New York State
Division of Housing and Community Renewal
Office of Rent Administration
Gertz Plaza, 92-31 Union Hall St.
Jamaica, New York 11433
Public Information: (718)739-6400

Mario M. Cuomo, Governor
Donald M. Halperin, Commissioner
Joseph A. D'Agosta, Deputy Commissioner for Rent Administration


< OPERATIONAL BULLETIN 94-1 (JANUARY 3, 1994) >

IMPLEMENTING RENT REGULATION REFORM ACT OF 1993

AFFECTING NEW YORK CITY RENT STABILIZATION LAW (RSL); EMERGENCY
TENANT PROTECT ON ACT OF 1974 (ETPA); NEW YORK CITY RENT AND
REHABILITATION LAW (CITY RENT CONTROL LAW OR CRCL); EMERGENCY
HOUSING RENT CONTROL LAW (STATE RENT CONTROL LAW OR SRCL)


This Operational Bulletin is issued pursuant to section 2527.11
of the Rent Stabilization Code; the Emergency Tenant Protection
Regulations adopted under the Emergency Tenant Protection Act;
section 2209.8 of the City Rent and Eviction Regulations; and
section 2109.8 of the State Rent and Eviction Regulations.

The Rent Regulation Reform Act of 1993 (RRRA), Chapter 253 of the
Laws of 1993, became effective on July 7, 1993. It affects each
of the above four rent regulatory systems as follows:

I.   Provides for deregulation of high rent housing
     accommodations:

     A.   Upon vacancy; or

     B.   Occupied by high income tenants.

II.  Establishes conditions for rent increases based upon
     individual apartment improvements.

III. Provides for deregulation of vacant rent regulated housing
     accommodations located in ETPA county cooperatives and
     condominiums and if occupied, provides for deregulation upon
     vacancy.

  IV.  Modifies penalties for failure to register rent stabilized
                   housing accommodations subject to RSL and ETPA


I. HIGH RENT DEREGULATION

The RRRA provides for high rent deregulation under all four
systems of rent regulation, with some variation among the
systems. All references are to RSL or ETPA, unless CRCL or SRCL
are indicated in brackets.

A.   Deregulation upon vacancy

The RRRA added section 26-504.2 to the RSL and paragraph 13 to
section 5a of ETPA [and added subparagraph k to paragraph 2 of
subdivision e of section 26-403 of CRCL, and added paragraph (n)
to subdivision 2 of section 2 of SRCL], providing for
deregulation of vacant high rent housing accommodations. and if
occupied, for deregulation upon vacancy.

1)   Conditions for deregulation

a)   The housing accommodation must have had a legal regulated
     rent of $2,000 per month or more at any time between July 7,
     1993 and October 1, 1993. The legal regulated rents on July
     7, 1993 and on October 1, 1993 are included [for CRCL and
     SRCL, it is the maximum rent that must be in excess of
     $2,000; for CRCL, DHCR interprets maximum rent as the
     maximum collectible rent (MCR); for SRCL, the maximum rent
     is the rent authorized by DHCR]; and

b)   The housing accommodation must have been or become vacant on
     or after July 7, 1993.

Examples

a.   The legal regulated rent is $2,050 per month on August 1,
     1993. The tenant in occupancy on August 1, 1993 vacates, and
     the next tenant executes a lease that commences September 1,
     1993 for a lower monthly rental of $1,950.

     The new tenancy is not subject to rent regulation. As long
     as the legal regulated  rent is $2,000 or more per month at
     any time during the applicable period, between July 7, 1993
     and October 1, 1993, a subsequent reduction in the legal
     regulated rent below $2,000 per month does not prevent high
     rent vacancy deregulation.

b.   The legal regulated rent is set at $2,050 per month pursuant
     to a lease that commenced January 1, 1992 and expires
     December 31, 1993. On May 1, 1993, DHCR issues a final order
     reducing the rent to a level below $2,000 per month based
     upon a finding that the owner has failed to maintain
     required services. The owner files an application to restore
     the rent on October 15, 1993. In a decision issued March 1,
     1994, DHCR restores the rent to $2,( 50 per month, effective
     November 1, 1993.

