What's happening
This bill increases from three to six years the ownership period required before landlords can apply for hardship rent increases.
Why it matters
Makes it harder for new owners to raise rents due to hardship. By doubling the required ownership period from three to six years, the bill aims to prevent landlords who have recently purchased a building from quickly seeking hardship-related rent increases, which could protect tenants from sudden rent hikes shortly after a building changes hands.
Targets speculative real estate activity. The longer ownership requirement may discourage speculative investors from buying rent-regulated properties with the intent to quickly apply for hardship increases to boost profits, thereby potentially stabilizing communities and reducing tenant displacement.
Potentially strengthens tenant protections. Tenants in rent-regulated apartments may gain greater assurance that their rents will not rise dramatically due to hardship claims by landlords who have not made a sustained investment in the property over time.
May affect landlord financial planning and property values. Owners who rely on hardship increases to cover operating costs or debt service will need to plan for a longer period before such relief is available, which could influence the market for rent-regulated buildings and the strategies of prospective buyers.
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Who cares
Headline styles
Extend Hardship Application Timeline
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 26
No co-sponsors yet.
History
- Referred to housing, construction and community development
- Referred to housing, construction and community development
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3382
2019-2020 Regular Sessions
IN SENATE
February 6, 2019
Introduced by Sen. KAVANAGH -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development
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 hardship applications
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraph 6-a of subdivision c of section 26-511 of the administrative code of the city of New York is amended to read as follows:
(6-a) provides criteria whereby as an alternative to the hardship application provided under paragraph six of this subdivision owners of buildings acquired by the same owner or a related entity owned by the same principals [three] six years prior to the date of application may apply to the division for increases in excess of the level of applicable guideline increases established under this law based on a finding by the commissioner that such guideline increases are not sufficient to enable the owner to maintain an annual gross rent income for such building which exceeds the annual operating expenses of such building by a sum equal to at least five percent of such gross rent. For the purposes of this paragraph, operating expenses shall consist of the actual, reasonable, costs of fuel, labor, utilities, taxes, other than income or corporate franchise taxes, fees, permits, necessary contracted services and non-capital repairs, insurance, parts and supplies, management fees and other administrative costs and mortgage interest. For the purposes of this paragraph, mortgage interest shall be deemed to mean interest on a bona fide mortgage including an allocable portion of charges related thereto. Criteria to be considered in determining a bona fide mortgage other than an institutional mortgage shall include; condition of the property, location of the property, the existing mortgage market at the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02477-01-9
S. 3382 2
time the mortgage is placed, the term of the mortgage, the amortization rate, the principal amount of the mortgage, security and other terms and conditions of the mortgage. The commissioner shall set a rental value for any unit occupied by the owner or a person related to the owner or unoccupied at the owner's choice for more than one month at the last regulated rent plus the minimum number of guidelines increases or, if no such regulated rent existed or is known, the commissioner shall impute a rent consistent with other rents in the building. The amount of hardship increase shall be such as may be required to maintain the annual gross rent income as provided by this paragraph. The division shall not grant a hardship application under this paragraph or paragraph six of this subdivision for a period of three years subsequent to granting a hardship application under the provisions of this paragraph. The collection of any increase in the rent for any housing accommodation pursuant to this paragraph shall not exceed six percent in any year from the effective date of the order granting the increase over the rent set forth in the schedule of gross rents, with collectability of any dollar excess above said sum to be spread forward in similar increments and added to the rent as established or set in future years. No application shall be approved unless the owner's equity in such building exceeds five percent of: (i) the arms length purchase price of the property; (ii) the cost of any capital improvements for which the owner has not collected a surcharge; (iii) any repayment of principal of any mortgage or loan used to finance the purchase of the property or any capital improvements for which the owner has not collected a surcharge and (iv) any increase in the equalized assessed value of the property which occurred subsequent to the first valuation of the property after purchase by the owner. For the purposes of this paragraph, owner's equity shall mean the sum of (i) the purchase price of the property less the principal of any mortgage or loan used to finance the purchase of the property, (ii) the cost of any capital improvement for which the owner has not collected a surcharge less the principal of any mortgage or loan used to finance said improvement, (iii) any repayment of the principal of any mortgage or loan used to finance the purchase of the property or any capital improvement for which the owner has not collected a surcharge, and (iv) any increase in the equalized assessed value of the property which occurred subsequent to the first valuation of the property after purchase by the owner.
