Title 28: Housing Preservation and Development

Chapter 1: Rules and Regulations

§ 1-01 Applicability.

This chapter shall govern loans to owners of multiple dwellings for rehabilitation or improvement pursuant to Article VIII of the Private Housing Finance Law.

§ 1-02 Definitions.

As used in this chapter, the following terms shall mean:

Agency. The term “Agency” shall mean the Department of Housing Preservation and Development of the City of New York or the office or department charged with the administration of the program.

Cost of acquisition. The term “cost of acquisition” shall mean the sum of

   (1) cash payments made to acquire the property to be rehabilitated or improved and

   (2) the net cost of satisfying the bona fide mortgages, liens (including real estate taxes due and owing to the City of New York) and other encumbrances on the property. The cost of acquisition shall in no event exceed the appraised value of the property prior to rehabilitation.

Development cost. The term “development cost” shall comprehend those items included under such heading in 28 RCNY § 1-05 (Allowable Rehabilitation and Improvement Cost).

Maximum mortgage amount. The term “maximum mortgage amount” shall mean the lesser of the following:

   (1) An amount which, together with all prior liens permitted under 28 RCNY § 1-08(c), shall not exceed 90 percent of the value of the property after completion of rehabilitation;

   (2) Where the property is owned free and clear and was acquired more than one year before submission of the loan application, development cost;

   (3) Where the property was acquired more than one year before submission of the loan application and is encumbered, an amount necessary to satisfy such encumbrances (not to exceed the appraised value of the property prior to rehabilitation) plus development cost, provided that the loan shall not exceed two times the development cost;

   (4) Where the property is to be acquired or was acquired less than one year before submission of the loan application, the cost of acquisition plus development cost. Persons or families of low income. The term “persons or families of low income” shall mean and include, pursuant to § 401 subdivision 3 of Article VIII of the Private Housing Finance Law, owner-occupants, persons and families in occupancy immediately prior to the date the loan is granted, and persons or families whose probable aggregate annual income during the period of occupancy does not exceed six times the rental (including the value or cost to them of heat, light, water and cooking fuel) of the apartment occupied by such persons or families except in the case of persons or families with three or more dependents, where such ratio shall not exceed seven to one, as this definition may be further expanded or limited by 28 RCNY § 1-12 (Management Supervisory Requirements).

Value of the property after completion of rehabilitation. The term “value of the property after completion of rehabilitation” shall mean appraised value prior to rehabilitation plus development cost, provided that the estimated revenues, including any subsidies, will be sufficient to support the estimated debt service and operating expenses.

§ 1-03 Eligibility and General Conditions.

(a) Applicants for loans and any prior lienors must covenant in writing, that so long as any part of such loan remains unpaid, or any tax exemption-tax abatement granted as a result of the installations, alterations, improvements or rehabilitation remains in effect, or for a period of at least ten years from the occupancy date, whichever is the later, the following conditions will govern:

   (1) Apartments in such multiple dwelling shall be available solely for persons or families of low income as herein defined and as set forth below in subdivision (c) and in 28 RCNY § 1-12 (Management Supervisory Requirements).

   (2) Apartments shall be available strictly in the order of priority set forth in 28 RCNY § 1-12(d).

   (3) No charge or rental for apartments in such multiple dwelling shall be made or charged in excess of the maximum rentals prescribed by the Department of Housing Preservation and Development in accordance with the New York City Rent and Rehabilitation Law and the regulations promulgated thereunder.

   (4) At all times during the life of the mortgage, the owner shall keep and maintain the rehabilitated building and all fixtures and articles of personal property now or hereafter used in the building in good condition, order and repair. Failure on the part of the owner to comply with this provision or make repairs when requested by the Agency shall result in the Agency, at its option, employing workmen to make such repairs at the owner’s expense or declaring the unpaid principal balance of the mortgage, with interest, immediately due and payable.

   (5) Any persons owning, operating or managing such multiple dwelling, during or after rehabilitation, shall comply with the laws under which a loan is made and the Rules and Regulations now or hereafter adopted by the Agency, including Equal Opportunity Regulations.

   (6) Any persons owning, operating or managing such multiple dwelling shall permit the authorized officers, employees, agents or inspectors of the Agency to enter in or upon the mortgaged premises and inspect same at all reasonable hours.

   (7) The Agency, its officers, employees, agents or inspectors shall have full power to investigate and order the owner of said multiple dwelling or his agents to furnish such reports and information as it may require concerning the planning and construction of the installation, rehabilitation or improvement and the management of said multiple dwelling and shall also have full power to audit the books and records of such owner with respect to such matters. Owners of buildings rehabilitated under this program must submit reports as specified in 28 RCNY § 1-12 (Management Supervisory Requirements).

   (8) The foregoing covenants shall run with the land.

   (9) The applicant shall comply with applicable laws and regulations of the Department of Buildings, particularly § 26-235 of the Administrative Code referring to the sealing of vacant buildings, and make the buildings safe. It must be clearly understood that the filing of an application does not relieve the applicant of any liability for violation of such rules.

  1. Any individual, partnership, organization or corporation may qualify for a loan if the holder of a fee title to the property, or of an option or contract to purchase with a conveyance of title to be made prior to, simultaneous with, the execution of the loan documents.
  2. Loan applicants must be prepared to certify when the loan is granted that at least eighty percent of the tenants occupying the building on such date are persons or families of low income whose probable aggregate annual income will not exceed six times the rental (or seven times, where there are three or more dependents) (including the value or cost to them of heat, light, water and cooking fuel), based on the rents projected to be charged upon completion of the rehabilitation.

§ 1-04 Preliminary Site Submission.

The applicant, prior to the filing of a formal application, shall submit to the Agency, for preliminary consideration, a description of the proposed installation, alteration, improvement or rehabilitation which shall include the following information:

  1. A plot plan of the project site which will include the section, block and lot, metes and bounds description with specific designation of the building or buildings to be improved under the proposed loan or loans. This may be waived by the Agency for loans less than $4,200 per unit;
  2. A statement of the general character and physical condition of buildings within the immediate environs of the project site, and of the applicable zoning;
  3. A statement outlining plans for the installations, alterations and rehabilitation to each building, the approximate period of time necessary for the completion of such and the estimated cost to each building;
  4. A statement setting forth the names and addresses and telephone numbers of the proposed developers, architect and general contractor, attorney and accountants with a resume of the experience of each;
  5. A statement as to the source of the equity contribution for such work;
  6. A statement setting forth the results of a survey of the housing needs of site occupants and a plan for meeting those needs;
  7. A statement setting forth a plan for the management of the building during the alteration, improvement or rehabilitation where tenants remain in occupancy during the work and after such work is completed;
  8. Where the property is located within an Urban Renewal, Model Cities, Code Enforcement or any certified area of governmentally sponsored improvements, a letter from the Project Director in charge of such area certifying that rehabilitation of such property is in conformity with plans for the area. Upon receipt of such information, the agency shall advise the applicant whether a formal application may be filed within the time period specified by the agency.

§ 1-05 Allowable Rehabilitation and Improvement Costs.

Loans may, at the discretion of the Agency, include the following items of cost incurred in the process of rehabilitation or improvement of multiple dwellings:

  1. Development cost.

   (1) Construction costs.

   (2) Relocation stipends paid in accordance with applicable laws and regulations to tenants in occupancy of the building to be rehabilitated on the date of execution of the loan, or on such prior date as may be approved by the Agency, but not earlier than the date of filing the loan application.

   (3) Architectural and legal fees and contractor’s overhead and profit as set forth in the schedules herein, and reasonable fees for accounting and appraisals.

   (4) The cost of a “Payment and Performance Bond” or an amount in lieu thereof, as provided in 28 RCNY § 1-09 (Fee Requirements).

   (5) Real estate taxes, assessments, frontage and meter charges and sewer rents accruing during the period of construction, commencing on the date of execution of the loan, where income is inadequate during the period of construction to pay such costs.

   (6) Monthly interest on the amounts advanced under the loan during the period of construction.

   (7) A supervision fee as provided in 28 RCNY § 1-09.

   (8) Fees due and payable to an approved title company for the title insurance policy, recording of loan documents and mortgage recording taxes.

   (9) Net cost, if any, related to the rehabilitation or improvement including, but not limited to, maintaining the property pending rehabilitation or improvement, or where actions are taken in aid of the rehabilitation or improvement prior to the closing, such net costs commencing no earlier than the date of the loan application as may be approved by the Agency. Net cost represents the extent to which, due to the rehabilitation or improvement, operating expenses for repairs, janitorial services, real estate taxes, utilities and management contract and expenses related to the rehabilitation or improvement including cost of initial renting as such are approved by the Agency exceeds the rents collected from the property.

   (10) Premiums for insurance during construction.

   (11) An amount approved by the Agency for contingencies, to provide for approved change orders and other approved increases in development cost.

  1. Cost of acquisition.

   (1) The sum of cash payments made to acquire the property to be rehabilitated or improved, and

   (2) The net cost of satisfying bona fide mortgages, liens (including real estate taxes due and owing to the City of New York) and other encumbrances on the property. The cost of acquisition shall in no event exceed the appraised value of the property prior to rehabilitation. The sum of (1) and (2) shall not exceed the appraised value of the property prior to rehabilitation.

  1. Cost of refinancing. Actual cost to applicant or to any one with whom applicant has an identity of interest, of satisfying or refinancing existing mortgages, liens, including real estate taxes due and owing to the City of New York and other encumbrances.

§ 1-06 Application Submission.

Applicants who receive approval after review of the preliminary site submission may obtain application forms from the Department of Housing Preservation and Development, Office of Rehabilitation Financing, 100 Gold Street, New York, N.Y. 10033. Application forms may also be obtained from the Department of Housing Preservation and Development, Office of Special Improvements, 2 Lafayette Street, New York, N.Y. 10007, when a loan is sought for less than $4,200 per unit. Submission must include the following:

  1. An original and four (4) copies of the application (typewritten or legibly printed) shall be submitted. If the applicant is a corporation, the corporate seal must be affixed to the application. The application shall set forth the name, address and telephone number of the owner of record of the property, the holders of existing liens and of the proposed architect, contractor and attorney.
  2. Three (3) copies of preliminary plans shall be submitted. Such plans are to show existing and proposed room or apartment layouts of all the floors; also a plot plan showing the land and building with dimensions and an apartment distribution schedule. Preliminary drawings must be prepared by a registered architect or professional engineer. (Information on rehabilitation design standards promulgated by the Agency may be obtained from the Agency). Where because of the nature of the rehabilitation, plans are not required by the Department of Buildings, this requirement for three copies of preliminary plans may be waived in the discretion of the Deputy Commissioner.
  3. For all types of rehabilitation work, the applicant must file an original and three (3) copies of an outline specification and cost estimate for all work to be performed, giving a description of the work and an estimate of the cost and trade cost breakdown of each item. Quality of workmanship and materials shall conform to the rehabilitation design standards promulgated by the Agency.
  4. A copy of the document through which the applicant claims title or option.
  5. Where applicant is a corporation, a copy of the following additional documents will be required: New York State Certificate of Incorporation or authorization to do business in the state with proof of payment of current franchise taxes and New York City General Corporation Tax.
  6. Where applicant is a partnership, copies of its partnership agreement and certificate, a list of all its partners and the information specified in subdivision (g) of this section with regard to each.
  7. A list of the assets of the applicant with particular reference to any real estate holdings within the City of New York and where applicant is a corporation, a list of such assets of all officers, directors and of all stockholders having more than ten percent interest; and a statement of the direct or indirect interest of any such parties in other government programs providing loans or other public assistance.
  8. Applicant must file on the form provided by the Agency a sworn Certificate of Interest disclosing the identity of all parties involved or to be involved in the purchase, ownership and rehabilitation of the premises in question, and where applicable, the details of the transaction by which one or more of the parties acquired title and full particulars regarding all mortgages and other liens on the premises and all payments made or to be made in connection therewith. If any portion of the loan is to be used to satisfy a mortgage, the applicant will be required to certify as to the origin of each mortgage; if a purchase money mortgage to state the total purchase price of the property, the amount secured by the mortgage and the balance due thereon; if not a purchase money mortgage, to state the actual cash advanced to the mortgagor and the balance due thereon; to state the amount to be paid to the mortgage holder at the date of loan closing to satisfy the mortgage; to certify that payment made to the holder of the mortgage is and will be a bona fide arms length transaction, and disclose whether there is any relationship by family ties or otherwise among any of the parties, their officers or principals; and finally, to certify that the mortgagee of the satisfied mortgage neither has nor will have any financial relationship to the rehabilitation project. Applicant is also required to disclose promptly during the processing of the application, by an amended certificate, any changes which occur during such processing and to verify the continued accuracy of the certificate at the loan closing.
  9. Applicant must file a detailed plan for the management of the building during the period of alteration, improvement or rehabilitation when tenants remain in occupancy and after such work is completed. The plan should detail his experience in management of residential property, plans for tenant involvement in the upkeep and maintenance of the building and for community group involvement, if any.
  10. A filing fee shall be paid as provided in 28 RCNY § 1-09.
  11. Investigatory reports required by the Agency shall be charged to the applicant.
  12. Such additional information in such form as the Agency may require. Upon receipt of such application, the Agency will determine whether the loan shall be made based on a recommendation by a Municipal Loan Committee, consisting of the Commissioner of Development, the Deputy Commissioner of the Office of Rehabilitation Financing, the Assistant Administrator for Programs and Policies, the Comptroller, and the General Counsel; and in the case of loans processed by the Office of Special Improvements consisting also of the Office of Rent and Housing Maintenance and the Deputy Commissioner of such Office.

§ 1-07 Insurance Requirements.

The applicant is required to submit to the Agency, for its approval in a form satisfactory to the Agency including but not limited to, an endorsement that fifteen days prior notice by registered mail, return receipt requested, of cancellation shall be given to the City of New York as the Agency shall prescribe, the following evidence of insurance prior to loan closing or commencement of construction or installation, whichever is first: (a) An original policy of fire insurance with extended coverage, for a term of three (3) years, in an amount at least equal to the amount of the loan. During the construction period coverage may be for less than the amount of the loan. Such policy must contain a loss payable clause, naming the City of New York, c/o Department of Housing Preservation and Development as mortgagee and further provide that “buildings in course of renovation with permission granted to complete and occupy” or a similar description to this effect. When the improvements are completed, such proviso is to be deleted from the policy.

  1. An original policy of owners protective liability and property damage insurance issued to the contractor, with the owner and “The City of New York Department of Housing Preservation and Development” as additional insured, to protect the owner and the City against claims for property damage and for personal injuries, including accidental death caused by the operations of the contractor or his sub-contractors during the performance of work at the building or adjacent thereto, in at least the sum of $100,000 - $300,000 bodily injury and $25,000 - $50,000 property damage, or in such larger amounts as may be determined by the Agency. When improvements are completed, this coverage may be discontinued.
  2. Evidence of the contractor’s coverage for public liability and property damage insurance, or by the comprehensive general liability insurance to protect him and his subcontractors, the owner and the City against claims for property damage and for personal injuries including accidental death in at least the sum of $100,000 - $300,000 bodily injury and $25,000 - $50,000 property damage.
  3. An original policy of boiler insurance (broad form) in the amount of not less than $50,000 providing coverage in the event of explosion, collapse, or rupture of boilers during installation or operation, where applicable.
  4. The contractor and each sub-contractor shall provide adequate Worker’s Compensation Insurance for all employees engaged in the work on a building who may come within the protection of the Workers’ Compensation Law, and where practicable, Employer’s General Liability Insurance for employees not so protected.
  5. A payment and performance bond guaranteeing performance by the contractor and payment for all services and material. Where satisfactory proof has been presented that after a diligent effort such bond cannot be obtained, the Agency may accept in lieu thereof

   (1) a guarantee of completion executed by the owner and where the owner is a corporation, by the principal stock- holder(s) or officer(s) thereof,

   (2) a financial statement by each party executing such a guarantee, showing sufficient net assets and net worth to give reasonable certainty of financial ability to fulfill such commitment, and

   (3) an amount equal to two (2%) percent of the construction cost as a non-refundable fee. The Agency may in its discretion, where satisfactory proof has been presented that after a diligent effort such bond cannot be obtained, accept in lieu thereof bonds furnished by subcontractors covering at least fifty (50%) percent of the construction cost, in which case the balance of the construction cost shall be covered by guarantees of completion and fees as described above. Following completion of the rehabilitation the owner shall maintain public liability insurance against claims for personal injury or death and for damage to property suffered by others, occurring upon, in or about the building in at least the sum of $100,000 – $300,000 bodily injury and $25,000 – $50,000 property damage in a form satisfactory to the Agency. Modification of those insurance requirements as to term, amount, or coverage may be made only with the approval of the Deputy Commissioner of the Agency charged with the administration of this pro- gram.

§ 1-08 Mortgage Conditions.

(a) No loan may exceed the maximum mortgage amount.
  1. Each loan made under this program shall be secured by a bond or note and mortgage upon the multiple dwelling to be improved and the land upon which it is situated to be repaid over or within a period of thirty years in such manner as may be provided therein.
  2. The Agency may take a junior lien on the property as security for the loan or may, in accordance with the provisions of the Private Housing Finance Law, participate in a rehabilitation loan with a private lender, provided that the total indebtedness will not exceed the maximum mortgage amount after completion of rehabilitation. In determining whether to take a junior lien the Agency shall give favorable consideration to the following, if present: that the interest rate on the prior lien is more favorable than the Agency can offer the mortgagor; that the holder of the prior lien is an institutional lender of recognized standing; and that the principal amounts due under the prior lien or liens are being amortized on a basis which would not jeopardize the City’s lien. A subordination agreement may be required from the holder of any prior lien where the Agency deems it desirable.
  3. The mortgagor shall be required at the closing to execute a construction contract for the performance of the work with a general contractor or tradesman. Both the contract and the general contractor or tradesman must be approved by the Agency and the Agency reserves unto itself the right to approve or reject a contractor. The mortgagor shall be required to submit a resume of the experiences of the proposed contractor and all proposed subcontractors, financial statements of the contractor and for all firms in which the contractor has a controlling interest for the last three years, references from at least three major clients of each contractor, and a statement of the ethnic breakdown of the employees of each such contractor and subcontractor in advance of such closing.
  4. At the closing of the loan, the owner shall advise the Agency by a sworn statement of changes, if any, that have occurred since the date of application for the loan with respect to condition of the building, mortgage balances, acquisition cost, taxes, liens, discounts and assignments, and any change in relationship of parties in interest, and if there have been no changes, shall so state. If any portion of the loan is used to satisfy a mortgage, the mortgagor will be required at the closing to provide a certificate from the holder of the mortgage as to the amount paid by such mortgagee for the mortgage, where applicable, and the balance due thereon.
  5. Interest and amortization payments shall be due and payable commencing on the first day of the third month after a certificate of occupancy, temporary or permanent, has been obtained, where applicable. This period may be extended upon due notice by the Agency to the City Comptroller where occupancy is dependent on conditions beyond the owner’s control such as the availability of Federal rent supplements.
  6. A mortgagor may not, at any time, further encumber, mortgage or permit any encumbrance or lien of any kind upon the mortgaged premises without the prior written consent of the Agency, nor may the premises or any part thereof be conveyed, assigned or transferred without the prior written consent of the Agency. Failure to comply with this subdivision (g) at the option of the Agency, shall result in the Agency’s declaring the entire unpaid principal balance and interest immediately due and payable.
  7. The mortgage may provide that with the consent of the Agency a mortgagor may prepay the principal amount of the loan together with interest then due. However, the apartments in the premises shall remain subject to the conditions set forth in 28 RCNY § 1-03 (Eligibility and General Conditions).
  8. The Agency shall establish first rentals or adjust maximum rents, whichever is applicable, for all buildings rehabilitated with a municipal loan and certify same to the Division of Housing and Community Renewal. In arriving at such rent levels, the Agency shall consider the total of the projected operating costs, including water and sewer taxes, fuel, insurance, utilities, painting and repairs, and vacancy allowance, a reasonable return on the owner’s equity and interest and amortization payments on the mortgage.

§ 1-09 Fee Requirements.

(a) Simultaneously with the filing of the application the applicant shall deliver to the Department of Housing Preservation and Development, Office of Rehabilitation Financing, a certified or cashier's check payable to the "Municipal Loan Program Application Account" in the sum of one hundred fifty dollars ($150), or such larger amount as may be required by the Agency to defray the costs of appraisal, credit reports and other expenses of processing the application. Applications filed with the Office of Special Improvements must be accompanied by such a check payable to "Small Loan Program Application Account" in the amount of one hundred dollars ($100) for such purposes.
  1. All mortgage loans are subject to a supervision fee in the amount of two (2%) percent of the total loan, payable to the City of New York. Such fee may be waived by the Agency in whole or in part in the case of loans under $4,200 per unit.
  2. A fee in lieu of payment and performance bond, where applicable, shall be requested equal to two (2%) percent of the estimated construction cost, which sum shall be deposited by the Agency in its Rehabilitation Loan Reserve Fund.
  3. A management fee in the amount of 1/4 percent of the original principal amount of the loan shall be charged and payable per annum to meet costs of supervision during the life of the loan. The Agency may in its discretion deposit such sum in its Rehabilitation Loan Fund or use such sum in whole or in part to pay a bank or the New York City Housing Development Corporation for the performance of such services as are generally performed by a banking institution which itself owns and holds a mortgage.
  4. Where a monthly installment of principal and interest on a mortgage has become overdue for a period in excess of fifteen (15) days a “late charge” of one (1) cent per month for every dollar of such installment so overdue may be charged the mortgagor by the Agency and deposited in its Rehabilitation Loan Reserve Fund.
  5. The Agency may determine in its sole discretion to submit the loan application to the New York City Housing Corporation. In the event that such corporation is or shall become the mortgagee, all fees required by this section shall be paid to the corporation rather than to the City of New York, except as the Agency may otherwise prescribe.
  6. None of the fees provided for by this section are refundable.

§ 1-10 Construction Requirements: Payments.

(a) The plans, specifications, work write-ups or any description of work to be performed on a building subject to a loan under this program must be approved by the applicable office of the Agency prior to the commencement of any rehabilitation work or the closing of a mortgage loan for same. Such plans, specifications, work write-ups or other description of work must conform to the rehabilitation design standards of the Agency and must have been approved by the Department of Buildings, where applicable, or any other necessary governmental bureau or department.
  1. During the rehabilitation process the Agency’s architects, engineers, rehabilitation specialists or officers and others designated by the Agency may conduct periodic inspections of the work. Copies of all plans, specifications, work write-ups or other description of work, with the Agency’s approval stamped thereon, must be kept on the job site for the use of such Agency personnel.
  2. Requests for change-orders shall be in writing. Change-orders must be fully documented, showing original and revised cost estimates and reasons for such change-orders. Upon approval thereof, which shall also be in writing, the change shall be reflected in a revised trade payment breakdown.
  3. The Agency may require the deposit of loan advances in a separate escrow account, in a bank designated by the Agency, subject to withdrawal only upon the joint signatures of the borrower and a representative of the Agency. The Agency may further require that the owner deposit all or a designated portion of the rents collected from the multiple dwellings during the period of construction in such escrow account, or in a separate trust account under such terms and provisions as the Agency shall prescribe.
  4. Progress payments on work completed shall be made on the basis of sworn statements as herein provided, subject to review and approval by the Agency. At the time of each progress payment, the contractor, mortgagor or owner shall execute for the Agency a sworn statement that all bills due for labor, services rendered, and materials furnished in connection with the work to the date of payment are paid and that no liens have been filed, or if not paid, submit list itemizing the amounts due to creditors so as to insure a proper allocation of the payment to satisfy in full such unpaid items. Such statement shall reconcile requisitions with the trade payment breakdown previously submitted. The Agency reserves unto itself the right, at its discretion, to take proceeds of the loan and pay all verified delinquent claims for labor, materials or other services rendered. The Agency shall further withhold an amount equal to no less than ten percent of the total amount of each progress payment as a retention fund under the mortgage to assure satisfactory progress of the work. Such retention, or a portion thereof, may be released prior to the completion of the work upon written request by the owner or mortgagor with the approval of the Deputy Commissioner of the Agency; the retention on completed work may thus be reduced to five percent upon completion of fifty percent of the work. All of the retention remaining shall be released upon the completion of the work to the entire satisfaction of the Agency and other necessary state or municipal bureaus or departments, the presentation to the Agency of a permanent certificate of occupancy, where applicable, proof of payment for all labor and materials, a cost certification prepared and certified by an independent public accountant licensed by New York State, and also a sworn certificate disclosing any changes from the applicant’s filing in accordance with 28 RCNY § 1-06(g) (Application Submission).
  5. The portion of the loan representing interest on advances during construction shall be adjusted upon completion of the rehabilitation as follows: If such portion shall be more than the amount required for interest on advances, the excess shall be credited to the mortgagor in reduction of the principal of the loan; if less than the amount required for such interest, the difference shall be deducted from the final payment of loan proceeds and paid over to the City of New York.
  6. Any income derived during any period of occupancy prior to commencement of debt service may be credited against the construction loan.
  7. Books and records of the contractor and of subcontractors relative to the rehabilitation shall be subject to audit by the Agency. All subcontracts shall be submitted to the Agency when executed and any interest between the mortgagor and the subcontractor shall be disclosed at that time.
  8. The aforementioned cost certification shall be provided on a form approved by the Agency and must include the following:

   (1) A certified list of the actual costs paid by the general contractor for materials and sub-contract work under the general contract.

   (2) A certified list of the actual costs for non-construction items as were approved by the Agency.

   (3) Proof that all labor and materials included in the rehabilitation have been paid for.

   (4) An opinion certifying as to the accuracy of the owner’s costs statements by an independent certified public accountant.

§ 1-11 Labor Compliance Conditions.

Each mortgagor or contractor performing rehabilitation work with proceeds of a mortgage loan under this program must agree that the following standards and requirements will be strictly complied with:

  1. The contractor will not discriminate against any employee or applicant for employment because of race, creed, color, national origin or sexual orientation. The contractor will take affirmative action to insure that applicants are employed, and that employees are treated during employment without regard to their race, creed, color, national origin or sexual orientation. Such action will include, but not be limited to the following: employment, up-grading, demotion, transfer, recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Agency setting forth the provisions of this non-discrimination clause.
  2. The contractor will participate in an on-the-job training program in accordance with the Mayor’s Executive Order No. 50 of 1980 as amended and the agreement dated December 10, 1970 with the New York Building and Construction Industry, Board of Urban Affairs Fund, and will enter into a contract with the Agency to implement such training program.
  3. To the extent that such preference is not inconsistent with the Executive Orders and the agreements referred to in subdivision (b) above, the contractor, including sub-contractors within model cities, urban renewal and code enforcement areas will give a priority in hiring to persons living within the geographic neighborhood in which the work is being performed.
  4. The contractor will not sub-contract any part of the work without prior written approval of the Agency. The Agency will not approve any sub-contractor for work who is at the time ineligible because of violations of this 28 RCNY § 1-11 (Labor Compliance Conditions), inefficiency, abandonment of duties, or disregard for creditors on prior jobs performed under this program. Failure to comply with the provisions of this 28 RCNY § 1-11 will result in the Agency’s withholding from the contractor any progress payments, in addition to exercising such other rights as may be reserved to the Agency in the loan documents, and forfeiture by the contractor of consideration for future work under this program.
  5. With every requisition for a progress payment or at such times as the Agency shall prescribe, the contractor shall submit to the Agency copies of his payroll report and of each of the sub-contractors (it being understood that the contractor will be responsible for the submission of records of sub-contractors). Such payroll report shall contain such items as prescribed by the Agency including, but not limited to, the name and address of each employee, his classification or trade, ethnic/racial origin, hourly rate of pay, deductions made, number of hours worked and actual wages paid for the work week.
  6. In order to assure strict compliance with this section and these rules and regulations, the books and records of the general contractor or tradesman and all sub-contractors shall at all times be available to the agents or representatives of this Agency and the Agency reserves the right to interview or confer with any employee on a construction job or in the office of general contractor or tradesman or sub-contractor, at any time, in order to determine such strict compliance. Failure to comply with this chapter shall be considered a breach of construction contract and may result, at the discretion of the Agency, in the removal of the general contractor, tradesman or sub-contractor from the construction job and other penalties as the Agency might deem necessary to impose.

