building in such covered project that meets the Greenpoint-Williamsburg Waterfront Exclusion Area affordability requirements commences construction or before December 31, 2015; and (c) all of the buildings in such covered project that receive benefits pursuant to RPTL section 421-a(6)(f) completed construction on or before June 15, 2025.

Section nine amends subdivision 6 of RPTL section 421-a to provide that covered projects entirely located within the Greenpoint-Williamsburg Waterfront Exclusion Area are exempt from the assessed valuation cap.

Section ten amends the current prevailing wage requirements for 421-a beneficiaries. The section would exclude superintendents from the definition of "building service employee," since there are no prevailing wages for such employees and if there were, they would be covered because the list is not exhaustive. The section would also require, in a building receiving benefits under the existing 421-a program and whose construction commenced on or after December 28, 2007, all building service employees to receive prevailing wages for the duration of such benefits, and authorize the fiscal officer to enforce this requirement and further require such fiscal officer to present evidence of noncompliance to the local housing agency.

Section eleven provides for effective dates.

Part C

Section 1 and 2: Extends mayoral control in New York City and other current sections of Article 52-A of the Education Law for one year to June 30, 2016.

Section 3: Allows charter schools that are currently authorized by the New York City Department of Education to a different charter authorizing entity.

Section 4: Removes regional caps placed on charters granted, and returns charters that were previously granted but not currently being used to the pool of available charters.

Section 5: Requires the New York City Department of Education to report on the distribution of specific types of funding by individual school and per pupil.

Section 6: Makes budget and expenditure reports of New York City Department of Education schools more readily available by placing them on the department's website.

Section 7: Requires the Department of Education to maintain certain information to be made available to members and officers of the Executive and Legislature.

Section 8: Provides for an enrollment preference for children of charter school employees accounting for up twenty percent of newly admitted students.

Section 9: Allows charter schools to employ individuals, up to the greater of thirty percent of total teaching staff or five, that meet certain exceptional statutory criteria, but lack teaching certification.

Section 10: Requires the mayor of New York City to submit an education budget plan to the Director of the budget, the temporary president of the Senate, and the speaker of the Assembly for approval.

Part D

Section 1: Section 1 amends section 1 of subpart E of part EE of chapter 56 of the laws of 2015 by directing that after a 45 day comment period such adopted regulations may be amended.

Section 2: Section 2 amends subdivision 11 of section 3012-d of the education law and adds a new subdivision 11-a that would extend the date at which school districts would need to have a plan approved by the department to February 15, 2016. This section would also require the department to issue regulations if a district faces hardship by not having a plan approved and implemented by February 15, 2016.

Section 3: Section 3 adds a new subdivision 51-a to section 305 of the education law that would require the commissioner to release the test questions and correct answers from the ELA and math 3-8 exams by June 1, 2015 and each year thereafter. In addition, the commissioner shall release the general student success rate on such questions by July 1, 2015 and each year thereafter.

Section 4: Section 4 allocates $8.4 million to the state education department to aid in the release of test questions pursuant to subdivision 51-a of section 305 of the education law and to eliminate stand-alone field testing.

Section 5: Section 5 amends subparagraph 1 of paragraph a of subdivision 4 of section 3012-d by requiring certain characteristics be considered in the first subcomponent. Such characteristics shall include, but not be limited to, students with disabilities, poverty, English language learners, prior academic history, and student growth of educators who are well above or well below average compared to similar students for a teacher's or principal's students after the certain student characteristics listed are taken into account.

Section 6: Section 6 adds two new subdivisions 53 and 54 to section 305 of the education law. Subdivision 53 would establish a content review committee to ensure all standardized test items on grades 3-8 ELA and math are, among other things, grade level appropriate. All test questions used shall be reviewed by the content review committee for use in future examinations, except in certain instances in the

2015-2016 school year only. The content review committee shall include teachers in the grade and subject levels and teachers of students with disabilities and English language learners. Subdivision 54 would eliminate the requirement that teachers in grades 3-8 are prohibited from discussing the contents of the standardized ELA and math 3-8 assessments.

Section 7: Section 7 requires any contract needed to be amended to be compliance with section 6 of this act.

