Section 4. GENERAL POWERS AND DUTIES OF THE COMMISSION.
1. At the time this act shall become effective, the commission
shall establish maximum rents which shall be
(a) for housing accommodations outside the city of New
York, the maximum rent which was established on March
first, nineteen hundred fifty, pursuant to the federal
act, and shall not include adjustments granted by
orders issued under the federal act after that date,
regardless of whether they were made effective as of,
or retroactive to, that date or a date prior thereto;
and
(b) for housing accommodations within the city of New York,
the maximum rent which was established on March first,
nineteen hundred fifty, pursuant to the federal act,
and shall not include either, (1) adjustments granted
by orders issued under the federal act after that date,
regardless of whether they were made effective as of,
or retroactive to, that date or a date prior thereto,
or (2) adjustments granted by orders increasing the
maximum rent, issued after March first, nineteen
hundred forty-nine, under the federal act, regardless
of whether the order of increase was made effective as
of, or retroactive to, March first, nineteen hundred
forty-nine, or a date prior thereto, but shall include
adjustments for new or additional services or
facilities provided by the landlord while the housing
accommodations were not rented or where tenant-
occupied, to which the tenant then in possession had
agreed, either expressly or impliedly; and
(c) for housing accommodations within the cities of New
York and Buffalo which on March first, nineteen hundred
fifty, had no maximum rent established pursuant to the
federal act, but which were subject to a maximum rent
established pursuant to the local laws of the cities of
New York and Buffalo, the maximum rent which was
established on March first, nineteen hundred fifty,
pursuant to such local laws.
2. Whenever the commission determines that such action is
necessary to effectuate the purposes of this act, it may
also establish maximum rents for housing accommodations, as
that term is defined herein, in municipalities in which no
maximum rent was in effect on March first, nineteen hundred
fifty. Any housing accommodation for which a maximum rent is
so established shall be deemed a housing accommodation for
all the purposes, and subject to all the provisions of this
act.
2-a. For housing accommodations created by a change from a non-
housing to a housing use or by conversion on or after
February first, nineteen hundred forty-seven, including
those decontrolled by order, and certified by a municipal
department having jurisdiction to be a fire hazard or in a
continued dangerous condition or detrimental to life or
health, the maximum rent shall be the rent charged on
January first, nineteen hundred fifty-seven, or the date of
first rental, whichever is later. Any housing accommodations
for which a maximum rent is so established shall be deemed a
housing accommodation for all the purposes, and subject to
all the provisions of this act, but only so long as such
illegal or hazardous condition continues and further
certification with respect thereto shall not be required
notwithstanding any inconsistent provision of this act.
2-b. Provision shall be made pursuant to regulations prescribed
by the commission for the establishment, adjustment and
modification of maximum rents in rooming houses, which shall
include those housing accommodations subject to control
pursuant to the provisions of paragraph (b) of subdivision
two of section two of this act, having regard for any
factors bearing on the equities involved, consistent with
the purposes of this act to correct speculative, abnormal
and unwarranted increases in rent.
3. Whenever the foregoing standard is not susceptible of
application to a housing accommodation to which this act
applies, and for which no maximum rent was established on
March first, nineteen hundred fifty, or where no
registration statement had been filed as had been required
by the federal act, the maximum rent thereof shall be fixed
by the commission, having regard to the maximum rents for
comparable housing accommodations or any other factors
bearing on the equities involved, consistent with the
purposes of this act.
3-a. Notwithstanding the foregoing provisions of this section, on
and after May first, nineteen hundred fifty-three, the
maximum rent for any housing accommodations shall not be
less than the maximum rent in effect on March first,
nineteen hundred forty-three (or if there was no such
maximum rent then in effect, the maximum rent first
established pursuant to the federal act prior to July first,
nineteen hundred forty-seven) plus fifteen per centum
thereof as such sum is adjusted to reflect:
(1) the amount of any decreases in maximum rent required by
order because of decreases in dwelling space, services,
furniture, furnishings or equipment, or substantial
deterioration or failure to properly maintain such
housing, and
(2) the amount of increases in maximum rent authorized by
order because of increases in dwelling space, services,
furniture, furnishings or equipment, or major capital
improvements.
Nothing contained in this subdivision, however, shall have
the effect of increasing the maximum rent of any housing
accommodation more than fifteen per centum above the maximum
rent in effect on April thirtieth, nineteen hundred fifty-
three.
