NY City Council Intro 920-A (1997)


Text of Vallone's Continuing Decontrol Bill -- Intro. 920-A

Although containing some flowery language as to the City Council's "intent", Council Speaker Peter Vallone's bill will continue Vacancy Decontrol in full force, has no enforcement mechanism, and does not make it retroactive so as to even try to get back the thousands of apartments lost to his shenanigans (and with the help of his former chief aid Joe Strasburg, now with the RSA). This bill passed the Housing Committee after Councilman Stanley Michels caved in to what was reported as "threats and extreme pressure" from Vallone. Tenant attorneys were asked (and obliged) to offer suitable language for enforcement mechanisms, but their suggestions were ignored by the Housing Committee, resulting in a sloppily contructed bill. The full City Council voted to approve this bill on March 25th.

Due to internet limitations, deleted sections are contained [within brackets] and new material is contained within <<< triple angle brackets >>>.



Staff: Anthony Baronci
Counsel to the Committee

THE COUNCIL
REPORT OF THE INFRASTRUCTURE DIVISION
COMMITTEE ON HOUSING AND BUILDINGS

March 14, 1997

PROP. INT. NO. 920-A

By The Speaker (Council Member Vallone) and Council Members
Spigner, Albanese, DiBrienza, DeMarco, Fisher, Foster, Harrison,
Henry, Lasher, Leffler, Linares, Marshall, McCaffrey, Miller,
O'Donovan, Perez, Pinkott, Povman, Powell IV, Robles, Warden,
Watkins, Weiner, Williams, Wooten, Robinson, Dear, Cruz and
Stabile.

TITLE

In relation to continuing the rent stabilization laws with
certain amendments to vacancy decontrol provisions of such law
and of the rent control law.

ADMINISTRATIVE CODE:

Amends subparagraph k of paragraph 2 of subdivision e of section
26-403; amends section 26-502; amends section 26 504.2; amends
subdivision d of section 26-513; and amends section 26-520.

LEGISLATIVE HISTORY OF THE RENT STABILIZATION LAW OF 1969:

In 1969, the Council passed Local Law No. 16 which enacted the
Rent Stabilization Law regulating multiple dwellings containing
six or more units, built after February 1, 1947. That local law
was to expire on April 1, 1974.

In 1971, the State Legislature enacted Chapter 371 of the Laws of
1971 which removed from the protection of the City Rent and
Rehabilitation Law ("Rent Control") and the Rent Stabilization
Law dwelling units that became vacant. These units were
thereafter not subject to any rent regulation.

In 1974, the Council passed Local Law No. 1 extending the Rent
Stabilization Law for those dwelling units not vacated during the
1971-1974 period to April 1, 1979. Thereafter, the State
Legislature enacted Chapter 576 of the Laws of 1974 (the
"Emergency Tenant Protection Act") which gave or restored Rent
Stabilization Law protection to those units that had become
vacant during the 1971-1974 "decontrol" period, as well as
dwelling units in buildings constructed after March 10, 1969 and
prior to January 1, 1974.

The Council has extended the Rent Stabilization Law for three
year periods in 1979 (Local Law No. 8), 1982 (Local Law No. 18),
1985 (Local Law No. 24), 1988 (Local Law No. 10), 1991 (Local Law
No. 20) and 1994 (Local Law No. 4).

BASIS FOR EXTENDING THE RENT STABILIZATION LAW

In order to extend the Rent Stabilization Law of 1969, the
Council must determine whether a housing emergency exists "on the
basis of the supply of housing accommodations ..., the condition
of such accommodations and the need for continued regulation and
control of residential rents..." (Section 3 of Chapter 576 of the
Laws of 1974). "A declaration of emergency may be made as to any
class of housing accommodations if the vacancy rate for the
housing accommodations in such class ... is not in excess of five
percent and a declaration of emergency may be made as to all
housing accommodations if the vacancy rate for the housing
accommodations ... is not in excess of five percent." (Section 3
of Chapter 576 of the Laws of 1974).

A report containing the results and findings of the 1996 Housing
and Vacancy Survey (HVS or Survey) was prepared by the Department
of Housing Preservation and Development (HPD) for the period
between March and June of 1996[1] The Department of Housing
Preservation and Development entered into a contract with the
United states Bureau of the Census for the latter to conduct the
survey and calculate the rental vacancy rate for the City based
upon the data contained in the survey.