Section 8: Section 8 requires the commissioner to conduct a comprehensive review of the education standards and to seek input from education stakeholders when doing so. Such review shall include whether curriculum materials and modules are aligned to the standards and fully available to school districts, age and grade appropriateness of the standards, and current progress of the implementation of the standards. The review is to contain recommendations on how to modify the standards if necessary. The review is to be conducted by June 30, 2016.

Section 9: Section 9 sets forth an immediate effective date except as otherwise noted.

Part E

The enactment of the property tax cap has been truly effective at generating savings for property owners and businesses. Historically, skyrocketing local property taxes had forced people to leave their homes and caused businesses and jobs to leave for other states.

Massachusetts has the longest history with an enacted property tax cap, after it earned national derision for its high tax burden, and the moniker "Taxachusetts". Twenty years after the passage of "Proposition 2 1/2" the residential property tax levy actually dropped 1.6%, adjusted for inflation. In the first three years in New York the property tax cap has saved $2.6 billion and is projected to save more than $11.4 billion over the first ten years of implementation.

Tax cap permanence is necessary to continue in the right direction for New York, and provide surety to New York's businesses and tax payers that New York's tax climate is one that they can trust to limit unwieldy and unnecessary tax growth.

PART F

Provides a rebate check for STAR eligible recipients based on their current STAR exemption. For the 2015-16 and each year school year thereafter rebate checks would amount to $1.3 billion in the first year growing to $1.5 billion when fully enacted.

Justification

Affordable housing is becoming more difficult to maintain, the Senate agrees that the demand for such accommodations in New York City, and even statewide outstrips the existing supply. Therefore, to ensure that there is continuity in the system of rent regulation in the City of New York, the laws implementing such a system of rent control

should be extended for six years, providing necessary certainty for tenants. Further, the system should be reformed to provide:

*An increase in the luxury decontrol provision to capture rising rents in the borough of Manhattan. This increase will be rationally tied to an index relative to the cost in housing as determined by the Rent Guidelines Board annually.

*The system of rent regulation will additionally be reformed to codify the tenant protection unit (TPU) within DHCR to ensure that audits of landlords can continue and ensure that improvements are properly accounted for and that tenants are not overcharged unnecessarily.

*This legislation additionally provides that the provisions applicable to property owners who must verify income and residency for STAR eligibility will apply to rent regulated tenants, to ensure that only those who meet the existing qualifications for rent regulated apartments will be utilizing them.

*The bill further increases penalties for harassment of tenants.

*The legislation would also authorize, at local option, a program to exempt low-income tenants in rent regulated apartments from increases in their rent, those eligible would earn less than $50,000 per year and pay more than 50% of their income towards rent.

*The legislation would also ensure that tenants would not be able to rent their apartments at a profit and that it must be utilized as a primary residence, not as an illegal hotel room.

New York State's rent control laws play a critical role in ensuring that millions of New Yorkers have access to decent, affordable housing. Since the enactment, these laws have promoted neighborhood stability and enabled generations of working families to make New York State their home.

Recognizing the vital contribution that these laws make to the quality of life in this State, this legislation, among other changes, would extend the effectiveness of the rent protection laws until June 15, 2021.

The legislation additionally extends the 421-a program which is almost solely responsible for the net increase in rent regulated housing in New York City. It is crucial to ensure that new properties can be constructed and remain rent regulated for the period of tax benefits, which will be equal up to 35 years under this proposal.

The provisions in this legislation further make common-sense changes to make needed reform to ensure our students are afforded a high quality education in New York and that our educators are provided with a fair and robust APPR system.

The extension of Mayoral Control in the City of New York can only be considered with the reforms to require more transparency. This transparency will ensure that over $9 Billion in state money sent towards the education of over one million school children is spent properly.

Expanding the cap on charter schools will further school choice for students within New York City, and across the State. These schools help to provide quality access to education, not only in New York City, but in areas across the State. Increasing access to charter schools, that are held accountable by the charter renewal process, will allow students the opportunity to attend some of the most successful and highest achieving schools in the State.

The implementation of a Property Tax Cap upstate has saved New Yorkers over $7 Billion since its inception, the permanence of this cap is important to continue the progress made in reversing uncontrollable increases, which were further driving New Yorkers out of state. This legislation makes the cap permanent and decouples it from the rent control laws.

The legislation further returns money to homeowners via a rebate check for those eligible for STAR, many of whom are still struggling with high property taxes.

Legislative history

New Bill.

Fiscal implications

None

Effective date

This act shall take effect immediately.