Wednesday, May 20, 2015

Assembly Introduces Omnibus Rent Bill - Good but needs more

The State Assembly's plan is to pass this bill on May 19, 2015. 

The Assembly Democrats introduced an omnibus bill renewing the state rent and coop laws and making numerous changes to both the state and NYC rent laws. The changes are pro-tenant, although some of the changes are not adequate.

A7526 is sponsored by Assembly Housing Committee chairman Keith Wright (D-Manhattan) and co-sponsored by numerous other Democratic Assembly Members. (See list at end of this memo.)

A7526 extends state rent control and the Emergency Tenant Protection Act of 1974 for four years, to June 15, 2019. It also extends the NYC and three-county coop conversion laws to the same sunset.

2019 is the worst possible sunset year in terms of leverage. 2019 is after the next two legislative elections, and after the next gubernatorial election. Our friends in the Assembly are for some reason choosing to put tenants at a political disadvantage. This is unacceptable. Tenants should insist on a two-year extender, to 2017.

Other features of the bill, based on a very quick analysis:

 The preferential rent loophole is closed.

 The bill increases the amounts of possible fines for landlords found guilty of harassing tenants.

 The bill repeals Vacancy Deregulation amendments in all four of the rent laws: state rent control, ETPA, NYC rent control, and NYC rent stabilization.

 The bill re-regulates any apartment currently renting for less than $3,500 (three suburban counties of Nassau, Westchester andRockland) or for less than $5,000 (New York City). (There seems to be a technical drafting error in this section of the bill.)

 The bill raises the income threshold for high income deregulation from $200,000 annual household income to $225,000 annual household income, and the rent trigger threshold for means testing from $2,500 to $3,500 monthly rent, effective July 1, 2015.

 The bill tightens the rules affecting owner use evictions. Landlords would no longer be able to empty entire buildings by claiming that they want all the apartments for their family, but would be limited to claiming one apartment. The superior protections currently applicable to NYC rent control, state rent control and suburban rent stabilization are imported into NYC rent stabilization, including the requirement that the landlord demonstrate “immediate and compelling necessity” for the apartment. The provision exempting tenants from eviction for owner use if they have lived in the building for 20 years or longer is reduced to 15 years.

 Instead of outright repeal of the “statutory vacancy bonus,” the bonus is reduced from 20 percent to 7.5 percent. This is bad.

 Municipalities are authorized to bring former project-based Section 8 buildings into rent stabilization coverage even if they were constructed after December 31, 1973. Landlords are barred from applying for rent hikes based on “unique or peculiar circumstances.”

 The Major Capital Improvement provisions of the four rent laws are reformed, making MCI rent increases temporary surcharges, which disappear once the landlord has recovered the cost of the improvement, plus the surcharge must be listed as a separate line on the rentbill with no compounding. The J-51 offset for NYC rent control and rent stabilization is increased from 50 to 100 percent of the J-51 tax benefit collected by the landlord. MCI rent increases are also reduced by any grant from the NYS Energy Research and Development Authority. The 6 percent cap on annual collectability is extended to the three suburban ETPA counties, replacing the current 15 percent cap.

 All Individual Apartment Improvements would be amortized over 84 months instead of the current 40-month/60-month standard depending on the building size. The IAI rent hike would have to be a separate surcharge on the rent bill, with no compounding, but the rent increase would still be permanent. (The sponsor’s memo states that IAI rent hikes are to cease after the cost of the improvement is recovered, but the bill does not repeal the current statutory language referring to IAIs as permanent rent increases, and the IAI sections of the bill lack the specific language contained in the MCI sections, to the effect that the rent increase “shall cease when the owner has recovered the cost” of the improvement. Perhaps this is a drafting error.) No IAI rent hikes are allowed for cosmetic improvements. The billincludes new administrative requirements that could increase, somewhat, oversight of IAIs by the NYS Division of Housing and Community Renewal. DHCR is required to publish a schedule of reasonable costs for IAIs.

 The alternative hardship formula under rent stabilization is changed to require a new landlord to own the property for six years before being allowed to apply for hardship, increased from the current three-year standard.

 Municipalities are authorized to bring former Mitchell-Lama rentals under rent stabilization coverage even if they were constructed after December 31, 1973. Landlords are barred from applying for rent hikes based on “unique or peculiar circumstances.”

 Judges or hearing officers are authorized to consider evidence more than four years old when considering cases of fraud or violation of DHCR orders. The court or DHCR can consider evidence from any year where the landlord has failed to file a timely rent registration as required by law. This is a partial piercing of the four-year rule incorporated into the 1997 renewal bill.

 Minor changes are made to the rent registration system, but the meaningful penalties for failure by landlords to register or for filing a fraudulent registration that were repealed in 1993 are not restored.

 Landlords will be required to give new tenants a written explanation of how the rent was legally increased over the previous four years.

 A new Class A misdemeanor is created, harassment in the second degree, in cases where landlords create bad conditions designed to force rent-regulated tenants to vacate.

► State and city rent control laws are amended to cap rent increases at the average rent adjustments over the last five years adopted by the NYC or suburban rent guidelines board; city rent control is amended by repealing the fuel cost pass-along and the labor cost pass-along.

► Section 235-e of the Real Property Law is amended to tighten the requirement that the landlord give a tenant a written receipt for the rent, if the tenant requests it.         

► Two changes are made to the NYC Loft Law: The deadline prohibiting tenants from applying for coverage after March 2014 is lifted, and pro-tenant amendments enacted in 2013 are made permanent.

► The Civil Practice Law and Rules are amended to require a certificate of merit to be signed by an attorney for the landlord, or by the landlord if not represented by an attorney, attesting to the good faith of the landlord in any eviction proceeding or in any action to deregulate a rent-regulated apartment.

This analysis is hasty, and there are undoubtedly some errors of interpretation.

The following Assembly Democrats are co-prime sponsors of A7526:

Denny Farrell (Manhattan)
Daniel O’Donnell (Manhattan)
Jeff Aubry (Queens)
Marcos Crespo (Bronx)
Deborah Glick (Manhattan)
Sheldon Silver (Manhattan)
Brian Kavanagh (Manhattan)
Richard Gottfried (Manhattan)
Joseph Lentol (Brooklyn)
Walter Mosley (Brooklyn)
Gary Pretlow (Westchester)
Linda Rosenthal (Manhattan)
Rodneyse Bichotte (Brooklyn)
Vivian Cook (Queens)
Maritza Davila (Brooklyn)
Jeff Dinowitz (Bronx)
Latoya Joyner (Bronx)
Guillermo Linares (Manhattan)
Francisco Moya (Queens)
Victor Pichardo (Bronx)
Annette Robinson (Brooklyn)
Robert Rodriguez (Manhattan)
Luis Sepulveda
Latrice Walker
Tom Abinanti (Westchester)
Michael Benedetto (Bronx)
Bill Colton (Brooklyn)
Michael DenDekker (Queens)
Ellen Jaffee (Rockland)
Alec Brook-Krasny (Brooklyn)
Felix Ortiz (Brooklyn)

There is not yet a “same as” bill in the State Senate.

Respectfully submitted,

Michael McKee
Tenants Political Action Committee

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