§ 1-12 Management Supervisory Requirements.

(a) Neither an owner, nor anyone acting in his behalf, shall make a charge or demand a fee of any kind for processing a tenant's application.
  1. The owner shall receive no more than one month’s rent as security and one month’s rent in advance at the time the tenant takes occupancy of premises rented after the loan is granted. Upon direction by the Agency, such security deposits when received by the owner shall be immediately submitted to the Agency to be held in escrow by the Agency for the benefit of the tenant. The Agency will deposit all such funds in a separate interest bearing account with a banking institution of the Agency’s choice. The records of such account shall be available at all times to an owner or tenant for the purposes of audit, inspection or examination, and interest accruing from such account shall enure to the benefit of the tenant-depositor. The principal amount of such deposit together with interest thereon shall be returned to the tenant by the Agency upon the written request of the owner certifying that the tenant’s occupancy has been terminated and that all the terms and conditions of such occupancy have been complied with.
  2. The apartments in a rehabilitation building are available to persons or families of low income as defined in 28 RCNY § 1-02 (Definitions).

   (1) Probable aggregate annual income includes the annual income of the chief wage earner of the family, plus all other income of other members of the family in excess of $1,500 per annum for each such member. The income of a working minor who is a full-time student shall not be included in the computation of such annual income. Social Security or other pension plan payments received by females aged sixty-two years and over, or males sixty-five or over shall be excluded from computation of annual income up to a total maximum amount of $75 a month per individual.

   (2) If at the time a loan is granted, the tenant’s probable annual income exceeds, or later increases so as to exceed, the prescribed income limits by more than fifty percent, he can be removed, with the Agency’s consent, from the building either the expiration of a two-(2) year period from the time the loan was granted.

   (3) A tenant who moves into the building after the loan has been granted is subject to removal, with the Agency’s consent, when his yearly income exceeds the income limits by more than fifty percent.

   (4) If, after the expiration of a two-year period from the time the loan was granted, more than twenty percent of the tenants in the building are over-income, the Agency may require the owner to remove over-income tenants.

   (5) When the owner of the building occupies one of the units, he will be liable for rent surcharges the same as any tenant.

   (6) Any person or family in occupancy whose income exceeds the maximum prescribed shall pay a rent surcharge in accordance with the following schedule:

(Percentage of Maximum Permitted Income)  
Up to 100 percent Basic rent only
In excess of 100 to 105 percent Basic rent only
In excess of 105 to 110 percent Basic rent plus 5 percent
In excess of 110 to 115 percent Basic rent plus 10 percent
In excess of 115 to 120 percent Basic rent plus 15 percent
In excess of 120 to 125 percent Basic rent plus 20 percent
In excess of 125 to 130 percent Basic rent plus 25 percent
In excess of 130 to 135 percent Basic rent plus 30 percent
In excess of 135 to 140 percent Basic rent plus 35 percent
In excess of 140 to 145 percent Basic rent plus 40 percent
In excess of 145 to 150 percent Basic rent plus 45 percent
In excess of 150 percent Basic rent plus 50 percent

~

The owner of the dwelling must, subject to the approval of the Agency, take the action necessary to assure compliance with these provisions. Rental surcharges collected by the owner are paid to the Agency by check made out to the order of the City of New York and are used to reimburse the City for any tax exemption or abatement granted to the owner. If such benefits have not been granted, or if a sum equal to the amount of tax exemption and abatement granted has already been paid to the City, the surcharge shall be paid to the City in reduction of the loan in accordance with § 403 Subdivision 4 of Article VIII of the Private Housing Finance Law.

  1. Tenants for initial occupancy of such rehabilitated buildings, and for the filing of vacancies as they occur, shall be selected by the Owner in the following order of priority:

   (1) Site occupants, that is, tenants occupying the building on the date of preliminary site submission or such later date approved by the Agency. “Building” in this paragraph shall include parcels subject to a consolidated loan. Where the Housing Authority has entered into a leasing program regarding the rehabilitated building, all tenants eligible for public housing must apply to the Housing Authority to recognize their priority.

   (2) Tenants in occupancy shall have the first priority for internal transfer.

   (3) If the site is within an urban renewal area or other redevelopment area, residents of sites acquired to effectuate the plans for such area; families in emergency need of housing, including families who are homeless, under warrant of eviction, living in buildings condemned as unfit for human habitation, or facing displacement from sites, buildings or dwelling units being cleared or vacated by governmental action. Within this class preference shall be given to residents of the same community planning district.

   (4) Persons listed on the outside waiting list in strict chronological order.

   (5) Others, subject to Agency approval. Notwithstanding the foregoing, where a federal subsidy is involved, federal standards of priority are controlling as to the affected apartments.

  1. The Agency may direct that a certain number of apartments be held vacant until the building is at least 70 percent occupied by relocatees having priorities (1) through (3) of subdivision (d) above, but not beyond the date when debt service commences. Implementation of the priority system described above shall be accomplished as follows:

   (1) The owner shall submit to the Agency, prior to renting, a Tenant Selection Review Form prescribed by the Agency.

   (2) The owner shall fully complete such form and state whether he wishes to reject or accept the tenant applicant.

   (3) The Agency shall render a decision on acceptability of the tenant within three working days of receipt of the Tenant Selection Review Form.

   (4) The Agency reserves the right to approve or reject any tenant applicant and the owner agrees to be bound by its decision. It shall be the owner’s responsibility to contact the Agency to obtain such decision. If the applicant is rejected, the owner will follow the same procedure for any other applicant he considers.

   (5) The owner shall accept referrals from whatever governmental source the Agency may designate. Where the Agency determines that an owner has rejected a tenant applicant, it reserves the right to order him to submit another applicant for that housing unit. The fact that an applicant is on welfare shall not be grounds for rejection. Failure to submit a Tenant Selection Review Form to the Agency, failure to obtain Agency approval prior to renting, or renting an apartment to a tenant applicant who has not been approved by the Agency, shall, at the option of the Agency, make the owner liable for the expense of finding a comparable housing unit for another applicant who is eligible under renting priorities set forth above and for any unusual cost in relocating such applicant in such comparable unit.

  1. At the discretion of the Agency, the owner may be required to enter into a regulatory agreement with regard to the management and operation of the building and the rents, profits, dividends or distribution of its property and as otherwise prescribed by the Agency.
  2. The owner shall maintain separate and accurate books and records of all managerial and financial data, including assets, liabilities, equity, income and expense, relative to the rehabilitated property or properties for which a separate loan has been made. Such books and records must be made available to the representatives of the Agency for audit, examination or review upon demand. Unless this requirement is modified or waived in the case of a loan under $4,200 per unit, financial reports as prescribed by the Agency relative to a rehabilitated property or properties for which such a separate loan has been made are required to be filed in duplicate, with the Agency for the six-month period ended December 31, and the twelve-month (annual) period ended each June 30. The reports are due within 90 days after the close of each respective period. The indicated filing requirements are to be met with respect to the initial operating periods although these may not be full six- or twelve- month periods. Such reports are to be based on audit examination, in accordance with generally accepted auditing standards, by an independent public accountant licensed in New York State. The annual report, for the fiscal year ended each June 30, is to be certified by such accountant relative to the financial statements and other data required to be contained therein. The foregoing reports are to include the following:

   (1) Accountant’s certification.

   (2) Financial statements (accrual basis).

      (i) Balance Sheet, with such supporting schedules as required to be fully informative.

      (ii) Statement of Operations, with detailed income and expense subclassifications. The annual statement shall also show separately the operating figures for the last six months of the fiscal year, January l-June 30.

      (iii) Statement of Sources and Application of Funds (Change in net working capital). There shall also be filed such other financial reports or data as the Agency may require.

  1. The Agency reserves the right to make periodic inspection on each apartment in the rehabilitated building. Such inspections shall be for the purpose of inspecting the condition and maintenance of the building, the condition of utilities, fixture and equipment. Periodic visits may also be made to the building by representatives of the Agency for the purpose of conferring with tenants, advising on consumer practices, frauds and products, education regarding maintenance of dwellings and where necessary serving as a liaison or intermediary on landlord-tenant problems. Copies of reports of such inspections shall be made available to the owner with recommendations for corrective measures where necessary.
  2. Re-renting or eviction proceedings may only take place with the approval of the Agency. No new tenants may be moved into a building without the owner’s following the same procedures as hereinabove set forth.

§ 1-13 Community Participation.

The Agency acknowledges the desirability of involving recognized and responsible community organizations in the planning and execution of rehabilitation efforts in their areas.

§ 1-14 Fee Schedules.

Allowable architectural and legal fees and contractor’s overhead and profit shall not exceed the fee schedules below:

  1. Architectural fees. Five and a half percent of construction cost up to $400,000; above that, four and a half percent but not less than $22,000. The fee, which includes mechanical engineers fees will be paid directly to the architect in three parts. Upon closing the municipal loan with plans and specifications approved by the Department of Buildings and this Agency, the architect will receive sixty percent of his fee, an additional twenty percent at closing of the walls and the final twenty percent at completion thereof and upon receipt of a statement of compliance accompanied by a Certificate of Occupancy.

   (1) Any work beyond the scope of the contract requirements requested by the Department of Housing Preservation and Development in writing, shall be paid to the architect at the rate of two and a half times the reasonable salaries of technicians engaged in such changes.

   (2) When the basic plans are repeated for identical buildings (within twenty percent of design is reused) then such fee shall be reduced by thirty-three and a third percent of original design fee.

   (3) Architect shall supply all required services, plans, specifications and filing with the Department of Buildings.

   (4) If buildings are contiguous, and only one set of mechanical drawings is used for all buildings, then the fee for each duplicate building shall be 50 percent of the original building construction cost.

  1. Contractor’s overhead and profit.

~

Less than $100,000 10.0
100,000 9.7
200,000 9.4
300,000 9.1
400,000 8.8
500,000 8.5
600,000 8.2
700,000 7.9
800,000 7.6
900,000 7.3
1,000,000 7.0
1,500,000 5.5
2,000,000 4.0

~

The amount allowed shall not be less than that for the preceding construction cost.

  1. Legal fees. One percent of construction cost up to $50,000, plus three tenths of one percent on amounts in excess of $50,000. The legal fee shall be paid in two parts as follows: Seventy-five percent on closing and twenty-five percent at final payment.

§ 1-15 Rent Adjustments.

(a) Upon completion of the rehabilitation or improvement, maximum rents shall be adjusted pursuant to § 33.9 of the Rent and Eviction Regulations and the rules and regulations adopted pursuant to those provisions.
  1. Such rentals may thereafter be increased upon application made by the owner to the office or department charged with administration of the Program in the manner set forth herein and as set forth in § 33.9 of the Rent and Eviction Regulations and the rules and regulations adopted pursuant thereto. If such office or department determines that a rent increase is required based upon operating and maintenance expenses, real estate taxes, debt service requirements, vacancy and other rent collection losses, and a return on equity computed at 8 percent, the director of that office or department shall so certify to the Office of Rent Control and inform the Office of Rent Control of the amount of the increases which are requested. The Office of Rent Control shall issue written notice to the tenants of the rent increases requested by the owner. Upon expiration of the time allowed for the tenants to answer as set forth in such notice, the Office of Rent Control shall forward any responses to the administering office or department. Such office or department shall review the responses and the record and may then request that the Office of Rent Control issue orders adjusting the rents as finally determined by that office or department. The Office of Rent Control will issue such orders within fifteen days after receipt of such request.

§ 1-16 Failure to Comply with Regulations.

Upon failure of an applicant, owner or mortgagor to comply with this chapter, said applicant, owner or mortgagor may be disqualified by the Agency from applying for a loan under this program for up to three years following the date of any failure.

§ 1-17 Waiver.

The Agency may waive any of this chapter where the nature of the installation, alteration, improvement or rehabilitation or other circumstances warrant such exception. Any waiver to be effective requires the approval of the Commissioner or the Municipal Loan Committee.

Chapter 2: Rules and Regulations Pursuant To Article Viii-a of the Private Housing Finance Law of New York and Title I of the Housing and Community Development Act of 1974

§ 2-01 General Provisions.

(a) Purpose. This chapter (and any applicable regulations promulgated by the governmental authority providing funds for the rehabilitation or improvement) shall govern the making of loans for rehabilitation and improvement pursuant to Article VIII-A of the Private Housing Finance Law of the State of New York.
  1. Definitions. As used in these rules and regulations, the following terms shall have the meanings set forth below:

   Administrative Code. “Administrative Code” shall mean the Administrative Code of the City of New York.

   City. “City” shall mean the City of New York.

   Commissioner. “Commissioner” shall mean the Commissioner (or Acting Commissioner) of the Department or the chief executive officer (or acting chief executive officer) of any successor to the Department.

   Department or Dept. “Department” or “Dept.” shall mean the Department of Housing Preservation and Development of the City or any successor thereto.

   Dwelling unit. “Dwelling unit” shall mean any residential accommodation in a multiple dwelling.

   Housing Maintenance Code. “Housing Maintenance Code” shall mean the Housing Maintenance Code of the City constituting Chapter 2 of Title 27 of the Administrative Code.

   Multiple Dwelling Law. “Multiple Dwelling Law” shall mean the Multiple Dwelling Law of the State of New York.

   Multiple dwelling or building. “Multiple dwelling” or “building” shall mean an existing dwelling within the City which is rented or leased to be occupied, or is occupied, as the residence of three or more families living independently of each other, and for which a loan application is made under the program.

   Occupancy by persons or families of low income. “Occupancy by persons or families of low income” shall mean occupancy by persons or families paying rentals or carrying charges not in excess of the average rentals or carrying charges prevailing in local projects of municipally-aided limited-profit housing companies aided under Article II of the Private Housing Finance Law of the State of New York, the occupancy of which commenced on or after May 18, 1970. The rental or carrying charge for any such projects assisted under § 236 of the United States Housing Act of 1937 shall mean the fair market rental or carrying charge determined from time to time in accordance with the provisions of the agreement with the housing company pursuant to said section. Notwithstanding the foregoing, “occupancy by persons or families of low income” in single room occupancy housing shall mean occupancy by persons paying rentals not in excess of seventy-five (75) percent of the Moderate Rehabilitation Fair Market Rents for 0-bedroom units. “Moderate Rehabilitation Fair Market Rent” shall mean one hundred twenty (120) percent of the amount, less tenant utility allowance where applicable, which is indicated for 0-bedroom units on the then current Existing Housing Fair Market Rent Schedule for the § 8 Existing Housing Assistance Payments Program under the administration of the Department. Where the Department determines on the basis of a market survey or other acceptable and documented evidence that the market rents for dwelling units in the immediate neighborhood where the building is located exceeds the applicable Existing Housing Fair Market Rents, the Department may increase said rents by an amount not to exceed ten (10%) percent.

   Owner. “Owner” shall mean an individual, partnership, corporation or other entity, including a non-profit company, a mutual company, or a housing development fund company, which holds record title in fee simple to the premises or is the lessee thereof under a lease having an unexpired term of not less than fifteen years.

   Premises. “Premises” shall mean the multiple dwelling or the building and includes the land upon which it is situated.

   Program. “Program” shall mean the program for the making of loans pursuant to Article VIII-A of the Private Housing Finance Law of the State of New York and this chapter.

   Rehabilitation. “Rehabilitation” or “rehabilitation or improvement” shall mean the curing of any substandard or insanitary condition or conditions, or the replacement, repair or upgrading of heating, plumbing, electrical and related systems.

   Rent or rental. “Rent” or “rental” shall also mean carrying charge whenever the multiple dwelling is cooperatively owned. This definition shall not apply to 28 RCNY § 2-04(a)(2).

   Single room occupancy housing. “Single room occupancy housing” shall mean dwelling units which:

      (1) may be lawfully occupied as the residence of single individuals capable of living independently of each other and do not contain either food preparation facilities or sanitary facilities or both, or

      (2) are otherwise used and maintained for such occupancy in full compliance with the building’s certificate of occupancy and the provisions of the New York State Multiple Dwelling Law.

   Useful life of the dwelling. “Useful life of the dwelling” shall mean the period of time, as determined by the Dept., that the multiple dwelling is expected to be habitable at a level of comfort, safety and sanitation compatible with current requirements of state and city statutes, ordinances and administrative regulations, where there is regular maintenance and care of the major building systems by competent mechanics.

   Useful life of the rehabilitation or improvement. “Useful life of the rehabilitation or improvement” shall mean the period of time as determined by the Department that the improvement is expected to function in good condition, with routine maintenance and repair.

§ 2-02 Eligibility and General Conditions.

(a) Eligible buildings.

   (1) Loans may be made to an owner of a multiple dwelling located within the City to enable or assist such owner to eliminate a substandard or insanitary condition or conditions in violation of the Multiple Dwelling Law or the Housing Maintenance Code of the City of New York or to provide for the replacement and rehabilitation of the heating, plumbing, electrical and related systems or other improvements as shall be reasonably necessary to prolong the useful life of such dwelling.

   (2) No loan shall be made unless the average rent for dwelling units in the building is not in excess of the average rent prevailing in local projects of municipally-aided limited-profit housing companies aided under Article II of the Private Housing Finance Law of the State of New York, the occupancy of which commenced on or after May 18, 1970, except for loans made to rehabilitate single room occupancy housing, in which cases the average rent for such units in the building shall not exceed seventy-five (75%) percent of the Moderate Rehabilitation Fair Market Rent as defined in 28 RCNY § 2-01(b) “Occupancy by persons or families of low income”, for 0-bedroom units.

  1. Allowable costs. At the discretion of the Dept., loan proceeds may be advanced to finance the following items of cost incurred in connection with the rehabilitation or improvement:

   (1) Construction costs and filing fees required by the Department of Buildings and other governmental agencies having jurisdiction.

   (2) Interim interest on the loan proceeds.

   (3) Recording and filing fees and mortgage taxes.

   (4) Payment and Performance Bond(s).

   (5) Fees or charges attributable to the examination and insurance of title.

   (6) Real estate taxes, assessments, water and meter charges and sewer rents.

   (7) Fire insurance premiums.

  1. Maximum amount. The loan amount shall not exceed an average of ten thousand ($10,000) dollars per dwelling unit or the actual cost of the rehabilitation or improvement, whichever is less.
  2. Term. The term of a loan shall not exceed twenty years, except that the term of a loan whose amount exceeds an average of five thousand ($5,000) dollars per dwelling unit shall not exceed thirty (30) years. In no event shall the term of any loan exceed the useful life of the rehabilitation or improvement.
  3. Interest rate. The interest rate shall be three (3%) percent per annum, except where otherwise determined by the Department.
  4. Protection of mortgage lien. Subsequent to the loan closing, the Department at its discretion may pay any liens and charges the priority of which are superior to its mortgage and may pay such other expenses as may be appropriate to protect its loan or to protect the lien of the mortgage relating thereto, provided that such expenditures shall not exceed one-half of the total amount of the loan.

§ 2-03 Application Procedure.

(a) Application forms. Application forms may be obtained from the Department, 100 Gold Street, New York, N.Y. 10038, Attention: Article VIII-A Loan Program. All applications shall be submitted to the Department for review and approval.
  1. Eligible applicants. Loan applications may be submitted by an owner or his duly authorized agent or by a contract vendee who becomes an owner prior to or simultaneously with the loan closing.
  2. Application submission. The application, in form specified by the Department, shall include the following:

   (1) A description of the rehabilitation or improvement and the estimated cost thereof.

   (2) The name, address and telephone number of the applicant, the owner, the managing agent and the holders of existing mortgages and other liens against the multiple dwelling.

   (3) A statement of income and expenses for a period of time to be determined by the Department.

   (4) A statement of the current monthly rent or carrying charges of each residential and commercial unit, the name of each residential tenant, the number of rooms in each residential unit, and the rent controlled or rent stabilized status of each residential unit.

   (5) A statement of the current non-publicly assisted, rent stabilized market rents of residential units in the building and, if known, a similar statement for comparable apartments in adjacent buildings or buildings in the immediate vicinity.

   (6) Such additional information as the Department may require.

  1. Consultation. The staff of the Department will be available for preapplication consultation.
  2. Certification of inability to obtain financing. With the application, the owner shall submit an affidavit certifying that within the prior six months attempts to obtain financing for the rehabilitation or improvement at prevailing interest rates with the premises as security, from at least two (2) lending institutions which normally provide this type of financing were not successful, and, if known, the reasons for such failure or other factors indicating an inability of the private sector to provide unaided financing. If the multiple dwelling is encumbered by a mortgage held by a lending institution whose deposits are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or their successors, such mortgagee shall be one of the lending institutions to which the applicant made an attempt to obtain such financing.
  3. Application fee. The owner shall pay an application fee in the amount of seventy-five ($75) dollars for each building for which application is made. Payment shall be made no later than the date of the Department’s loan closing. The fee shall not be refundable and shall be used to help defray the expenses of the City in administering the Program. In the case of applications covering two or more adjacent buildings the application fee shall be seventy-five ($75) dollars for the first building and fifty ($50) for each additional building.
  4. Loan commitment. No commitment for a loan shall be deemed to have been made unless and until a written letter of commitment shall have been issued by the Department. Any commitment issued shall be conditioned upon full and timely compliance with the requirements of these Rules and Regulations, the availability of funds to make the loan and such other terms and conditions as the Department may require. The acceptance or processing of a loan application by the Department may not be construed to be a commitment for a loan. A commitment may only be issued in writing and no owner, applicant or other party may rely upon any statement or representation made by any official, employee or agent of the Department regarding the loan application.

§ 2-04 Determination of Feasibility and Conditions Precedent to Making a Loan.

(a) Low income tenancy and rent increases.

   (1) Covenant on low income tenancy. No loan shall be made unless the owner covenants in writing that so long as any part of the loan shall remain unpaid:

      (i) Upon vacancy, each dwelling unit in the multiple dwelling shall be available solely for occupancy by persons or families of low income; and

      (ii) No person living in the multiple dwelling at the time the loan is made shall be required to move because of the rehabilitation or improvement financed by the loan, other than temporarily during the course of construction.

   (2) Rent increases.

      (i) The Department, in its sole discretion, shall have the option to adjust the rent for each rental unit within the multiple dwelling pursuant to authority granted by subdivision 7 of § 452 of the Private Housing Finance Law of the State of New York. The total rental adjustment shall be in an amount not in excess of the debt service (both principal and interest) calculated on that portion of the loan which the Department attributes to the financing of the rehabilitation of the rental units as if such loan were to be repaid over a self-amortizing term to be determined by HPD which shall be not less than ten (10) years for loans averaging five thousand ($5,000) dollars or less per dwelling unit, and not less than fifteen (15) years for loans exceeding five thousand ($5,000) dollars per dwelling unit. The initial rental adjustment for each rental dwelling unit will be calculated by dividing the total rental adjustment by the total number of rental rooms. Such adjustment shall be applied equally on a per room per month basis, except that a greater adjustment may be allowed for vacant units. For loans which closed prior to the effective date of these regulations, unequal adjustments may be allowed if HPD sends notification of such rent adjustment to the tenants prior to the closing of the loan. For rents to be adjusted under the provisions of this subparagraph, the owner(s) of the premises must agree to waive any and all increases which are attributable to the completed rehabilitation work financed by the 8A loan or required pursuant to the Housing Repair and Maintenance Agreement to which he might be entitled under the Administrative Code Chapters 4 and/or 5 of Title 26. Rental adjustments under this subparagraph shall have no effect upon the status of

         (A) rent stabilized units which will remain stabilized with the rental adjustment added to the then current rent and subject to continuing lease increases granted by the appropriate governmental authority, or

         (B) rent controlled units which will remain controlled with the rental adjustment added to the then current maximum base rent and maximum collectible rent and subject to continuing increases in the maximum base rent and maximum collectible rent granted by the appropriate governmental authority. Nothing contained in this subparagraph (2)(i) shall affect the time period for the repayment of the loan as determined by the Department under 28 RCNY § 2-02(d).

      (ii) As an alternative to the rental adjustment provided under the preceding sub- paragraph (2)(i) the Department may in appropriate circumstances restructure the rents under § 33.9 of the New York City Rent and Eviction Regulations provided the rents as restructured do not exceed the average rent prevailing in local projects of municipally-aided limited- profit housing companies aided under Article II of the Private Housing Finance Law of the State of New York, the occupancy of which commenced on or after May 18, 1970, or in the case of a single room occupancy housing, seventy-five (75%) percent of the Moderate Rehabilitation Fair Market Rent, as defined in these regulations, for 0-bedroom units.

   (3) Status of apartments. Loans may be made irrespective of the current status of control, stabilization or decontrol of dwelling units and shall not have any effect upon such present or future status of the units.

   (4) Tenant notification. Prior to final approval of the loan, the owner shall be required to give tenants residing in the multiple dwelling written notification of the proposed rehabilitation or improvement and the possibility of rent increases, in form specified or approved by the Department. The owner shall submit an affidavit to the Department certifying that such written notification has been given to the tenants. The Department shall notify the tenants in writing no later than twenty-eight (28) calendar days prior to the loan closing of the nature of the proposed rehabilitation or improvement and any projected rent increases. The tenants may forward their comments or objections regarding the proposed loan to the Department for consideration of all relevant issues. The Department, in its discretion, may hold or require the owner to hold at least one public meeting with the tenants or their representatives to discuss the proposed rehabilitation or improvement and any projected rent increases. The Department may, as an alternative to its twenty-eight day notification, hold a tenant meeting if at least three (3) business days before the meeting a copy of the Department’s notification letter is sent by ordinary mail to all tenants. If rents are to be adjusted pursuant to 28 RCNY § 2-04(a)(2)(i), the Department shall send by ordinary mail a written notice of the approximate expected rent increase after the completion of the rehabilitation or improvement and prior to the establishment of the rental adjustments. After this notification, tenants may again forward their comments or objections to the Department for consideration. The Department shall consider any comments or objections that it considers to be relevant to the rent increases and which are received within ten (10) days after the date of mailing (by deposit in a general or branch post office or other official depository of the United States Postal Service) of the Department’s notification.

