HCR-28-12-00003-P Regulations Govern the Implementation of the State Rent Control Laws

7/11/12 N.Y. St. Reg. HCR-28-12-00003-P

NEW YORK STATE REGISTER

VOLUME XXXIV, ISSUE 28

July 11, 2012

RULE MAKING ACTIVITIES

DIVISION OF HOUSING AND COMMUNITY RENEWAL

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. HCR-28-12-00003-P

Regulations Govern the Implementation of the State Rent Control Laws

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Amendment of sections 2100.9(v), (w), 2102.3(b)(1)(i)(b), 2110.2, 2110.3, 2110.4 and 2110.5 of Title 9 NYCRR.

Statutory authority:

Emergency Housing Rent Control Law, L. 1946, ch. 274, subd. 4(a), as amd. by L. 1950, ch. 250, as amd., as transferred to the Division of Housing and Community Renewal by L. 1964, ch. 244 and L. 2011, ch. 97, part B, section 44

Subject:

Regulations govern the implementation of the State Rent Control Laws.

Purpose:

To comply with the L. 2011, ch. 97, part B.

Text of proposed rule:

9 NYCRR § 2100.9(v)(2) is amended to read as follows and paragraphs (3), (4) and (5) are renumbered (5), (6) and (7) and new paragraphs (3) and (4) are added and renumbered paragraph (6) is further amended to read as follows:

(2) became or become vacant on or after June 19, 1997 but before June 24, 2011, with a maximum rent of $2,000 or more per month;

(3) became or become vacant on or after June 24, 2011, with a maximum rent of $2,500 or more per month;

(4) exemption pursuant to this subdivision shall apply regardless of whether the next tenant in occupancy or any subsequent tenant in occupancy is charged or pays less than the applicable amount qualifying for deregulation as provided in this subdivision;

[(3)](5) [renumbered only - text remains the same]

[(4)](6) during the period of effectiveness of an order issued pursuant to section 2102.4 of this Title for failure to maintain essential services, which lowers the maximum rent below [$2,000 per month] the applicable amount qualifying for deregulation as provided in this subdivision, during the time period specified in this subdivision, a vacancy shall not qualify the housing accommodation for exemption under this subdivision;

[(5)](7) [renumbered only - text remains the same]

9 NYCRR § 2100.9(w)(1) is amended to read as follows and paragraph (2) is renumbered (3) and new paragraph (2) is added as follows:

(1) Upon the issuance of an order by the commission, pursuant to the procedures set forth in Part 2110 of this Title, including orders resulting from default, housing accommodations which have a maximum rent of $2,000 or more per month as of October 1, 1993 or as of any date on or after January 1, 1998, and which are occupied by persons who had a total annual income in excess of $250,000 per annum for each of the two preceding calendar years, where the first of such two preceding calendar years is 1992 through 1995 inclusive, and in excess of $175,000, when the first of such two preceding calendar years is 1996 [or later] through 2009 inclusive, with total annual income being defined in and subject to the limitations and process set forth in Part 2110 of this Title.

(2) Upon the issuance of an order by the commission, pursuant to the procedures set forth in Part 2110 of this Title, including orders resulting from default, housing accommodations which have a maximum rent of $2,500 or more per month as of July 1, 2011 or later and which are occupied by persons who had a total annual income in excess of $200,000 per annum for each of the two preceding calendar years, where the first of such two preceding calendar years is 2010 or later, with total annual income being defined in and subject to the limitations and process set forth in Part 2110 of this Title.

[(2)](3) In determining whether the maximum rent for a housing accommodation is [$2,000 per month or more,] the applicable amount qualifying for deregulation, the standards set forth in subdivision (v) of this section shall be applicable; to be eligible for exemption under this subdivision, the maximum rent must continuously be [$2,000 or more per month] the applicable amount qualifying for deregulation pursuant to subdivision (v), from the landlord's service of the income certification form provided for in section 2110.2 of this Title upon the tenant to the issuance of an order deregulating the housing accommodation.

9 NYCRR § 2102.3(b)(1)(i)(b)is amended to read as follows:

(b) on or after July 7, 1993, the landlord and tenant may, by mutual voluntary written agreement, agree to a substantial increase in dwelling space or a change in the services, furniture, furnishings or equipment provided in the housing accommodation; or the tenant has accepted and is obtaining the benefit of increased services, furniture, furnishings or equipment. In such case, an adjustment of the maximum rent shall be available without the approval of the Administrator, and shall include [be equal to 1/40th of] the total cost incurred by the landlord in providing such modification or increase, including the cost of installation, but excluding finance charges. Prior to September twenty-fourth, two thousand eleven, the rent adjustment shall be 1/40th of the cost of the improvement and on or after September twenty-fourth, two thousand eleven, the rent adjustment shall be 1/40th of the cost of the improvement in buildings and complexes containing 35 or fewer housing accommodations and 1/60th of the cost of the improvement in buildings and complexes of more than 35 housing accommodations. A landlord who is entitled to a rent adjustment pursuant to this paragraph, 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 landlord shall give written notice to the Commission of any such adjustment; or