The rental vacancy rate is calculated by dividing the number of
vacant available for rent units (that are not dilapidated) by the
number of renter occupied units plus the number of vacant
available for-rent housing units (that are not dilapidated). When
an emergency was last declared in 1994, the net citywide rental
vacancy rate for the first quarter of 1993 was 3.44%. According
to the 1996 HVS the citywide rental vacancy rate is 4.01% with a
standard of error of +/- 0.211. Accordingly, a "declaration of
emergency" may be made by the Council to all housing
accommodations citywide. Therefore, the legal basis exists for
the Council to adopt Prop. Int. No. 920-A which extends the Rent
Stabilization Law from April 1, 1997 to April 1, 2000.

The survey points out that there were approximately 81,000 vacant
available rental units in New York City as of the survey period,
an increase of approximately 11,000 units since 1993. The number
of housing units in the City since 1993 has increased slightly
from 2.986 million to 2.995 million, while the total number of
rental units for the same period has decreased slightly from
approximately 2.05 million to approximately 2.03 million rental
units. In 1996 units subject to Rent Control make up
approximately 3.6% of the occupied rental stock, or 71,000 units,
while in 1993 there were approximately 102,000 Rent Controlled
units, a decline of approximately 31,000 units or 31%.

The Survey also notes that the median monthly gross rent,
including utility payments, increased 14.3% from $551 in 1993 to
$630 in 1996. However, the inflation adjusted increase in median
gross rent was only 6.1%.

RESTATEMENT OF COUNCIL'S INTENT
OF LOCAL LAW NO. 4 OF 1994:

In addition to extending the Rent Stabilization Law from April 1,
1997 to April 1, 2000, Prop, Int. No. 920-A also includes
amendments to certain provisions of the Administrative Code
enacted by Local Law No. 4 of 1994 which clarify the intent of
the Council when it enacted Local Law No. 4. Those provisions
have been interpreted by the New York State Division of Housing
and Community Renewal ("DHCR") in a way that runs counter to the
Council's intent and the Council is therefore compelled to enact
these "clarifying" amendments. These amendments do not in any way
alter the regulatory structure established by Local Law No. 4.

Local Law No. 4 provided for the deregulation of housing
accommodations with a "maximum rent" (which for this purpose is
intended to be the maximum collectible rent as it pertains to
housing accommodations that are rent controlled) or legal
regulated rent (as it pertains to housing accommodations that are
rent stabilized) of $2,000 or more per month "which is or becomes
vacant on or after April 1, 1994" (heretofore referred to as the
"vacancy decontrol law"). It has been brought to the attention of
the Committee at a hearing held on March 11, 1997 that DHCR has
misconstrued Local Law No. 4. An example of this is to be found
in a DHCR opinion letter dated October 13, 1995, "where an owner
installs new equipment in a vacant housing accommodation that had
a monthly maximum or legal regulated rent of less than $2000, and
where such installation results in an increase in the monthly
rental amount to at least $2,000, the lawful monthly maximum or
legal regulated rent will be deemed as having been $2,000 or more
and the apartment will be deregulated, provided that the next
tenant in occupancy actually rents the housing accommodation for
at least $2,000 per month."

It was the clear intent of the Council when it enacted Local Law
No. 4 that a housing accommodation which became vacant and had a
maximum rent or legal regulated rent below $2,000 or more per
month at the time it became vacant was not to be deregulated
based upon rent increases for installation of new equipment or
improvements to that housing accommodation that raised the
monthly rent to $2,000 or more, where such equipment was
installed or such improvement was made during the period of
vacancy. Such increases were not to be included in the
calculation of the rent for the purpose of deregulating a housing
accommodation. Rather, the Council's intent in 1994, which is
restated today, is that a vacant housing accommodation becomes
deregulated only where the maximum rent or legal regulated rent
was two thousand dollars or more at the time the tenant vacated
such housing accommodation. (emphasis added). Nothing in this
bill is intended to affect the rights or remedies of those
subject to the provisions of Local Law No. 4 of 1994.