     Even if the tenant in occupancy vacates on or after July 7,
     1993, the housing accommodation is not deregulated because
     the legal regulated rent was not $2,000 or more per month
     between July 7, 1993 and October 1, 1993. Although the
     reduced rent was later restored, for the period of
     effectiveness of the rent reduction order, which in this
     example covered the entire period between July 7, 1993 and
     October 1, 1993, the reduced rent was below $2,000 per month

c.   Where prior to October 2, 1993, an owner installed new
     equipment in a vacant housing accommodation that had a
     monthly maximum or legal regulated rent of less than $2,000,
     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 between July 7, 1993 and October 1,
     1993, provided that the next tenant in occupancy actually
     rents the housing accommodation for at least $2,000 per
     month. This is so, notwithstanding that the housing
     accommodation was not actually occupied by and rented to a
     tenant at that amount prior to October 2, 1993.

d.   Where an owner substantially alters the outer dimensions of
     a vacant, rent stabilized housing accommodation which
     qualifies for a ''first rent" and executes a vacancy lease
     that commenced between July 7, 1993 and October 1, 1993
     providing for a monthly rent of $2,000 or more, the new
     tenancy is not subject to rent regulation.

e.   Where a tenant in occupancy under a renewal lease sublets a
     housing accommodation pursuant to a sublease effective
     between July 7, 1993 and October 1, 1993 for which a sublet
     allowance would apply; the housing accommodation had a
     monthly legal regulated rent of less than $2,000 at the time
     of the subletting; and the collection by the owner of a
     sublet vacancy allowance results in an increase in the
     monthly rental amount to at least $2,000; the housing
     accommodation will qualify for deregulation based upon the
     monthly legal regulated rent having been $2,000 or more
     between July 7, 1993 and October 1, 1993. However, if the
     monthly rental amount for such period would not have
     otherwise reached at least $2,000 were it not for a ten
     percent surcharge payable to the tenant if the housing
     accommodation is sublet fully furnished, the monthly legal
     regulated rent will not be regarded as having been $2,000 or
     more between July 7, 1993 and October 1, 1993.

2)   Exceptions

a)   A housing accommodation found by DHCR to have become vacant
     due to an owner's harassment will not be deregulated.

b)   Where a member of the household has acquired the right to be
     named on a renewal lease [for CRCL and SRCL, the right to
     continue in occupancy as a statutory tenant] by
     "succession," as a family member (traditional or
     nontraditional) under DHCR regulations, the housing
     accommodation will not be considered as having become
     vacant.

c)   These deregulation provisions shall not apply to housing
     accommodations which are subject to rent regulation by
     virtue of receiving tax benefits pursuant to sections 421-a
     or 489 of the Real Property Tax Law until the expiration of
     the tax abatement period.


B.   Deregulation of high rent housing accommodations occupied by
     high income tenants

The RRRA added sections 26-504.1 and 26-504.3 to RSL and
following renumbering, paragraph 12 to subdivision a of section
5, and a new section 5-a to ETPA [and added a new subparagraph
(j) to paragraph 2 of subdivision e of section 26 403 of CRCL,
added a new section 26403.1 to CRCL, added paragraph (m) to
subdivision 2 of section 2 of SRCL, and added a new section 2-a
to SRCL], providing for deregulation of housing accommodations
occupied by certain "high income" tenants.

1)   The RRRA provides for deregulation under the following
     conditions:

     a)   The legal regulated rent [for CRCL and SRCL, the
          maximum rent] of the housing accommodation must have
          been $2,001 or more per month as of October 1, 1993,
          which means on October 1. 1993. and not earlier or
          later, and

     b)   The housing accommodation must be occupied by a tenant
          who had a total annual income in excess of $250,000 per
          year in each of the two calendar years preceding the
          year in which an owner serves the tenant with an income
          certification form (ICF).

          (1)  Annual income is defined as the federal adjusted
               gross income, as reported on the New York State
               income tax return.

          (2)  Total annual income is defined as the sum of the
               annual incomes of all persons named as tenants or
               co-tenants on the lease who occupy the housing
               accommodation, and of all other persons who occupy
               the housing accommodation as their primary
               residence on other than a temporary basis. The
               incomes of bona fide employees of such occupants
               residing in the housing accommodation in
               connection with their employment are not included.
               In addition, where a housing accommodation is
               sublet, the annual income of a bona fide sublessee
               is also not considered. However, the annual income
               of a tenant or co-tenant named on the lease who
               will reoccupy the housing accommodation when the
               sublease expires will be considered.

