N.Y. ETP Law § 10-B — New York Code / Act ETP / Section 10-B
Major capital improvements and individual apartment improvements in rent regulated units
Status: in_force

§ 10-b. Major capital improvements and individual apartment\nimprovements in rent regulated units. (a) Notwithstanding any other\nprovision of law to the contrary, the division of housing and community\nrenewal, the "division", shall promulgate rules and regulations\napplicable to all rent regulated units that shall:\n  1. establish a schedule of reasonable costs for major capital\nimprovements, which shall set a ceiling for what can be recovered\nthrough a temporary major capital improvement increase, based on the\ntype of improvement and its rate of depreciation;\n  2. establish the criteria for eligibility of a temporary major capital\nimprovement increase including the type of improvement, which shall be\nessential for the preservation, energy efficiency, functionality or\ninfrastructure of the entire building, including heating, windows,\nplumbing and roofing, but shall not be for operational costs or\nunnecessary cosmetic improvements. Allowable improvements must\nadditionally be depreciable pursuant to the Internal Revenue Service,\nother than for ordinary repairs, that directly or indirectly benefit all\ntenants; and no increase shall be approved for group work done in\nindividual apartments that is otherwise not an improvement to an entire\nbuilding. Only such costs that are actual, reasonable, and verifiable\nmay be approved as a temporary major capital improvement increase;\n  3. require that any temporary major capital improvement increase\ngranted pursuant to these provisions be reduced by an amount equal to\n(i) any governmental grant received by the landlord, where such grant\ncompensates the landlord for any improvements required by a city, state\nor federal government, an agency or any granting governmental entity to\nbe expended for improvements and (ii) any insurance payment received by\nthe landlord where such insurance payment compensates the landlord for\nany part of the costs of the improvements;\n  4. prohibit temporary major capital improvement increases for\nbuildings with outstanding hazardous or immediately hazardous violations\nof the Uniform Fire Prevention and Building Code (Uniform Code), New\nYork City Fire Code, or New York City Building and Housing Maintenance\nCodes, if applicable;\n  5. prohibit individual apartment improvement increases for housing\naccommodations with outstanding hazardous or immediately hazardous\nviolations of the Uniform Fire Prevention and Building Code (Uniform\nCode), New York City Fire Code, or New York City Building and Housing\nMaintenance Codes, if applicable;\n  6. prohibit temporary major capital improvement increases for\nbuildings with thirty-five per centum or fewer rent-regulated units;\n  7. establish that temporary major capital improvement increases shall\nbe fixed to the unit and shall cease thirty years from the date the\nincrease became effective. Temporary major capital improvement increases\nshall be added to the legal regulated rent as a temporary increase and\nshall be removed from the legal regulated rent thirty years from the\ndate the increase became effective inclusive of any increases granted by\nthe local rent guidelines board;\n  8. establish that temporary major capital improvement increases shall\nbe collectible prospectively on the first day of the first month\nbeginning sixty days from the date of mailing notice of approval to the\ntenant.  Such notice shall disclose the total monthly increase in rent\nand the first month in which the tenant would be required to pay the\ntemporary increase. An approval for a temporary major capital\nimprovement increase shall not include retroactive payments. The\ncollection of any increase shall not exceed two percent in any year from\nthe effective date of the order granting the increase over the rent set\nforth in the schedule of gross rents, with collectability of any dollar\nexcess above said sum to be spread forward in similar increments and\nadded to the rent as established or set in future years. Upon vacancy,\nthe landlord may add any remaining balance of the temporary major\ncapital improvement increase to the legal regulated rent.\nNotwithstanding any other provision of the law, for any renewal lease\ncommencing on or after June 14, 2019, the collection of any rent\nincreases due to any major capital improvements approved on or after\nJune 16, 2012 and before June 16, 2019 shall not exceed two percent in\nany year for any tenant in occupancy on the date the major capital\nimprovement was approved;\n  9. ensure that the application procedure for temporary major capital\nimprovement increases shall include an itemized list of work performed\nand a description or explanation of the reason or purpose of such work;\n  10. provide, that where an application for a major capital improvement\nrent increase has been filed, a tenant shall have sixty days from the\ndate of mailing of a notice of a proceeding in which to answer or reply;\n  11. establish a notification and documentation procedure for\nindividual apartment improvements that requires an itemized list of work\nperformed and a description or explanation of the reason or purpose of\nsuch work, inclusive of photographic evidence documenting the condition\nprior to and after the completion of the performed work. Provide for the\ncentralized electronic retention of such documentation and any other\nsupporting documentation to be made available in cases pertaining to the\nadjustment of legal regulated rents; and\n  12. establish a form in the top six languages other than English\nspoken in the state according to the latest available data from the U.S.