Amd §26-511, NYC Ad Cd; amd §§10-b & 5, Emerg Ten Prot Act of 1974; amd Part B §§2 & 3, add §2-a, Chap of
2023 (as proposed in S.2980-C & A.6216-B)
Establishes the legal regulated rent for the combination of two or more vacant apartments; relates to exemptions from rent stabilization on the basis of substantial rehabilitation; relates to clearly defining the scope of the fraud exception to the pre-HSTPA four-year rule for calculating rents and relates to the effectiveness thereof.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8506
SPONSOR: Rosenthal L TITLE OF BILL:
An act to amend the administrative code of the city of New York and the
emergency tenant protection act of nineteen seventy-four, in relation to
establishing the legal regulated rent for the combination of two or more
vacant apartments; to amend the emergency tenant protection act of nine-
teen seventy-four, in relation to exemptions from rent stabilization on
the basis of substantial rehabilitation; to define clearly the scope of
the fraud exception to the pre-HSTPA four-year rule for calculating
rents; and to amend part B of a chapter of the laws of 2023 relating to
defining clearly the scope of the fraud exception to the pre-HSTPA four-
year rule for calculating rents, as proposed in legislative bills
numbers S. 2980-C and A. 6216-B, in relation to claims of fraudulent
schemes and determination relating thereto and in relation to the effec-
tiveness thereof
PURPOSE OR GENERAL IDEA OF BILL:.
The purpose of this bill is to make amendments to Chapter 760 of the
Laws of 2023.
SUMMARY OF PROVISIONS:
Section one of the bill amends parameters within the rent stabilization
law for setting a new legal regulated rent when a regulated unit has
been combined with regulated or unregulated unit(s) to remove a
provision that required when vacant units are altered pursuant to a
regulatory agreement, the initial rent cannot be higher than how the
initial rent would have otherwise been calculated.
Section two of the bill amends parameters within the emergency tenant
protection act for setting a new legal regulated rent when a regulated
unit has been combined with regulated or unregulated unit(s) to remove a
provision that required when vacant units are altered pursuant to a
regulatory agreement, the initial rent cannot be higher than how the
initial rent would have otherwise been calculated.
Section three of the bill amends the emergency tenant protection act to
clarify that an owner claiming exemption from rent stabilization on the
basis of a substantial rehabilitation, where the work for such rehabili-
tation was initiated on or after 1/1/24, shall seek approval from the
division of housing and community renewal within one year of the
completion of the substantial rehabilitation and provides that DHCR may
deny approval of deregulated units due to substantial rehabilitation on
any additional grounds as set forth in regulations.
Section four of the bill clarifies the fraud exception to the look back
period in overcharge cases by providing that when a colorable claim that
an owner has engaged in a fraudulent scheme to deregulate a unit is
properly raised before a court of competent jurisdiction or the DHCR, a
court of competent jurisdiction or the DHCR shall issue a determination
as to whether the owner knowingly engaged in such fraudulent scheme
after a consideration of the totality of the circumstances.
Section five of the bill amends the prior effective date to clarify the
fraud exception applies to pending actions and proceedings.
Section six of the bill relates to the effective date.
JUSTIFICATION:
The Housing Stability and Tenant Protection Act of 2019 (HSTPA) trans-
formed and strengthened many of the state's laws that protect tenants
and provide housing stability. This bill seeks to address certain gaps
in these laws that persist after that landmark legislation in the vari-
ous ways detailed in the summary of provisions above and to make some
technical corrections.
PRIOR LEGISLATIVE HISTORY:
This is a new bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
EFFECTIVE DATE:
This act shall take effect immediately; provided, however that sections
one, two, and three of this act shall take effect on the same date and
in the same manner as part A of a chapter of the laws of 2023 amending
the administrative code of the city of New York and the emergency tenant
protection act of nineteen seventy-four relating to establishing the
legal regulated rent for the combination of two or more vacant apart-
ments, as proposed in legislative bills numbers S. 2980C and A. 6216-B,
takes effect; and provided further, however, that sections four and five
of this act shall take effect on the same date and in the same manner as
part B of a chapter of the laws of 2023 relating to defining clearly the
scope of the fraud exception to the pre-HSTPA four-year rule for calcu-
lating rents, as proposed in legislative bills numbers S. 2980-C and A.
6216-B, takes effect; and provided further, however, that the amendments
to section 26-511 of chapter 4 of title 26 of the administrative code of
the city of New York made by section one of this act shall expire on the
same date as such law expires and shall not affect the expiration of
such law provided under section 26-520 of such law.
