Rent Adjustments

STATEMENT OF BASIS AND PURPOSE

On June 21, 2010, the New York State Legislature amended Article 7-C of the Multiple Dwelling Law (“Loft Law”) to add, among other things, MDL § 281(5) which expanded the criteria for Article 7-C coverage. In Chapter 4 of the Laws of 2013, the New York State Legislature further amended MDL § 281(5) and, among other things, modified the amount of rent adjustments that owners may receive pursuant to MDL § 286(2)(ii), commonly referred to as “milestone increases.”

Pursuant to MDL § 286(2)(ii), owners of interim multiple dwelling (“IMD”) buildings, including those owners of the buildings covered pursuant to MDL § 281(5), may seek rent adjustments upon achieving three legalization milestones. The legalization milestones are: 1) the filing of an alteration application with the Department of Buildings for conversion of the building from commercial to residential use; 2) the issuance of a permit for the alteration application; and 3) achieving Article 7-B compliance. An IMD owner may collect the rent adjustment for achieving one or more milestones the month immediately following compliance.

The proposed rule describes the procedure for obtaining the rent adjustments in MDL § 286(2)(ii) for units subject to the Loft Law pursuant to MDL § 281(5) and refers to MDL § 286(2)(ii) for the rent adjustment percentages for achieving each legalization milestone. Finally, the proposed rule includes new section headings and minor clarifying revisions.