          Examples

          As noted above, a condition for high rent, high income
          deregulation is that the housing accommodation must
          have had a monthly legal regulated rent or a maximum
          rent of $2,000 or more on October 1, 1993. As discussed
          above in the examples set forth under high rent vacancy
          deregulation (IA), various issues may arise which
          affect the determination of whether the rent reached
          such level. Generally, such examples are also
          applicable to high rent high income deregulation,
          although the relevant dates are different.

2)   The RRRA requires the following procedures:

     a)   Income Certification Form ("ICE

          (1)  With regard to a high rent housing the owner may
               (but is not required to) serve the tenant on or
               before May 1st in each calendar year with DHCR's
               ICE, Form DHCR will not process an owner's
               petition for high income rent deregulation under
               the RHEA where the ICE has not been served on the
               tenant on or before May 1st. Where an owner serves
               an ICE upon a tenant, the owner must serve the ICE
               by at least one of the following methods:

               (a)  Personal delivery, where accompanied by the
                    tenant's dated and signed receipt;

               (b)  Certified mail, where accompanied by a United
                    States Postal Service receipt;

               (c)  Regular first class mail, where accompanied
                    by a United States Postal Service Certificate
                    of Mailing.

          The ICF requires the listing of the names of the
          tenants and all other persons who occupy the housing
          accommodation as a primary residence on other than a
          temporary basis; and an identification of bona fide
          employees of such occupants residing in the housing
          accommodation in connection with such employment, and
          bona fide subtenants in occupancy pursuant to the
          provisions of section 226-b of the Real Property Law.
          The ICF also requires a certification of whether the
          total annual income of only those tenants and occupants
          described in paragraph B.1.b(2) above exceeded $250,000
          in each of the two preceding calendar years. The ICF
          informs the tenant of the protections against
          harassment, that disclosure of income information is
          limited to the manner required on the ICF, and that
          only the tenants of housing accommodations that had a
          monthly legal regulated rent [for CRCL and SRCL, a
          maximum rent] of $2,000 or more per month as of October
          l, 1993 may be served with and asked to complete an
          ICF. Where the monthly legal regulated or maximum rent
          of the housing accommodation was less than $2,000 on
          such date, an owner is not authorized to serve an ICF
          on the tenants of such housing accommodation.

          (2)  The tenant must return the completed ICF to the
               owner within thirty days of service by the owner.
               The tenant is advised to retain a copy of the
               completed ICF.

          (3)  If the tenant(s) complete the ICF by conceding
               that the total annual income exceeded $250,000 in
               each of the two preceding calendar years, the
               owner may apply to DHCR for high income rent
               deregulation by filing a Petition by Owner for
               High Income Rent Deregulation (OPD), together with
               the ICF, by June 30th of the year in which the
               owner serves the ICF upon the tenant. DHCR will
               not process the owner's petition where a complete
               OPD has not been filed with DHCR by such June 30th
               deadline. Incomplete or otherwise defective OPD's
               filed on or before June 15th will be rejected
               without prejudice, and owners advised of the
               reasons for such rejection and of the right to
               refile a complete OPD by June 30th. This
               advisement will not be available to owners who
               file incomplete or defective OPD's after June
               15th, but they will be entitled to, on their own,
               perfect their OPD's by June 30th.

          The OPD must be filed in person or by mail. An OPD
          filed by mail must be postmarked no later than June
          30th If the prepaid postage on the envelope in which
          the certification is mailed is by private postage
          meter, and the envelope does not have an official U.S.
          Postal Service postmark, then the certification will
          not be considered timely filed unless received by June
          30th or the owner submits other adequate proof of
          mailing by June 30th, such as an official Postal
          Service receipt or certificate of mailing. Within
          thirty days after the filing, DHCR will issue a
          deregulation order effective at the expiration of the
          existing lease [for CRCL and SRCL, effective June 1st
          of the following year]. A copy of the order will be
          mailed to the tenant by regular and certified mail,
          return receipt requested, and a copy will be mailed to
          the owner.