STATE OF NEW YORK
________________________________________________________________________
8506
IN ASSEMBLY
January 4, 2024
___________
Introduced by M. of A. L. ROSENTHAL -- read once and referred to the
Committee on Housing
AN ACT to amend the administrative code of the city of New York and the
emergency tenant protection act of nineteen seventy-four, in relation
to establishing the legal regulated rent for the combination of two or
more vacant apartments; to amend the emergency tenant protection act
of nineteen seventy-four, in relation to exemptions from rent stabili-
zation on the basis of substantial rehabilitation; to define clearly
the scope of the fraud exception to the pre-HSTPA four-year rule for
calculating rents; and to amend part B of a chapter of the laws of
2023 relating to defining clearly the scope of the fraud exception to
the pre-HSTPA four-year rule for calculating rents, as proposed in
legislative bills numbers S. 2980-C and A. 6216-B, in relation to
claims of fraudulent schemes and determination relating thereto and in
relation to the effectiveness thereof
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subparagraph (d) of paragraph 15 of subdivision c of
2 section 26-511 of the administrative code of the city of New York, as
3 added by part A of a chapter of the laws of 2023 amending the adminis-
4 trative code of the city of New York and the emergency tenant protection
5 act of nineteen seventy-four relating to establishing the legal regu-
6 lated rent for the combination of two or more vacant apartments, as
7 proposed in legislative bills numbers S. 2980-C and A. 6216-B, is
8 amended to read as follows:
9 (d) where the vacant housing accommodations are combined, modified,
10 divided or the dimension of such housing accommodation otherwise altered
11 and these changes are being made pursuant to a preservation regulatory
12 agreement with a federal, state or local governmental agency or instru-
13 mentality, the rent stabilized rents charged thereafter shall be based
14 on an initial rent set by such agency or instrumentality[, provided such
15 initial rent shall not be higher than if the initial rent was calculated
16 in accordance with subparagraphs (a), (b), (e) or (f) of this para-
17 graph].
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07250-13-4
A. 8506 2
1 § 2. Subparagraph (iv) of paragraph 13 of subdivision (a) of section
2 10-b of section 4 of chapter 576 of the laws of 1974, constituting the
3 emergency tenant protection act of nineteen seventy-four, as added by
4 part A of a chapter of the laws of 2023 amending the administrative code
5 of the city of New York and the emergency tenant protection act of nine-
6 teen seventy-four relating to establishing the legal regulated rent for
7 the combination of two or more vacant apartments, as proposed in legis-
8 lative bills numbers S. 2980-C and A. 6216-B, is amended to read as
9 follows:
10 (iv) where the vacant housing accommodations are combined, modified,
11 divided or the dimension of such housing accommodation otherwise altered
12 and these changes are being made pursuant to a preservation regulatory
13 agreement with a federal, state or local governmental agency or instru-
14 mentality, the rent stabilized rents charged thereafter shall be based
15 on an initial rent set by such agency or instrumentality[, provided such
16 initial rent shall not be higher than if the initial rent was calculated
17 in accordance with subparagraphs (i), (ii), (v) or (vi) of this para-
18 graph].
19 § 3. Paragraph 5 of subdivision a of section 5 of section 4 of chapter
20 576 of the laws of 1974, constituting the emergency tenant protection
21 act of nineteen seventy-four, as amended by part A of a chapter of the
22 laws of 2023 amending the administrative code of the city of New York
23 and the emergency tenant protection act of nineteen seventy-four relat-
24 ing to establishing the legal regulated rent for the combination of two
25 or more vacant apartments, as proposed in legislative bills numbers S.