4. (a) The commission may from time to time adopt,
promulgate, amend or rescind such rules, regulations
and orders as it may deem necessary or proper to
effectuate the purposes of this act, including
practices relating to recovery of possession; provided
that such regulations can be put into effect without
general uncertainty, dislocation and hardship
inconsistent with the purposes of this act; and
provided further that such regulations shall be
designed to maintain a system of rent controls at
levels which, in the judgment of the commission, are
generally fair and equitable and which will provide for
an orderly transition from and termination of emergency
controls without undue dislocations, inflationary price
rises or disruption. Provision shall be made pursuant
to regulations prescribed by the commission, for
individual adjustment of maximum rents where the rental
income from a property yields a net annual return of
less than seven and one-half per centum of the
valuation of the property. Such valuation shall be the
current assessed valuation established by a city, town
or village, which is in effect at the time of the
filing of the application for an adjustment under this
subparagraph properly adjusted by applying thereto the
ratio which such assessed valuation bears to the full
valuation as determined by the state board of
equalization and assessment on the basis of assessment
rolls of cities, towns and villages for the year
nineteen hundred fifty-four and certified for such year
by such board pursuant to section forty-nine-d of the
tax law; provided, however, that where at the time of
the filing of the application for an adjustment under
this subparagraph such board has computations for such
year indicating a different ratio for subclasses of
residential property in a city, town or village, the
commission shall give due consideration to such
different ratio except ratios in excess of one hundred
percent, provided, further, that where such board has
not determined and certified any ratio pursuant to such
section of such law for a city, town or village for
such year, the commission shall apply the ratio
determined or certified by such board pursuant to
section twelve hundred twelve of the real property tax
law for the most recent year; except where there has
been a bona fide sale of the property within the period
between March fifteenth, nineteen hundred fifty-seven,
and the time of the filing of the application, as the
result of a transaction at arms` length, on normal
financing terms at a readily ascertainable price and
unaffected by special circumstances such as a forced
sale, exchange of property, package deal, wash sale or
sale to cooperative; provided, however, that where
there has been more than one such bona fide sale within
a period of two years prior to the date of the filing
of such application the commission shall disregard the
most recent of such sales if a prior sale within such
two-year period was adopted as the valuation of the
property in a proceeding under this subparagraph. In
determining whether a sale was on normal financing
terms, the commission shall give due consideration to
the following factors:
(i) The ratio of the cash payment received by the
seller to (a) the sales price of the property
and (b) the annual gross income from the
property;
(ii) The total amount of the outstanding mortgages
which are liens against the property (including
purchase money mortgages) as compared with the
equalized assessed valuation of the property;
(iii) The ratio of the sales price to the annual gross
income of the property, with consideration given
to the total amount of rent adjustments
previously granted, exclusive of rent
adjustments because of changes in dwelling
space, services, furniture, furnishings or
equipment, major capital improvements, or
substantial rehabilitation;
(iv) The presence of deferred amortization in
purchase money mortgages, or the assignment of
such mortgages at a discount;
(v) Any other facts and circumstances surrounding
such sale which, in the judgment of the
commission, may have a bearing upon the question
of financing.