  1. Real estate taxes, assessments, water and meter charges and sewer rents. The owner shall make full and timely payment of current real estate taxes, assessments, water and meter charges and sewer rents during the term of the loan. At the time of the loan closing real estate taxes, assessments, water and meter charges or sewer rents may, with the consent of the Department, be in arrears, provided all such arrears, including any interest and penalties thereon, shall be discharged by the owner subsequent to the loan closing pursuant to arrangements satisfactory to the Department. The Department may require under terms and provisions as it shall prescribe, that the owner place money in escrow on a monthly basis to cover any outstanding real estate taxes, assessments, water and meter charges and sewer rents, accrued interest and penalties, or payments of principal and interest on the loan and one-twelfth of the prospective annual real estate taxes, assessments, water and meter charges, sewer rents and premiums for insurance. Unless otherwise required by the Department as a condition precedent to the loan and subject to all provisions of this chapter, the owner may apply for any rent adjustment or other benefits, including tax exemption and/or tax abatement, to which he, as a result of the rehabilitation or improvement, may become entitled under the provisions of the Administrative Code and all regulations promulgated thereunder.
  2. Relationship of loan to other mortgages.

   (1) Existing mortgages. Loans may be made with respect to a multiple dwelling encumbered by mortgages provided no mortgage is in default, except by reason of the deteriorated physical condition of the building, if such condition and default shall be remedied by the proposed rehabilitation or improvement.

   (2) Modification agreement. A mortgage modification or extension agreement may be required from the holder of a prior mortgage against the building where such mortgage secures a loan which is not self-liquidating and matures prior to the final payment date of the proposed loan.

   (3) Subordination of existing liens.

      (i) An existing mortgage or other lien held by the owner or a relative of the owner, or an officer, director, stockholder or partner of the owner, or a relative of such persons, or a party which is associated or affiliated with or a subsidiary of the owner shall be subordinated to the lien of the mortgage given to secure the City loan.

      (ii) A secured loan made by a private non-institutional lender, if made in conjunction with a loan made by the City for the partial financing of the rehabilitation, shall be subordinated to the lien of the mortgage given to secure the City loan.

  1. Removal of violations and management.

   (1) Removal of violations. All multiple dwellings assisted under this Program shall be brought into substantial compliance with the Multiple Dwelling Law and the Housing Maintenance Code within a period of time to be determined by the Department but in no event later than one (1) year from the date set forth in the loan documents for the commencement of the payment of principal and interest on the loan.

   (2) Additional work. The Department may require that the owner correct conditions and perform work in the premises in addition to that set forth in the Building Improvement Loan Agreement.

   (3) Management. No loan shall be made unless the Department shall have determined that the owner has evidenced an ability to manage the building in accordance with good real estate industry practice. In appropriate cases, the Department may require a written management plan, acceptable to the Department, to ensure proper procedures for management of the property, including rent collection, supervision of building employees, payment of bills for maintenance and operation and handling tenant complaints.

  1. Agency determination of feasibility.

   (1) Code compliance. No loan shall be made unless the rehabilitation or improvement will result in the elimination of a substandard or unsanitary condition(s) existing in the multiple dwelling in violation of the Multiple Dwelling Law or the Housing Maintenance Code, or will provide for the replacement and rehabilitation of the heating, plumbing, electrical and related systems or other improvements if reasonably necessary to prolong the useful life of the dwelling. In either case, the estimated useful life of the multiple dwelling after rehabilitation shall not be less than the term of the loan.

   (2) Economic viability. No loan shall be approved unless after the rehabilitation or improvement and any restructuring of rents as set forth in 28 RCNY § 2-04(a), or any rent adjustment or other benefits to which the owner may otherwise become entitled under the provisions of the Administrative Code, or otherwise, as a result of the rehabilitation or improvement, the building’s projected revenues are sufficient to meet all maintenance and operating expenses, real estate taxes, water rates, sewer rents, vacancy and collection losses, debt service and return on equity.

§ 2-05 Contract Terms and Insurance Requirements.

(a) Loan documents. Each loan shall be evidenced by a promissory note executed by the owner of the multiple dwelling in form specified by the Department. The Department in its discretion may require that one or more of the shareholders, officers or directors of a corporate owner co-sign the note or otherwise guarantee or pledge security or provide an acceptable surety for the repayment of the loan. The following additional documents may be required:

   (1) Building Loan Contract. A Building Loan Contract between the owner and the City in form specified by the Department.

   (2) Mortgage or financing statement. A mortgage executed by the owner in form specified by the Department, shall be required as security for all loans, except that, if the loan is for thirty-five thousand ($35,000) dollars or less, or for a term of seven (7) years or less, the Department may, in its discretion, accept a financing statement as security.

   (3) Disclosure statement. A sworn disclosure statement, in form specified by the Department, executed by the owner or his duly authorized agent disclosing the identity of all parties involved or to be involved in the ownership, financing and rehabilitation or improvement of the building.

   (4) Such other documents executed by the owner as the City or the Department and its attorneys deem necessary or desirable.

  1. Repayment of the loan by the borrower.

   (1) Method of repayment. Debt service consisting of payments of interest on the unpaid principal balance and repayment of the principal amount shall be paid in equal monthly installments so as to be fully amortized by the maturity date of the loan. At its discretion, the Department may require an alternative schedule of loan payments provided the loan is fully paid by its maturity date.

   (2) Prepayment privileges. The loan may be prepaid only in accordance with the terms specified in the loan documents.

   (3) Refinancing. Any debt in existence prior to the time of the closing of the City loan and secured by a lien against the premises may, without the consent of the Department be refinanced after such closing provided:

      (i) the principal amount of the refinanced debt shall not exceed the unpaid principal balance of the debt at the time of the refinancing, except that if such lien is subordinate to that of the mortgage given to secure the City loan, the principal amount shall not exceed the unpaid balance of the debt at the time of the closing of the City loan;

      (ii) the rate of interest on the refinanced debt shall not exceed the rate prevailing in the private market at the time of the refinancing;

      (iii) after refinancing debt service on the refinanced debt shall be paid in equal and constant periodic installments; and

      (iv) at the time of the refinancing the mortgage given to secure the City loan shall not be in default with respect to any payment of principal or interest or any other payment required under the terms of said mortgage or the note secured thereby.

   (4) Further encumbrances. Except as otherwise provided in 28 RCNY § 2-05(b)(3), an owner shall not at any time further encumber, mortgage or permit any encumbrance or lien of any kind or nature upon the premises without the prior written consent of the Department nor, shall the premises or any part thereof be conveyed without the prior written consent of the Department. On failure to comply with this paragraph (4), the Department, at its option, may declare the entire loan immediately due and payable.

  1. Insurance requirements.

   (1) Fire insurance. Ten days before loan closing the owner shall deliver to the Department prepaid insurance policies issued by companies in form and amounts satisfactory to the Department, insuring the premises against loss or damage by fire, with the usual extended coverage endorsement, and such other hazards as may reasonably be required by the Department. Such policies shall name the City as a mortgagee and provide that losses thereunder shall be payable to the City as its interest may appear.

   (2) Workmen’s compensation. Each contractor and sub-contractor, pursuant to the Workmen’s Compensation Law, shall provide adequate Workmen’s Compensation Insurance for all employees engaged in work on a building who may come within the protection of said law.

   (3) The Department may require the owner or contractor to provide Public Liability, Property Damage and Employer’s General Liability insurance.

§ 2-06 Construction Requirements and Payment of Loan Proceeds.

(a) Cost estimates, construction contract and contractors.

   (1) Scope of work and cost estimates. Applicants shall be required to submit estimates showing the nature and cost of each item of the rehabilitation or improvement. The Department may require the applicant to submit more than one estimate per trade and may prescribe forms on which such estimates shall be prepared or summarized. The plans, specifications, work write-ups or any other description of work to be performed must be approved by the Department prior to the commencement of any rehabilitation work or the making of a loan for same. The technical specifications shall conform to the standards established by the Department and where applicable, shall be subject to the approval of the Department of Buildings or other governmental agencies having jurisdiction.

   (2) Approval of construction contract. The specifications approved by the Department shall be made part of the written construction contract between the owner and the general contractor, and such construction contract shall be subject to the written approval of the Department. If a general contractor is not engaged, the owner shall enter into a written construction contract with each subcontractor. The pertinent specifications approved by the Department shall be made a part of each such contract and each such contract shall be subject to the written approval of the Department.

   (3) Contractors. The Department reserves the right to disapprove any contractor or subcontractor because of previous violation of statutes, rules or regulations relating to discrimination, standards of employment or labor standards, or because of inefficiency, abandonment of duties, or disregard for creditors on prior jobs performed under this Program or other programs of the City.

  1. Payment of loan proceeds.

   (1) Periodic inspections. While rehabilitation is in progress the Department’s personnel may conduct periodic inspections of the work and ma- terials.

   (2) Progress payments. Progress payments for work completed shall be made on the basis of sworn statements as hereinafter provided, subject to review, inspection and approval by the Department. At the time of each progress payment, the borrower and the general contractor, if a general contractor has been engaged, or other contractor, shall execute and submit to the Department a sworn statement, in form specified by the Department, certifying that there has been compliance with all labor standards pursuant to 28 RCNY § 2-06(d), that payment has been made or will be made from the proceeds of such progress payments for all labor and services rendered and materials furnished in connection with the work to the date of payment and that any liens placed against the premises subsequent to the closing of the loan have been paid, bonded or otherwise discharged. In the sole discretion of the Department, progress payments shall be made payable directly to the owner, directly to the contractor, or jointly to the owner and contractor.

   (3) Retention. The Department shall withhold an amount equal to ten percent (10%) of the total amount of each approved progress payment to create a retention fund to assure satisfactory progress and completion of the work. Up to fifty percent (50%) of such retention may be released upon the completion of at least fifty per cent (50%) of the work upon written request by the borrower and approval by the Department. The remainder of the retention funds shall be released upon:

      (i) completion of the work to the full satisfaction of the Department;

      (ii) issuance of approvals by governmental agencies having jurisdiction, including, where applicable, a certificate of occupancy or of completion by the Department of Buildings; and

      (iii) proof of payment for all labor and materials provided in connection with the rehabilitation or improvement. In lieu of subparagraph (ii) above, the Department in its discretion may accept from an architect registered with the State of New York or a professional engineer licensed by the State of New York, a certification that the completed work complies with the requirements of the particular governmental agencies having jurisdiction thereof and that applications seeking the approval of certification of such agencies have been properly filed with or submitted to such agencies.

   (4) Escrow provisions. The Department may require the deposit of loan advances in a separate escrow account, in a bank designated by the Department, subject to withdrawal only upon the joint signatures of the borrower and a representative of the Department. The Department may further require that the owner deposit in such escrow account, or in a separate trust account in such bank under such provisions as the Department shall prescribe, all or a designated portion of the rents collected from the multiple dwelling during the period of construction.

   (5) Failure to complete work. If the borrower for any reason fails to diligently pursue or timely complete the rehabilitation to the full satisfaction of the Department, the Department may, after written notice to the borrower, enter upon the premises, effect the completion of the rehabilitation and charge the cost thereof to the borrower.

   (6) Adjustments for interim interest. Any portion of the loan representing interest on advances during construction shall be adjusted upon completion of the rehabilitation as follows. If such portion shall be more than the amount required for interest on advances, the excess shall be credited to the borrower in reduction of the principal of the loan; if less than the amount required for such interest, the difference shall be deducted from the final advance of loan proceeds due borrower and paid to the City.

  1. Non-discrimination and affirmative action.

   (1) Compliance. The owner and any contractor or subcontractor engaged in connection with the rehabilitation or improvement must agree as a condition of such engagement to comply with all applicable federal, state and local statutes, rules and regulations relating to discrimination and standards of employment. The owner shall not exclude any person, including prospective tenants, from participation in, deny any person the benefits of, or subject any person to discrimination under this Program on the grounds of race, color, national origin, creed, age, sex, or sexual orientation. If an owner, contractor or subcontractor fails to comply with the provisions of this paragraph (1), the Department, in its discretion, may, in addition to or as an alternative to any other remedies reserved to the City or the Department in the loan documents, withhold progress payments to the owner or disapprove the contractor or subcontractor for future work under this Program or other programs of the Department.

   (2) Books, records and inspections. In order to assure strict compliance with this subdivision (c), all contractors and subcontractors will be required to sign an agreement, in form specified by the Department, to make their books and records available for inspection by representatives or agents of the Department. In order to determine such compliance the Department reserves the right to interview or confer with any employee at any time, on a rehabilitation site or in the office of the contractor or subcontractor.

  1. Labor standards.

   (1) Compliance with labor standards. The owner and any contractor or subcontractor engaged in connection with the rehabilitation or improvement must agree as a condition of such engagement to comply with all applicable federal, state and local statutes, rules and regulations relating to labor standards, including the payment of prevailing wage rates.

   (2) Enforcement. Each contractor and subcontractor shall be required to submit to the Department for review, copies of their weekly payrolls and such other documentation and reports as may be required by the Department. If the contractor engages a subcontractor, the contractor shall be obligated to obtain such required documentation and reports from the subcontractor. All books and records of the owner, contractors, subcontractors, laborers and materialmen involved in the rehabilitation shall be made available to representatives or agents of the Department and other governmental agencies having jurisdiction, for review or audit. The above parties may be required to submit to oral examination under oath. Such examination may include, but is not limited to, the performance and quality of the work, any and all matters pertaining to the loan and compliance with applicable statutes, rules and regulations.

§ 2-07 Supervision by the Department.

(a) Power to inspect and investigate.

   (1) Covenant on inspection and investigation. No loan shall be made unless the owner covenants in writing that so long as any part of the loan shall remain unpaid:

      (i) All persons operating or managing the multiple dwelling will permit the duly authorized officers, employees, agents or inspectors of the Department to enter in or upon and inspect such multiple dwelling at all reasonable hours; and

      (ii) The Department by its duly authorized representatives shall have full power to investigate into and order the owner of the multiple dwelling to furnish such reports and information as the Department may require concerning the rehabilitation or improvement and the management of the multiple dwelling, and shall have full power to audit the books of the owner with respect to such matters.

   (2) Nature of inspection. In addition to any other inspections authorized by law, the Department may make periodic inspections of the building so long as any monies remain unpaid on the loan. Such inspections shall be for the purpose of inspecting the condition and maintenance of the building, including its utilities, fixtures and equipment. Copies of any inspection reports shall be made available to the owner with recommendations for corrective measures where necessary. Representatives of the Department may periodically visit the building for the purpose of conferring with tenants and, where necessary, serving as a liaison or intermediary on landlord-tenant problems.

  1. Annual statement of income and expenses.

   (1) No loan shall be made unless the owner covenants in writing that so long as any part of the loan shall remain unpaid the owner shall submit to the Department annually, in such form as shall be approved by the Department, a statement of the income and expenses of such multiple dwelling. The statement of income shall include, but is not limited to, the monthly rent of each residential apartment and the rent controlled or rent stabilized status of each unit.

   (2) The annual statement shall cover the twelve month period ending June 30th or such other period approved by the Department, and shall be submitted within ninety days after the close of such period. The Department, in its discretion, may require submission of statements of income and expenses on a more frequent basis.

   (3) On five days’ notice, the books and records of the owner relative to the premises shall be made available to representatives or agents of the Department for review, examination or audit.

  1. Failure to comply with regulations. Upon failure or refusal of an applicant, owner or mortgagor to comply with this chapter (and all applicable rules and regulations promulgated by the governmental authority providing funds for the rehabilitation or improvement), such applicant, owner or mortgagor in addition to the imposition of any civil or criminal penalties provided by law, may be disqualified by the Department from applying for or receiving a loan under this Program or other programs of the Department for up to three (3) years following the date of any such refusal or failure. These rules and regulations shall be enforceable by the governmental authority providing funds for the rehabilitation or improvement as well as by the City.
  2. Waiver. The Department may waive any of this chapter where the nature of the rehabilitation or improvement or other circumstances warrant such exception. Any waiver to be effective shall require the written approval of the Commissioner or his designee and shall include a specific statement of the reason(s) for such waiver.

Chapter 3: City-aided Limited Profit Housing Companies

§ 3-01 Sponsors and Publicity.

(a)  Sponsorship of development. Applicants for sponsorship of a limited-profit housing company development shall furnish to the Department of Housing Preservation and Development, hereinafter referred to as "HPD",

   (1) an application for approval of the site and sponsors,

   (2) evidence of financial ability and other qualifications, and

   (3) such other data or information as HPD shall require. Applications, financial data and information with respect to qualifications shall be in such form and substance as HPD shall, from time to time, require. All references herein to “housing company” shall be deemed to mean limited-profit housing company.

  1. Eligibility – letter of intent. In addition to other requirements, a person or organization shall be ineligible for final approval as a sponsor of a housing company development unless such person or organization complies with all of the policies of the HPD Office of Community Partnerships.
  2. Publicity by sponsor. No public announcements of any kind with respect to the housing company development shall be made by the sponsor without prior written formal approval of HPD.

§ 3-02 Rental or Sale of Space and Solicitation of Deposits.

(a) Priority of applicants for dwelling units – initial rent up period. All inquiries and applications for the purchase of shares or rental of dwelling units received within 10 days of the public announcement about the development by HPD shall be treated on a par with each other regardless of the actual date of receipt of inquiry, application or deposit. In order to receive consideration, all inquiries shall be in writing and directed to the housing company, which shall note the date of receipt thereon. All correspondence addressed to the housing company or sponsor relating to the proposed development shall be acknowledged within ten (10) days of its receipt.
  1. Offer to rent or sell during initial rent up period. No housing company shall advertise or offer to rent any space or sell any cooperative shares without prior written approval of HPD. Advertisements shall include language as follows: “Equal Housing Opportunity” and “supervised by N.Y.C. Department of Housing Preservation and Development.” Advertisements shall also include language as follows: “Only one request for an application per person shall be permitted.”
  2. Rental schedule and charges. No housing company shall rent or lease any dwelling units or other rental space or equipment until the schedule of rentals or of carrying charges and equity payments for the entire housing development company has been approved in writing by HPD. No change in the schedule or in the accommodations in the development shall be made without prior written approval of HPD.
  3. Prerequisites to rental or sales. The rental or leasing of space shall not be commenced by a housing company until:

   (1) In the case of a cooperative housing company (hereinafter referred to as a “mutual housing company”), the Information Bulletin shall be accepted for filing by the Department of Law of the State of New York pursuant to § 352-e of the General Business Law.

   (2) The sponsoring agreement, restricted bank account, and required insurance coverage have been provided by the housing company and approved, in writing, by HPD.

   (3) The sales or rental agreement, blanket position bond, and resolution of the Board of Directors of the housing company authorizing the agreement have been approved by HPD.

   (4) All application forms, subscription agreements, occupancy agreements, receipts, and all other forms proposed to be used by the housing company must be approved in writing by HPD before they are used.

  1. Solicitation of deposits. Deposits from applicants for dwelling units shall not be solicited or accepted by the housing company until after the development has been approved by the State Division of Housing and Community Renewal, the housing company has been duly organized, and the development has been approved by the Board of Estimate or its successor.
  2. Procedure for deposits. Deposits shall not exceed $100 per dwelling unit, nor shall deposits be solicited or accepted until HPD has approved in writing:

   (1) The form of receipt, and

   (2) The opening of a trust account in which all deposits are required to be promptly deposited in the name of the housing company (or such other person or organization designated by HPD), and

   (3) The proposed selling agent. Deposits shall be accepted by the housing company by check or money order only, payable to the housing company. In the case of a mutual housing company, all funds so received shall be deposited in said account and shall bear the title “Capital Trust Account” after the name of the housing company. Funds on deposit in said trust account shall be restricted and subject to withdrawal only upon the filing of a written authorization signed by a designee of HPD.

   (4) All other criteria set forth in this section governing rental of dwelling units or sale of shares.

  1. Form of receipt. The receipt for the deposit shall clearly state that no monies in addition to the deposit may be collected as a further or final payment until HPD has (1) authorized the receipt by the housing company of further payments, and (2) approved the provisions of the subscription and occupancy agreement in the case of a mutual housing company development or of the lease agreement in the case of a rental development.
  2. Filing of applications, eligibility, investigation of applicants, waiting lists.

   (1) Every housing company shall have adequate supplies of applications on hand at all times at its business and sales office.

   (2) Any bona fide resident of the State of New York who has reached his/her majority under the laws of the State of New York may file an application for the lease of a dwelling unit in a rental housing company or the purchase of shares in a mutual housing company, provided, however, that in developments assisted by a project-based Section 8 contract under the United States Housing Act of 1937, as amended, or assisted by a contract under Section 236 of the National Housing Act, as amended, any legal resident of the United States who has reached his/her majority under the laws of New York may file an application for such lease or such purchase of shares. No condition or limitation shall be imposed upon an applicant in connection with the filing or execution of an application other than:

      (i) an application fee;

      (ii) non-returnable fees to cover the cost of credit investigation, home visit or administrative costs; and

      (iii) conditions set forth in applicable governmental authorizations, Land Disposition Agreements or other documents of such public nature. The application and non-returnable fees shall be in amounts approved by HPD. No applicant can be refused a place on an external waiting list for reason of financial ineligibility. Financial eligibility shall be determined at the time an apartment is offered. However, applicants shall be advised of the financial eligibility requirements at the time of applying.

   (3) Applications shall be consecutively numbered and dated upon receipt by the housing company or shall be numbered pursuant to order of selection by lottery, as applicable. The housing company or its managing agent shall provide an applicant with a dated receipt or other form of documentation setting forth the date and/or waiting list number of the application. Applicants must meet the occupancy standards at the time of application and at the time the apartment is offered. No applicant may be placed on more than one waiting list by bedroom size in a particular housing company development. Applications are only transferable to spouses, siblings, or children who are at least eighteen years of age as of the date of the applicant’s initial application, provided that such spouse’s, sibling’s, or children’s names appeared on the applicant’s initial application. Each applicant shall only be entitled to one entry per lottery for a housing company development. Multiple entries shall result in disqualification from such lottery. Furthermore, an applicant whose name is selected in a lottery cannot be included in the family composition of any other applicant who is selected in the same lottery for that particular housing company development. Such inclusion in multiple selected family compositions also shall result in disqualification of all involved parties from such lottery.

   (4) Each application, together with income and occupancy information and other data as hereinafter specified, shall be investigated by the housing company at the time an apartment is offered to determine the eligibility of the applicant. The data received by any housing company relative to tenant income shall be regarded as confidential in nature and protected accordingly to the extent permitted by law. In the case of a mutual housing company development, applicants approved by the mutual housing company shall upon notification of such approval be required to pay the balance of the purchase price of the shares allocated to the apartment. Thereafter, such application, together with supporting data, including a satisfactory credit history, and, in the case of a mutual housing company development, one copy of the contract for sale of shares approved by the housing company, shall be forwarded to HPD for its approval. Home visits conducted in connection with a credit check are permitted.

   (5) Except for developments governed by 28 RCNY § 3-21, no applicant shall be given possession of an apartment until his or her application has been approved by HPD and he or she has executed an occupancy agreement or lease.

   (6) Applications which are rejected by a housing company without being submitted to HPD shall have clearly marked thereon the reason for disapproval and shall be kept for a period of time as HPD may direct, and shall be available for examination by HPD. The applicant shall be advised in writing of the reason for his or her rejection and advised that he or she can appeal the rejection to HPD within thirty (30) days from the date of such written notification. Such appeal shall be in writing.

   (7) The housing company may adopt a policy permitting or prohibiting guarantors that must be applied uniformly to all applicants. Where an applicant requires a guarantor to guarantee payment of rent/carrying charges to a housing company that has adopted a policy permitting guarantors, the managing agent shall conduct a credit check and income review of the guarantor to assure that guarantor is financially responsible.

   (8) (i)  All housing companies, whether mutual or rental, shall maintain all waiting lists on forms approved by HPD for all tenant/cooperator applications for apartments, listed in chronological order, by apartment size, by date of receipt or by order of selection by lottery, as applicable. All eligibility requirements for age, residency and family composition must be met by the cut-off date for the lottery. As used in this chapter, the term “tenant/cooperator” shall mean a tenant residing in an apartment in a rental development and/or a shareholder/proprietary lessee residing in an apartment in a mutual housing company development, as the case may be. These master waiting lists shall be kept in the management office. A conformed copy of the master waiting lists by apartment size shall be sent to HPD. Thereafter, on a semi-annual basis, or more frequently if requested by HPD, updated waiting lists shall be submitted to HPD. The waiting lists must reflect the status of each application, i.e. who received an apartment, who declined an apartment, who withdrew, or any other circumstances, including dates the actions were taken.

      (ii) The opening and closing of all waiting lists shall be subject to prior written approval of HPD. A housing company wishing to open a waiting list shall present HPD with a written proposal of its contemplated publicity efforts. The proposal shall require plans for the outreach to members of minority groups who would otherwise be unlikely to learn of these available housing opportunities. The plan shall include advertisement in at least two daily newspapers of general circulation and two publications known to have high readership amongst minorities, and shall contain language as set forth in subdivision (b) of this section. The plan shall be presented to HPD thirty days in advance of the projected date for commencement of advertising. Advertisements that do not meet the requirements of this chapter, including, but not limited to, receipt of HPD’s prior approval, are deemed void. In such instances, the housing company shall be responsible for publishing a notice in at least two daily newspapers of general circulation stating that HPD has invalidated the prior advertisement. A housing company opening a closed waiting list shall select applicants by a lottery to be approved by HPD. When a list has sufficient names on it to last for three years, the list may be closed by HPD. Waiting lists for various size apartments may be closed at different times as the particular apartment-size list attains sufficient names.

      (iii) No application shall be taken or deposit accepted for a position on the waiting list subsequent to the official closing of such waiting list. Any application added to the waiting list after the official closing date shall be rejected by HPD.

   (9) Each applicant and members of his or her household shall furnish an affidavit attesting to the gross household income for the preceding year and the anticipated gross household income for the current year. Each applicant and members of his or her household shall also be required to furnish to the housing company or HPD certified copies of tax returns filed by them with the Internal Revenue Service (“IRS”) and the New York State Department of Taxation and Finance for the preceding or subsequent years for admission purposes as well as during their occupancy of a dwelling unit of the development. Applicant and members of his or her household shall assume the cost of obtaining certified copies for these purposes. Failure to provide certified tax returns when requested for admission purposes shall result in rejection of the application; failure to provide certified copies during occupancy shall result in imposition of maximum surcharges upon the tenant/cooperator.

   (10) The waiting list shall be printed in a legible manner and shall be available for inspection by members of the Board of Directors, members of the Tenants Association, residents of the development, city officials and applicants. Both internal and external waiting lists must be posted in a format prescribed by HPD in the management office, or, if there is no management office, in the lobby of each building of the housing company development. Posted waiting lists shall exclude all personal information except for the first and last names of all active applicants. Names of applicants on such waiting lists shall appear in chronological order, by apartment size, by date of application receipt or by order of selection by lottery, as applicable.

   (11) If, at any time, an applicant’s name has been omitted from a waiting list in error, and said applicant can present adequate documentation satisfactory to the housing company or its managing agent to substantiate an earlier date of application for an apartment, applicant’s name shall be inserted into the waiting list in the corrected date order. Requests to be reinserted into the waiting list cannot be made more than seven years after the date of the initial application and must be submitted to HPD for prior written approval.

