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
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agency administration of the rent laws.
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Stabilization Law and various Rent Control Statutes.
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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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