New York State Bill A2-A
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Summary of Bill A00002-A
BILL NO A00002A SPONSOR Lopez COSPNSR Silver, Meeks, Sanders, Pheffer, Dinowitz, Gottfried, Grannis, Wright Katz MLTSPNSR Arroyo, Aubry, Bea, Boyland, Brennan, Carrozza, Clark, Colton, Cook, Crowley, Davis, Diaz, Farrell, Feldman, Glick, Green, Greene, Hill, Hoyt, Kaufman, Klein, Lentol, Mayersohn, McLaughlin, Norman, Ortiz, Perry, Polonetsky, Pretlow, Rivera, Stringer, Towns, Weinstein, Weisenberg, Weprin Amd SS4, 6, 7, 10, 10-a & 17, Emerg Ten Prot Act of 1974; amd SS26-504, 26-509, 26-510, 26-511, 26-514, 26-405 & 26-409, NYC Ad Cd; amd S4, rpld S1 sub 2, Emerg Hous Rent Cont L; amd SS352-eee & 352-eeee, rpld S352-eee sub 1 (c), sub 2 (c) sub (v), (d), rpld S352-eeee sub 1 (c), sub 2 (c) sub (v), (d), Gen Bus L; amd S2, Chap 329/1963; amd S10, Chap 555 of 1982; amd S4, Chap 402 of 1983 Enacts the omnibus cooperative and condominium conversion and rent control reform of 1997; makes various rent control provisions permanent; provides for the establishment of transitional guidelines, annual rent adjustments and sets forth rights and obligations of landlords and tenants with respect to leases and rental rates; provides for the repeal of various provisions relating to rent control and cooperative and condominium conversion.
BILL NO A00002A 01/08/97 referred to housing 03/10/97 amend and recommit to housing 03/10/97 print number 2a 03/12/97 reported referred to codes 03/12/97 reported 03/13/97 advanced to third reading cal.100 03/17/97 passed assembly 03/17/97 delivered to senate 03/18/97 REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOPMENT
BILL: A00002A DATE: 03/17/1997 MOTION: YEA/NAY: 080/062 Abbate Y Carrozz Y Eve Y Hill Y Mayerso Y Polonet Y Tedisco NO Acampor NO Casale NO Farrell Y Hochber Y Mazzare NO Prentis NO Thiele NO Alfano NO Christe Y Faso NO Hoyt Y McEneny Y Pretlow Y Tocci Y Anderso NO Clark Y Feldman Y Jacobs Y McGee NO Ramirez Y Tokasz Y Arroyo ER Colman Y Ferrara NO John Y McLaugh ER Ravitz Y Tonko Y Aubry Y Colton Y Fessend NO Johnson NO Meeks Y Reynold NO Towns Y Bacalle NO Connell Y Flanaga NO Katz Y Miller NO Rivera Y Townsen NO Balboni NO Conte NO Galef Y Kaufman Y Millman Y Robach NO Vann Y Barraga NO Cook Y Gantt NO Keane ER Morelle NO Sanders Y Vitalia NO Bea Y Crouch NO Genoves Y Kirwan NO Nesbitt NO Scarbor Y Warner NO Becker NO Crowley ER Glick Y Klein Y Nolan Y Schimmi Y Weinste Y Bonacic NO D`Andre NO Gottfri Y Koon NO Norman Y Seaman NO Weisenb Y Boyland Y Davis Y Grannis Y Labriol NO Nortz NO Seminer Y Weprin Y Boyle ER Denis Y Green Y Lafayet Y Oaks NO Sidikma Y Wertz NO Bragman Y Destito NO Greene Y Lentol Y O`Neil NO Smith NO Winner NO Brennan Y Diaz Y Griffit Y Little NO Ortiz Y Spano Y Wirth NO Brodsky Y DiNapol Y Gromack Y Lopez Y Ortloff NO Stephen NO Wright Y Brown NO Dinga NO Guerin NO Luster Y O`Shea NO Stranie ER Mr Spkr Y Butl DJ Y Dinowit Y Gunther NO Magee NO Parment NO Stringe Y Butl MW NO Doran NO Harenbe AB Mahoney NO Perry Y Sull EC Y Calhoun NO Englebr NO Herbst NO Manning NO Pheffer Y Sull F NO Canestr Y Espaill Y Hikind AB Matusow NO Pillitt Y Sweeney Y
BILL NUMBER: A2 PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to streamline and simplify the operation of New York State`s rent regulation statutes and reform the State`s cooperative and condominium conversion laws. SUMMARY OF SPECIFIC PROVISIONS: This bill would: * establish a January 1st effective date for rent adjustments for housing accommodations subject to rent regulation in New York City and Nassau, Westchester and Rockland counties; * require rent guidelines boards in New York City and Nassau, Westchester and Rockland counties to establish by October 1, 1997 guidelines for pro- rated transitional rent adjustments for leases expiring between January 1, 1998 and December 31, 1998: * require rent guidelines boards in New York City and Nassau, Westchester and Rockland counties to establish by October 1, 1998 guidelines for pro-rated transitional rent adjustments for leases expiring between January 1, 1999 and December 31, 1999; * require the Division of Housing and Community Renewal (DHCR) to order a rent reduction if it finds that an owner has failed to maintain services in accommodations subject to rent regulation in New York City and Nassau, Westchester and Rockland counties; * direct rent guidelines boards to require a sample of landlords subject to Rent Stabilization and the Emergency Tenant Protection Act (ETPA) to make records available regarding the income, expenditures, tax benefits and financing arrangements of