   (12) Except for the priorities mentioned below, the waiting list by apartment size in chronological order by date of receipt of application or order of selection by lottery, as applicable, shall be maintained in the following manner:

Type Apartment Desired (Example: 1 Bedroom)          
Date of Request Name Address Business Telephone Residence Telephone Veteran yes or no
1/1/69
  1. Doe
XXX Ave. Y 123-4567 765-5432 yes

~

Selections of tenants or cooperators must be made from this list in chronological order or order of selection by lottery, as applicable.

   (13) Notwithstanding anything to the contrary contained in this subdivision, an applicant on a waiting list for the lease of a dwelling unit in a rental housing company development or the purchase of shares in a mutual housing company development who, while he or she is on such waiting list, occupies a dwelling unit in such development in violation of this chapter, shall be removed from such waiting list.

  1. Occupancy priorities. The following occupancy priorities shall apply to all housing companies:

   (1) First priority. Tenant/cooperators currently residing in a development whose household composition renders them eligible for a larger or smaller apartment shall be given first priority for an internal transfer. First preference shall be given to tenant/cooperators who are moving to a smaller apartment. No priority shall be given to residents seeking additional apartments for members of their household, or for non-resident family members or any other parties. The housing company shall maintain an internal transfer list by apartment size, listed in chronological order by date of receipt of transfer request. If, at any time, a tenant/cooperator’s name has been omitted from the internal transfer list in error, and said tenant/cooperator can present adequate documentation satisfactory to the housing company or its managing agent to substantiate an earlier request for a transfer, said tenant/cooperator’s name shall be inserted into the internal list in the corrected date order. Insertions to the internal transfer list shall be submitted to HPD for prior written approval.

   A tenant/cooperator on an internal transfer list, whose household composition so changes as to render him or her ineligible for the apartment size requested, shall be placed on the appropriate size apartment list as of the date when the change occurred or the date the original request is made, whichever is later; provided, however, that, except for enlargement of a household due to birth or adoption, the change to a larger household composition must have occurred at least one year prior to placement on the internal transfer list. If a tenant/cooperator is offered an apartment as an internal transfer and he or she is no longer eligible for that size apartment due to a change in household composition, his or her name shall then be placed on the appropriate size apartment list as of the date when the change occurred which made him or her ineligible.

   The tenant/cooperator must meet the occupancy standards for the size apartment requested at the time that he or she places his or her name on the internal transfer list and must have been in residence for a period of no less than one year before he or she may request a transfer to a larger apartment. The income affidavit submitted by the tenant/cooperator on file with the housing company or its managing agent must reflect a sufficient number of occupants to warrant a transfer at the time of his or her request, as well as when an apartment is offered. The housing company or its managing agent shall deny a transfer to the tenant/cooperator if he or she fails to satisfy these requirements. No transfer request will be accepted based on pregnancy. No transfer of apartments shall be effected if the tenant/cooperator seeking the transfer is in arrears in rent/carrying charges, surcharges, capital assessments, submetering charges or any other fees or charges. The housing company shall advise the tenant/cooperator in writing of its denial of a request for transfer.

   The tenant/cooperator shall be required to pay a surcharge effective the first day of the month following his or her residency in the new apartment if his or her income exceeds the maximum allowable for that apartment.

   (2) Second priority. Pursuant to § 31(7) of the Private Housing Finance Law, preference in admission to a project with an open waiting list, as determined by HPD, shall be given to persons who are veterans as such term is defined pursuant to § 85 of the Civil Service Law or their surviving spouses, and for projects with a closed list, as determined by HPD, preference shall be given upon the opening of the waiting list to such veterans or surviving spouses that are selected in the lottery for such opened waiting list. This preference in admission shall only be provided to veterans or surviving spouses whose names appear on the waiting list as the applicants of record and who have identified themselves as the heads of household on their applications. The inclusion of a veteran or surviving spouse as a member of the household shall not entitle any other applicant of record to this preference in admission.

   (3) Third priority. Persons listed on the external waiting lists by apartment size in strict chronological order by date of receipt of application or order of selection by lottery, as applicable. Family members of a tenant/cooperator, whether or not members of the tenant/cooperator’s household, shall not receive preferential treatment on the waiting lists.

   (4) The above priorities shall not be applicable to staff or student housing or to housing for the elderly or disabled except as such priorities apply within each special category. Preference in admission to any development or to such portion of any development which has been specifically designed for occupancy by elderly or disabled persons, as the case may be, shall be given to such persons.

  1. Application fee for rentals and mutual housing companies. A rental or mutual housing company development may require an application fee of up to $200 at the time of submission of an application for an apartment. Any deviation from this subdivision (j) requires prior written approval from HPD. Said application fee is to be returned in full without interest if the housing company rejects the application. The housing company may retain a reasonable portion of the application fee, not to exceed fifty dollars, for administrative costs if an applicant withdraws his or her application. If an apartment is offered to an applicant and the applicant does not accept the apartment, the housing company may remove the applicant from the waiting list and retain fifty dollars of the application fee. A housing company may elect to offer an applicant an apartment for a second or third time, but such additional offers are not mandatory. If the applicant accepts the apartment, all of the application fee shall be retained by the housing company.
  2. Security deposit for purchase of cooperative shares. A mutual housing company may, at its option, require an applicant for a mutual housing company apartment to submit, along with his/her written acceptance of said apartment, a security deposit of up to one month’s carrying charges which may be retained by the housing company and apportioned between the housing company and the outgoing cooperator to reimburse them respectively for their losses in the event the applicant withdraws his or her acceptance of the apartment.
  3. Verification of income at time of admission and during occupancy.

   (1) Admission income verification. The housing company or its managing agent shall verify the aggregate income of each applicant and members of his or her household prior to admission to the development in the following manner:

      (i) Each applicant shall furnish an affidavit attesting to the gross household income of his or her household for the preceding year and the anticipated gross household income for the current year. All members of the household must be listed on the income affidavit whether or not income was earned.

      (ii) Each applicant and each member of the household having any income shall furnish proof of income by supplying copies of W-2 forms filed by them for the preceding year, or a statement from their employer setting forth their current rate of income and their total earned income for the immediately preceding year and a copy of their IRS or New York State income tax returns for the immediately preceding year. HPD or the housing company may require submission of certified income tax returns for admission purposes. Each self-employed applicant and self-employed member of the household who will reside with the applicant shall furnish a certified copy of his or her IRS and New York State income tax returns for the immediately preceding year. Applicants and members of the applicant’s household shall pay the cost of obtaining certified copies of their income tax returns.

      (iii) A copy of amendments to any tax returns, or of tax assessments shall be furnished to the housing company within 30 days after filing the amendment or receipt of notice of the assessment.

      (iv) Additional proof of eligibility may be requested by the housing company or HPD.

   (2) Income verification during occupancy. During occupancy, a tenant/cooperator and members of his or her household shall submit when requested by the housing company, its managing agent or HPD certified copies of their IRS and/or New York State income tax returns for audit or verification purposes with regard to continued eligibility, surcharges or any other valid purpose. The tenant/cooperator and members of his or her household shall assume the cost of obtaining such certified copies.

   (3) Failure to provide certified income tax returns or other documentation. Failure to provide certified copies of income tax returns or other required documentation shall result in denial of admission to new applicants and imposition of the maximum surcharge to those already in occupancy.

  1. Occupancy standards.

   (1) Apartments shall be offered for occupancy as they become vacant in accordance with the standards set forth below (occupancy standards shall be applied without regard to the pending birth or pending adoption of a child):

      (i) Efficiency apartments (no bedrooms). One (1) or two (2) persons.

      (ii) One (1) bedroom apartments. Two (2) or three (3) persons shall occupy a one-bedroom apartment. A single person may occupy a one-bedroom apartment if the development has less than ten percent (10%) efficiency apartments.

      (iii) Two (2) bedroom apartments. No fewer than three persons, a brother and a sister who are both adults, or a parent or guardian with at least one child.

      (iv) Three (3) bedroom apartments. No fewer than (A) five (5) persons, (B) parent(s) or guardian(s) with two children of the opposite sex, (C) a household of three adults with one child where at least one adult is the parent or guardian of such child, or (D) a household of one parent or guardian and his or her three children shall occupy a three-bedroom apartment.

      (v) Four (4) bedroom apartments. No fewer than (6) persons.

      (vi) All apartments. In all cases the tenant/cooperator named on the lease must be at least eighteen years of age and must actually occupy the apartment as his or her primary residence.

      (vii) HPD may grant waivers of occupancy standards for medical reasons or where there are no available applicants on the applicable waiting list and HPD has determined that it is in the housing company’s best interests to fill a specific vacancy by offering the vacant apartment to an applicant from a waiting list for an apartment of a different size.

   (2) Priority shall be given to internal transfers in the offering of all vacant apartments.

  1. Lease and occupancy agreements.

   (1) No tenant/cooperator shall be permitted to occupy an apartment until an executed lease or occupancy agreement has been approved by HPD. The minimum term of such lease or occupancy agreement shall be one year.

   (2) No tenant/cooperator shall have the right to sublet without prior written approval of HPD and the housing company, which only shall be given in exceptional circumstances, including, but not limited to, military service. No tenant/cooperator shall have the right to assign his or her lease/occupancy agreement.

   (3) No tenant/cooperator may accept any consideration or thing of value from a guest, invitee or other occupant in exchange for occupancy, whether temporary or permanent, unless such person is listed on the application, income affidavit or recertification of the tenant/cooperator and the tenant/cooperator continues to maintain the apartment as his or her primary residence.

   (4) It is required that the apartment of the tenant/cooperator be at initial occupancy and continue to be his or her primary place of residence. The facts and circumstances to be considered in determining whether a tenant/cooperator occupies a dwelling unit as his or her primary residence include, but are not limited to, whether such tenant/cooperator

      (i) specifies an address other than such dwelling unit as his or her place of residence or domicile in any tax return, motor vehicle registration, driver’s license or other document filed with a public agency,

      (ii) gives an address other than such dwelling unit as his or her voting address,

      (iii) sublets or permits unauthorized persons to occupy the dwelling unit without written approval by HPD and the housing company or attempts to assign such dwelling unit, or

      (iv) spent less than an aggregate of one hundred eighty-three days in the preceding calendar year in the City at such dwelling unit (unless such individual is in active service in the armed forces of the United States or took occupancy at such dwelling unit during the preceding calendar year). However, no dwelling unit may be considered the primary residence of the tenant/cooperator unless the tenant/cooperator’s name is listed on income documentation that must be sent by the tenant/cooperator to the Department or to any other governmental agencies (for example: income affidavits, re-certifications or Section 8 forms) for the most recent preceding year for which such documentation was required. No dwelling unit may be considered the primary residence of the tenant/cooperator unless the tenant/cooperator provides proof that he or she either filed a New York City Resident Income Tax return at the claimed primary residence for the most recent preceding taxable year for which such return should have been filed or that the tenant/cooperator was not legally obligated to file such tax return pursuant to § 1705(b)(1)(A) and § 1751(a) of the Administrative Code due to residency in a foreign country or pursuant to § 11-1751(a) of the Administrative Code and § 6-01 of the Tax Law because the tenant/cooperator’s income for such year was below that required for the filing of a return or pursuant to § 893 or 894 of the Internal Revenue Code due to employment by a foreign government or international organization or due to any treaty obligation of the United States which applies to such taxpayer. The tenant/cooperator whose residency is being questioned will be obligated to provide proof that his or her apartment is his or her primary place of residence, including, but not limited to certified New York State income tax returns, utility bills, and voter registration data.

   (5) The terms and conditions of all licensing agreements and all tenancies, including tenancies of commercial and professional space, shall be subject to HPD written approval.

  1. Applicability of Section 235-f of the Real Property Law.

   (1) Definition of terms. Section 235-f of the Real Property Law of the State of New York shall apply to all housing companies, subject to the restrictions set forth in this section. As used in this subdivision (o), the term “occupant” shall mean a person, other than a tenant/cooperator, residing together with the tenant/cooperator in an apartment in a rental or mutual housing company development subject to these rules, who is not a party to the lease or occupancy agreement, including, but not limited to, a member of a tenant/cooperator’s immediate family, whose occupancy has been approved by the housing company and HPD.

   (2) Admission and eligibility requirements for occupants.

      (i) No tenant/cooperator shall permit a person to “co-occupy” the tenant/cooperator’s apartment without first obtaining the written approval of the housing company and/or HPD, except as specified in subdivision (p) of this section. Such approval shall be sought by the tenant/cooperator and the proposed occupant, submitting to the housing company through its managing agent the same financial information as is required to be submitted by any tenant/cooperator.

      (ii) The housing company and/or HPD may reject any proposed occupant:

         (A) For the same reasons that the housing company and/or HPD would reject the application of a person who applies to become a tenant/cooperator of a vacant apartment, provided that no rejection shall be based on the financial ability of a proposed occupant to pay the rent/carrying charge for the apartment if the tenant/cooperator has adequate financial ability to pay such rent/carrying charge; or

         (B) when the acceptance of a proposed occupant would result in the apartment being occupied contrary to the occupancy standards for apartments set forth in subdivision (m) of this section; or

         (C) when the acceptance of a proposed occupant would result in the apartment being occupied in violation of the income eligibility requirements of the Private Housing Finance Law or these rules, or

         (D) when the acceptance of a proposed occupant would violate the income eligibility or other occupancy standards or requirements of any other federal, state or city program applicable to such apartment.

   (3) Status of occupant.

      (i) No occupant, except as otherwise set forth in subdivision (p) of this section, shall have any rights under the lease/occupancy agreement for the apartment or to succeed to the rights of the tenant/cooperator, if the tenancy of the tenant/cooperator terminates. Acceptance by the housing company of full or partial payment of rent/carrying charges from an occupant, by check or otherwise, shall not give the occupant any rights of tenancy under the lease/occupancy agreement or otherwise.

      (ii) Each occupant shall be required to furnish to the housing company such financial and other information, on an annual or more frequent basis, that the tenant/cooperator is required to furnish to the housing company, in the form that the tenant/cooperator is required to furnish such information, including by affidavit. Where the rental or carrying charge for an apartment, or a rental surcharge, is based on the income of persons residing in the apartment, the income of the occupant shall be included in such com- putation.

      (iii) The tenant/cooperator and the occupant shall occupy the apartment as their primary residence, and the occupant shall represent his or her intention to do so prior to commencing occupancy.

  1. Occupancy rights of family members.

   (1) The rights of family members of a tenant/cooperator who have requested to remain as the lawful tenant/cooperator are governed by policies and procedures set forth in this subdivision, except in those instances where this subdivision is preempted by the rules or regulations of other federal, state or city programs.

   (2) As used in this subdivision the following definitions shall apply:

      (i) “Tenant/Cooperator” shall mean any person named on a lease as a lessee or who is a party to a rental agreement or proprietary lease and obligated to pay rent or carrying charges for the use or occupancy of an apartment.

      (ii) “Family member” shall mean:

         (A) A husband, wife, son, daughter, stepson, stepdaughter, father, mother, stepfather, stepmother, brother, sister, nephew, niece, uncle, aunt, grandfather, grandmother, grandson, granddaughter, father-in-law, mother-in-law, son-in-law, or daughter-in-law of the tenant/cooperator.

         (B) Any other person residing with the tenant/cooperator in the apartment as a primary residence who can prove emotional and financial commitment and interdependence between such person and the tenant/cooperator. Although no single factor shall be determinative, evidence which is to be considered in determining whether such emotional and financial commitment and interdependence existed shall be the income affidavit filed by the tenant/cooperator for the apartment and other evidence which may include, without limitation, the following factors:

            (a) longevity of the relationship;

            (b) sharing of or relying upon each other for payment of household or family expenses, and/or other common necessities of life;

            (c) intermingling of finances as evidenced by, among other things, joint ownership of bank accounts, person and real property, credit cards, loan obligations, sharing a household budget for purposes of receiving government benefits, etc.;

            (d) engaging in family activities by jointly attending family functions, holidays and celebrations, social and recreational activities, etc.;

            (e) formalizing of legal obligations, intentions, and responsibilities to each other by such means as executing wills naming each other as executor and/or beneficiary, granting each other a power of attorney and/or conferring upon each other authority to make health care decisions each for the other, entering into a personal relationship contract, registering a domestic partnership pursuant to Executive Order No. 48, dated January 7, 1993 or Local Law No. 27 of 1998, serving as a representative payee for purposes of public benefits, or other such formalizations;

            (f) holding themselves out as family members to other family members, friends, members of the community or religious institutions, or society in general, through their words or actions;

            (g) regularly performing family functions, such as caring for each other or each other’s extended family members, and/or relying upon each other for daily family services;

            (h) engaging in other patterns of behavior, or other action which evidences the intention of creating a long-term, emotionally committed relationship.

In no event shall evidence of a sexual relationship between such persons be required or considered.

      (iii) “Disabled person” shall mean a person who has an impairment which results from anatomical, physiological or psychological conditions, other than addiction to alcohol, gambling, or any controlled substance, which is demonstrable by medically acceptable clinical and laboratory diagnostic techniques and which is expected to be permanent and to substantially limit one or more of such person’s major life activities.

      (iv) “Senior citizen” shall mean a person who is sixty-two (62) years of age or older.

   (3) Unless otherwise prohibited by occupancy restrictions based upon income limitations pursuant to federal, state or local law, regulations or other requirements of governmental agencies, if the tenant/cooperator has permanently vacated the apartment, any member of such tenant/cooperator’s family, who has resided with the tenant/cooperator in the apartment as a primary residence, as determined by 28 RCNY § 3-02(n)(4), for a period of not less than two years immediately prior to the tenant/cooperator’s permanent vacating of the apartment, and whose name is listed on any income documentation submitted by such tenant/cooperator to the Department or to any other governmental agencies (for example: income affidavits, re-certifications or Section 8 forms), for at least the two consecutive annual reporting periods immediately prior to the tenant/cooperator’s permanent vacating of the apartment or where such person seeking succession rights is a senior citizen or disabled person, for a period of not less than one year immediately prior to the tenant/cooperator’s permanent vacating of the apartment, and has appeared on such income documentation for at least the reporting period immediately prior to the permanent vacating of the apartment by the tenant/cooperator, or from the inception of the tenancy or commencement of the relationship if for less than such periods, and the apartment was and continues to be the primary residence of the member of the tenant/cooperator’s family that resided with such tenant/cooperator, may request to be named as a tenant/cooperator on the lease and where applicable on the stock certificate. In the event that HPD has authorized the housing company not to collect surcharges based on income documentation, the family member shall be asked to provide other evidence of occupancy for the required period of time. The burden of proof is on said family member to show use of the apartment as his or her primary residence during the required period to be eligible to succeed to possession.

   (4) Family members do not have the right to succeed the tenant/cooperator in occupancy if the housing company terminates the tenancy of a tenant/cooperator for cause.

   (5) The minimum periods of required residency set forth in this section shall not be deemed to be interrupted by any period during which the family member who is seeking succession rights temporarily relocates because he or she:

      (i) is engaged in military duty;

      (ii) is enrolled as a full-time student, and the family member resided in the subject apartment as a primary residence (as determined pursuant to paragraph 4 of subdivision (n) of this section) for at least two years immediately prior to the family member’s enrollment as a full-time student;

      (iii) is not in residence at the apartment pursuant to a court order not involving any terms or provisions of the lease/occupancy agreement, and not involving any grounds specified in the Real Property Actions and Proceedings Law;

      (iv) is engaged in employment requiring temporary relocation from the apartment;

      (v) is hospitalized temporarily for medical treatment; or

      (vi) has other reasonable grounds that shall be determined by HPD upon application by such person.

   (6) The housing company shall secure credible evidence of the tenant/cooperator’s permanent removal from the apartment and the surrender of the apartment or the tenant/cooperator’s written declaration to vacate the apartment prior to the consideration of reletting or succession to the apartment by a family member.

      (i) Where a tenant/cooperator has died, the lease and shares of stock for such decedent’s apartment shall be surrendered by the decedent’s estate or survivors for redemption. The housing company, upon written request received from any member of such deceased tenant/cooperator’s family who has resided with the deceased tenant/cooperator in the apartment as a primary residence as set forth in paragraph (3) of this subdivision, shall sell or transfer the shares and/or the lease to said family member.

      (ii) In the event that that is a legal dispute or claim involving the rightful ownership of the stock assigned to an apartment in a mutual housing company, pending a determination thereof by an appropriate tribunal or court of law, such family members as set forth in paragraph (3) of this subdivision shall continue to be permitted to reside in the apartment.

      (iii) If the appropriate tribunal or court of law shall determine that someone other than such family members as set forth in paragraph (3) of this subdivision is entitled to the ownership of the stock then, upon presentation of a court order or other valid evidence, such new owner shall be permitted solely to surrender the stock to the housing company for redemption pursuant to the applicable provisions of the Private Housing Finance Law. In such event, such family members in occupancy as set forth in paragraph (3) of this subdivision shall be afforded a reasonable opportunity to purchase the stock from the housing company for the price authorized pursuant to the Private Housing Finance Law and 28 RCNY § 3-06.

   (7) The housing company and/or HPD shall have the option of requiring any proposed successor to move to a smaller apartment in the development, in the event the apartment in question is or would become underoccupied according to occupancy standards set forth in subdivision (m) of this section.

   (8) Where a family member applies to the housing company for permission to remain in occupancy as a tenant/cooperator, the housing company shall act on the application within thirty (30) days of receipt by either requesting that HPD approve the application or by denying the application and notifying the applicant family members in writing of its determination.

      (i) In the event the housing company denies such application, the notice to the applicant shall set forth in writing the reasons why the evidence submitted was deemed inadequate and resulted in such denial and inform the applicant of the right to appeal and the method of appeal.

      (ii) A family member whose application to succeed to a lease or an occupancy agreement has been denied by a housing company may, within thirty (30) calendar days of receipt of the written denial, appeal to the Commissioner of HPD (hereinafter “Commissioner”) or his or her designee. Such appeal shall include proof of service of a copy of such appeal upon the housing company. The appeal shall briefly set forth the reasons why the family member believes he or she is entitled to occupy the apartment and any errors or erroneous findings he or she believes are contained in the housing company’s determination. The Commissioner or his or her designee shall review the housing company’s determination and any additional information submitted by the applicant and shall issue the final agency decision with regard to the applicant’s application. The only review of this determination is pursuant to Article 78 of the Civil Practice Law and Rules.

      (iii) Pending the agency’s determination, the applicant may continue in occupancy and shall be required to pay for the use and occupancy of the apartment in an amount equal to the monthly rental/carrying charge paid by the vacating tenant/cooperator.

      (iv) In the event the agency determines that the applicant is ineligible to remain in occupancy then such applicant shall vacate the apartment or the housing company may seek to terminate the occupancy without any further approval by HPD.

   (9) This subdivision shall not apply to staff housing where employment at the institution is a primary requirement for residency. It shall also not apply to housing designated for senior citizens or the disabled, unless such succeeding family member would have qualified for an apartment as an original tenant.

  1. Payment of rent and deposit of security.

   (1) A rental housing company may require all new tenants to deposit as security an amount equal to a maximum of two months’ rent, or such amount as may be approved by HPD at the time of signing the lease except where federal law or regulations prohibit. Commercial or professional tenants may be required to deposit as much rent as security as the housing company requires.

   (2) Each rental housing company is required to open an interest bearing bank account in accordance with § 7-103 of the General Obligations Law.

  1. Unauthorized payments. No company, associate, director, officer, employee, agent or other person shall solicit or receive, directly or indirectly, any commission, bonus, gratuity, fee or any other payment not expressly authorized by HPD from any person interested directly or indirectly, in the filing of an application or in obtaining a lease or occupancy agreement. Violation, in whole or in part, of Penal Law, § 180.55 by any agent, sub-agent, or employee of the agent is a crime and may be grounds for the cancellation of a sales or rental agreement or managing agent’s agreement by HPD.

§ 3-03 Tenant Income Limitations, Surcharges and Applicability of Federal § 8 Subsidy to Tenant/Cooperators in Residence.

(a)  Income limitations.

   (1) The dwellings in a rental development shall be available for persons or families whose probable aggregate annual income at the time of admission and during the period of occupancy does not exceed the greater of (i) the median income for such persons or families for the New York City metropolitan statistical area or (ii) seven times the annual rental, including the value or cost of heat, light, water and cooking fuel, except that in the case of families with three or more dependents, such ratio shall not exceed eight times the annual rental.

   (2) “Probable aggregate annual income” shall mean the total income of the chief wage earner as reported in the New York State income tax return, plus the total income of each other member of the household, excluding therefrom (i) the income of each additional wage earner up to $20,000 or such amount as determined by State law, and (ii) such personal exemptions and deductions for medical expenses as are actually taken by each tax paying occupant on the New York State tax return. However, the income of a household member, under 21 years of age, who is a full time student shall not be included in the computation of such annual income.

   (3) Subject to the conditions contained in paragraphs (1) and (2) supra, in determining the eligibility of tenant/cooperators in a mutual housing company development, there may be added to the total annual carrying charges an amount equal to six per cent of the original investment of a person or family in the equity obligations of such mutual housing company and where same is not included in the carrying charges payable to the mutual housing company, the value or cost to the tenant/cooperator of:

      (i) heat, light, water and cooking fuel

      (ii) the cost of repainting, upon the basis of $45 per room per year and

      (iii) the cost of replacement of fixtures and appliances upon the basis of $10 per room per year.

   (4) Notwithstanding other applicable provisions, families with two or more dependents whose probable aggregate annual income does not exceed one hundred twenty-five percent of the limitations as to income as determined pursuant to paragraphs (1) and (2) of this subdivision (a), shall also be eligible for admission to the dwelling of a project provided that any family becoming eligible for admission by reason hereof shall pay, from the time of admission, a rental surcharge as provided for in subdivision (b) of this section, computed on the basis of the income limitations applicable to such family in the absence of this provision.

  1. Surcharges. In the event that the aggregate annual income of all occupants of a dwelling unit shall exceed the maximum above set forth, the tenant or cooperator shall be required to pay a surcharge based upon the following schedule:
Schedule of Surcharges  
Income Percent of Basic Rent Constituting Surcharge
Up to 100 percent of maximum income limit None
From 100 percent and up to 105 percent of maximum income limit None
From 105 percent and up to 110 percent of maximum income limit 5
From 110 percent and up to 115 percent of maximum income limit 10
From 115 percent and up to 120 percent of maximum income limit 15
From 120 percent and up to 125 percent of maximum income limit 20
From 125 percent and up to 130 percent of maximum income limit 25
From 130 percent and up to 135 percent of maximum income limit 30
From 135 percent and up to 140 percent of maximum income limit 35
From 140 percent and up to 145 percent of maximum income limit 40
From 145 percent and up to 150 percent of maximum income limit 45
From 150 percent and over 50

~

  1. Surcharge procedures.

   (1) Surcharges shall be payable monthly on a current basis by tenant/cooperators in occupancy based upon income realized during the prior calendar year and such income shall be reported on income affidavits to be furnished by tenant/cooperators.

   (2) On February 15th of each year during occupancy, or at such other date as determined by HPD, the housing company shall distribute to each tenant/cooperator an affidavit to be executed by all occupants residing in the apartment as to the income realized by each of such occupants during the preceding calendar year. The information requested shall be set forth in a form of affidavit prescribed by HPD.

   (3) The tenant/cooperator shall return to the housing company or its managing agent the income affidavit supplied by the housing company duly executed and notarized by April 30th of each year.