9 NYCRR § 2110.2 intro paragraph and (a)(2) are amended to read as follows:

On or before the first day of May in each calendar year commencing with May 1, 1994 through May 1, 2011, the landlord of each housing accommodation for which the maximum rent is $2,000 or more per month or commencing with May 1, 2012, for which the maximum rent is $2,500 or more per month may provide the tenant or tenants residing therein with an income certification form (ICF) prepared by the commission on which such tenant or tenants shall identify all persons referred to in section 2110.1(b) of this Title, and shall certify whether the total annual income is in excess of $250,000 in each of the two preceding calendar years, where the first of such two preceding calendar years is 1992 through 1995 inclusive, and 175,000 where the first of such two preceding calendar years is 1996 [or later] through 2009 inclusive, and $200,000, where the first of such two preceding calendar years is 2010 or later. Such ICF shall not require disclosure of any income information other than whether the aforementioned threshold has been exceeded.

(a)(2) only tenants residing in housing accommodations which have a maximum rent [of $2,000 or more per month] equal to or exceeding the applicable amount qualifying for deregulation, provided in this section are required to complete the certification form;

9 NYCRR § 2110.3 is amended to read as follows:

In the event that the total annual income as certified is in excess of $250,000, [or] $175,000, or $200,000 in each such year, whichever applies, as provided in section 2110.2 of this Part, the landlord may file an owner's petition for deregulation (OPD), accompanied by the ICF, with the commission on or before June 30 of such year. [the rest remains the same]

9 NYCRR § 2110.4(a) and (b) are amended to read as follows:

(a) In the event that the tenant or tenants either fail to return the completed ICF to the landlord on or before the date required by subdivision (d) of section 2110.2 of this Part, or the landlord disputes the certification returned by the tenant or tenants, the landlord may, on or before June 30 of such year, file an owner's petition for deregulation (OPD) which petitions the commission to verify, pursuant to section 171-b of the Tax Law, whether the total annual income exceeds $250,000, [or] $175,000, or $200,000 in each of the two preceding calendar years, whichever applies, as provided in section 2110.2 of this Part.

(b) Within 20 days after the filing of such request with the commission, the commission shall notify the tenant or tenants that such tenant or tenants must provide the commission with such information as the commission and the DTF shall require to verify whether the total annual income exceeds $250,000, [or] $175,000, or $200,000, whichever applies, in each such year.

9 NYCRR § 2110.5 is amended to read as follows:

If the DTF determines that the total annual income is in excess of $250,000, [or] $175,000 or $200,000 in each of the two preceding calendar years, whichever applies as provided in section 2110.2 of this Part, the commission shall, on or before November 15 of the year in which DTF makes such determination, notify the landlord and tenants of the results of such verification. [the rest remains the same]

Text of proposed rule and any required statements and analyses may be obtained from:

Gary R. Connor, General Counsel, Division of Housing and Community Renewal, 25 Beaver Street, 7th Floor, New York, New York 10004, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

This action was not under consideration at the time this agency's regulatory agenda was submitted.

Regulatory Impact Statement

1. STATUTORY AUTHORITY

The Emergency Housing Rent Control Law, Laws of 1946, Chap 274, subdivision 4(a), as amended by the Laws of 1950, Chap. 250, as amended, as transferred to the Division of Housing and Community Renewal (DHCR) by the Laws of 1964, Chap. 244, provides the authority to the DHCR to amend the State Rent and Eviction Regulations (SRER) and Section 44 of Chap. 97, Par B of the Laws of 2011 enables DHCR to promulgate rules and regulations to implement and enforce all provisions of such law and any law renewed or continued by that act which includes the Emergency Housing Rent Control Law (RCL) which is implemented through the SRER.

2. LEGISLATIVE OBJECTIVES

The RCL requires, because of a serious public emergency, the regulation of residential rents and evictions to prevent the exaction of unreasonable rents and rent increases and to forestall other disruptive practices to produce threats to public health, safety and general health. The RCL is further designed to assure that any transition from regulation to normal market bargaining with respect to such landlords and tenants is administered with due regard to these emergency conditions. See RCL § 8581(1). DHCR is specifically authorized to promulgate regulations by RCL § 8584(4)(a), and by Chapter 97 of the Laws of 2011 was further empowered to promulgate regulations to implement and enforce the provisions of that chapter and any law continued or renewed by that chapter. The proposed rule making is to implement those changes specifically mandated by Chapter 97, Part B of the Laws of 2011: the raising of the threshold amount for deregulation based on vacancies, as well as raising of the thresholds for high rent/high income deregulation (both monthly rental amounts and household annual income); the modification of the apartment improvement increase formula for all buildings except those with 35 or fewer units.