their properties to aid in determining appropriate one and two year rent adjustments; * cap vacancy allowances at five percent for units subject to Rent Stabilization and the ETPA; * authorizes rent guidelines boards in Nassau, Westchester and Rockland counties to administer oaths, issues subpoenas, conduct investigations and make inspections in enforcing the provisions of the ETPA; * eliminate the existing requirement that renewal leases be offered to tenants living in accommodations subject to the ETPA and Rent Stabilization; * require owners of accommodations subject to the ETPA and Rent Stabilization to serve new tenants with a Notice of Rights and Duties of Owners and Tenants promulgated by DHCR; * require tenants living accommodations subject to the ETPA and Rent Stabilization to give at least 30 days notice of an intent to vacate; * require legal regulated rents for housing accommodations whose leases expire on December 31, 1997 to be adjusted on January 1, 1998 and each January 1st thereafter, or every other year thereafter if a tenant selects a two year rent adjustment, pursuant to the one or two year rent adjustment establishment by rent guidelines boards; * require legal regulated rents for housing accommodations whose leases expire between January 1, 1998 and December 31, 1999 to be increased on the first day following the expiration of such leases pursuant to a pro-rated transitional rent adjustment establishment by the rent guidelines board and in each January 1st thereafter, or every other year thereafter if a tenant selected a two year rent adjustment, pursuant to the one or two year rent adjustment established by such board; * require that legal regulated rents for vacancy leases entered on or after January 1, 1998 be increased on every January 1st thereafter, or every other January 1st thereafter if a tenant selects a two year rent adjustment, pursuant to the one or two year adjustment established by the applicable rent guidelines board; * allow tenants living accommodations subject to the ETPA and Rent Stabilization Law to sublease or assign a lease even in the absence of a written lease; * establish that housing accommodations which become rent stabilized pursuant to Article 7-C of the Multiple Dwelling Law would continue to be rent stabilized notwithstanding the expiration of Article 7-C of the Multiple Dwelling Law; * eliminates the requirement that a rent stabilized tenant have a two year renewal lease in order to qualify for Senior Citizen Rent Increase Exemption (SCRIE) program; * require the New York City Rent Guidelines Board to establish annual rent adjustments for rent controlled housing accommodations in the City of New York in the same manner in which it establishes rent adjustments under the Rent Stabilization Law; * require owners of rent controlled apartments in the City of New York who did not apply or qualify for an increase in the maximum rent in 1995, 1996, 1997 or 1998 to clear all conditions which constitute a fire hazard or other serious threat to the life, health or safety of their occupants and to clear at least eighty percent of a building`s non-rent impairing code violations prior to receiving any rent increases; * require all owners of rent controlled apartments in the City of New York to file registration statements annually with DHCR; * require the rent guidelines boards in Nassau and Westchester counties to establish annual rent adjustments for rent controlled units within their jurisdiction in the same manner in which rent adjustments are established under the ETPA; * prohibit cooperative or condominium conversion non-eviction plans in Nassau, Westchester and Rockland counties and the City of New York from being declared effective until at least thirty-five percent of the bona-fide tenants in occupancy have agreed to purchase under the plan; * require the sponsor of a cooperative or condominium conversion plan in Nassau, Westchester and Rockland counties to establish a reserve fund of vacancies that may exist to no more than five percent of the total price (as defined) to be used exclusively for making capital repairs, replacements or improvements; * make existing "warehousing" prohibitions for cooperative or condominium conversions more restrictive by limiting the number of vacancies that may exist to no more than five percent of the total number of dwelling units in a building or development or to no more than one dwelling unit in the case of a building or development containing less than 25 units; * eliminate eviction plans for cooperative or condominium conversions; * require MCI increases in