26 2980-C and A. 6216-B, is amended to read as follows:
27 (5) housing accommodations in buildings completed or buildings
28 substantially rehabilitated as family units on or after January first,
29 nineteen hundred seventy-four; provided that an owner claiming exemption
30 from rent stabilization on the basis of a substantial rehabilitation,
31 where the work for such rehabilitation was initiated on or after the
32 first day of January, two thousand twenty-four, shall seek approval from
33 state division of housing and community renewal within one year of the
34 completion of the substantial rehabilitation, [or for any building
35 previously alleged to have been substantially rehabilitated before the
36 effective date of the chapter of the laws of two thousand twenty-three
37 that amended this paragraph, within six months of such effective date,]
38 and ultimately obtain such approval, which shall be denied on the
39 following grounds:
40 (a) the owner or its predecessors in interest have engaged in harass-
41 ment of tenants in the five years preceding the completion of the
42 substantial rehabilitation;
43 (b) the building was not in a substandard or seriously deteriorated
44 condition requiring substantial rehabilitation; or
45 (c) any additional grounds as set forth by regulation;
46 § 4. Section 2 of part B of a chapter of the laws of 2023 relating to
47 defining clearly the scope of the fraud exception to the pre-HSTPA four-
48 year rule for calculating rents, as proposed in legislative bills
49 numbers S. 2980-C and A. 6216-B, is amended, and a new section 2-a is
50 added to read as follows:
51 § 2. [(a)] Nothing in this act, or the HSTPA, or prior law, shall be
52 construed as restricting, impeding or diminishing the use of records of
53 any age or type, going back to any date that may be relevant, for
54 purposes of determining the status of any apartment under the rent
55 stabilization law[;
A. 8506 3
1 (b) With respect to the calculation of legal rents for the period
2 either prior to or subsequent to June 14, 2019, an owner shall be deemed
3 to have committed fraud if the owner shall have committed a material
4 breach of any duty, arising under statutory, administrative or common
5 law, to disclose truthfully to any tenant, government agency or judicial
6 or administrative tribunal, the rent, regulatory status, or lease infor-
7 mation, for purposes of claiming an unlawful rent or claiming to have
8 deregulated an apartment, whether or not the owner's conduct would be
9 considered fraud under the common law, and whether or not a complaining
10 tenant specifically relied on untruthful or misleading statements in
11 registrations, leases, or other documents. The following conduct shall
12 be presumed to have been the product of such fraud: (1) the unlawful
13 deregulation of any apartment, including such deregulation as results
14 from claiming an unlawful increase such as would have brought the rent
15 over the deregulation threshold that existed under prior law, unless the
16 landlord can prove good faith reliance on a directive or ruling by an
17 administrative agency or court; or (2) beginning October 1, 2011, fail-
18 ing to register, as rent stabilized, any apartment in a building receiv-
19 ing J-51 or 421-a benefits.] or for such other purposes permitted under
20 law or the regulations of the New York State division of housing and
21 community renewal.
22 § 2-a. When a colorable claim that an owner has engaged in a fraudu-
23 lent scheme to deregulate a unit is properly raised as part of a
24 proceeding before a court of competent jurisdiction or the state divi-
25 sion of housing and community renewal, a court of competent jurisdiction
26 or the state division of housing and community renewal shall issue a
27 determination as to whether the owner knowingly engaged in such fraudu-
28 lent scheme after a consideration of the totality of the circumstances.
29 In making such determination, the court or the division shall consider
30 all of the relevant facts and all applicable statutory and regulatory
31 law and controlling authorities, provided that there need not be a find-
32 ing that all of the elements of common law fraud, including evidence of
33 a misrepresentation of material fact, falsity, scienter, reliance and
34 injury, were satisfied in order to make a determination that a fraudu-
35 lent scheme to deregulate a unit was committed if the totality of the
36 circumstances nonetheless indicate that such fraudulent scheme to dereg-
37 ulate a unit was committed.
38 § 5. Section 3 of part B of a chapter of the laws of 2023 relating to
39 defining clearly the scope of the fraud exception to the pre-HSTPA four-
40 year rule for calculating rents, as proposed in legislative bills
41 numbers S. 2980-C and A. 6216-B, is amended to read as follows:
42 § 3. This act shall take effect immediately and shall apply to any
43 action or proceeding in any court or any application, complaint or
44 proceeding before an administrative agency on the effective date of this
45 act.
46 § 6. This act shall take effect immediately; provided, however that
47 sections one, two, and three of this act shall take effect on the same
48 date and in the same manner as part A of a chapter of the laws of 2023
49 amending the administrative code of the city of New York and the emer-
50 gency tenant protection act of nineteen seventy-four relating to estab-
51 lishing the legal regulated rent for the combination of two or more
52 vacant apartments, as proposed in legislative bills numbers S. 2980-C
53 and A. 6216-B, takes effect; and provided further, however, that
54 sections four and five of this act shall take effect on the same date
55 and in the same manner as part B of a chapter of the laws of 2023 relat-
56 ing to defining clearly the scope of the fraud exception to the
A. 8506 4
1 pre-HSTPA four-year rule for calculating rents, as proposed in legisla-
2 tive bills numbers S. 2980-C and A. 6216-B, takes effect; and provided
3 further, however, that the amendments to section 26-511 of chapter 4 of
4 title 26 of the administrative code of the city of New York made by
5 section one of this act shall expire on the same date as such law
6 expires and shall not affect the expiration of such law provided under
7 section 26-520 of such law.