   (4) The surcharges shall be computed by the housing company or its managing agent in sufficient time so that surcharge billings shall commence no later than July 1st of each year. The income affidavits will be subject to verification at any time, pursuant to such method as may be determined by HPD, including, but not limited to, spot check audits of certified income tax forms and verification by the New York State Department of Taxation and Finance as set forth in § 60(9) of the Private Housing Finance Law. Tenant/cooperators and other occupants selected for audit shall be required to provide a certified copy of the IRS or New York State income tax return for the audited year(s). The tenant/cooperators shall assume the cost of obtaining said certified copies. If HPD establishes a verification system with the New York State Department of Taxation and Finance, those tenant/cooperators found to have reporting discrepancies shall be obligated to furnish certified copies of IRS or New York State income tax returns. The housing company may, upon HPD’s approval, implement a policy imposing a penalty fee when additional income is found that would have resulted in an additional surcharge.

   (5) A housing company or its designee is required to collect all surcharges computed on the basis of income received by all individuals in occupancy.

  1. General requirements.

   (1) In the event that a tenant/cooperator fails to return a fully completed affidavit by April 30th of each year, the income of such tenant/cooperator will be presumed to have exceeded the maximum allowable income by 150 percent or more. Written notice will be given informing such tenant/cooperator that the maximum surcharge will be imposed effective July 1st. In the event completed income affidavits are submitted after April 30th but prior to June 30th, the maximum surcharge will not be imposed. However a non-refundable administrative charge, payable to the housing company, will be applied. This charge cannot exceed $50.00. The housing company may remit half of any such charge collected to the managing agent to compensate for the additional administrative work.

   In the event fully completed income affidavits are submitted after June 30th, a correction to the maximum surcharge billing will be made effective the first day of the month following the submission of such income affidavit. However, a non-refundable administrative charge, payable to the housing company, will be applied. This charge cannot exceed $150.00 for each month after June 30th in which the tenant/cooperator has not submitted a fully completed income affidavit. This charge must be made payable to the housing company. The housing company may remit half of any such charge collected to the managing agent, in accordance with the terms of the applicable contract, to compensate for the additional administrative work. In extenuating circumstances, HPD may permit reimbursement of excess surcharge to the tenant/cooperator.

   For purposes of this paragraph, an income affidavit in which the tenant/cooperator’s household income is not disclosed is not a fully completed income affidavit.

   (2) [Reserved.]

   (3) Whenever changes occur in rentals or carrying charges or any component thereof used in the computation of surcharges, surcharges shall be recalculated by the housing company or its managing agent.

   (4) A housing company cannot bring an eviction proceeding against any tenant/cooperator who fails or refuses to pay surcharges without the issuance of a certificate of eviction by HPD following an administrative hearing by an HPD designated hearing officer in accordance with 28 RCNY § 3-18.

   (5) Housing companies or their managing agents shall submit a copy of the surcharge information tabulation sheets, and all changes thereto, together with copies of the income affidavits for HPD review and evaluation. Surcharge records shall be kept available by the housing company or its managing agent for inspection by HPD.

   (6) Tenant/cooperators and other occupants shall be required by HPD to furnish certified copies of their IRS and New York State income tax returns. The cost for the certified report is to be borne by the tenant/cooperator.

  1. [Reserved.]
  2. Interim changes in income.

   (1) Where a tenant/cooperator anticipates a long-term reduction in income, resulting from death of a wage earner, retirement, or other such circumstances, said tenant/cooperator must submit documentation of such interim change in income to the managing agent. The managing agent shall verify the documentation submitted, and if a change in income is so determined, shall remove the surcharge and inform HPD of such action. HPD reserves the right to disapprove the action of the housing company.

   (2) Where a tenant/cooperator anticipates a temporary reduction in income, such as job loss, temporary illness, or other such circumstances, said tenant/cooperator must submit documentation of such temporary reduction in income to the managing agent. The managing agent shall verify the documentation submitted, and if the interim change in income is so determined, shall reduce, eliminate or defer collection of surcharges for a reasonable period of time or shall arrange for an extended payment plan.

   (3) The managing agent must maintain supporting documentation for all agreements which shall be available for review by HPD. Any tenant/cooperator shall have the right to appeal any determination under this subdivision (f) to HPD.

  1. Applicability of federal § 8 subsidy to tenant/cooperators in residence. Pursuant to § 31, subdivision 10 of the Private Housing Finance Law, a housing company shall accept federal reimbursement under § 8 of the Housing and Community Development Act of 1974, as amended, in lieu of such amount of rent/carrying charge payment for a person qualifying under such act. A housing company shall not reject an applicant for an apartment solely on the basis that all or part of the rent/carrying charges shall be paid under § 8 of the Housing and Community Development Act of 1974, as amended.

§ 3-04 Housing Company Funds and Bonds.

(a) Bank accounts. All funds of the housing company shall be deposited in banks or savings and loan associations maintaining an office in the State of New York in accounts which are insured by the Federal Deposit Insurance Corporation or Federal Savings and Loan Insurance Corporation. All bank accounts shall be maintained in the name of the housing company and in a manner and form prescribed by HPD.
  1. Trust funds. All funds received by housing companies shall be held by such companies as trust funds to be applied and used for the purpose of carrying out their obligations under the law.
  2. Fidelity bonds general. Each housing company shall obtain and keep in full force and effect a fidelity bond or bonds covering its signatory officers and such other persons as are authorized to receive or disburse monies on behalf of the company. These bonds shall be in such amounts as HPD may require, shall be drawn in form and substance satisfactory to it and shall have as surety thereunder such company or companies authorized to do business within the State of New York as are approved by HPD.
  3. Fidelity bonds for rental, sales and managing agent. All rentals, sales and managing agents shall be required to deliver to the housing company and to HPD before their employment shall become effective, a fidelity bond covering all officers and employees handling funds of the housing company. The amount, form and substance of such bond shall be subject to approval by both the housing company and HPD.

§ 3-05 Rent Collection.

(a)  Rent collection.

   (1) Rent/carrying charges of tenant/cooperators is payable on the first day of each month.

   (2) It is the responsibility of the managing agent to collect rent/carrying charges and take the necessary actions to collect past due rent/carrying charges.

   (3) A charge for late payment of rent/carrying charges may be implemented by each housing company. In order to implement a late charge, a written request must be submitted to HPD setting forth the dollar amount of the proposed charge and the date of the month it is to be billed. In the case of a mutual housing company, a Board of Directors Resolution certified and acknowledged by the Secretary of the Corporation setting forth the adoption of the late charge by the Corporation shall be submitted to HPD. HPD shall respond in writing. Late charges shall be considered additional rent.

  1. Write-offs of uncollectible accounts.

   (1) Where collection efforts on the part of the housing company, managing agent and counsel have not been successful, the housing company may turn over uncollected accounts to a collection agency licensed by the New York City Department of Consumer Affairs.

   (2) Where all efforts as outlined above prove to be unsuccessful and an account appears to be uncollectible, write-offs should be handled as follows:

      (i) Accounts receivable not in excess of three months’ rent may be written off at discretion of the housing company.

      (ii) Accounts receivable equal to or in excess of three months’ rent may be written off only after approval by HPD. Requests for such approval must be supported by a detailed description of collection efforts and such other material as may be required by HPD.

      (iii) Except for cases of fraud and misrepresentation, counsel to the housing company may be permitted to compromise and settle all accounts of vacated tenants turned over to him or her regardless of the amount involved when such compromise and settlement are of an urgent nature and are approved by the housing company. HPD must be advised of such settlements in cases where indebtedness equaled or exceeded three months’ rent.

§ 3-06 Resale of Cooperative Shares.

(a)  Procedures.

   (1) A shareholder desiring to sell his or her shares in a mutual housing company shall notify the housing company in writing no later than 90 days in advance of his or her intention to sell his or her shares to the housing company or its designee, pursuant to the provisions of the housing company by-laws and occupancy agreement.

   (2) The shareholder shall transfer his or her shares to the housing company and shall thereafter surrender possession of the apartment at the agreed upon time pursuant to arrangements made with the housing company. After the shareholder has surrendered possession of the apartment, the housing company will inspect the apartment to determine necessary repairs. Any surcharge or any other fees and charges owing to the housing company shall be deducted from the equity due the cooperator.

   (3) The housing company shall enter the transfer of shares on its books.

   (4) The shareholder shall be responsible for carrying charges and submetered electrical charges for up to 90 days after surrendering possession of the apartment or until the housing company transfers the shares to the new owner, whichever occurs earlier.

   (5) (i) If a tenant/cooperator seeks to withdraw his or her offer of sale of shares, and no commitment has been made to a purchaser, the housing company at its option, may permit the tenant/cooperator to withdraw his or her offer, and may charge the tenant/cooperator a reasonable fee for this service.

      (ii) If, within an 18 month period, shares for the same apartment are re-offered for sale after a previous withdrawal pursuant to subparagraph (i) of this paragraph, the tenant/cooperator must post security for administrative costs in the amount of two months’ carrying charges. If the shares for the apartment are sold, the security shall be refunded. If the shares for the apartment are withdrawn again, the security shall be forfeited.

   (6) The occupancy agreement for each mutual housing company shall set forth the obligations of each shareholder with respect to the condition of the unit at the time that such shareholder vacates the unit.

   (7) In the case of National Housing Act of 1937, as amended, § 223(f) refinanced mutual housing companies, where the appliances were included as security for the insured mortgage, the outgoing shareholder shall be required to leave behind the appliances which were in place at the time of refinancing or to replace them with appliances of equal size and amenities. In the case of non-refinanced mutual housing companies, a board of directors may adopt a uniform policy whereby either the incoming or outgoing cooperator shall be responsible for providing a stove and refrigerator for his or her apartment. A board may adopt a policy which apportions the cost of appliances between the incoming and outgoing shareholders as follows: As appliances require replacement, the cooperator in residence would be required to purchase the new appliance(s). A life-expectancy schedule would be established for each type of appliance and the appliance would be depreciated over that pre-determined time period. If the cooperator in residence vacated the apartment any time during the depreciation period, he or she would be reimbursed for the remainder of the period by the incoming cooperator. If the depreciation period were over when the cooperator vacated, the incoming cooperator would be obligated to purchase new appliances and the process would commence again. The depreciated appliances would become the property of the housing company. Any policy adopted must be applied uniformly to all apartments.

   (8) The mutual housing company shall follow the chronological order of its waiting list in the sale of shares. In the event a mutual housing company has substantially depleted its waiting list, the mutual housing company shall seek potential applicants. A mutual housing company and its managing agent shall only open a closed waiting list in accordance with the requirements of 28 RCNY § 3-02.

  1. Resale price of shares.

   (1) The resale price of shares in a mutual housing company shall be fixed by the mutual housing company, subject to the approval of HPD and shall be equal to

      (i) the consideration the selling tenant/cooperator paid for such shares and

      (ii) any capital assessments and voluntary capital contributions approved by HPD and paid by the selling tenant/cooperator to the mutual housing company, to the extent not already included in the consideration paid for such shares, and,

      (iii) if established by the mutual housing company, a proportionate share of the actual aggregate amortization paid on all existing and prior mortgages on the project in reduction of total outstanding principal indebtedness during such period as shall be fixed by the board of directors of the mutual housing company, to the extent not already included in the consideration paid for such shares, and

      (iv) reasonable non-refundable administrative charges, not to exceed $150. Said administrative charge is to be retained by the mutual housing company.

   (2) The aggregate amount to be paid to the selling tenant/cooperator with respect to the sale of the selling tenant/cooperator’s shares shall be fixed by the board of directors of the mutual housing company, subject to the approval of HPD, and shall be equal to

      (i) the consideration the selling tenant/cooperator paid for such shares,

      (ii) any capital assessments and voluntary capital contributions approved by HPD and paid by the selling tenant/cooperator to the mutual housing company, to the extent not already included in the consideration paid for such shares, and

      (iii) a proportionate share of the actual aggregate amortization paid by the selling tenant/cooperator on all existing and prior mortgages on the project in reduction of total outstanding principal indebtedness during such period as shall be fixed by the board of directors pursuant to subparagraph (iii) of paragraph (1) of this subdivision (b), to the extent not already included in the consideration paid for such shares. To the extent that a selling tenant/cooperator may be entitled to an amount less than the resale price of his or her shares, the difference shall be retained by the mutual housing company.

   (3) The Board of Directors may, subject to the approval of HPD, establish a general policy pursuant to which a selling tenant/cooperator who had occupied more than one dwelling unit is paid an amount measured by his or her proportionate share of the actual aggregate amortization paid during his or her period of occupancy on all existing or prior mortgages on the project. To the extent that a selling tenant/cooperator may be entitled to an amount greater than the resale price of shares, the difference may be paid to the selling tenant/cooperator by the mutual housing company.

   (4) The “proportionate share of the actual aggregate amortization paid on all existing and prior mortgages on the project” referred to in paragraph (1) of subdivision (b) of this section shall be in the same ratio to such actual aggregate amortization as the number of shares held by the selling tenant/cooperator at the time of sale bears to the total number of shares of issued and outstanding capital stock of the mutual housing company during such period.

   (5) Nothing contained in this section shall prohibit the continued use of any method of calculating resale price adopted by a mutual housing company and approved by HPD prior to July 26, 1983.

   (6) Participation in the full amortization provisions of this section is voluntary and not mandatory.

   (7) A mutual housing company electing to amend its by-laws pursuant to this subdivision (b) shall submit to HPD for its approval, a Board of Directors Resolution certified and acknowledged by the Secretary of the Corporation setting forth the adoption of this provision and a fully executed copy of a by-law amendment certified by the Secretary of the Corporation.

  1. Joint ownership of cooperative shares. With respect to any person who became a co-owner of shares before December 25, 2014, such co-ownership of shares does not guarantee the right to succession to ah apartment in a mutual housing company development, and any such co-owner must qualify for succession under 28 RCNY § 3-02(p). On or after December 25, 2014, no housing company shall permit any person other than a family member who has been approved for succession in accordance with 28 RCNY § 3-02(p) to become an owner of the shares and a signatory on the occupancy agreement. Notwithstanding the foregoing, upon the request of a shareholder, and with HPD’s prior approval, a housing company may permit spouses to become co-owners of shares and co-signatories of the applicable occupancy agreements if they meet the following requirements, as established pursuant to satisfactory evidence:

   (a) such spouse either was an initial occupant of the applicable dwelling unit with such shareholder or was included in at least two of the income affidavits filed by such shareholder during the time period immediately preceding such shareholder’s request to add the spouse as co-owner of shares and a co-signatory of such occupancy agreement;

   (b) such spouse has occupied the applicable dwelling unit as his or her primary residence for at least two consecutive years and continues to occupy such dwelling unit as his or her primary residence at the time of such request; and

   (c) such spouse and the shareholder intend in good faith to remain joint occupants of the applicable dwelling unit. Any spouse that becomes a co-owner of shares and a co-signer of the applicable occupancy agreement pursuant to these requirements also shall be considered a shareholder of record for such dwelling unit.

  1. Bequeathing of apartments. In no event may the right of occupancy in a Mitchell-Lama mutual housing company development be bequeathed to another. Upon the death of the tenant/cooperator, the shares must be returned to the mutual housing company which will arrange for a sale pursuant to subdivision (a) of this section. Notwithstanding the foregoing, eligible members of the tenant/cooperator’s immediate family in occupancy may acquire such shares if they meet the requirements of 28 RCNY § 3-02(p).

§ 3-07 Management and Operations.

(a)  Special services. A housing company may furnish tenant/cooperators with special services not provided for in the lease or occupancy agreement such as bus, laundry, television antenna or other services upon such terms as HPD shall approve in writing. These services and all facilities used in connection therewith, shall be made available to all tenant/cooperators on equal terms. Discontinuance of special services at the request of a tenant/cooperator shall not entitle the tenant/cooperator to a reduction in rent or carrying charges unless HPD shall otherwise direct.
  1. Services, repairs, replacements and improvements.

   (1) Each housing company shall maintain its structures, grounds, elevators, boilers and other equipment, either by contract or by qualified employees in such a manner as to preserve the property, to protect the health and safety of the residents and employees, and to provide economical operation of the development.

   (1-a) Periodically, HPD will require each housing company to submit a physical condition report prepared by an independent qualified consultant acceptable to HPD. The report will determine the physical condition of the property and all appurtenant equipment. The report must specify all items and equipment that are in need of repair or replacement or which have exceeded their useful lives or are projected to need repair or replacement within five years. The report must also include a plan to address its findings, including an explanation of how any necessary work will be financed.

   (2) Contracts for building services, repairs, replacements, redecorating or improvements and supplies shall be let on the basis of lowest cost compatible with quality of performance, material and workmanship, on the basis of no less than three competitive bids, according to the following schedule:

   Contracts over $100,000 shall be submitted for HPD written approval. The housing company’s submission shall include the three bids plus a contract executed by the successful bidder as well as the other documents as set forth below.

   Notwithstanding the foregoing, HPD reserves the right to require any individual housing company to submit for approval any or all contracts over $5,000.

   In the case of a mutual housing company, the submission shall be accompanied by

      (i) a certified copy of resolution of the housing company’s Board of Directors acknowledged by the Secretary of the Corporation, approving the contract, bearing the housing company’s corporate seal and

      (ii) the housing company’s attorney’s certification that the proposed contract is in compliance with the rules of HPD.

   In the case of a rental development, the president or managing general partner of the housing company or his or her duly authorized designee must sign the contract.

   The following language shall be included in all contracts for building services, repairs, replacements, redecorating and improvements: “Material, equipment and workmanship shall be subject to the inspection and approval of HPD or its duly authorized agent at the discretion of HPD during the progress of the work and before final payment is made on the contract.”

   Every contract subject to HPD approval shall contain the following language: “This agreement is subject to written approval by HPD. No work shall commence until this agreement is approved by HPD.”

   (3) The housing company or its managing agent shall require that all firms performing work on the housing company’s behalf, supply evidence in the form of a certificate of insurance for workers’ compensation and commercial general liability, naming the housing company and HPD as additional insured parties. For contracts subject to HPD approval, such certificates must be submitted to HPD for its written approval before any such contract is executed by the housing company. The liability limits for workers’ compensation shall be statutory, and the commercial general liability insurance shall be in standard comprehensive general liability form, naming the housing company and HPD as additional insureds, against all claims for bodily injury, death or property damage in an amount not less than $1,000,000 per occurrence, $2,000,000 annual aggregate for bodily injury and property damages.

   (4) On all contracts over $100,000, the successful bidder shall, not later than the time of its delivery of the executed contract, deliver to the housing company and HPD an executed Performance Bond for 100 percent of the accepted bid as surety for the faithful performance of the contract and an executed Payment Bond for 100 percent of the accepted bid as surety for the payment of all persons performing labor or furnishing materials in connection therewith. Alternatively, the contractor may submit an unconditional, irrevocable letter of credit from a New York Clearing House bank equal to at least 10 percent (10%) of the dollar amount of the contract which shall provide that the full amount may be drawn down by the housing company upon delivery of a letter certifying default of the contractor. Request for waiver of a bond or letter of credit shall be submitted in writing to HPD by the housing company.

   (5) The following language shall be included in all contracts that are subject to HPD approval for building services, repairs, replacements, redecorating and improvements: “Contractor shall not assign any monies due or to become due hereunder without the written consent of the Owner and HPD, nor shall Contractor subcontract or assign any of the work without prior written approval by the Owner and HPD of such sub-contractor or assignee.” In addition, such contracts shall contain the following language: “This agreement is subject to written approval by HPD.”

   (6) In the case of emergencies, where immediate employment of a contractor is deemed necessary by the housing company to prevent damage to property or prevent injury to persons, submission to HPD of the data required by paragraph (2) above may be made after execution of a contract or performance of the work, provided that such submission is made promptly following the date on which such emergency arose. However, if the emergency occurs during working hours, notification of emergency should be made by telephone to HPD and verbal approval obtained prior to commencement of repairs.

   (7) All contracts for building services or maintenance of buildings equipment on an annual or time basis that require HPD approval pursuant to paragraph two of this subdivision shall be submitted to HPD for written approval before execution by the housing company, and prior to expiration of the previous contract, if any. Where such a contract does not provide for automatic renewal, a new contract must be submitted for approval to HPD at least thirty (30) days prior to expiration of the existing contract. All such contracts for building services or maintenance of buildings equipment shall provide that they are subject to termination without cause upon thirty (30) days written notice by the housing company or upon ten (10) days written notice by HPD, and immediately upon notification by the housing company or HPD that the contractor has materially breached his contract. After termination, no amounts shall be owed except for work actually completed.

   (8) In the event that any director, officer, shareholder, employee or agent of any housing company shall be directly or indirectly connected with any person, firm or corporation which may submit any bid, or to whom any contract is proposed or awarded, pursuant to the provisions of paragraph (2) or (5) hereof, a statement setting forth the nature of such connection shall be included in the submission to HPD and shall be made a part of the minutes of the meeting wherein the contract was approved.

  1. Contracts and retainers.

   (1) All contracts and retainer agreements with attorneys and accountants shall be subject to termination without cause by HPD or the housing company upon thirty (30) days written notice and immediately by written notice by the housing company or HPD if there has been a material breach of contract. After termination, no amounts shall be owed except for work actually completed. Managing agent contracts are subject to 28 RCNY § 3-16.

   (2) An accountant retained by a housing company shall be an independent C.P.A. licensed to practice under the laws of the State of New York.

   (3) No company, association, director, officer, employee, agent or other person shall solicit or receive, directly or indirectly any commission, bonus, gratuity, fee or any other payment not expressly authorized by HPD from any individual, firm or corporation which may submit any bid, or to whom any contract is proposed to be awarded.

   (4) Violation of this subdivision (c) by any company, association, director, officer, employee, agent or other person shall be cause for discharge and any other appropriate action; and a provision to such effect shall be incorporated in all employment agreements entered into by the company.

  1. Cancellation by HPD. Any contract, agreement or retainer, entered into by the housing company or its managing agent in violation of the provisions of this section shall be subject to immediate cancellation by HPD.
  2. Employees, wages and living quarters.

   (1) The number, types, qualifications and rate of pay of the employees required for the proper maintenance and operation of the housing company’s properties shall be subject to review by HPD and the housing company shall submit staffing plans to HPD for its review and approval, if required by HPD.

   (2) The rental of an apartment in a development by an employee of the housing company shall be subject to the same rules and procedures as are applicable to all other tenants, except that income limitations, occupancy standards, and surcharges shall not apply when the employee is living at the development for the furtherance of the housing company’s interests. However, the number of apartments, if any, which may be set aside for such employees shall be subject to the approval of HPD. The agreement shall provide for the termination of occupancy by the employee when his or her services are discontinued. Such resident employees shall not be shareholders, if such company is a mutual housing company.

  1. Certification of superintendents and boiler technicians. The housing company or managing agent shall require the building superintendent and one boiler room technician from each housing company to obtain a certificate of completion of a course offered by an accredited institution on the maintenance of a vacuum steam system, where applicable. Such accreditation must be furnished to the Division of Housing Supervision of HPD if requested by HPD.
  2. Examination of operations. The administration and operation of a development shall be subject to examination at the discretion of HPD. The housing company shall make all data, records, information and areas of the physical property available for such examination.

   (1) Physical inspection. All developments are subject to physical inspection. HPD may retain a third party to make inspections or may rely on inspections made by others. The inspector shall carry out his or her inspection together with a representative of the housing company. In the case of a rental development, a representative of the duly constituted Tenants Association may join in the inspection. The Tenants Association may make a list of complaints available to HPD in advance of the inspection date; the inspector shall notify the representative in advance of the date and time of the inspection. All inspections shall be made in the course of normal business hours. HPD or its designee shall issue a written inspection report which shall be sent to the owner or President of the Board of Directors, the managing agent and, in the case of a rental development, the Tenants Association. The managing agent, with the knowledge and approval of the housing company, shall cause all emergency repairs to be made immediately and will comply expeditiously with the requirements of the inspection report. The managing agent will advise HPD in writing of actions taken to comply with recommendations in the inspection report. To facilitate the physical inspection of a development, the following records shall be maintained:

      (i) Apartment painting, maintenance and repair files.

      (ii) A log of repairs or improvements to plant, structures and grounds.

      (iii) A log of service interruptions, such as heat, hot water, elevator and utilities.

      (iv) log of contracts, including, but not limited to, name of contractor, fee and expiration date.

      (v) A log of general supplies, tools and equipment.

      (vi) An oil consumption log setting forth delivery date, gallonage and price per gallon; or a steam or gas consumption log, where applicable.

      (vii) Electricity usage log (monthly kwh consumed).

   (2) Fiscal examination of operations. HPD shall at its discretion conduct audits and reviews of housing company financial operations. The housing company shall cooperate in making all books and records available for such audit and review. To facilitate the examination of data, the following records shall be maintained and (where indicated) sent to HPD:

      (i) Permanent individual tenant/cooperator files which shall include the initial application forms, credit checks, home visit reports where applicable, and other supporting documentation. In addition, the file should contain all income affidavits, tenant/cooperator leases and occupancy agreements and any special forms, riders, documents and information which may pertain to the eligibility of said tenant/cooperator for his or her apartment and any and all subsidies which may be applicable.

      (ii) A quarterly vacancy report to be sent to HPD within thirty days of its preparation.

      (iii) Current tenant/cooperator rent roll to be sent to HPD every twelve months.

      (iv) A monthly operating statement showing rent/carrying charges and other receipts, disbursements, aged accounts payable and aged rent/carrying charge arrears, including the name of occupant in arrears, his or her apartment number and dollar amount of arrears to be sent to HPD no later than thirty days after the end of the month for which such monthly operating statement was prepared.

      (v) An annual audited financial statement which shall be prepared for and submitted to HPD no later than one hundred twenty (120) days from the end of the audited fiscal period.

   (3) In the event the income and reserves of the housing company shall be insufficient, as determined by HPD, to complete all required repairs, HPD, in conjunction with the housing company, shall establish priorities.

§ 3-08 Reserves.

(a)  Reserves. Each housing company shall be required to maintain a capital repair and replacement reserve account.

   (1) Deposits.

      (i) Annually, each housing company must deposit into the capital repair and replacement reserve account three hundred dollars ($300) per dwelling unit in equal monthly installments.

      (ii) If the capital repair and replacement reserve account balance does not equal or exceed the greater of one thousand dollars ($1,000) per dwelling unit or twenty-five percent (25%) of the housing company’s rent roll, such housing company must deposit three percent (3%) of its rent roll on a monthly basis to the capital repair and replacement reserve account until its balance is raised to equal or exceed the greater of one thousand dollars ($1,000) per dwelling unit or twenty-five percent (25%) of the housing company’s rent roll.

   (2) Disbursements. No disbursements from the capital repair and replacement reserve account can be made without prior written authorization by HPD.

  1. Bank resolutions. The resolution filed with the bank shall contain, in addition to the clauses required by the bank, the following clauses: Further resolved, that withdrawals from such reserve account be accompanied by “Authorization for Expenditure of Funds” signed by a designated HPD official of, and that duplicate copies of monthly bank statements shall be forwarded to HPD’s Division of Housing Supervision, upon HPD’s request; that when an investment in securities is contemplated, withdrawal shall be made upon presentation of “Authorization for Expenditure of Funds;” that the bank shall make the investment, shall hold the securities in safekeeping and shall deposit to such account the proceeds realized on either liquidation or redemption.