all rent regulated buildings to be treated as a temporary surcharge; * limit MCI monthly surcharges in all rent regulated buildings to an amount equaling no more than 6% of the monthly rent; * require that major capital improvement (MCI) rent surcharges in all rent regulated buildings cease once the cost of such improvement has been recovered; * limit the permanent increase in rent for individual apartment improvements in all rent regulated units to an amount equal to one seventy-second of the total cost incurred by landlords in making such improvements; and * remove the sunset provisions contained in the ETPA, the New York City Rent Control and Rent Stabilization Laws, the Emergency Housing Rent Control Law and those provisions of the General Business Law related to the regulation of rents in cooperatives and condominiums. EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER: This bill would eliminate the current requirement that renewal leases be provided to tenants subject to the provisions of the Rent Stabilization Law and the ETPA. The bill would change the effective date of rent guideline boards rent adjustments from October 1st to January 1st and cap vacancy allowances at five percent. The bill would subject rent controlled units in the City of New York and Nassau, Westchester and Rockland counties to annual rent adjustments set by the local rent guidelines board, replacing the maximum base rent program. The bill Would require owners of rent controlled units to register those units annually with the Division of Housing and Community Renewal in order to receive rent adjustments. The bill would prohibit cooperative conversion plans in New York City and Nassau, Westchester and Rockland counties from being declared effective unitl 35 percent of the bona-fide tenants in occupancy have agreed to purchase. Current law requires only that 15 percent of bona-fide tenants purchase. The bill would impose a new reserve fund requirement on the sponsors of cooperative and condominium conversions in Nassau, Westchester and Rockland counties. Currently, only sponsors undertaking cooperative or condominium conversions in the City of New York must meet reserve fund requirements. The bill would make cooperative conversions "warehousing" prohibitions more restrictive and eliminate eviction plans in New York City and Nassau, Westchester and Rockland counties. In place of current provisions which allow the cost of a major capital improvement to be recovered through a permanent increase in the base rent, the bill would allow owners of rent regulated buildings to recover the cost of those improvements as a temporary surcharge. The bill would limit the permanent increase in rent for individual apartment improvements in all rent regulated units to an amount equal to one seventy-second of the total cost incurred by landlords in making such improvements. Owners of rent regulated units are currently allowed to increase rents in an amount equal to one-fortieth of the cost of the improvement. The bill would also repeal the sunset provisions contained in the ETPA, the New York City Rent Control and Rent Stabilization Laws, the Emergency Housing Rent Control Law and those provisions of the General Business Law related to the regulation of rents in cooperatives and condominiums. JUSTIFICATIONS: New York State`s four separate and distinct rent regulation laws provide a patchwork quilt of rent and eviction protections for tenants. As such, one of the primary purposes of this omnibus bill is to streamline and simplify the administration of an compliance with these laws. Currently, rent adjustments based on changes in operating costs are allowed on an application basis for rent controlled apartments and on an automatic basis determined through annual rent guidelines board orders for units subject to the Emergency Tenant Protection Act and the New York City Rent Stabilization Law. The use of these systems results in inequities in rent adjustments between rent controlled and rent stabilized apartments in the same building and between rent stabilized tenants, depending upon whether they select one or two year leases. This legislation would simplify both the administration of an compliance with the various rent laws by providing for a uniform method of determining rent adjustments, as well as a uniform effective date for those rent adjustments. Under the provisions of this bill, rent adjustments for rent controlled units in the City of New York and Nassau, Westchester and Rockland counties would be set by local rent guidelines boards. This bill would also significantly