No application for adjustment of maximum rent based
upon a sales price valuation shall be filed by the
landlord under this subparagraph prior to six months
from the date of such sale of the property. In
addition, no adjustment ordered by the commission based
upon such sales price valuation shall be effective
prior to one year from the date of such sale. Where,
however, the assessed valuation of the land exceeds
four times the assessed valuation of the buildings
thereon, the commission may determine a valuation of
the property equal to five times the equalized assessed
valuation of the buildings, for the purposes of this
subparagraph. The commission may make a determination
that the valuation of the property is an amount
different from such equalized assessed valuation where
there is a request for a reduction in such assessed
valuation currently pending; or where there has been a
reduction in the assessed valuation for the year next
preceding the effective date of the current assessed
valuation in effect at the time of the filing of the
application. Net annual return shall be the amount by
which the earned income exceeds the operating expenses
of the property, excluding mortgage interest and
amortization, and excluding allowances for obsolescence
and reserves, but including an allowance for
depreciation of two per centum of the value of the
buildings exclusive of the land, or the amount shown
for depreciation of the buildings in the latest
required federal income tax return, whichever is lower;
provided, however, that no allowance for depreciation
of the buildings shall be included where the buildings
have been fully depreciated for federal income tax
purposes or on the books of the owner; or (2) the
landlord who owns no more than four rental units within
the state has not been fully compensated by increases
in rental income sufficient to offset unavoidable
increases in property taxes, fuel, utilities, insurance
and repairs and maintenance, excluding mortgage
interest and amortization, and excluding allowances for
depreciation, obsolescence and reserves, which have
occurred since the federal date determining the maximum
rent or the date the property was acquired by the
present owner, whichever is later; or (3) the landlord
operates a hotel or rooming house or owns a cooperative
apartment and has not been fully compensated by
increases in rental income from the controlled housing
accommodations sufficient to offset unavoidable
increases in property taxes and other costs as are
allocable to such controlled housing accommodations,
including costs of operation of such hotel or rooming
house, but excluding mortgage interest and
amortization, and excluding allowances for
depreciation, obsolescence and reserves, which have
occurred since the federal date determining the maximum
rent or the date the landlord commenced the operation
of the property, whichever is later; or (4) the
landlord and tenant voluntarily enter into a valid
written lease in good faith with respect to any housing
accommodation, which lease provides for an increase in
the maximum rent not in excess of fifteen per centum
and for a term of not less than two years, except that
where such lease provides for an increase in excess of
fifteen per centum, the increase shall be automatically
reduced to fifteen per centum; or (5) the landlord and
tenant by mutual voluntary written agreement agree to a
substantial increase or decrease in dwelling space or a
change in the services, furniture, furnishings or
equipment provided in the housing accommodations;
provided that an owner shall be entitled to a rent
increase where there has been a substantial
modification or increase of dwelling space or an
increase in the services, or installation of new
equipment or improvements or new furniture or
furnishings provided in or to a tenant's housing
accommodation. The permanent increase in the maximum
rent for the affected housing accommodation shall be
one-fortieth of the total cost incurred by the landlord
in providing such modification or increase in dwelling
space, services, furniture, furnishings or equipment,
including the cost of installation, but excluding
finance charges provided further that an owner who is
entitled to a rent increase pursuant to this clause
shall not be entitled to a further rent increase based
upon the installation of similar equipment, or new
furniture or furnishings within the useful life of such
new equipment, or new furniture or furnishings. The
owner shall give written notice to the commission of
any such adjustment pursuant to this clause; or (6)
there has been, since March first, nineteen hundred
fifty, an increase in the rental value of the housing
accommodations as a result of a substantial
rehabilitation of the building or housing accommodation
therein which materially adds to the value of the
property or appreciably prolongs its life, excluding
ordinary repairs, maintenance and replacements; or (7)
there has been since March first, nineteen hundred
fifty, a major capital improvement required for the
operation, preservation or maintenance of the
structure; or (8) there has been since March first,
nineteen hundred fifty, in structures containing more
than four housing accommodations, other improvements
made with the express consent of the tenants in
occupancy of at least seventy-five per centum of the
housing accommodations, provided, however, that no
adjustment granted hereunder shall exceed fifteen per
centum unless the tenants have agreed to a higher
percentage of increase, as herein provided; or (9)
there has been, since March first, nineteen hundred
fifty, a subletting without written consent from the
landlord or an increase in the number of adult
occupants who are not members of the immediate family
of the tenant, and the landlord has not been
compensated therefor by adjustment of the maximum rent
by lease or order of the commission or pursuant to the
federal act; or (10) the presence of unique or peculiar
circumstances materially affecting the maximum rent has
resulted in a maximum rent which is substantially lower
than the rents generally prevailing in the same area
for substantially similar housing accommodations.
In addition to the filing of written statements setting
forth the final rate of equalization concerning
assessment rolls of cities, towns and villages, after
determination thereof by the state board of
equalization and assessment, with the appropriate
officials as now required by law, such board shall also
file a copy of each such statement, duly certified, in
so far as they relate to cities, towns and villages
subject to rent control pursuant to this act, with the
state rent administrator and the chairman of the
temporary state commission to study rents and rental
conditions. Where such board has made computations
indicating a different ratio for subclasses of
residential property, such information shall also be
filed with such rent administrator and the chairman of
such temporary state commission.