     b)   Failure of tenant to return ICF

     If the tenant fails to return the completed ICF to the
     owner, or if the owner disputes the information supplied by
     the tenant on the ICF, the owner may, by June 30th of the
     calendar year, request that DHCR verify, through the New
     York State Department of Taxation and Finance, whether the
     total annual household income exceeded $250,000 for each of
     the two preceding calendar years. DHCR will, within twenty
     days of receipt of the owner's request, ask for necessary
     identifying information from the tenant, giving the tenant
     sixty days to respond and advising the tenant that failure
     to respond will result in deregulation. If the tenant fails
     to provide the requested information, DHCR will issue by
     December 1st of such year an order providing that the
     housing accommodation shall be deregulated effective upon
     the expiration of the existing lease [for CRCL and SRCL,
     where leases are not used, deregulation will be effective on
     March 1st of the following year]. A copy of the order will
     be mailed to the tenant by regular and certified mail,
     return receipt requested, and a copy will be mailed to the
     owner. Where there is more than one named tenant, and only
     one responds to the notice, DHCR shall not consider the
     tenants to be in default.

     c)   Verification of total annual household income

     If the Department of Taxation and Finance determines that
     the total annual household income exceeded $250,000 in each
     of the two preceding calendar years, the owner and tenant
     shall be notified by DHCR by November 15th and given 30 days
     to comment. Within forty-five days after the expiration of
     the comment period, where the facts warrant, DHCR shall
     issue an order of deregulation, effective upon expiration of
     the existing lease [for CRCL and SRCL, effective March 1st
     of the following year], and serve such order by mail as
     discussed under paragraph b. above.

     Where the Department of Taxation and Finance determines that
     the income threshold has not been met or cannot ascertain
     whether the threshold has been met, DHCR will deny the OPD.

     d)   For both paragraphs b. and c. above, the same
          procedural filing requirements and deadlines as are set
          forth in paragraph a above shall apply.

     e)   Administrative and judicial review

     Orders pursuant to the RRRA granting or denying deregulation
     are subject to Petitions for Administrative Review (PAR's),
     which must be filed with the DHCR within thirty-five days
     after the date such orders are issued. A party aggrieved by
     a PAR order may seek judicial review by filing a proceeding
     in the Supreme Court under Article 78 of the Civil Practice
     Law and Rules.

3)   Privacy

     a)   The only information exchanged in the process of income
          verification among the owner, tenant, DHCR and the
          Department of Taxation and Finance is whether the
          income threshold has been met. Specific income figures
          will not be disclosed or exchanged.

     b)   The provisions of the State Freedom of Information Law
          ("FOIL") which might otherwise allow certain
          information to be disclosed, do not apply to any income
          information obtained by the DHCR pursuant to the RRRA.

4)   Subsequent occupancy

     A high rent housing accommodation, which becomes deregulated
     on the basis of high income, remains deregulated,
     notwithstanding subsequent occupancy by a household, the
     total annual income of which would not qualify for high
     income deregulation.

5)   Additional Issues

     Question:   Where the tenant on the lease is a corporation,
                 is the annual income of the corporation
                 considered in determining whether the threshold
                 income level is met?

     Answer:     No. Only the annual incomes of qualified
                 occupants will be considered.

     Question:   Where a tenant occupies two or more contiguous
                 housing accommodations which may or may not be
                 structurally combined to some degree, but not
                 to a degree that would qualify for a "first
                 rent," will the rents of each be combined in
                 determining whether the monthly legal regulated
                 rent is $2.000 or more?

     Answer:     Because the facts of each situation will vary
                 extensively, this issue will be considered on a
                 case by case basis. Generally, the greater the
                 degree of integration of apartments and their
                 usage, the more likely they will be considered
                 one apartment for determination of the issue


II.  RENT INCREASES FOR INDIVIDUAL APARTMENT IMPROVEMENTS

The RRRA modified the conditions under which rent increases are
allowed for individual apartment improvements under all four rent
regulatory systems.