Further resolved, that this resolution shall remain in full force and effect unless and until revoked with HPD’s written consent. A certified copy of the housing company’s resolution opening the bank account and a photocopy of the housing company’s signature card filed with the bank shall be submitted to HPD’s Division of Housing Supervision.

  1. Investments. The capital repair and replacement reserve account shall be held in Federally insured interest-bearing bank accounts and/or interest bearing Federal obligations in a form approved in writing by HPD.

   (1) If interest-bearing bank accounts are utilized, passbooks and bank records shall be annotated as follows: Withdrawals from this account are limited to checks payable to (Housing Company), Capital Repair and Replacement Reserve Account, (Name of bank in which reserve account is maintained).

   (2) If Federal obligations are purchased, a custodial agreement for the bank in which the “Capital Repair and Replacement Reserve Account” must be maintained. This agreement shall require that all interest and proceeds from liquidation or redemption of securities be re-deposited to the “Capital Repair and Replacement Reserve Account.” A photocopy of the custodial agreement shall be submitted to HPD.

§ 3-09 Insurance.

(a)  General. The following is intended to serve as minimum requirements for housing companies in arranging an insurance program to provide protection against the usual hazards experienced during the course of operation. Since the same conditions may not prevail in all developments, separate studies should be made as to the actual exposures and hazards and the insurance coverage necessary to meet them. It is incumbent upon all housing companies to see that proper insurance coverage is maintained at all times and that coverages are modified or changed to meet changing conditions. Copies of all insurance policies and renewals shall be transmitted promptly to HPD. Furthermore, all insurance coverage that is maintained by housing companies must be issued by an insurance company in good standing licensed to issue insurance in New York State.
  1. Minimum required coverage.

   (1) Upon opening a corporate or sales office.

      (i) Public liability (Comprehensive General Liability Form) Minimum limits of $1,000,000 per occurrence, $2,000,000 annual aggregate for bodily injury and property damage.

      (ii) Workers’ compensation. As required by statute.

      (iii) Disability benefits. As required by statute.

      (iv) Blanket fidelity bond. Appropriate limits as determined by HPD.

      (v) Hold up. Inside and outside. Money and securities. (Broad Form if possible where safe is located on premises.)

   (2) Upon acquisition of site.

      (i) Liability coverage. To be endorsed to include site and any buildings thereon.

      (ii) Fire insurance. Housing company should obtain this coverage on its buildings and/or personal property.

   (3) Upon commencement of construction of the limited-profit housing company development. The following coverages are generally supplied by the General Contractor pursuant to the terms of the construction contract. Contractors shall be required to submit the required policies delineated in this section to HPD before the commencement of any construction work and operations shall not be allowed to commence until coverage required has been approved by HPD.

      (i) Contractor’s public and protective liability and property damage. Contractor shall provide such coverage to protect him and his subcontractors against claims for property damage and personal injury, including accidental death, in the sum of $1,000,000 per occurrence, $2,000,000 annual aggregate bodily injury and property damage.

      (ii) Owner’s protective liability and property damage. Contractor shall provide such coverage to protect the housing company against claims for property damage and personal injury including accidental death caused by the operation of the contractor or his subcontractors during the performance of the work in the sum of $1,000,000 per occurrence, $2,000,000 annual aggregate bodily injury and property damage.

      (iii) Workers’ compensation. As required by statute.

      (iv) Disability benefits. As required by statute.

      (v) Fire and extended coverage insurance. Pursuant to the terms of the Construction Contract. It is recommended that a builder’s risk “Completed Value” form of policy be used. Adequate coverage shall be maintained for any materials which are stored away for the development site. It is recommended that the housing company rather than the contractor obtain this coverage.

      (vi) Boiler. Minimum of $1,000,000 pursuant to the terms of the Construction Contract. It is recommended that the housing company rather than the contractor obtain this coverage.

      (vii) Payment and performance bond. Pursuant to the terms of the Construction Contract.

   (4) Upon occupancy of buildings. Policies carried during the initial or construction periods of a housing development for which there is a continuing exposure thereafter may remain in force and the policies adjusted in accordance with requirements during later conditions.

      (i) Comprehensive general liability. Minimum limits of $1,000,000 per occurrence, $2,000,000 annual aggregate for bodily injury including accidental death and property damage. This policy should include coverage for the maintenance or use of the premises as well as for all elevators which are located in the development.

      (ii) All Risk Property Policy. Policy should be written in an amount equal to at least 90 percent of the insurable value of the development. The prior approval of HPD shall be obtained for a deductible clause in excess of $5,000. Fire policies shall contain a provision that the settlement of all fire losses shall be subject to the approval of HPD. Policies shall be endorsed to cover the interest of The City of New York, as first mortgagee.

      (iii) Rents. The rental income of the development should be written on a 100 percent co-insurance basis.

      (iv) Workers’ compensation. As required by statute.

      (v) Disability benefits. As required by statute.

      (vi) Fidelity Bond. 3D Comprehensive form of policy is recommended for this coverage. The amount of the coverage shall be two and one-half times the value of the monthly rent roll plus any other fluid assets. However, in certain cases using the two and one-half times factor may make the amount of coverage unrealistic and the cost prohibitive for the risk involved. Therefore, HPD reserves the right to determine, on a case by case basis, what amount is sufficient. A rider should include coverage for a managing agent. Furthermore, for mutual housing companies, a rider can also be added to include the interest of all non-compensated officers, directors and committee members.

      (vii) Boiler and machinery. HPD recommends a “Comprehensive” form of coverage be used or a rider be added to the “Broad” form to cover “Miscellaneous Electrical Equipment”. The amount of insurance to be carried shall be sufficient to cover the maximum probable damage to the property of the development and property of others that may arise out of any accident occurring through the operation of such equipment, but in any event not less than $1,000,000. Policies shall be endorsed to cover the interest of the City of New York, as first mortgagee.

      (viii) Directors and officers. For mutual housing companies. Minimum limit of $1,000,000.

      (ix) Umbrella liability. The minimum requirement for under 150 units $1,000,000; 151 to 500 units $5,000,000; 501 to 1,000 units $10,000,000; over 1,001 units $15,000,000.

      (x) Miscellaneous risks.

         (A) Automobiles. Any vehicle owned by the housing company shall be covered by automobile liability insurance with minimum limits of $250,000/500,000 for bodily injury, including accidental death, and at least $100,000 for property damage. For damage to the vehicle itself, comprehensive fire and theft shall be obtained. For automobiles owned by employees and officers of the housing company, used on behalf of the company, proper liability coverage shall be obtained with limits of $250,000/500,000 for bodily injury including accidental death and $100,000 for property damage.

         (B) Sales and management companies. Where the housing company employs independent sales or managing agents, these agents or their employees who are responsible for the handling of housing company monies shall, without expense to the company, be bonded by a Blanket Position Bond, in favor of the housing company and a copy of such Blanket Position Bond shall be submitted to HPD.

         (C) Contractors, concessionaires, and similar professionals. In the event that repair, alterations, exterminating or any other work or services shall be performed by the housing company, the housing company shall require that all firms performing such operations, supply evidence that workers’ compensation and public liability insurance are in force. The limits for liability shall be at least $500,000 for bodily injury and property damage, combined single limit. It may be that certain contractors and concessionaires, by the nature of the liability factor for the work being done, and the cost of the contract, would have a higher risk factor. In that event we reserve the right to require, on a case by case basis, a higher amount for bodily injury. The housing company and HPD shall be named as an Additional Insured.

         (D) Commercial tenants and licensees. Must carry a minimum of $1,000,000 for bodily injury and property damage, combined single limit. It may be that certain commercial tenants and licensees, by the nature of their business, would have a higher bodily injury risk factor. In that event we reserve the right to require, on a case by case basis, a higher amount for bodily injury. The housing company and HPD shall be named as an Additional Insured.

         (E) Architects and engineers. Must furnish evidence of their liability coverage.

         (F) For subparagraphs (x)(C) and (x)(D) above, the housing company and HPD shall be named as an Additional Insured.

         (G) Insurance coverage shall be reviewed prior to the anniversary date of each policy with respect to the adequacy of coverage. HPD may direct a housing company to increase the amount of its coverage to reflect current replacement value where appro- priate.

  1. Notice of loss.

   (1) The housing company shall give immediate notice to HPD of the occurrence of any damage to its property caused by fire or any other hazards, whether or not covered under any of the above insurance coverages.

   (2) If damage to housing company property is sustained at other than normal business hours, the loss must be reported to HPD on the first regular business day following the occurrence.

   (3) Personal injury or fatality as a result of a fire or other than natural causes must be reported to HPD immediately.

   (4) In the event that a housing company decides to employ a Public Adjuster for the purpose of negotiating a settlement with its insurance company, the housing company must request approval from HPD in writing. Approval by HPD must be confirmed in writing to the housing company.

   (5) Unless HPD exercises its rights under the mortgage to apply insurance proceeds to the mortgage, all checks in payment of losses shall clear through HPD Insurance Unit. HPD representatives will inspect to see that the damaged property has been restored to satisfactory condition, after which time the checks shall be released to the housing company.

  1. Cancellation. All policies shall provide for a minimum of thirty (30) days notification to HPD in the event of cancellation, amendment or alteration of a policy.
  2. Capital grant insurance requirements.

   (1) The housing company shall cause to be placed and kept in force all forms of insurance needed to protect the company adequately or required by law, including but not limited to workers’ compensation insurance, disability insurance, public liability, boiler insurance, and all risk property insurance. All of the various types of insurance coverage required for the benefit of the housing company shall be placed with such companies, in such amounts, and with such beneficial interest appearing therein as shall be acceptable to the housing company and the New York State Division of Housing and Community Renewal, and otherwise be in conformity with the requirements of the mortgage.

   (2) The housing company shall provide or make provision for a managing agent’s bond naming the New York State Housing Finance Agency as obligee with an amount and an insurance company acceptable to the housing company, the New York State Housing Finance Agency, the New York State Division of Housing and Community Renewal and HPD.

§ 3-10 Rent and Carrying Charge Increases.

(a) Procedure for request of increase.

   (1) The housing company shall prepare the requisite petition, application, or motion for an increase in the maximum rental or carrying charges per room and submit same to HPD for approval as to form and authorization for hearing procedures.

   (2) In the event the housing company fails to submit said petition, application or motion as set forth in paragraph (1) above, HPD may, upon its determination of the need for an increase in rents or carrying charges, promulgate a petition preparatory to effectuating the hearing, which petition need not be in the same form as delineated in 28 RCNY § 3-10(b).

  1. Public hearing requirement.

   (1) Before acting upon any application or motion for an increase in the maximum rental/carrying charges per room to be charged tenant/cooperators of dwellings where HPD is the supervising agency under the provisions of the Private Housing Finance Law, a public hearing shall be held. Said hearing shall be held upon not less than thirty (30) days notice to the tenant/cooperators. Such notice shall have annexed thereto a copy of the application or motion for increase in rental/carrying charges and shall set forth the facts upon which the application or motion is based. A development assisted by a Federal Section 236 contract must also comply with Federal rent/carrying charge increase requirements.

   (2) No applications or motion for an increase in the maximum rental/carrying charges per room shall be entertained or acted upon hereunder for a period of two years from the date of any previous order of the supervising agency for the increase of maximum rental/carrying charges affecting the same dwelling.

   (3) In the event that a hearing having been scheduled is adjourned for any reason whatsoever, then notice of such adjourned date shall be posted near the elevators, on bulletin boards or in any other conspicuous places on the lobby floor; such notice shall constitute compliance with these regulations.

  1. Contents of application.

   (1) An application for rental/carrying charge increases shall be submitted to HPD, together with a copy of the notice proposed to be delivered to the tenant/cooperators. (For the purpose of this subdivision (c) the term “rental” shall mean and be interchangeable with the term “carrying charges” as used for a mutual company and the term “tenant” shall mean and be interchangeable with the term “cooperator”).

   (2) The notice to be delivered to the tenants shall first be submitted to HPD for its approval and shall contain:

      (i) In bold print, at the top,

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      (ii) In the body of the notice:

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   (3) Applications for rent increases shall be verified and submitted in quadruplicate. They shall contain:

      (i) Name of housing company, location of development, date of organization and number of rental rooms.

      (ii) Dates of completion and of occupancy.

      (iii) Status with respect to tax exemption.

      (iv) Present average room rent.

      (v) Present income from non-dwelling spaces.

      (vi) Capitalization, authorized and actual.

      (vii) Status of dividend and debenture interest payments accruing from date of initial occupancy.

      (viii) Assessed valuation. Land and land improvements.

      (ix) Such other information and data as may be pertinent.

      (x) Request for a specific rent increase.

   (4) The application shall have annexed the following exhibits and schedules:

      Exhibit I. A three year projection of operations on a cash flow basis as per a format available from HPD, complete with applicable schedules. In addition to the three years an actual base year should be used as a starting point reflecting the information in the latest certified statement of financial condition as prepared by a certified public accountant.

      Exhibit II. A calculation of the increase required on an average per room per month rate in a format available from HPD. This calculation will commence with beginning working capital or deficit working capital as of the beginning of the projection. Include total deficits projected for the length of the projection and one month’s working capital to be left at the end of the period. This deficit then divided by the number of months between expected day of increase and the end of projections and that amount divided by the number of rental rooms in the development will produce the required per room per month dollar increase.

      Exhibit III. A three year projection of operations on a cash flow basis after reflecting the increase calculated in Exhibit II above. All applicable schedules will be provided as required in Exhibit I.

      Exhibit IV. The most recent annual audited financial statement for the housing company. It should be noted that working capital or negative working capital resulting from prior years’ operations, as well as required reserves not funded, must be considered in the calculation of required increase in the petition. The format for these exhibits and schedules is available from HPD. HPD may require further information on any of the matters listed above or on any other matters and may request an amended or superseding application. Such additional information shall be verified and filed in quadruplicate within the time stated by HPD.

  1. The hearing.

   (1) If the papers submitted to HPD are in form sufficient to warrant consideration by such agency, the applicant shall be notified in writing. Such notification shall include the date and place established by HPD for the public hearing on the application. The hearing shall be held within sixty (60) days of the date of such notification.

   (2) Thereafter, the applicant shall notify each tenant in writing by notice approved by HPD of the pending application and the date and place set for the hearing. Such notification shall be sent to the tenants by ordinary mail or distributed under each apartment door and a copy shall be posted in a conspicuous public place on the lobby floor of each building affected. Additional copies of the notice to tenants shall be kept by the applicant for inspection by tenants requesting same. Satisfactory proof of notification to tenants must be supplied to HPD not less than ten (10) days prior to the date set for hearing.

   (3) All books, records and financial data pertinent to the requested increase shall be made available to representatives of the Tenants Association in a rental development.

   (4) The hearing shall be presided over by such hearing officer as may be designated by HPD for such purpose. The applicants and those opposing the application, in person or by duly authorized representatives, shall each be given a reasonable opportunity to be heard.

   (5) A record of the proceedings shall be kept, which shall include, among other things, the application, the notice to tenants, the written and documentary material received, including comments received by HPD. A verbatim transcript of the hearing shall be made and kept as a record of the public hearing. The cost of such transcript shall be borne by the housing company.

   (6) HPD shall make its decision with respect to the application, and if it is determined that an increase shall be granted, the Commissioner shall issue an Order specifying the amount of the increase and the date(s) of implementation. Said Commissioner’s Order may be structured to provide for a single or multiple-stage increase.

   (7) Prior to the issuance of the Commissioner’s order, HPD shall make available the results of a preliminary financial analysis of the application. In the case of a rental development, such analysis shall be provided to both the owner and the Tenants Association or their respective representatives or designees. If either party in the case of a rental development requests a meeting to review the preliminary financial analysis, HPD’s Assistant Commissioner of Housing Supervision shall call a meeting with both parties present prior to making a recommendation to the Commissioner. In the case of a mutual housing company, such analysis shall be provided to the President of the Board of Directors or his or her designee. If the Board of Directors requests a meeting to review such analysis, the Assistant Commissioner of Housing Supervision shall call a meeting prior to making a recommendation to the Commissioner.

  1. Implementation of rent or carrying charge increase. A rent increase shall become effective on the first day of the month specified in the Commissioner’s Order. The housing company or managing agent shall notify the tenants of such increase by ordinary mail or distribution under each apartment door at least fifteen (15) days in advance thereof or thirty (30) days in advance in the case of a development assisted by a Federal 236 contract, and by posting a copy of the order granting said increase in a conspicuous public place on the lobby floor of each building affected; if such notice is not given in sufficient time then the rent increase shall become effective on the first day of the following month. Proof of such notification shall also be furnished prior to the institution of any rent increase.
  2. Failure to maintain essential services. No increase will be granted where in the discretion of HPD the owner of a rental development is not substantially maintaining essential services. Any tenant or his or her representative who wishes to raise this objection must do so by filing a verified statement with HPD a minimum of ten (10) days prior to the date set for the hearing, setting forth in separate allegations each claimed instance of failure to substantially maintain essential services.
  3. Service fees and charges. A housing company may, with the prior written approval of HPD, impose or increase fees for services including, but not limited to parking, air- conditioning, master antenna, appliances and storage.
  4. Reimbursement of professional fees to Tenants Associations.

   (1) A Tenants Association that is constituted pursuant to 28 RCNY § 3-17 shall be eligible for reimbursement of professional fees incurred when such Tenants Association retains an accountant, architect or engineer to review a rent increase application which has been submitted by a housing company to HPD and approved as to form by HPD. Only one accountant and/or one architect or engineer may be retained by a Tenants Association pursuant to this subdivision to review a particular rent increase application submitted by a housing company pursuant to this section.

   (2) On the date upon which a housing company submits a rent increase application to HPD pursuant to paragraph one of subdivision (a) of this section, such housing company shall notify the Tenants Association in writing that it has submitted such application and that the Tenants Association may retain an accountant and/or an engineer or architect to review the rent increase application upon approval as to form of such application by HPD.

   (3) A Tenants Association may retain a professional or professionals to review a rent increase application that has been approved as to form by HPD provided, however, that such professional or professionals shall be retained within ten days after receipt of the notice required pursuant to paragraph two of this subdivision. Said notice shall be deemed to have been received on the business day immediately following the day of mailing. Such Tenants Association shall provide a copy of the retainer agreement or agreements to the housing company and to HPD prior to submission of the professional report or reports pursuant to paragraph four of this subdivision.

   (4) A Tenants Association which has retained a professional or professionals to review a rent increase application that has been approved as to form by HPD shall submit a copy of the report and the bill for services of such professional or professionals to the housing company and to HPD at least seven days prior to the scheduled date of the hearing on such application.

   (5) The total fees charged by a professional or professionals retained by a Tenants Association pursuant to this subdivision shall be the fair and reasonable cost of the services rendered by such professional or professionals, but shall not exceed in total the amounts specified in the following schedule:

Size of Housing Development Maximum Total Fee(s)
Under 500 units $7,500
500 or more units $8,500

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   (6) The housing company shall remit payment for services to a professional or professionals who is retained by a Tenants Association pursuant to this subdivision within a reasonable time after receipt of the bill for services, and not later than thirty days after the hearing on the rent increase application.

   (7) This subdivision shall not apply in the case of a rent increase application exclusively subject to the approval of HUD.

§ 3-11 Utility Pass-Through, Submetering, Direct Metering.

(a)  Utility pass-through.

   (1) Procedure for request of increase.

      (i) A housing company which desires to implement an increase in that portion of the rent/carrying charges attributable to utilities must make a request in writing to HPD for permission to do so. Accompanying said request must be photocopies of utility bills for the period of two years prior to the date of request in order to compare current costs with prior costs.

      (ii) The housing company must indicate the total annual amount of the increase requested and, in addition, indicate the amount of the increase on a per room per month basis.

      (iii) In the case of a mutual housing company, the utility increase request must be accompanied by a board of director’s resolution approving same.

      (iv) The housing company’s accountant shall verify in writing that the supporting figures submitted are correct.

      (v) The housing company, upon submission of a request to HPD, shall post the request in a conspicuous public place on the lobby floor of each building. In the case of a rental development, a copy of the request with the back-up data shall be mailed to the President of the Tenants Association for review and comment. Additional copies of the request with back-up data shall be kept by the housing company for inspection by tenant/cooperators requesting same.

   (2) Procedure for processing increase. The above data will be analyzed by the Division of Housing Supervision of HPD to determine the validity of the request for a utility pass-through. Tenant/cooperators shall be allowed thirty (30) days from the date of notification to the shareholders or Tenants Association to comment on the request. Upon determination by HPD that a pass-through of increased utility costs is warranted, based on an increase in utility rates, an increase in utility consumption or any combination thereof, HPD shall approve implementation of said utility pass-through and shall notify the housing company in writing of such approval and of the duration of said utility pass-through. In a rental development, a copy of the approval letter shall be sent to the President of the Tenants Association. HPD may deny the request if the housing company has sufficient resources to absorb the increases.

   (3) Implementation by housing company.

      (i) A utility pass-through shall become effective on the first day of the month following the approval of same. The housing company shall notify the tenant/cooperators of such utility pass-through at least fifteen (15) days in advance thereof by either ordinary mail or distribution under each apartment door, and by posting a copy of the approval letter in a conspicuous public place on the lobby floor of each building affected; if such notice is not given in sufficient time, then the pass-through shall become effective on the first day of the next following month after such notice is given.

      (ii) A utility pass-through may be requested at any time that an increase in rates or usage occurs; however, no more than one (1) pass-through for the housing company will be approved by HPD for implementation within any six (6) month period.

  1. Submetering of electricity. Wherever allowable as determined by the Public Service Commission, a housing company which is master metered for electricity may, pursuant to HPD approval, install equipment for the submetering of electrical charges within dwelling units and bill tenant/cooperators for their individual consumption, plus administrative costs and amortization of equipment. A housing company seeking to convert to submetering must comply with all requirements of the Public Service Commission with respect to such conversion. Rent/carrying charges shall continue to reflect the cost of electricity for public areas and usages.

   (1) Submission of plans. The housing company shall submit to HPD for review and approval plans and specifications for the installation of submetering equipment.

   (2) Bidding requirements.

      (i) All contracts for the sub-metering of electricity shall be bid in accordance with 28 RCNY § 3-07.

      (ii) In the event that any director, officer, stockholder, employee or agent of any housing company shall be directly or indirectly connected with any person, firm, or corporation which may submit any bid, or to whom any contract is proposed or awarded, a statement setting forth the nature of such connection shall be included in the submission to HPD. In the case of a mutual housing company, it shall be made a part of the minutes.

   (3) Testing of submetering equipment.

      (i) The housing company shall be responsible for maintaining accurate meters. Periodic inspections shall be conducted for this purpose.

      (ii) If a tenant/cooperator requests an inspection of a meter at a time other than the periodic inspection, the cost of said inspection will be borne by the housing company if the meter is found to be defective, or by the tenant/cooperator if the accuracy of the meter is found to be within prescribed parameters.

   (4) Grievance procedures. Grievance procedures prepared by the housing company relating to the submetering of electrical charges shall be submitted to HPD for review and approval before such procedures are implemented by the housing company.

  1. Direct metering of electricity.

   (1) A housing company whose project obtains electricity through a master meter may, pursuant to HPD approval, install equipment for the purpose of having electricity directly metered to each tenant/cooperator.

   (2) The housing company shall submit to HPD for review, plans and specifications for installation of direct metering equipment. The bidding requirement set forth in 28 RCNY § 3-07 shall be complied with.

   (3) At the time of request by the housing company for permission to direct meter a development, a copy of the request shall be sent by ordinary mail to all tenant/cooperators.

   (4) Prior to any determination being made by HPD regarding the conversion to direct metering, HPD will solicit tenant/cooperator comments regarding said conversion.

   (5) A determination will be made by HPD after analysis of existing utility charges as to whether rents or carrying charges at the development require adjustment as a result of the conversion.

§ 3-12 Energy Conservation. [Repealed]

(a)  Written notice and opportunity to appear. In the event of a violation by a housing company which could result in removal of any or all of a Board of Directors pursuant to § 32(6) of the Private Housing Finance Law, the Board of Directors shall be provided with written notice and affected directors shall be given an opportunity to appear and be heard before HPD with respect to any alleged violations.
  1. Representation by counsel. The respective parties may be represented by counsel before HPD.
  2. Appointment of replacement board of directors. Pursuant to § 32(6) of the Private Housing Finance Law, HPD may replace any or all members of a Board of Directors by appointing persons who HPD in its sole discretion deems advisable, including officers or employees of HPD, as new directors to serve in the places of those removed. Directors so appointed need not be shareholders or meet other qualifications which may be prescribed by the housing company’s Certificate of Incorporation or by-laws.
  3. Term of appointment. Directors appointed under this section shall serve only for a period coexistent with the duration of the violation, or until HPD is assured against commitment of violations of a similar nature, and shall serve in such capacity without compensation.
  4. Debarment. Any person or entity may be debarred for a period not to exceed ten years from contracting with or managing any housing companies supervised by HPD upon a finding by a hearing officer designated by the Commissioner that there has been a material violation of these rules or the provisions of Article II of the Private Housing Finance Law by such person or entity or their agent or agents or upon a finding by a hearing officer designated by the Commissioner that they have engaged in activity which would constitute a violation of the Penal Law. Any person or entity so debarred may appeal in writing to the Commissioner within ninety days of written notification of the debarment.
  5. Control of admissions and transfers. Upon a finding that any housing company is in violation of these rules with respect to admissions and transfers, HPD may take over control of all internal and external waiting lists and have sole responsibility for the selection and approval of admissions and transfers.
  6. Compulsory training. HPD may at its discretion require managing agent employees and members of the board of directors to attend housing education courses at the respective expense of the managing agent and the housing company.

§ 3-14 Corporate Action.

(a)  Certificates of incorporation, by-laws, rules and regulations. Each housing company shall file with HPD, for its approval, a certified and acknowledged copy of its proposed by-laws. Each housing company shall also file with HPD, for its approval, a certified and acknowledged copy of all proposed amendments to its certificate of incorporation or by-laws. The housing company shall forward to HPD for its files two copies of the by-laws or amendments to the certificate of incorporation or by-laws subsequent to HPD approval. Failure to seek HPD approval or rejection by HPD of the by-laws or amendments to the certificate of incorporation or by-laws will render the by-laws or such amendments null and void. Certificates of incorporation, by-laws, rules and regulations established by a housing company shall be in conformity with state laws and HPD rules. Housing company certificates of incorporation, by-laws, rules and regulations to the contrary shall be deemed null and void.
  1. Disposition of housing company property. No personal property, books, financial or other records of a housing company shall be destroyed or disposed of without the written consent of HPD.
  2. Salaries, fees or other compensation to officers or directors. No housing company shall pay any salaries, fees or any other form of compensation to any officer or director for services rendered in his or her capacity as corporate officer.
  3. Responsibilities of Board of Directors.

   (1) Members of the Board of Directors of a housing company, whether rental or mutual housing company, bear a high public responsibility, since they have elected to operate under a City-aided program to effectuate public policy by encouraging the building and operating of housing developments for families of moderate income.

   (2) Board members have a fiduciary responsibility to the shareholders of the corporation. Each board member must ensure that buildings, grounds and other assets are kept up to high standards so that their value is not impaired and that the annual operating revenue is spent effectively and economically.

