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.

Actions on Bill A00002

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

Votes on Bill A00002

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

Memo on Bill A00002

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.


Bill A00002-A
[ Summary ] [ Actions ] [ Votes ] [ Memo ] [ Text ]