A.   Required DHCR approval eliminated

     1.   Before the enactment of the RRRA, the approval of DHCR
          was required in order for rent increases to be
          collected for individual apartment improvements under
          the CRCL and the SRCL and, in certain instances, under
          ETPA. Under the RRRA, the approval of DHCR is no longer
          required under any system. However, where there is a
          tenant in occupancy at the time of the improvement,
          written tenant consent is required. In the case of a
          vacant housing accommodation, no tenant consent is
          required.

     2.   For all applications for individual apartment
          improvement rent increases with tenant consent, or
          where the apartment was vacant, which were pending when
          the RRRA became effective (July 7, 1993), DHCR has sent
          notices to the parties informing them that, since such
          applications are no longer required, the proceedings
          have been closed without processing.

B.   Amount of rent increase

     1.   Before the enactment of the RRRA, the amount of the
          permanent increase in the legal regulated rent (for
          rent stabilization) or maximum rent (for rent control)
          was not contained in any of the rent laws but was set
          by regulation or DHCR practice at one-fortieth (1/40)
          of the cost of the improvement, including the cost of
          installation, but excluding finance charges. This
          1/40th increase was made statutory by the RRRA for all
          four rent regulatory systems.

     2.   The RRRA, consistent with already established DHCR
          regulation and practice, provided that no further rent
          increase for an individual apartment improvement is
          permitted during the useful life of the replaced
          equipment.

C    Notification requirement and effective date of rent increase

     1.   Under the RRRA, for housing accommodations governed by
          the CRCL and SRCL, an owner must notify DHCR of the
          individual apartment improvement on Form RN-79-b. Such
          notification is not required under RSL or ETPA.

     2.   Where the filing of Form RN-79-b with DHCR is required,
          the increase is not collectible until the first rent
          payment date after the owner's filing of such form.

D.   DHCR approval still required for air conditioner charges

     Where DHCR approval has been required in order for an owner
     to collect charges for the use of an air conditioner,
     whether electricity is included in the rent or not, such
     approval is still required. Permissible charges for air
     conditioners in New York City rent regulated housing
     accommodations are established annually. The latest
     establishment of such charges is found in the Eighth Annual
     Update of Section B of Supplement No. 1 to Operational
     Bulletin 84-4, issued August 30, 1993.


III. VACANCY DEREGULATION OF COOPERATIVE AND CONDOMINIUM HOUSING
     ACCOMMODATIONS IN MUNICIPALITIES IN NASSAU, WESTCHESTER AND
     ROCKLAND COUNTIES WHICH HAVE ADOPTED ETPA

The RRRA amended subdivision a of Section 5 of ETPA by adding a
new paragraph 14, which adds a category of housing accommodations
exempt from ETPA. This exemption applies to housing
accommodations located in buildings converted to co-operative or
condominium ownership, which are or become vacant on or after
July 7, 1993, and to such housing accommodations which are
occupied by "nonpurchasing tenants" (as defined by Sec. 352-eee
of the General Business Law) upon the occurrence of a vacancy
after July 7, 1993. The rent laws and the general enforcement
provisions of ETPA shall also continue to apply where DHCR finds
that a tenant has vacated because of an owner's harassment.

This provision of the RRRA essentially brings into conformity the
status of such vacated housing accommodations located in
buildings under cooperative or condominium forms of ownership
with the exempt status of similar housing accommodations located
in New York City.


IV.  PENALTIES FOR FAILURE TO REGISTER RENT STABILIZED HOUSING
     ACCOMMODATIONS SUBJECT TO RSL AND ETPA

The RRRA amended sections 26-516 and 26-517 of the RSL, and
subdivision a of section 12 and subdivision e of section 12-a of
ETPA, modifying the penalties for failure to register rent
stabilized housing accommodations and modifying the procedures
for determining nonregistration-related overcharges.

A.   Treble damages may no longer be imposed against an owner
     based solely on the owner's failure to register initially or
     annually. Where, however, DHCR finds that an owner has
     willfully collected an overcharge other than an overcharge
     attributable to an owner's nonregistration, DHCR will assess
     treble damages on the entire overcharge, including that
     portion based upon the owner's nonregistration.