   (3) Board members must exercise judicious control of the premises entrusted in their care, including community rooms and public spaces.

   (4) Members of the Board of Directors have an obligation to provide to tenant/cooperators the most economical operation of the development without endangering the long term interest of the project.

   (5) Board members should be aware of and responsive to tenant/cooperator grievances.

   (6) Upon HPD’s request, the housing company shall submit to HPD a copy of the minutes from the relevant meeting, certified as to correctness by the housing company’s secretary.

   (7) No board member shall receive any preferential treatment or thing of value as a result of his or her board membership.

   (8) Members or officers of the Board of Directors must occupy a dwelling unit at the mutual housing company development represented by such Board of Directors as his or her primary place of residence.

  1. Duties and powers. The Board of Directors has the responsibility for establishing policy covering administration of property, interests, business and transactions of the corporation and may delegate to officers such authority as it deems necessary. Sound organizational policy dictates that individual members of the Board should not interfere with day-to-day management and operation of the project or with its employees or intrude upon management functions. Failure to adhere to this policy reduces the efficiency of the operating staff by creating conflicts in control and in the chain of command. However, the Board as a whole is obligated to ensure that the day-to-day operations of the housing company are handled in the most efficient and expeditious manner and nothing herein should be construed to reduce that responsibility.
  2. Capital assessments by a mutual housing company.

   (1) Capital assessments. A mutual housing company may, by vote of its directors followed by a vote of the shareholders, assess all shareholders on an equitable basis in order to undertake a program of major capital improvements or major repairs approved by HPD. A mutual housing company must obtain a majority of votes at a meeting of shareholders for this purpose and obtain HPD’s approval for the assessment.

   (2) Proceeds of capital assessments. The proceeds of capital assessments shall be deposited in a blocked bank account and all withdrawals from such account shall be subject to the written approval of HPD. Any surplus remaining in the account upon completion of HPD approved repairs or improvements shall be added to the reserve fund.

   (3) Approval process. A request for approval of a capital assessment shall be submitted in writing to HPD, and shall specifically indicate the type of capital improvements or repairs required, along with an estimate of probable cost and the timetable for completion of the proposed program. Contracts for completion of the program shall be subject to the appropriate provisions of HPD rules [;and regulations];, and shall include a provision that the acceptance of all work is subject to the approval of HPD.

  1. Conflicts of interest prohibited in mutual housing companies. No officer or member of the Board of Directors or their immediate family:

   (1) shall be or become interested directly or indirectly in any manner whatsoever in any business dealing with the mutual housing company except for resale of shares of their own apartments.

   (2) shall act as attorney, accountant, managing agent, broker or employee for any person, firm or corporation interested directly or indirectly in any manner whatsoever in business dealings with the mutual housing company;

   (3) shall accept any valuable gift, whether in the form of service, loan, thing or promise, or any other form from any person, firm or corporation which to his or her knowledge, is interested directly or indirectly, in any manner whatsoever, in business dealings with the mutual housing company.

   (4) Any deviation from the above requires prior written approval of HPD.

  1. Annual meetings and elections.

   (1) The Board of Directors of a mutual housing company shall hold regular meetings for the conduct of business. In addition, an annual meeting for the election of directors shall be held at a time and place, and in the manner prescribed by the mutual housing company’s by-laws.

   (2) (i)  All elections of directors for a mutual housing company that has not been refinanced under § 223(f) of the National Housing Act must be supervised by an independent election company or the mutual housing company’s attorney and/or accountant. Prior to conducting the election, the mutual housing company must notify HPD in writing of the name of the independent election company, or the alternate supervisor of the election, and of the intended election procedures.

      (ii) A mutual housing company may request a waiver from the requirements of subparagraph (i) of paragraph two of this subdivision by making a written submission at least sixty days prior to the election of directors to the Assistant Commissioner of Housing Supervision.

      (iii) When the cost of an independent election company meets the dollar threshold, the contract between the independent election company and the mutual housing company will require HPD’s approval in accordance with 28 RCNY § 3-07.

  1. Voluntary dissolution.

   (1) Subdivisions two and three of section 35 of the Private Housing Finance Law, with respect to City-aided limited-profit housing companies, provides as follows: “A company aided by a loan made after [;May 1, 1959]; may voluntarily be dissolved, without the consent of [;HPD];, not less than twenty [;(20)]; years after the occupancy date upon payment in full of the remaining balance of principal and interest due and unpaid upon the mortgage or mortgages and of any and all expenses incurred in effecting such voluntary dissolution. Upon such dissolution, title to the project may be conveyed in fee to the owner or owners of its capital stock or to any corporation designated by it or them for the purpose, or the company may be reconstituted pursuant to appropriate laws relating to the formation and conduct of corporations, provided, however, that prior to any such dissolution and conveyance or reconstitution, payment shall be made of all current operating expenses, taxes, indebtedness and all accrued interest thereon and the par value of and accrued dividends on the outstanding stock of such company. If after making such payments, and after conveyance of the project, a surplus remains in the treasury of the company, such surplus … shall upon dissolution, be paid into the general fund of the [;City of New York];. After such dissolution and conveyance, or such reconstitution, the provisions of [;Article II of the Private Housing Finance Law]; shall become and be inapplicable to any such project and its owner or owners and any tax exemption granted with respect to such project pursuant to [;§ 33 of the Private Housing Finance Law]; shall cease and terminate.”

   (2) Notice of Intent for Rental Companies. A rental housing company intending to dissolve and/or reconstitute pursuant to § 35, shall submit to HPD no later than 365 days prior to the anticipated date of dissolution and/or reconstitution, a notice of such intention (“Notice of Intent”) which shall contain the following information and supporting documents:

      (i) Name and address of the housing development;

      (ii) Name and business address of the beneficial and legal owner(s) other than limited partners and stockholders;

      (iii) Name and address of proposed transferee, if property is being sold or transferred and the proposed date of any such transfer;

      (iv) A current rent roll reflecting rents last ordered by HPD and/or by HUD including surcharges, subsidy and other special charge data;

      (v) A list of tenants who are presently receiving rent subsidies which may be discontinued as a result of dissolution and the proposed rents to be charged such subsidy recipients after dissolution;

      (vi) A copy of any applicable documents relating to the rental development, including, but not limited to, the urban renewal plan, the plan and project, the deed or lease, the land disposition agreement, any applicable Board of Estimate or City Council resolution and the temporary certificate of occupancy and permanent certificate of occupancy, or any other documents requested by HPD; and

      (vii) A list of all State, municipal and/or federal financial assistance or subsidies received by the housing development (such as low income housing tax credits, tax exempt bond financing, interest reduction subsidy under Section 236 of the National Housing Act, as amended, project-based Section 8 under the United States Housing Act of 1937, as amended, housing choice vouchers, rent supplement, J-51 or other tax exemption and/or abatement benefits, and flexible subsidy grants) and the amount thereof. All such documents shall also be given to the Tenants Association as well as to a management office on site (or, if there is no management office on site, to a management office located within the city of New York). At such management office, such documents shall be made available to any tenant of such rental housing company and/or his or her representative upon request. The owner shall notify all tenants by ordinary mail or distribution at or under each apartment door and by posting a copy in a conspicuous place on the lobby floor of each building affected of its intent to dissolve or reconstitute at or about the same time as the delivery of the notice of intent to HPD.

   (3) Public information notice for rental companies. At least sixty (60) days prior to the proposed date of dissolution and/or reconstitution, a rental housing company intending to dissolve and/or reconstitute shall serve a Notice of a Public Meeting by distribution under each apartment door; shall post such notice in three (3) conspicuous locations within the lobby and elevator areas of each building; and shall send such notice by certified or registered mail to each of the following:

      (i) Commissioner and the Assistant Commissioner of Housing Supervision, and

      (ii) The president or chairperson of the Tenants Association. Such notice shall specify the day, date, time and location of a public information meeting which shall be held to inform tenants of the proposed dissolution and/or reconstitution of the housing company. If the public information meeting is outside the community district in which the housing company is located, the owner must provide transportation for tenants. Such public information meeting shall be held not less than 10 nor more than 20 days after service of the Notice upon the parties set forth above.

   (4) Public information meeting for Rental Companies. Pursuant to the Notice as specified above, the rental housing company shall conduct at least one public information meeting with the tenants. At such meeting representatives of the rental housing company shall inform the tenants of the rental housing company’s intention to dissolve and/or reconstitute; the rental housing company’s removal from HPD’s jurisdiction and, if applicable, its subsequent registration with the New York State Division of Housing and Community Renewal (DHCR) for the purpose of rent stabilization pursuant to the applicable DHCR rules and regulations; whether rent stabilization will be applicable; prospective changes in ownership and any other relevant information regarding future plans for the rental housing company affecting the tenants. A question and answer period shall be conducted. The Tenants Association may invite local elected officials or other representatives to participate.

   (5) Where applicable, the rental housing company shall provide evidence that it has appropriately preregistered all apartments with DHCR, indicating current rents for each apartment and services provided to the tenants as of the date of dissolution and/or reconstitution.

   (6) Mutual housing companies-special meeting. A board of directors of a mutual housing company considering dissolution and/or reconstitution pursuant to § 35 shall call a special meeting in conformance with the mutual housing company by-law requirements for the purpose of ascertaining shareholder interest in dissolution and/or reconstitution. The secretary of the board of directors shall submit to HPD a certified resolution stating that not less than a majority of the dwelling units represented at such special meeting approved an expenditure of funds in a specified amount not to exceed $100,000 for the purpose of the preparation of a written feasibility study that will be distributed to each shareholder no later than sixty days after the preparation of such written feasibility study is completed, unless the by-laws of the company mandate a greater affirmative vote. Each dwelling unit shall be entitled to one vote regardless of the number of shares allocated to such dwelling unit, the number of shareholders holding such shares, or the provisions regarding voting in such mutual housing company’s certificate of incorporation or by-laws. Said resolution shall include language as follows:

   “This resolution authorizes the board of directors to take steps necessary to prepare a written feasibility study investigating dissolution and/or reconstitution that will be distributed to each shareholder no later than sixty days after the preparation of such written feasibility study is completed. This resolution authorizes the expenditure of $__________ for such study, and notifies the shareholders that there are Private Housing Finance Law requirements for dissolution and/or reconstitution. This resolution also advises the shareholders that any additional expenditure of funds for such study will require a separate shareholder approval in accordance with the same voting procedures and cannot exceed $100,000 at any one time, and that the New York State Department of Law requirements must be met prior to actual dissolution and/or reconstitution.”

   A certified copy of the resolution shall be submitted to HPD within seven (7) business days after such vote. Expenditure of funds authorized above shall require prior written approval of HPD.

   The feasibility study prepared in accordance with such resolution shall investigate dissolution and/or reconstitution and shall include, but not be limited to:

      (i) a physical condition survey of the mutual housing company development prepared by a licensed engineer or architect projecting such development’s capital needs and the costs thereof for the next ten years from the date of such survey;

      (ii) projected increases in real property taxes for the next five years due to the loss of any abatements of and/or exemptions from real property taxation that would result from dissolution and/or reconstitution;

      (iii) advisory estimates from State and City taxing authorities of the real estate and real property transfer taxes that would result from dissolution and/or reconstitution; and

      (iv) a market study prepared by an independent real estate professional containing projected sales prices for dwelling units if such mutual housing company were to dissolve and/or reconstitute.

   (6-a) Special meeting to authorize preparation of an offering plan and filing of Notice of Intent.

      (i) Pursuant to the applicable notice period in the mutual housing company’s by-laws, a special meeting shall be convened by the board of directors of the mutual housing company no later than ninety days after the written feasibility study has been distributed to each shareholder to authorize the (A) expenditure of $__________ for the preparation and submission to the office of the Attorney General of the State of New York of a private cooperative or condominium offering plan for the housing project, and (B) submission to HPD of the mutual housing company’s notice of its intention to dissolve and/or reconstitute (“Notice of Intent”). Eligible voters for purposes of a quorum and for a vote on preparation and submission of such plan and such Notice of Intent shall be persons named on the stock certificate. Preparation and submission of such plan and such Notice of Intent requires approval of two-thirds (2/3) of the dwelling units in such mutual housing company. Each such dwelling unit shall be entitled to one vote regardless of the number of shares allocated to such dwelling unit, the number of shareholders holding such shares, or the provisions regarding voting in such mutual housing company’s certificate of incorporation or by-laws. On or after the effective date of this amendment to this subparagraph (i), any other expenditures in furtherance of dissolution and/or reconstitution that have not already either been authorized pursuant to an agreement entered into by the board of directors or received the express prior approval of the shareholders shall require the express prior approval of a majority of the dwelling units in such mutual housing company before the board of directors is authorized to allocate such funds in furtherance of dissolution and/or reconstitution. For purposes of this subparagraph (i), “express prior approval” shall mean that both the purpose of the expenditure and the exact dollar amount of such expenditure are or have been approved.

      (ii) The Notice of Intent shall be submitted to HPD no later than 365 days prior to the anticipated date of dissolution and/or reconstitution. It shall be accompanied by evidence of the appropriate shareholder vote and resolution authorizing the preparation and submission of the offering plan and such Notice of Intent in accordance with subparagraph (i) of this paragraph and shall contain the following information and supporting documents:

         (A) Name and address of the housing development;

         (B) Name and address of proposed transferee, if property is being sold or transferred and the proposed date of any such transfer;

         (C) A current rent roll reflecting carrying charges last ordered by HPD and/or by HUD including surcharges, subsidy and other special charge data;

         (D) A list of cooperators who are presently receiving subsidies which may be discontinued as a result of dissolution and the proposed carrying charges to be charged such subsidy recipients after dissolution;

         (E) A copy of any applicable documents relating to the mutual development, including, but not limited to, the urban renewal plan, the plan and project, the deed or lease, the land disposition agreement, any applicable Board of Estimate or City Council resolution and the temporary certificate of occupancy and permanent certificate of occupancy, or any other documents requested by HPD. Such documents shall also be given to a management office on site (or, if there is no management office on site, to a management office located within the city of New York). At such management office, such documents shall be made available to any cooperator of such mutual housing company and/or his or her representative upon request; and

         (F) A list of all State, municipal and/or federal financial assistance or subsidies received by the housing development (such as low income housing tax credits, tax exempt bond financing, interest reduction subsidy under Section 236 of the National Housing Act, as amended, project-based Section 8 under the United States Housing Act of 1937, as amended, housing choice vouchers, rent supplement, J-51 or other tax exemption and/or abatement benefits, and flexible subsidy grants) and the amount thereof; All such documents shall also be given to a management office on site (or, if there is no management office on site, to a management office located within the city of New York). At such management office, such documents shall be made available to any cooperator of such mutual housing company and/or his or her representative upon request. Such mutual housing company shall notify all cooperators by ordinary mail or distribution at or under each apartment door and by posting a copy in a conspicuous place on the lobby floor of each building affected of its intent to dissolve or reconstitute at or about the same time as the delivery of the Notice of Intent to HPD.

   (7) Special meeting to authorize dissolution and/or reconstitution of mutual housing companies. Pursuant to the applicable notice period in the mutual housing company’s by-laws, a special meeting to authorize dissolution and/or reconstitution shall be convened by the board of directors of the mutual housing company after the acceptance by the office of the Attorney General of the State of New York of the filing of the offering plan pertaining to the proposed transfer from the mutual company to a private cooperative or condominium corporation. Eligible voters for purposes of a quorum and for the vote on dissolution and/or reconstitution shall be persons named on the stock certificate. Dissolution and/or reconstitution of the mutual housing company requires approval of two-thirds (2/3) of the dwelling units in such mutual housing company. Each such dwelling unit shall be entitled to one vote regardless of the number of shares allocated to such dwelling unit, the number of shareholders holding such shares, or the provisions regarding voting in such mutual housing company’s certificate of incorporation or by-laws.

   (7-a) Conduct of special meetings.

      (i) Special meetings required pursuant to paragraphs six, six-a, seven and fifteen of this subdivision shall be conducted no more frequently than once every twelve months.

      (ii) Special meetings required pursuant to paragraphs six-a, seven and fifteen of this subdivision shall be conducted by an independent election company. At least sixty days prior to conducting such special meetings, the mutual housing company must notify HPD in writing of the name of the independent election company, and of the intended special meeting procedures, and HPD must issue its approval in writing of such independent election company and of the intended special meeting procedures before such special meeting can take place.

      (iii) If the cost of any special meeting required pursuant to paragraphs six, six-a and seven of this subdivision exceeds $15,000 in housing companies with fewer than five hundred (500) dwelling units or $30,000 in housing companies with at least five hundred (500) dwelling units, the contracts will require HPD’s prior written approval.

      (iv) With respect to special meetings required pursuant to paragraphs six-a, seven and fifteen, the independent election company must submit proof to HPD that the requirements of this paragraph have been met.

   (8) Operating Documents of Mutual Housing Companies. Each mutual housing company shall provide in any voting provisions in its certificate of incorporation and by-laws that in the shareholder votes required pursuant to paragraphs six, six-a, seven and fifteen of this subdivision, each dwelling unit shall be entitled to one vote regardless of the number of shares allocated to such dwelling unit, the number of shareholders holding such shares, or any other provisions regarding voting in such mutual housing company’s certificate of incorporation or by-laws.

   (9) Waiting list notifications. Both rental and mutual housing companies shall submit an affidavit certifying that each applicant on such housing company’s apartment waiting list has been advised in writing of the proposed dissolution and/or reconstitution and that fees have been returned to said applicants prior to dissolution and/or reconstitution. Further, the affidavit shall state that any funds unreturned for lack of proper address or other technicality shall be escrowed and returned upon applicant’s request.

   (10) Payment of mortgage(s) and other indebtedness by rental and mutual housing companies. On the date set for dissolution and/or reconstitution and mortgage prepayment, the housing company shall submit to HPD payment in a form approved by HPD for all principal, interest, supervisory fees, surcharges, amounts payable pursuant to residual receipt notes and any other amounts which may be owing to the City of New York, including any surplus due to be paid into the general fund of the City pursuant to Private Housing Finance Law Article II, § 35(3).

      (i) At least sixty (60) days prior to the date set for dissolution and/or reconstitution and mortgage prepayment, a schedule of all accounts payable, taxes due and any other indebtedness, including the par value and accrued dividends on outstanding stock (or, in the case of a partnership, accrued distributions) shall be submitted to HPD for its review and written approval; said schedule to be prepared and certified to HPD by an independent certified public accountant acceptable to HPD. Such schedule shall contain a listing of all items of indebtedness, the amount thereof, the source of payment thereof and the anticipated date of payment, plus the amount of money anticipated to be paid to the City from the remaining surplus. At the time of dissolution and/or reconstitution, such certified schedule shall be amended to reflect the current status of all accounts, and the exact amount, if any, owed to the City. Housing company funds may not be used for the purpose of prepayment of the mortgage debt.

      (ii) Accounts payable may include monies owed on executed contracts for repairs or capital improvements, subject to HPD approval. Any contract for capital improvement or repair work in an amount in excess of $15,000 executed within ninety (90) days prior to submission of a Notice of Intent to dissolve and/or reconstitute other than contracts for projects subject to HUD supervision must have a statement attached to the contract submission, sent to HPD for approval, advising HPD that the housing company is contemplating dissolution and/or reconstitution at the time of said submission of the contract. Failure to submit such contracts may result in exclusion of their cost in calculating surplus.

      (iii) No legal and accounting fees or other costs in a rental development associated with dissolution and/or reconstitution shall be charged to the housing company.

      (iv) Where applicable, the housing company shall submit evidence of payment of any relevant mortgages.

   (11) Issuance of letter of no objection to rental and mutual housing companies. Upon payment by certified check or checks from a New York clearing house bank of all amounts owing to the City and/or other mortgagee and certification of compliance with all applicable rules and provisions of law relating to dissolution and/or reconstitution, HPD shall issue a Letter of No Objection to the housing company’s dissolution and/or reconstitution.

   (12) Notification to New York City Department of Finance. On the date of dissolution and/or reconstitution, both rental and mutual housing companies shall send written notification to the Department of Finance that the property owned by the housing company is to be restored to a full taxpaying position effective the date of dissolution and/or reconstitution. A copy of such notice shall be sent to the HPD Division of Housing Supervision.

   (13) Notification to senior citizen rent increase exemption (SCRIE) program. No later than ten days after the date of dissolution and/or reconstitution, both rental and mutual housing companies shall send written notification to the HPD Division of Housing Supervision’s SCRIE unit of said dissolution and/or reconstitution and to all SCRIE recipients advising them of their status after dissolution and/or reconstitution.

   (14) Terminology Used by Mutual Housing Company. Whenever a mutual housing company uses the term “dissolution,” it shall include reconstitution where such housing company elects to reconstitute upon dissolution of such housing company. Furthermore, where the mutual housing company’s board or the sponsor of a cooperative conversion of a mutual housing company represents in its cooperative offering plan or other documents that such mutual housing company is amending and/or restating its certificate of incorporation and/or that the shareholders will be voting on a voluntary reconstitution and conversion from a limited-profit mutual housing company to a private cooperative or to a housing development fund company in accordance with paragraph fifteen of this subdivision, section 35 of the Private Housing Finance Law designates these actions as a dissolution and reconstitution of the former limited-profit housing company cooperative.

   (15) Notwithstanding anything to the contrary contained in this subdivision, for the purposes of dissolving and reconstituting a mutual housing company as a housing development fund company (organized pursuant to Article XI of the Private Housing Finance Law) that will enter into a thirty-year regulatory agreement with HPD, the following shall apply:

      (i) such mutual housing company must follow the procedures contained in subdivisions two and three of Section 35 of the Private Housing Finance Law;

      (ii) such mutual housing company shall (A) call a special meeting in conformance with its by-law requirements to conduct a vote in which not less than a majority of the dwelling units represented at such special meeting approve the preparation of a draft proxy statement and the submission to HPD of such mutual housing company’s notice of its intention to dissolve and reconstitute as a housing development fund company, and (B) after such draft proxy statement has been prepared, submit the draft proxy statement in support of the plan of dissolution and reconstitution to the office of the Attorney General of the State of New York and, simultaneously with such submission, deliver copies of such draft proxy statement to HPD and to each of such mutual housing company’s cooperators by ordinary mail or distribution under each apartment door;

      (iii) the cooperators shall have ninety (90) days from the submission date to provide comments to the office of the Attorney General of the State of New York, at the expiration of which such Attorney General shall provide any deficiency comments to the mutual housing company;

      (iv) within thirty days of the Attorney General’s issuance of an exemption letter, such mutual housing company must distribute the proxy statement and no other materials to each cooperator by ordinary mail or distribution under each apartment door;

      (v) between thirty and one hundred-twenty days after the proxy statement is distributed to the cooperators, such mutual housing company shall conduct a special meeting in accordance with the applicable notice period in such mutual housing company’s by-laws and in accordance with the requirements of subparagraphs (i), (ii) and (iv) of paragraph (7-a) of this subdivision in which the cooperators shall vote on the proxy statement. Eligible voters for purposes of a quorum and for the vote shall be persons named on the stock certificate. No fewer than two-thirds of the dwelling units in such mutual housing company must approve such proxy statement in order for such dissolution and reconstitution to proceed and every dwelling unit shall be entitled to one vote, regardless of the number of shares allocated to such dwelling unit, the number of shareholders holding such shares, or the provisions regarding voting in such mutual housing company’s certificate of incorporation or by-laws;

      (vi) the independent election company that conducts the special meeting pursuant to subparagraph (v) herein must certify the results of the shareholder vote to HPD as well as prove that the requirements of such subparagraph (v) for such special meeting have been met. If at least two-thirds of the dwelling units have approved the proxy statement and such voting procedures have been followed, HPD shall issue a letter of authorization to the mutual housing company to proceed with dissolution and reconstitution as a housing development fund company in lieu of a Letter of No Objection otherwise required pursuant to paragraph (11) of this subdivision;

      (vii) within seven days of receipt of HPD’s letter of authorization or within such reasonable time period as HPD has otherwise provided in writing, the mutual housing company shall send a written notice to each cooperator by ordinary mail or by distribution under each apartment door (“Effective Date Notice”), which provides the following:

         (A) the proxy statement has been approved by at least two-thirds of the dwelling units and the requisite voting procedures were followed;

         (B) the procedures by which cooperators who wish to dissent can exercise the option of becoming rental tenants of the housing development fund company by providing such mutual housing company with an affidavit of intent to forego participating in the plan of dissolution and reconstitution within thirty days of receipt of the Effective Date Notice, and

         (C) the mutual housing company shall submit an effectiveness amendment to the Attorney General, which shall include as exhibits HPD’s letter of authorization and the Effective Date Notice, within thirty days of such Effective Date Notice. After the Attorney General’s acceptance of the effectiveness amendment, HPD shall request that the City Council approve a real property tax exemption for such reconstituted housing development fund company in accordance with Section 577 of the Private Housing Finance Law on substantially the same terms as the prior real property tax exemption that had been issued pursuant to Section 33 of the Private Housing Finance Law;

      (viii) within six months after the City Council has approved such real property tax exemption or within such reasonable time period as HPD has otherwise approved in writing, the mutual housing company shall set the date upon which it shall be reconstituted as a housing development fund company (“Reconstitution Date”). On such Reconstitution Date, the following actions must occur:

         (A) the filing with the New York State Department of State of the amended and restated certificate of incorporation for such housing development fund company;

         (B) the loan closing for any new financing for such housing development fund company;

         (C) execution of the thirty-year regulatory agreement by all parties, and

         (D) payment of any and all costs associated with carrying out the plan to reconstitute as a housing development fund company; and

      (ix) within thirty days after the Reconstitution Date or within such reasonable time period as HPD has otherwise approved in writing, the board of such housing development fund company shall:

         (A) provide participating shareholders with their propriety leases and such housing development fund company’s corporate documents, including, but not limited to, its by-laws; and

         (B) provide dissenting shareholders the return on their initial equity investment in the former mutual housing company and market-rate rental leases for their dwelling units.

      (x) Notwithstanding anything to the contrary contained in this paragraph, the Reconstitution Date shall be within twelve months from the first day of the proposed first year of operation of the housing development fund company, provided, however, that if HPD, in consultation with the Attorney General, has approved in writing a Reconstitution Date in accordance with subparagraph (viii) of this paragraph that is more than twelve months from the first day of the proposed first year of operation of the housing development fund company, such mutual housing company shall file an amendment to the proxy statement that was circulated to the cooperators in accordance with subparagraph (iv) of this paragraph.

  1. Proxies, Direct Mail Ballots and Absentee Ballots.

   (1) With HPD’s approval, a mutual housing company may require a standard form and procedure for the casting of proxies or absentee ballots in any matter requiring a shareholder vote.

   (2) Notwithstanding anything to the contrary contained herein, in any vote conducted pursuant to paragraphs six-a, seven or fifteen of subdivision (i) of this section, voting by proxy shall not be permitted. However, HPD may approve, in writing, a standard form direct mail ballot for transmission to the independent election company engaged to conduct any votes pursuant to paragraphs six-a, seven or fifteen of subdivision (i) of this section. Such standard form of direct mail ballot shall be invalidated by the shareholder executing such ballot if such shareholder appears to vote in person in any vote conducted pursuant to paragraphs six-a, seven or fifteen of subdivision (i) of this section.