\nBureau of Census for an individual apartment improvement rent increase\nfor a tenant in occupancy which shall be used by landlords to obtain\nwritten informed consent that shall include the estimated total cost of\nthe improvement and the estimated monthly rent increase. Such consent\nshall be executed in the tenant's primary language. Such form shall be\ncompleted and preserved in the centralized electronic retention system\nto be operational by June 14, 2020, provided further that any changes to\nthe form required due to the individual apartment improvement being\npermanent shall be completed as of October 14, 2024. Nothing herein\nshall relieve a landlord, lessor, or agent thereof of such person's duty\nto retain proper documentation of all improvements performed or any rent\nincreases resulting from said improvements.\n  13. (i) where an owner combines two or more vacant housing\naccommodations or combines a vacant housing accommodation with an\noccupied housing accommodation, such initial rent for such new housing\naccommodation shall be the combined legal rent for both previous housing\naccommodations, subject to any applicable guideline increases and any\nother increases authorized by this chapter including any individual\napartment improvement increases applicable for both housing\naccommodations. If an owner combines a rent regulated accommodation with\nan apartment not subject to rent regulation, the resulting apartment\nshall be subject to this act. If an owner increases the area of an\napartment not subject to rent regulation by adding space that was\npreviously part of a rent regulated apartment, each apartment shall be\nsubject to this act.\n  (ii) where an owner substantially increases the outer dimension of a\nvacant housing accommodation, such initial rent shall be the prior rent\nof such housing accommodation, increased by a percentage that is equal\nto the percentage increase in the dwelling space and such other\nincreases authorized by this act including any applicable guideline\nincrease and individual apartment improvement increase that could be\nauthorized for the unit prior to the alteration of the outer dimensions.\n  (iii) notwithstanding subparagraphs (i) and (ii) of this paragraph,\nsuch increases may be denied based on the occurrence of such vacancy due\nto harassment, fraud, or other acts of evasion which may require that\nsuch rent be set in accordance with section twelve of this act.\n  (iv) where the vacant housing accommodations are combined, modified,\ndivided or the dimension of such housing accommodation otherwise altered\nand these changes are being made pursuant to a preservation regulatory\nagreement with a federal, state or local governmental agency or\ninstrumentality, the rent stabilized rents charged thereafter shall be\nbased on an initial rent set by such agency or instrumentality.\n  (v) where an owner substantially decreases the outer dimensions of a\nvacant housing accommodation, such initial rent shall be the prior rent\nof such housing accommodation, decreased by the same percentage the\nsquare footage of the original apartment was decreased by and such other\nincreases authorized by this act including any applicable guideline\nincrease and individual apartment improvement increase that could be\nauthorized for the apartment prior to the alteration of the outer\ndimensions.\n  (vi)(1) when an owner combines two or more rent regulated apartments,\nthe owner may use each of the previous apartments' remaining individual\napartment improvement allowances for the purposes of a temporary\nindividual apartment improvement rent increase. The owner shall\nsubsequently designate a surviving apartment for the purposes of\nregistration that has the same apartment number as one of the prior\napartments. If that prior apartment has any reimbursable individual\napartment improvement money remaining after the combination, that money\nmay be reimbursed for future individual apartment improvements\nundertaken within the subsequent fifteen years following the\ncombination.\n  (2) in order for an owner to qualify for a temporary individual\napartment improvement rent increase when apartments are combined, the\nrequirements for an individual apartment improvement, including all\nnotification requirements under this act shall be met.\n  (vii) owners shall maintain the records and rent histories of all\ncombined apartments, both prior to and post combination, for the\npurposes of rent setting, overcharge and all other proceedings to which\nthe records are applicable.\n  (b) The division shall establish an annual inspection and audit\nprocess which shall review twenty-five percent of applications for a\ntemporary major capital improvement increase that have been submitted\nand approved. Such process shall include individual inspections and\ndocument review to ensure that owners complied with all obligations and\nresponsibilities under the law for temporary major capital improvement\nincreases. Inspections shall include in-person confirmation that such\nimprovements have been completed in such way as described in the\napplication.\n  (c) The division shall issue a notice to the landlord and all the\ntenants sixty days prior to the end of the temporary major capital\nimprovement increase and shall include the initial approved increase and\nthe total amount to be removed from the legal regulated rent inclusive\nof any increases granted by the applicable rent guidelines board.\n