3. NEEDS AND BENEFITS

The rule making will implement provisions of Chapter 97 mentioned above. Specifically, the SRER amendments reflect the raising of the threshold amount for deregulation based on vacancies, as well as raising of the thresholds for high rent/high income deregulation (both monthly rental amounts and household annual income) that were increased by that law. As set forth in the legislative memorandum (McKinney's Session Laws 2011 A-111 through A-116), the thresholds for deregulation have not increased in seventeen years. In addition, in accord with legislative directive, the apartment improvement increase formula has been modified for all buildings except those with 35 or fewer units.

4. COSTS

The regulated parties are residential tenants and the owners of the rent controlled housing accommodations in which such tenants reside. The amended regulations do not impose any new program, service, duty or responsibility upon any state agency or instrumentality thereof, local government or business, and therefore impose no costs on those entities which are not already required through the enactment of the RCL generally or through these amended statutory provisions referenced above. For the owners of regulated housing accommodations, who may need to be initially more vigilant to assure their compliance with these new statutory requirements, costs should be relatively minimal. In fact, compliance costs are already a generally-accepted expense of owning regulated housing. Similarly, tenants will not incur any additional costs through implementation of the proposed regulations but would be best served by being aware of these changes.

5. LOCAL GOVERNMENT MANDATES

The proposed rule making will not impose any new program, service, duty or responsibility upon any level of local government.

6. PAPERWORK

The amendments will not increase the paperwork burden on either regulated parties or the agency as the statutory amendments implemented here simply change substantive thresholds for existing applications and methodologies for increasing rent.

7. DUPLICATION

The amendments do not add any provisions that duplicate any known State or federal requirements except to the extent required by law. There are instances where a rent controlled property participates in another State, city or federal housing program. In those instances there may be a need to comply with the State Rent and Eviction Regulation as well as the mandates of that city, state or federal program.

8. ALTERNATIVES

The proposed amendments implement statutory provisions not yet reflected in the regulations. An area that may facially seem to provide a choice of alternative is that the maintenance of the present apartment improvement compensation formula for smaller properties is defined both in terms of complexes as well as buildings. However a distinction based on both is simply a recognition of what constitutes a "building" for rent regulation purposes. In part through statute, and in part through long term usage, as upheld judicially, rent regulation treats ostensibly separate structures as a dingle building where the common factors that unite them into a single entity, outweigh those that divide them. Applying this same standard here is the only reasonable alternative in keeping with the statutory distinction for using a different apartment improvement compensation formula that is in fact based on the number of units.

9. FEDERAL STANDARDS

The proposed amendments do not exceed any known minimum federal standards.

10. COMPLIANCE SCHEDULE

It is not anticipated that regulated parties will require any significant additional time to comply with the proposed rules.

Regulatory Flexibility Analysis

1. EFFECT OF RULE

The State Rent and Eviction Regulations (SRER) apply only to housing units located in those communities outside New York City that are subject to the Emergency Housing Rent Control Law. The small businesses that would be affected by these proposed amendments are the owners of small numbers of regulated housing units, at least one of which is rent controlled.

2. COMPLIANCE REQUIREMENTS

The proposed amendments would not require small business that own regulated residential housing units to perform any additional recordkeeping or reporting. Such businesses will continue to need to keep records of rent increases and improvements made to the properties in order to qualify for rent increases authorized under the proposed changes.

3. PROFESSIONAL SERVICES

The proposed amendments do not require small business to obtain any new or additional professional services.

4. COMPLIANCE COSTS

There is no indication that the proposed amendments will impose any significant, initial costs upon small business or local governments. It is expected that the cost of compliance with the new rules will be no different than the cost of compliance with existing rules.

5. ECONOMIC AND TECHNOLOGICAL FEASIBILITY

Compliance is not anticipated to require any unusual, new or burdensome technological applications.

6. MINIMIZING ADVERSE IMPACT

These proposed amendments, required by statute, do not impair the rights of small business owners, and they have no adverse economic impact on such parties or any local government. In fact the regulations, with respect to the modifications to the apartment improvement compensation formula, in accordance with law, create an exception that will be advantageous to small businesses. Otherwise, the statutes being implemented do not create different regulatory standards for small businesses. To the extent the approaches suggested in SAPA section 202-b are otherwise appropriate, present procedures take these into account.

7. SMALL BUSINESS AND LOCAL GOVERNMENT PARTICIPATION

Since the passage of the statutes on which these regulations are based, DHCR's Office of Rent Administration held over fifty meetings with community groups, owner and tenant advocacy organizations and local officials where the implementation of those provisions was one of the matters under discussion.

Rural Area Flexibility Analysis

The proposed rules are not anticipated to impose any reporting, recordkeeping, or other compliance requirements on public or private entities located in any rural area pursuant to Subdivision 10 of SAPA Section 102.

Job Impact Statement

It is apparent from the text of the rules, required by statutory amendment, that there will be no adverse impact on jobs and employment opportunities by the promulgation of these regulations.