(b) The total of all adjustments ordered by the commission
pursuant to (1) and (3) of paragraph (a) of subdivision
four hereof for any individual housing accommodations
shall not exceed fifteen per centum for any twelve
month period; provided, however, that in ordering an
adjustment pursuant to (1), the commission may waive
this limitation where a greater increase is necessary
to make the earned income of the property equal to its
operating expense; provided further, however, that the
maximum rents subject to the allocation requirement of
paragraph (c) hereof shall be increased by such further
additional amount during each succeeding twelve-month
period, not exceeding fifteen per centum of the maximum
rent in effect on the effective date of the original
order of adjustment, until the maximum rents for the
property shall reflect the net annual return provided
for pursuant to (1) hereof, but in no event, however,
shall the total increase ordered for a succeeding
twelve-month period be more than an additional three
per centum of the maximum rent in effect on the
effective date of the original order of adjustment
unless a new application be filed by the landlord.
The commission shall compile and make available for
public inspection at reasonable hours at its principal
office and at each appropriate local office, and shall
file with the chairman of the temporary state
commission to study rents and rental conditions the
manual of accounting procedures and advisory bulletins
applicable to applications under (1), (2) and (3)
hereof, and all amendments thereto.
(c) Any increase in maximum rent shall be apportioned
equitably among all the controlled housing
accommodations in the property. In making such
apportionment and in fixing the increases in maximum
rents the commission shall give due consideration (1)
to all previous adjustments or increases in maximum
rents by lease or otherwise; and (2) to all other
income derived from the property, including income from
space and accommodations not controlled, or the rental
value thereof if vacant or occupied rent-free, so that
there is allocated to the controlled housing
accommodations therein only that portion of the amount
of increase necessary pursuant to (1), (2) or (3) of
paragraph (a) of subdivision four hereof, as is
properly attributable to such controlled
accommodations.
(d) No landlord shall be entitled to any increase in the
maximum rent unless he certifies that he is maintaining
all essential services furnished or required to be
furnished as of the date of the issuance of the order
adjusting the maximum rent and that he will continue to
maintain such services so long as the increase in such
maximum rent continues in effect; nor shall any
landlord be entitled to any increase in the maximum
rent in any case where a municipal department having
jurisdiction certifies that the housing accommodation
is a fire hazard or is in a continued dangerous
condition or detrimental to life or health, or is
occupied in violation of law.
(e) Before ordering any adjustment in maximum rents, a
reasonable opportunity to be heard thereon shall be
accorded the tenant and the landlord.
5. (a) Whenever in the judgment of the commission such
action is necessary or proper in order to effectuate
the purposes of this act, the commission may, by
regulation or order, regulate or prohibit speculative
or manipulative practices or renting or leasing
practices, including practices relating to recovery of
possession, which in the judgment of the commission are
equivalent to or are likely to result in rent increases
inconsistent with the purposes of this act.
(b) Whenever in the judgment of the commission such action
is necessary or proper in order to effectuate the
purposes of this act, the commission may provide
regulations to assure the maintenance of the same
living space, essential services, furniture,
furnishings and equipment as were provided on the date
determining the maximum rent, and the commission shall
have power by regulation or order to decrease the
maximum rent for any housing accommodation with respect
to which a maximum rent is in effect, pursuant to this
act if it shall find that the living space, essential
services, furniture, furnishings or equipment to which
the tenant was entitled on such date has been
decreased.
(c) Whenever any municipal department having jurisdiction
certifies that any housing accommodation is a fire
hazard or is in a continued dangerous condition or
detrimental to life or health, or is occupied in
violation of law, the commission may issue an order
decreasing the maximum rent of such housing
accommodation in such amount as it deems necessary or
proper, until the said municipal department has
certified that the illegal or hazardous condition has
been removed.
6. Any regulation or order issued pursuant to this section may
be established in such form and manner, may contain such
classifications and differentiations, and may provide for
such adjustments and reasonable exceptions as in the
judgment of the commission are necessary or proper in order
to effectuate the purposes of this act. No increase or
decrease in maximum rent shall be effective prior to the
date on which the order therefor is issued.
7. Regulations, orders, and requirements under this act may
contain such provisions as the commission deems necessary to
prevent the circumvention or evasion thereof.
8. The powers granted in this section shall not be used or made
to operate to compel changes in established rental
practices, except where such action is affirmatively found
by the commission to be necessary to prevent circumvention
or evasion of any regulation, order, or requirements under
this act.