§ 2. Paragraph 5 of subdivision d of section 6 of section 4 of chapter 576 of the laws of 1974 enacting the emergency tenant protection act of nineteen seventy-four, as amended by chapter 102 of the laws of 1984, is amended to read as follows:
(5) as an alternative to the hardship application provided under paragraph four of this subdivision, owners of buildings acquired by the same owner or a related entity owned by the same principals [three] six years prior to the date of application may apply to the division for increases in excess of the level of applicable guideline increases established under this law based on a finding by the commissioner that such guideline increases are not sufficient to enable the owner to maintain an annual gross rent income for such building which exceeds the annual operating expenses of such building by a sum equal to at least five percent of such gross rent. For the purposes of this paragraph, operating expenses shall consist of the actual, reasonable, costs of fuel, labor, utilities, taxes, other than income or corporate franchise taxes, fees, permits, necessary contracted services and non-capital repairs, insurance, parts and supplies, management fees and other administrative costs and mortgage interest. For the purposes of this paragraph, mort-
S. 3382 3
gage interest shall be deemed to mean interest on a bona fide mortgage including an allocable portion of charges related thereto. Criteria to be considered in determining a bona fide mortgage other than an institutional mortgage shall include; condition of the property, location of the property, the existing mortgage market at the time the mortgage is placed, the term of the mortgage, the amortization rate, the principal amount of the mortgage, security and other terms and conditions of the mortgage. The commissioner shall set a rental value for any unit occupied by the owner or a person related to the owner or unoccupied at the owner's choice for more than one month at the last regulated rent plus the minimum number of guidelines increases or, if no such regulated rent existed or is known, the commissioner shall impute a rent consistent with other rents in the building. The amount of hardship increase shall be such as may be required to maintain the annual gross rent income as provided by this paragraph. The division shall not grant a hardship application under this paragraph or paragraph four of this subdivision for a period of three years subsequent to granting a hardship application under the provisions of this paragraph. The collection of any increase in the rent for any housing accommodation pursuant to this paragraph shall not exceed six percent in any year from the effective date of the order granting the increase over the rent set forth in the schedule of gross rents, with collectability of any dollar excess above said sum to be spread forward in similar increments and added to the rent as established or set in future years. No application shall be approved unless the owner's equity in such building exceeds five percent of: (i) the arms length purchase price of the property; (ii) the cost of any capital improvements for which the owner has not collected a surcharge; (iii) any repayment of principal of any mortgage or loan used to finance the purchase of the property or any capital improvements for which the owner has not collected a surcharge; and (iv) any increase in the equalized assessed value of the property which occurred subsequent to the first valuation of the property after purchase by the owner. For the purposes of this paragraph, owner's equity shall mean the sum of (i) the purchase price of the property less the principal of any mortgage or loan used to finance the purchase of the property, (ii) the cost of any capital improvement for which the owner has not collected a surcharge less the principal of any mortgage or loan used to finance said improvement, (iii) any repayment of the principal of any mortgage or loan used to finance the purchase of the property or any capital improvement for which the owner has not collected a surcharge, and (iv) any increase in the equalized assessed value of the property which occurred subsequent to the first valuation of the property after purchase by the owner.
§ 3. This act shall take effect immediately; provided that the amendments to section 26-511 of chapter 4 of title 26 of the administrative code of the city of New York made by section one of this act shall expire on the same date as such law expires and shall not affect the expiration of such law as provided under section 26-520 of such law; and provided that the amendments to section 6 of the emergency tenant protection act of nineteen seventy-four made by section two of this act shall expire on the same date as such act expires and shall not affect the expiration of such act as provided in section 17 of chapter 576 of the laws of 1974.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
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 hardship applications
Purpose
To extend from three years to six years the duration of ownership required for a landlord to be eligible for an alternative hardship rent adjustment.
Summary of specific provisions
Section 1 of the bill amends paragraph 6-a of subdivision c of section 26-511 of the administrative code of the city of New York to revise the number of ownership years required to apply for an alternative hardship rent adjustment through the New York State Division of Housing and Community Renewal (DHCR) from three years to six years.
Read the full memo (741 words)
Section 2 of the bill amends paragraph 5 of subdivision d of section 6 of section 4 of chapter 576 of the laws of 1974, as amended by chapter 102 of the laws of 1984, constituting the emergency tenant protection act, to revise the number of ownership years required to apply for an alternative hardship rent adjustment through DHCR from three years to six years for building owners outside a city of one million or more.
Section 3 of the bill sets forth the effective date.
Justification
Both subdivision c of section 26-511 of the administrative code of New York City and paragraph 5 of subdivision d of section 6 of section 4 of chapter 576 of the emergency tenant protection act are designed to provide a means by which building owners can apply to the DHCR commis- sioner for rent increases greater than the increases approved by the relevant rent guidelines board. In order to be granted the hardship exemption, DHCR must find that the set rent increases will be insuffi- cient for the owner to accrue a profit of at least five percent after annual operating expenses. Currently, building owners must have acquired the property at least three years prior to filing an application for the alternative hardship exemption. This bill would adjust the years of ownership required for the landlord to receive an alternative hardship exemption to be in line with the requirements for receiving a compar- ative hardship exemption. Comparative hardship exemptions are determined by comparing the annual net income of the past three years with that of either the three years prior, under the same ownership, or 1968 to 1970. Many applicants are therefore required to have owned a property for three base years plus three years of comparison, making the standard time of ownership required for many building owners six years. This bill would align the duration of ownership required for both exemptions at six years.
Beyond creating a more consistent framework for these exemptions, this bill would discourage potential building purchasers from overleveraging their assets with the intent of seeking a hardship exemption, since the prospect of hardship relief will be contingent on an initial six-year ownership period.
Lastly, the bill would provide DHCR with a more reasonable amount of data from which to determine the owner's capacity to make a sufficient profit relative to the profit anticipated when the property was first purchased.
Fiscal impact on the state
None.
Fiscal impact on localities
None.
Impact on regulation of businesses and individuals
Landlords seeking an alternative hardship exemption would not be able to apply for one until six years after purchasing the building for which such exemption is being sought.
Impact on fines, imprisonment, forfeiture of rights, or other penal sanctions
None.
Prior legislative history
2018: S7125 - REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOP- MENT 2017: A1297 - advanced to third reading cal. 375 2016: A5566 - REPORTED AND COMMITTED TO FINANCE/ referred to correction 2015: A5566 - housing
Effective date
This act shall take effect immediately; provided that the amendments to section 26-511 of chapter 4 of title 26 of the administrative code of the city of New York made by section one of this act shall expire on the same date as such law expires and shall not affect the expiration of such law as provided under section 26-520 of such law; and provided that the amendments to section 6 of the emergency tenant protection act of nineteen seventy-four made by section two of this act shall expire on the same date as such act expires and shall not affect the expiration of such act as provided in section 17 of chapter 576 of the laws of 1974.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.