Amendments in Prop. Int No. 920-A that reflect the Council's
clarification of its intent when it enacted Local Law No. 4 of
1994 are found in sections 1 and 3 of the bill. Bill section 1
amends the applicable provision of the Rent Control Law while
bill section 3 amends the applicable provision of the Rent
Stabilization Law.

ADDITIONAL AMENDMENTS TO INT. NO. 920:

In addition to restating the intent of the Council, Prop. Int.
No. 920-A makes certain amendments with respect to notice to be
given to the first tenant of a housing accommodation that is
deregulated pursuant to the "vacancy decontrol law". Under the
current law, the owner of a vacant housing accommodation that is
excluded from the Rent Stabilization Law or Rent Control Law is
not required to give a new tenant any notice of the legal
regulated rent or maximum rent that was in effect at the time
such housing accommodation became vacant. Bill section 3 amends
the current law to require that an owner of such housing
accommodation shall give a certified written notice to the first
tenant of that housing accommodation after it became exempt from
the provisions of the Rent Stabilization Law or Rent Control Law.
The certified notice, attached to which must be a certified copy
of the last registration or the document most recently filed with
DHCR which sets forth the maximum rent for such housing
accommodation, must be given by certified mail within 30 days
after the new tenancy commences and it must contain a statement
that the legal regulated rent may be verified by the tenant by
contacting DHCR, or any successor agency, and the address and
telephone number of DHCR, or any successor agency.

Under current law the owner of a housing accommodation that is
subject to the Rent Control Law and becomes subject to the Rent
Stabilization Law is required to give written notice by certified
mail to the next tenant of the initial legal regulated rent of
such housing accommodation and of such tenant's right to file an
application for adjustments of such initial legal regulated rent.
Section 4 of the bill amends this notice provision to require
that the owner include in such notice the maximum rent of such
housing accommodation at the time such housing accommodation
became vacant.

This legislation would take effect immediately.

Int. No. 920 was considered by the Committee at a hearing held on
March 11, 1997. on Friday, March 14, 1997 the Committee adopted
this legislation by a vote of five in the affirmative, two in the
negative and no abstentions.

-----------------------------------
[1.] According to the Department of Housing Preservation and
Development, in 1993 and previous, survey years, the survey
interviews were usually conducted between late January and May.
However, in 1996, due to two governmental-wide federal furloughs
followed by snow storm closings, the Census Bureau had to delay
the survey interview by more than four weeks.

hb97\reports\i920a
3/14/97 4:30 pm

***************************************************************

Prop. Int. No. 920-A

By The Speaker (Council Member Vallone) and Council Members
Spigner, Albanese, DiBrienza, DeMarco, Fisher, Foster, Harrison,
Henry, Lasher, Leffler, Linares, Marshall, McCaffrey, Miller,
O'Donovan, Perez, Pinkott, Povman, Powell IV, Robles, Warden,
Watkins, Weiner, Williams, Wooten, Robinson, Dear, Cruz and
Stabile.

A LOCAL LAW

To amend the administrative code of the City of New York, in
relation to continuing the rent stabilization laws with certain
amendments to vacancy decontrol provisions of such law and of the
rent control law.

BE IT ENACTED BY THE COUNCIL AS FOLLOWS:

Section 1. Subparagraph k of paragraph 2 of subdivision e of
section 26-403 of the administrative code of the city of New
York, as amended by local law number 4 for the year 1994, is
amended to read as follows:

(k) Any housing accommodation [with a maximum rent of two
thousand dollars or more per month] which [is or] becomes vacant
on or after April first, [nineteen hundred ninety-four]
<<< nineteen hundred ninety-seven and where at the time the tenant
vacated such housing accommodation the maximum rent was two
thousand dollars or more per month. >>> Provided however, that
this exclusion shall not apply to housing accommodations which
became or become subject to this law by virtue of receiving tax
benefits pursuant to section four hundred eighty-nine of the real
property tax laws. This subparagraph shall not apply, however, to
or become effective with respect to housing accommodations which
the commissioner determines or finds that the landlord or any
person acting on his or her behalf, with intent to cause the
tenant to vacate, has engaged in any course of conduct
(including, but not limited to, interruption of discontinuance of
required services) which interfered with or disturbed or was
intended to interfere with or disturb the comfort, repose, peace
or quiet of the tenant in his or her use or occupancy of the
housing accommodations and in connection with such course of
conduct, any other general enforcement provision of this law
shall also apply.