strengthen State laws regulating the conversion of residential rental property to cooperative or condominium ownership. First, the bill would limit the ability of sponsors to warehouse apartments, i.e., to hold off of the market habitable rental units in anticipation of conversion, by reducing the permissible vacancy rate to five percent from the current ten percent level. In addition, the length of time these units can remain vacant would be reduced from five months prior to the date the plan is submitted for filing, as allowed by current law, to 110 days after the plan is submitted for filing. This change in the laws is critical because some sponsors have warehoused up to 25% of their total units by the time their plan was accepted for filing. Given the severe shortage of affordable rental units throughout the state, the cooperative and condominium conversion laws need to be strengthened to prohibit the warehousing of habitable apartments. Second, the bill would require that 35% of the tenants in occupancy on the date the plan is accepted for filing purchase their apartments before an non-eviction plan could be declared effective. This change would increase the participation and control owners actually living in the cooperatives and condominiums have in the management of their building. The current 15% purchase requirement, which in New York City need not include any existing residents of a building, results in conversions where a small number, and some cases no residents purchase their apartments. Current law, then, does little to foster tenant ownership in these converted cooperatives and condominiums and results in such buildings being owned by a myriad of absentee owners. Third, the bill would extend to all municipalities covered by General Business Law S352 (eee) a requirement that the sponsor of a conversion plan establish a three percent reserve fund for capital repairs, replacements and improvements. A reserve fund is now required by local law in New York City and in several other municipalities. The requirement for the fund is becoming of greater importance as sponsors seek to convert older buildings in need of repair. This change in State law would provide the necessary resources to new cooperators and condominium owners to make essential capital repairs in their building, thereby preserving and improving the residential housing stock in New York State. The bill would also alter the manner in which owners of rent regulated buildings can recover the cost of major capital improvements (MCIs). In 1989, the Court of Appeals rules unanimously that building owners may increase rent levels in perpetuity based on MCIs to their buildings. However, since actual cost of the improvement is recovered after seven years to continue to pay for improvements long after costs have been fully recovered, and even after they have outlived their useful life. In addition, most MCIs, such as window that further increase the profitability of MCIs. This bill seeks to balance the conflicting concerns of maintaining affordable housing and ensuring adequate incentives for investment in MCIs in order to preserve and improve our house stock. Current law allows owners of property subject to rent regulations to permanently increase the rent of an individual apartment in an amount equal to one-fortieth of the cost of improvements to such apartment. By increasing the rent of an apartment in this manner, property owners are able to increase the base rent of a unit and continue to reap the benefits of that increase long after the cost of the improvement is recovered. Altering the method of calculating an individual apartment increase to an amount equal to one seventy-second of the cost of the improvement would provide a more modest increase in rent, while providing property owners with a reasonable rate of return on their investment. The bill would also repeal the sunset provisions contained in the ETPA, the New York City Rent Control and Ren Stabilization Laws, the Emergency Housing Rent Control Law and those provisions of the General Business Law related to the regulation of rents in cooperatives and condominiums. By making these laws ongoing, this provision would prevent New York State from interfering with legitimate policy decisions made by local governments. PRIOR LEGISLATIVE HISTORY: New legislation. FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: Staff savings should result from the elimination of Maximum Base Rent/Maximum Collectible Rent application processing and the elimination of the need for lease renewal dispute resolution. EFFECTIVE DATE: Immediately.