B.   Where rent increases were lawful but for the owner's failure
     to register. and where the owner files and serves a late
     registration, DHCR will not thereafter find that the owner
     has collected an overcharge at any time prior to the filing
     of the late registration. Furthermore, where DHCR finds that
     an owner has collected an overcharge other than an
     overcharge attributable to non-registration, but the
     collection of such overcharge was not willful pursuant to
     DHCR Policy Statement 89-2 and where the owner files and
     serves a late registration, DHCR shall not find that the
     owner collected an overcharge based upon non registration.
     If, however, a late registration is filed subsequent to the
     filing of a rent overcharge complaint, DHCR will assess the
     owner with a late filing surcharge for each unit affected in
     the amount of fifty percent of the current administrative
     fee for timely filed registrations. The surcharge, based
     upon the current administrative fee, is $5.00. Where DHCR
     assesses an owner with a late filing surcharge, under RSL,
     the owner must pay this surcharge to the New York City
     Department of Finance, and under ETPA, to the applicable
     locality.

C.   The RRRA does not affect the noncollectibility of that
     portion of temporary retroactive major capital improvement
     (MCI) rent increases applicable to periods of
     nonregistration.

D.   The provisions of the RRRA described in paragraphs A and B
     of this section will only apply to proceedings docketed by
     DHCR on or after July 1, 1991. DHCR deems a proceeding to be
     docketed as of the date such complaint is date-stamped as
     received in DHCR's mail room or is date-stamped by a DHCR
     employee when such complaint is submitted in person at a
     DHCR office.

E.   A PAR against an order involving a complaint docketed prior
     to July 1, 1991, being an appeal of the determination of
     that proceeding, will not be considered a separate
     "proceeding" subject to the provisions of the RRRA described
     in this section of this Operational Bulletin.

F.   With regard to complaints docketed on or after July 1, 1991,
     because the scope of review of a PAR is limited to that
     which was presented in the Rent Administrator's proceeding,
     an owner who files a late registration after the issuance of
     a Rent Administrator's order finding overcharges based
     solely upon non-registration will remain responsible for
     such rent overcharges.


Joseph A. D'Agosta
Deputy Commissioner for Rent Administration

--------------------------------------------------------------
DHCR Operational Bulletins are issued by the New York State
Division of Housing and Community Renewal (DHCR) and update
agency administration of the rent laws.

Electronic versions of the documents on TenantNet
are for informational purposes only and there is no guarantee
they will be accepted by any court (or even DHCR) as true copies
of DHCR policy. The reader is advised to obtain true copies of
these documents from DHCR. Also see DHCR Policy Statements,
DHCR Advisory Opinions, the Rent Stabilization Code, the Rent
Stabilization Law and various Rent Control Statutes.

Every attempt has been made to conform to the original Operational
Bulletins as issued by DHCR; TenantNet makes no
representation the enclosed material is current or will be
applied as written.  The reader is advised that DHCR often fails
to properly apply, interpret or enforce housing laws.  Since
housing laws are complex and often contradictory, it is
recommended the reader obtain competent legal advice from a
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For more information or assistance. call the DHCR Rent Infoline
at (718) 739-6400, or visit your Borough Rent Office.

Queens Central Office
92-31 Union Hall St. 4th Fl.
Jamaica, NY 11433
(718) 739-6400

Bronx
One Fordham Plaza
Bronx, NY 10458
(718) 563-5678

Brooklyn
250 Schermerhorn St.
3rd Floor
Brooklyn, NY 11201
(718) 780-9246

Lower Manhattan
156 William Street
9th Floor
NY, NY 10038
(212) 240-6011, 6012
South side of 110th St. and below

Upper Manhattan
163 W. 125th St.
5th Floor
NY, NY 10027
(212) 961-8930
North side of 110th St. and above

Staten Island
350 St. Mark's Place
Room 105
Staten island, NY 10301
(718) 816-0277

Nassau County District Rent Office
50 Clinton Street, 6th Floor
Hempstead, NY 11550
(516) 481-9494

Westchester County District Rent Office
55 Church Street, 3rd Floor
White Plains, NY 10601
(914) 948-4434

Rockland County District Rent Office
94-96 North Main St.
Spring Valley, NY 10977
(914) 425-6575

Albany Regional Office
119 Washington Avenue
Albany, NY 12210
(518) 432-0596

Buffalo Regional Office
Ellicot Square Building
295 Main St., Room 438
Buffalo, NY 14203
(716) 856-1382
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