April 2024 Insights
By Eileen O’Toole, Esq., Contributing Editor
A number of anticipated New York State housing law provisions that were brewing before and during annual budget negotiations were finalized and enacted on April 20, 2024.
Good Cause Eviction. Of most significant interest to owners and tenants is the new Good Cause Eviction (GCE) law (LVT #33162), which adds a number of sections to the state’s Real Property Law, was made a requirement for New York City, and may be adopted by other municipalities elsewhere in the state. GCE doesn’t apply to rent-regulated units but limits both the grounds for nonrenewal of unregulated tenancies and the amount of rent increase that can be charged upon lease renewal.
There are some carve-outs to exempt, for example, small owners and co-op and condo units. The law lists specific grounds that constitute “good cause”—that is, reasons upon which refusal to renew can be based. These include nonpayment (unless based on an unreasonable rent increase), breach of a substantial obligation of the lease agreement and failure to cure, nuisance, illegal occupancy, failure to provide access for repairs, owner use and occupancy with exemptions for tenants who are 65 years of age or older and who are disabled, demolition, withdrawal from the rental market, and where a tenant fails to agree to reasonable changes in the lease at renewal.
While portions of the new law won’t be effective until August 2024, the requirement to provide renewal leases and not to exceed a reasonable rent increase are effective immediately.
IAI rent increases. Also enacted on April 20, 2024, were amendments to the provisions of the rent stabilization and rent control laws that permit rent increases for individual apartment improvements (IAIs) (LVT #33163). These provisions had been substantially cut by HSTPA in June 2019. Significantly enough, under the new law, IAI rent increases are permanent, with several tiers of permissible rent increase. The basic $15,000/15-year cap on IAI spending that can be approved for rent increases under HSTPA has been increased, with two tiers of potentially available increases. The new cap for IAIs is $30,000 within a 15-year period with no to change the HSTPA amortization schedule. In some outlined circumstances, the IAI cap can be $50,000 with a different amortization rate.
Replacement of 421-a tax benefit program. The state’s 2024 Budget Bill also included enactment of a new affordable housing tax benefit program under RPTL Section 485-x, which replaces the former 421-a tax benefit program for new construction (LVT #33179). The new program, set to expire in 10 years, contains more stringent “affordability” criteria than required under 421-a, with different requirements for small, medium, and large buildings.
Expansion of rent stabilization outside NYC. Enactment of rent stabilization coverage, expanded under HSTPA to upstate municipalities that adopt the ETPA after determining that it is justified by an area’s vacancy rate, has met opposition in both Kingston and Newburgh, with conflicting results. In Hudson Valley Property Owners Association v. City of Kingston (LVT #33160), the 3rd Department recently upheld Kingston’s adoption of the ETPA and reversed part of the lower court’s ruling on how a newly appointed Rent Guidelines Board could set rents. The HVPOA has filed both a motion to reargue before the appeals court, as well a motion for leave to appeal before the New York Court of Appeals.
Elsewhere, after expeditious consideration, a court in Orange County determined this month that Newburgh’s December 2023 adoption of ETPA coverage was “null and void.” In Chadwick Gardens Associates, LLC v. The City of Newburgh (LVT #33161), the court ruled after a hearing that the city’s Vacancy Study lacked a rational basis and had incorrectly determined that the vacancy rate in Newburgh was under 5 percent. At press time, it is not known if the City of Newburgh will appeal the court’s decision.
Adoption of ETPA outside NYC and selected municipalities in Nassau, Westchester, and Rockland counties has expanded since HSTPA added provisions permitting other regions to adopt rent stabilization if a declaration of emergency is made after conducting a vacancy study. Nyack adopted ETPA in 2023, while Albany and Poughkeepsie currently are considering ETPA enactment.