Section 2. Section 26 502 of the administrative code of the city
of New York, as amended by local law number 4 for the year 1994,
is amended to read as follows:

Section 26-502 Additional findings end declaration of emergency.
The council hereby finds that a serious public emergency
continues to exist in the housing of a considerable number of
persons within the city of New York and will continue to exist
after April first, [nineteen hundred ninety-four] <<< nineteen
hundred ninety-seven >>> and hereby reaffirms and repromulgates
the findings and declaration set forth in section 26-501 of this
title.

Section 3. Section 26-504.2 of the administrative code of the
city of New York, as amended by local law number 4 for the year
1994, is amended to read as follows:

Section 26-504.2 Exclusion of high rent accommodations.

<<< a. >>> "Housing accommodations" shall not include any housing
accommodation [with a legal regulated rent of two thousand
dollars or more per month] which [is or] becomes vacant on or
after April first, [nineteen hundred ninety-four] <<< nineteen
hundred ninety seven and where at the time the tenant vacated
such housing accommodation at the legal regulated rent was two
thousand dollars or more per month. >>> Provided however, that the
exclusion shall not apply to housing accommodations which became
or become subject to this law (a) by virtue of receiving tax
benefits pursuant to section four hundred twenty-one-a or four
hundred eighty-nine of the real property tax law, except as
otherwise provided in subparagraph (i) of paragraph (f) of
subdivision two of section four hundred twenty-one-a of the real
property tax law, or (b) by virtue of article seven-c of the
multiple dwelling law. This section shall not apply, however, to
or become effective with respect to housing accommodations which
the commissioner determines or finds that the landlord or any
person acting on his or her behalf, with intent to cause the
tenant to vacate, engaged in any course of conduct (including,
but not limited to, interruption or discontinuance of required
services) which interfered with or disturbed or was intended to
interfere with or disturb the comfort, repose, peace or quiet of
the tenant in his or her use or occupancy of the housing
accommodations and in connection with such course of conduct, any
other general enforcement provision at this law shall also apply.

<<< b. The owner of any housing accommodation that is not subject to this law pursuant to the provisions of subdivision a of this section or subparagraph k of paragraph 2 of subdivision e of section 26-403 of this code shall give certified written notice to the first tenant of that housing accommodation after such housing accommodation became exempt from the provisions of this law or the city rent and rehabilitation law, which contains a statement that the legal regulated rent or maximum rent may be verified by the tenant by contacting the state division of housing and community renewal, or any successor thereto, and the address and telephone number of such agency, or any successor thereto, attached to which shall be a certified copy of the last registration statement for such housing accommodation or the document most recently filed with the state division of housing and community renewal which sets forth the maximum rent for such housing accommodation. Such notice shall be sent by certified mail within thirty days after such tenancy commences. >>> Section 4. Subdivision of section 26-513 of the administrative code of the city of New York is amended to read as follows: d. Within thirty days after the local effective date of the emergency tenant protection act of nineteen seventy-four the owner of housing accommodations as to which an application for adjustment of the initial legal regulated rent may be made pursuant to subdivision b of this section shall give notice in writing by certified mail to the tenant of each such housing accommodation on a form prescribed by the commissioner of the initial legal regulated rent for such housing accommodation<<< , the maximum rent at the time such housing accommodation became vacant >>> and of such tenant's right to file an application for adjustment of the initial legal regulated rent of such housing accommodation. Section 5. Section 26-520 of the administrative code of the city of New York, as amended by local law number 4 for the year 1994, is amended to read as follows; Section 26-520 Expiration date. This chapter shall expire on April first, [nineteen hundred ninety-seven] <<< two thousand >>> unless rent control shall sooner terminate as provided in subdivision three of section one of the local emergency housing rent control law. Section 6. If any clause, sentence, paragraph, section or part of this local law shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, section or part thereof directly involved in the controversy in which such judgment shall have been rendered. Section 7. This local law shall take effect immediately. hb96\INTROS\920a 3/14/97 2:45 pm