§ 3-15 Partnerships.

(a)  Partnership agreements. Certain housing companies are permitted to become partners of partnerships formed pursuant to Section 16 of the Private Housing Finance Law. Partnership Agreements and amendments thereto are subject to prior approval in writing by HPD. Admission, withdrawal or retirement of general partners is [;also]; subject to the prior written approval of HPD.
  1. Partnership distributions. All distributions of any partnership organized pursuant to § 16 of the Private Housing Finance Law are subject to the written approval of HPD. All such distributions must be in accordance with the rules of HPD and with the requirements of the Private Housing Finance Law.
  2. Related party transactions. In the event that a housing company employs or contracts with any person or entity in which any partner of such a partnership is directly or indirectly an interested party, the partnership shall disclose such fact to HPD.
  3. Financial records. A partnership formed pursuant to § 16 of the Private Housing Finance Law shall furnish to HPD all financial and other reports required by HPD.
  4. Removal of directors. In the event that HPD exercises its right to remove the directors of a housing company, the housing company as a general partner shall have the right to terminate the exercise of all rights and powers by any other general partner and to exclusively exercise all rights and powers in connection with the project so long as HPD-appointed directors continue to serve.
  5. Transfers of interests. All transfers of general partnership interests are subject to the prior written approval of HPD. HPD may require, as a condition of admission or substitution of general partners all such information regarding any proposed new general partner as it deems necessary.

§ 3-16 Managing Agents Agreements.

(a)  Managing agents agreement required. All housing companies are required to enter into written agreements for management services which must be approved in writing by HPD. This subdivision (a) applies to all agents, corporate or individual. Managing agent agreements are subject to the provisions of subdivision (e) of 28 RCNY § 3-13 regarding debarment.
  1. Criteria for selection of managing agent.

   (1) The prospective agent, corporate or individual, must be a real estate broker in good standing duly licensed by the State of New York. Site managers employed by the prospective agent must be certified, by an organization acceptable to HPD, within twelve (12) months after assignment to an HPD-supervised housing development. The certification requirement cannot be waived by transferring the site manager to an alternate HPD-supervised site prior to the end of the twelve month period. If a housing company elects to undertake self-management of its housing development, it must seek written approval from HPD. The person being employed to perform the role of manager must be approved in writing by HPD. If the manager is an employee of the housing company, he or she is not obligated to have a real estate broker’s license. However, the employee-manager must be certified, by an organization acceptable to HPD, within twelve (12) months after his or her initial employment date.

   (2) The agent must provide a fidelity bond in an amount and form and with a surety approved by HPD.

   (3) The agent shall provide evidence of experience and capability commensurate with the responsibility it seeks to undertake.

   (4) The agent may be required to submit a management plan proposing a program conducive to proper maintenance and economic viability of the project, and to harmonious relations among tenant/cooperators, management and the community. The plan shall include, but shall not be limited to, policy regarding deployment of personnel, tenant/cooperator-management relations, tenant/cooperator selection, rent/carrying charge collection procedures, agency reporting procedures, fiscal accountability, physical plant maintenance, equal opportunity measures and security measures. The plan shall take into account the characteristics of the development, its neighborhood and type of tenancy (e.g., senior citizen or handicapped). The plan and its implementation will be considered in determining the agent’s employment, renewal and compensation, and will be subject to HPD review and written approval.

   (5) The agent must maintain an office or place of business in the metropolitan area at no cost to the housing company where it will keep all books, records, bills and other documents pertaining to the housing company. These records will be available for inspection and review by the owner, HPD or other interested parties as permitted by statute or rules of HPD.

  1. Term of managing agent’s agreement.

   (1) Any managing agent’s agreement shall be in a form approved by HPD and shall be of no force or effect until the contract has been approved in writing by HPD.

   (2) All new managing agent’s agreements shall have a term of one (1) year commencing July 1st and terminating on June 30th of the following year. All renewals shall have a similar one (1) year term; provided, however that if a new managing agent agreement commences after July 1st, it still shall terminate on the June 30th following the commencement of such agreement.

   (3) Managing agent agreement renewals must be submitted to HPD for written approval.

   (4) Any managing agent’s agreement shall provide that it is subject to termination without cause upon thirty (30) days written notice by the housing company or HPD. HPD or the housing company shall have the right to immediately terminate any managing agent for cause.

   (5) Promptly upon any termination, the managing agent shall turn over to the housing company, all project records, rent rolls, bills, cancelled checks, bank statements, bank books, waiting lists, correspondence, ledgers and all other documents related to or owned by the housing company.

   (6) HPD may review the performance of a managing agent at any time and may solicit comments from owners, tenants, and others relating to the performance of the managing agent.

  1. Managing agent’s fee.

   (1) The managing agent’s fee will be negotiated by the housing company and will be subject to approval by HPD.

   (2) The fee may be further adjusted on a compound basis by a percentage to be established annually by HPD, said percentage may be subject to negotiation by the housing company, but may not exceed the maximum percentage authorized by HPD.

   (3) If a new managing agent enters into an agreement with a housing company to replace an existing agent at a development, the maximum fee which can be paid to the new agent will be the fee established for the prior agent, plus any cumulative percentages adjustments which have been approved by HPD, regardless of whether the prior agent was given said increases. The new agreement is subject to negotiation by the housing company within the maximum established above.

   (4) If, upon evaluation by HPD, it is determined that an agent’s performance has not been satisfactory during the prior year, the agent shall not be entitled to the annual increase in its fee. In its evaluation, HPD will consider comments from the housing company and the Tenants Association but will make the final determination regarding the increase. HPD will advise the housing company in writing at least 30 days prior to the agreement renewal date each year if approval of the annual increase is being withheld and the reasons therefor.

   (5) An approved annual increase in the managing agent’s fee will become effective on July 1st of each year.

   (6) In the event a newly constructed development goes into occupancy, the managing agent’s fee shall be negotiated by the housing company, but in no event shall it exceed the highest fee plus cumulative increases for a development of comparable size and nature already in existence within the program. Comparability will be determined solely by HPD.

   (7) If HPD disapproves an annual increase for a managing agent, HPD may within a reasonable period of time meet with the representatives of the housing company and the managing agent to discuss the reasons for HPD’s dissatisfaction. The managing agent shall take such steps as deemed necessary by HPD to satisfy HPD requirements. If the agent’s performance remains unsatisfactory, HPD may, upon notice to the housing company, terminate the managing agent’s agreement.

  1. Duties and responsibilities of managing agent. The principals of the managing agent shall devote a reasonable percentage of their time in supervising management duties of their subordinate staff. Said management duties shall include, but shall not be limited to, the following:

   (1) investigate, hire, pay, supervise and discharge all personnel necessary to be employed in order to properly maintain and operate the development in accordance with an operating schedule, job standards and reasonable and necessary wage rates approved by the housing company. Such personnel shall be considered employees of the housing company and compensation for the services of such employees shall be considered an operating expense of the company, provided, however, that in each development the managing agent shall employ and shall compensate out of its fee one or more responsible individuals as approved by HPD and the housing company whose job it shall be to carry out the responsibilities of the managing agent at the premises;

   (2) prepare tax records, including withholding and social security records for the employees of the development, and shall administer required programs of workers’ compensation and other employee liability insurance programs;

   (3) collect all monthly rents, carrying charges and all other charges due from tenant/cooperators both residential and commercial, and from other users or concessionaires; including, but not limited to, licensees, and take such action with respect thereto as the owner may authorize;

   (4) cause the buildings and grounds of the development, and all equipment appurtenant thereto to be maintained according to standards acceptable to the housing company and to HPD;

   (5) subject to the approval of the owner and in accordance with HPD rules, contract for water, electricity, gas, fuel oil, extermination and other necessary services;

   (6) submit tenant/cooperator applications to HPD for approval; maintain waiting lists in accordance with HPD rules and utilize such lists in the re-rental of vacated apartments or resale of shares in a mutual housing company; perform all services in connection with the processing of applications resulting from such reletting or resale;

   (7) diligently undertake the renting of any parking spaces, commercial and non-dwelling space in the project, arranging for the execution of such leases or permits as may be required;

   (8) undertake recertification of tenant/cooperator income as required by HPD or by federal regulations;

   (9) prepare and submit annual operating budgets, monthly operating reports, rent rolls, vacancy reports, rent arrears reports, surcharge tabulation sheets, equal opportunity reports, HUD excess income reports, where applicable, and any other documents required by the housing company or HPD;

   (10) maintain books and records relating to the development;

   (11) establish operating bank accounts and make deposits and withdrawals in such account as directed by the housing company; maintain a blocked reserve account as required by HPD and invest the funds of such account in accordance with HPD rules to attain the maximum return on investment;

   (12) advise the housing company and HPD of projected needs for repairs and replacements at least once each year; review physical inspection reports and effect compliance;

   (13) submit contracts and retainers for HPD approval in accordance with HPD rules; (14)  process tax matters in a timely manner;

   (15) conduct an annual inspection of all apartments for the purpose of identifying unreported electrical or other equipment (air conditioners, freezers, washing machines and dryers), observing the physical condition of the apartments, and ascertaining compliance with the rules and regulations of the project, HPD and HUD, where applicable, and report its findings in writing to the Owner and HPD;

   (16) receive, record and respond to all service requests made by tenants in a timely manner; and

   (17) carry out such other duties and responsibilities as may be stipulated by the housing company or HPD and as may be included in the management agreement.

  1. Allocation of management expenses. In order to establish a uniform allocation of management expenses between the managing agent and the housing company, the below listed charges are allocated as follows:
  Charge to  
  Managing Agent Housing Company
(1)  Item of expense    
(i)  Wages for managing agent’s staff    
  1. On site
X  
  1. Central office
X  
(ii)  Sight staff, where applicable Case by Case Basis  
(iii)  Messenger service and out of pocket expenses for deliveries X  
(iv)  Travel expense from central office to site and back X  
(v)  Travel expense to and from HPD for such things as meetings X  
(vi)  Overtime for emergencies or deadlines X  
(vii)  Legal and accounting fees of managing agent X  
(viii)  Rent hearing participation X  
(ix)  Cost of preparing all reports required by HPD, HUD, where applicable, or any other city, state, or federal agency X  
(2)  On site furnishings    
(i)  Office furniture (desk, chair, carpet)   X
(ii)  Office equipment, purchased or rented (computers, facsimile machine, mimeo, xerox, typewriters, adding machines)   X
(iii)  Maintenance and repair of equipment   X
(3)  On site supplies and services    
(i)  Housing company stationery, plain and copy paper   X
(ii)  Pens, pencils, clips, carbon paper and other office supplies   X
  1. Postage
  X
  1. Telephone
  X
  1. On site
  X
  1. Central office
X  
(v)  Printing of leases, notices and advisories to tenant/cooperators; proxies and other forms for Board elections   X
(vi)  Photocopying and other reproduction costs   X
(vii)  Fidelity Bond and other insurance covering management operation X  
(viii)  Penalties or fines levied by Finance Department or other agencies Case by Case Basic depending on fault  
(ix)  Lock box service X  

~

  1. Leasing of commercial space, commissions. In the leasing of commercial space, payment of real estate brokerage commission shall be solely in accordance with the following rules:

   (1) No brokerage commissions shall be permitted for that part of a lease term in excess of 20 years.

   (2) No brokerage commissions shall be permitted for:

      (i) tax payments deemed to be additional rent and paid by the tenant,

      (ii) options to renew for an additional term of years, unless such option shall have been duly exercised in accordance with the terms of the lease or

      (iii) payments for items not included in basic rent, including, but not limited to, utilities and costs of improvements made by the owner.

   (3) Maximum brokerage commissions shall be permitted in accordance with the following schedule, based on the rentals charged the tenant:

      First year or any fraction thereof            5 1/2%

      Second year or any fraction thereof         2 1/2%

      Third year up to and including the tenth year      2 1/2%

      Eleventh year up to and including the twentieth year   1 1/2%

   (4) Brokerage commissions earned and due the broker, shall be paid by the housing company in an amount not to exceed the dollar amount of the non-refundable security held by the housing company at the time the lease is approved by HPD. The balance due, if any, shall be paid when the tenant takes possession of the premises in accordance with the terms of the lease.

   (5) Brokerage commissions earned and due the broker, where the tenant is a bank, supermarket chain or where the tenant’s latest published credit rating is “A” or better and no security deposit is required under the lease, shall be paid by the housing company when the lease is approved by HPD.

   (6) When requested by HPD, the broker shall submit trade references, financial statements and any other credit information which shall be properly authenticated in order to determine the credit-worthiness of the tenant.

   (7) The brokerage agreement shall constitute the complete understanding between the housing company and the broker. There shall be no payments to the broker beyond those authorized by such agreement.

§ 3-17 Housing Company Responsibilities to Tenant/Cooperators.

(a)  Tenants Association.

   (1) All rental housing companies shall recognize a duly constituted Tenants Association that will be representative of the tenant body as a whole.

   (2) A Tenants Association shall be duly constituted when a petition is signed by tenants representing no less than forty (40%) percent of the dwelling units. A group seeking recognition on the basis of such petition must submit the original petition to HPD and a copy to the housing company, and must arrange for the posting of a notice in each building of the development advising the other tenants of their intention to seek recognition. If HPD determines that the proposed group has been duly constituted, it will advise the housing company in writing of its decision to recognize the group. In the event other tenants representing no less than forty (40%) percent of the dwelling units in the development seek recognition of an alternative group, the housing company shall provide for an election to determine which shall be the duly constituted Tenants Association. In such an election each dwelling unit in the development shall be accorded one vote.

   (3) Upon recognition of a Tenants Association, an election of officers must be held and the names of the officers of said association shall be furnished to HPD.

   (4) HPD reserves the right to review and approve the by-laws and constitution of a Tenants Association.

   (5) Members or officers of the Tenants Association must occupy a dwelling unit at the rental housing company development represented by such Tenants Association as his or her primary place of residence.

  1. Availability of housing company records.

   (1) The rental housing company shall provide the Tenants Association with copies of operating budgets and financial statements of the housing company within 30 days after said documents are filed with HPD.

   (2) In a rental development which does not have a duly constituted and recognized Tenants Association, the rental housing company shall maintain copies of the operating budget and financial reports in the management office on site. If there is no office on site, the documents shall be made available upon request.

   (3) Any tenant/cooperator or any Tenants Association’s duly authorized representative may audit the books of the housing company during normal business hours and shall have access to the financial records upon which such financial statement is based.

   (4) In a mutual housing company, the operating budget and financial statements shall be supplied to all shareholders.

  1. Consultation. The housing company or its duly authorized representative shall meet on a regular basis with representatives of a Tenants Association to discuss matters relating to the development. Such meeting shall take place at the development at a time mutually convenient to the Tenants Association and the housing company, and shall be held on a monthly basis unless the Tenants Association chooses to meet on a less frequent basis.
  2. Availability of community space. The housing company or its managing agent shall not unreasonably withhold permission for use of the development’s community space from its residents. A reasonable charge may be made for janitorial or related services. A deposit may be required for the use of the space which is refundable if the premises is free of acts of vandalism. The housing company shall, in consultation with the Tenants Association, establish priorities for the use of the community space. If other organizations of tenants exist within a housing development, such as, for example, a senior citizen’s club or garden club, the housing company through its managing agent, should make every effort to accommodate the needs of these organizations by providing an opportunity for use of the community space available. While the Tenants Association has first priority with regard to meeting space, it should not be to the exclusion of all other tenant organizations in the development. There is no obligation for the housing company to make community space available for fund-raising events or for organizations whose membership consists primarily of non-tenants. The use of the community room for these purposes should be at the discretion of the housing company in consultation with the Tenants Association.
  3. Bedbug Disclosure Notification. In accordance with Administrative Code § 27-2018.1, all rental and mutual housing companies must provide notice to each tenant/cooperator signing a vacancy lease or occupancy agreement of the project’s previous year’s bedbug infestation history. Such notice must be in a form approved by the Department.

§ 3-18 Lease Termination and Renewals.

(a)  Preliminary notice of grounds of eviction, administrative hearing and certificate of eviction. Except as otherwise provided in this subdivision, no eviction proceeding based upon a holdover or a breach of the terms of the lease or occupancy agreement shall be initiated by a housing company against a residential tenant/cooperator without the issuance of a certificate of eviction by HPD following an administrative hearing by an HPD designated hearing officer. The hearing officer's decision shall be final without recourse to an administrative appeal. Notwithstanding the foregoing, such hearing and certificate of eviction shall not be required for any eviction proceeding based upon non-payment of rent/carrying charges or any sum which constitutes rent or additional rent pursuant to the applicable lease or occupancy agreement. Furthermore, at HPD's sole discretion, such hearing and certificate of eviction may be waived in accordance with subdivision (e) of this section. To set an eviction hearing the housing company shall notify HPD in writing of the facts which it contends justify eviction, together with an affidavit stating that a preliminary notice of grounds for eviction has been served upon the tenant/cooperator as follows:

   (1) The notice shall be sent to the tenant/cooperator by regular first class mail, and by certified or registered mail, return receipt requested; and

   (2) A copy of the notice shall also be served by personal delivery to the tenant/cooperator; or by delivery to a person of suitable age and discretion occupying the apartment in question; or if admittance cannot be obtained and such person cannot be found, by affixing a copy upon the door or placing a copy under the door of the apartment.

   (3) The notice may be served simultaneously with any notice to cure which may be required by the tenant/cooperator’s lease/occupancy agreement, and shall advise the tenant/cooperator of the following:

      (i) The specific charges against him or her;

      (ii) that he or she has the opportunity to appear before an HPD hearing officer to deny or explain the charges against him or her;

      (iii) that he or she may retain counsel to represent him or her at a hearing;

      (iv) that the findings of the HPD hearing officer, should a hearing take place, may be determinative as to the factual issues.

  1. Administrative hearing. If, after ten days from the date of service of the preliminary notice of grounds for eviction, the tenant/cooperator has not cured the breach of his or her lease/occupancy agreement, the housing company may request HPD to proceed to schedule a hearing at which the housing company shall present to the hearing officer its charges against the tenant/cooperator. The housing company shall advise the tenant/cooperator of the date and place of the hearing in the same manner prescribed for the service of the preliminary notice of grounds for eviction as specified in paragraphs one and two of subdivision (a) of this section. If the tenant/cooperator fails to appear at the designated hearing, he/she shall be advised by the hearing officer, by regular first class mail, that unless a request to reopen the matter is received by the hearing officer within a designated period of time, a decision shall be rendered by the hearing officer based upon the information provided by the housing company and that such decision shall be final. All witnesses at the hearing shall be sworn to tell the truth. Witnesses may be examined and cross-examined by either party and by the hearing officer. The hearing officer may accept any evidence which he or she deems to be relevant and material. A tape recording of the hearing shall be made by the hearing officer, and the hearing officer shall arrange for a transcript of the tape upon the written request of either party, at the expense of the party requesting said transcript. In the event the hearing officer finds grounds for the eviction, he or she shall issue a certificate authorizing the housing company to commence summary proceedings for such eviction of the tenant/cooperator, stating the reasons for his or her decision. At the soll discretion of the hearing officer, such decision may also contain a probationary period or opportunity to cure. A copy of said certificate shall be sent to the tenant/cooperator and to his or her attorney, if any, by regular first class mail. Service of process for summary proceedings may be made simultaneously with or subsequent to the service of such certificate. Acceptance of rent/carrying charges after the commencement of eviction proceedings, pursuant to the administrative hearing process, shall be without prejudice. Notwithstanding anything to the contrary contained in this subdivision (b), a breach of lease or occupancy agreement involving hazardous conditions, violent or disruptive behavior, fraud or illegality shall not be subject to any opportunity to cure by the tenant/cooperator.
  2. Appeals. There is no administrative appeal from the determination of the hearing officer. The decision of the hearing officer is subject only to review by commencing an action pursuant to Article 78 of the Civil Practice Law and Rules.
  3. Summary proceedings. The above procedures do not apply to summary proceedings for non-payment of rent, carrying charges and any other monetary obligations of the tenant/cooperator to the housing company pursuant to his or her lease or occupancy agreement or any other agreement between the tenant/cooperator and the housing company with respect to ancillary services, except as specified in subdivision (a) of this section.
  4. Emergency evictions. The above procedures may be waived at the sole discretion of HPD in any case in which HPD determines that the health or safety of the tenant/cooperators of a development is jeopardized by another tenant/cooperator or his or her family, members of his or her household or visitors to his or her premises.
  5. Applicability. The above procedures shall be the sole requirements to commencement of eviction proceedings and it is the express intention of HPD that no other section of these rules is applicable.
  6. Lease/occupancy agreement renewals. The housing company shall offer a renewal of a tenant/cooperator’s lease/occupancy agreement between ninety (90) and one hundred twenty (120) days prior to the expiration of his or her existing lease/occupancy agreement, unless the tenant/cooperator shall have materially breached the lease/occupancy agreement, shall be ineligible for continued occupancy of his or her apartment, or shall otherwise be found to be a nuisance. Such renewal lease/occupancy agreement shall be for a minimum of a one-year term. If a housing company wishes to refuse to renew a tenant/cooperator’s lease/occupancy agreement, it shall notify the tenant/cooperator with respect to its reason for refusing to renew in a notice to be served upon the tenant/cooperator in the same manner prescribed with respect to the preliminary notice of grounds for eviction between ninety (90) days and one hundred twenty (120) days prior to the expiration of his or her existing lease/occupancy agreement. A copy of said notice shall be sent to HPD. If the tenant/cooperator holds over subsequent to the expiration date of his or her lease, the housing company shall commence eviction proceedings against the tenant/cooperator in accordance with the administrative hearing process set forth in this section, unless the material breach of lease relates to non-payment of rent/carrying charges or additional rent/carrying charges as set forth in subdivision (a) of this section.
  7. Illegal occupancy. A housing company having knowledge of occupancy of an apartment in conflict with the requirements of the Private Housing Finance Law, HPD rules or the requirements applicable to the apartment by reason of any federal, state or city benefit or subsidy, lease or occupancy agreement, or by reason of any other applicable law or regulation, shall notify HPD in writing of said illegal occupancy. The housing company shall, as soon as practicable, commence eviction proceedings against the last-authorized tenant/cooperator of the apartment in accordance with the administrative hearing process set forth in this section. An illegal occupant of an apartment shall not be entitled to any protections pursuant to this section. A housing company shall not knowingly accept rent from an illegal occupant, and shall seek to recover from such occupant the full market value of the apartment. The acceptance of rent/carrying charges from or on behalf of an illegal occupant shall not be deemed to create any right of tenancy or any obligation on the part of the housing company to afford such person the protection which these rules afford to authorized tenant/cooperators.

§ 3-19 Senior Citizen Rent Increase Exemption Program (“SCRIE”).

(a)  Background and applicability. Local Law No. 40 of 1976 (§§ 26-601 et seq.) amended the Administrative Code of the City of New York in order to establish an exemption from rent increases for senior citizens who meet the eligibility requirements specified therein, and who reside in a dwelling unit whose rent is regulated or established pursuant to the provisions of Articles II, IV, V or XI of the Private Housing Finance Law. Amendments to the law in 1977 and 1978 made dwelling units in a dwelling subject to or initially subject to a mortgage insured by the federal government pursuant to § 213 of the National Housing Act (12 U.S.C. § 1715e) eligible for the exemption. The Administrative Code was subsequently further amended to include increases in charges due to capital assessments and voluntary capital contributions within the definition of "increase in maximum rent," and to require that rent increase exemptions and tax abatements granted for such assessments and contributions be paid back by the tenant/shareholder to the housing company, and by the housing company to the City, upon transfer of shares. The amendment regarding capital assessments specifically excluded any dwelling unit subject to a mortgage insured or initially insured by the federal government pursuant to § 213 of the National Housing Act, as amended (12 U.S.C. § 1715e). Subdivision (g) of 28 RCNY § 3-19 implements the amendment to the Administrative Code. The rules set forth in this section implement Administrative Code §§ 26-601 et seq., and are applicable as provided therein. In addition, an amendment was passed on September 6, 1977 to allow portability for senior citizens receiving a subsidy under the rent and rehabilitation law, the rent stabilization law and Local Law 40 of 1976. Portability means that a senior citizen with a valid SCRIE subsidy may move within a development, and in addition, certificates issued by the Department for the Aging and HPD are interchangeable under conditions set forth in the law.
  1. Eligibility requirements.

   (1) The head of household or spouse is 62 years of age or older.

   (2) The total disposable income of all members of the household when combined does not exceed the amount provided for in RPTL § 467-c(1)(d).

   (3) The increase in maximum rent or carrying charges resulted in the maximum rent or carrying charge equalling or exceeding one-third of the combined disposable income of all members of the household. That portion of a rent or carrying charge increase attributable to gas or electrical utility charges or an increase in dwelling space, services or equipment is excluded from exemption.

   (4) The head of household is not receiving any other rent subsidies other than public assistance.

  1. Procedures.

   (1) A head of household may apply to HPD for a SCRIE subsidy on a form prescribed and made available by HPD. In addition to the application, he or she must submit any other documentation necessary to assist HPD in its review.

   (2) HPD shall review the application and shall notify the applicant of its determi- nation.

   (3) When HPD determines that an applicant is eligible, HPD shall advise both the eligible senior citizen and the housing company of the established base rent which the housing company is to charge the senior citizen. The established base rent shall remain the same until a change in circumstance occurs.

   (4) Senior citizens receiving benefits under this program must complete an annual recertification form prescribed and made available by HPD.

   (5) The effective date of the SCRIE subsidy for applications received by HPD not more than 120 days from the date of the increase shall be the effective date of the increase. The effective date of the SCRIE subsidy for all other applications shall be the first day of the month following the receipt of the application and shall be based only upon the most recent increase in maximum rent.

   (6) It shall be illegal for a housing company to collect any amount for which a SCRIE subsidy provides credit or to withhold benefits from a tenant/cooperator entitled to a SCRIE subsidy and collection or retention of any such amount for a dwelling unit occupied by such eligible head of household shall be deemed a rent overcharge. Upon conviction therefor, the housing company and its directors and any employee responsible therefor, shall be guilty of a misdemeanor, punishable by a fine not to exceed one thousand dollars or imprisonment not to exceed six months, or both.

  1. Reimbursement to housing companies.

   (1) On a quarterly basis, HPD will issue Tax Abatement Certificates to all housing companies which have extended benefits to senior citizens deemed eligible by HPD. The certificates will be in an amount equal to the difference between the approved rent/carrying charges for the dwelling units and the amount of the established base rents charged to the eligible senior citizens.

   (2) The housing company, upon receipt of the Tax Abatement Certificate, shall submit the certificate with the next quarterly real estate tax bill to the Department of Finance, paying the amount of the bill less the credit for the amount on the Tax Abatement Certificate. In those instances, where the taxes to be paid are less than the amount to be abated, HPD shall issue a voucher to the housing company for the balance.

   (3) The housing company shall provide HPD with a revised rent roll upon implementation of each new rent/carrying charge increase.

   (4) HPD, at its discretion, may electronically notify the Department of Finance of the abatement amount in lieu of the issuance of a Tax Abatement Certificate. If HPD electronically notifies the Department of Finance of the abatement amount, such electronic notification shall be deemed to be the equivalent of a Tax Abatement Certificate.

  1. Termination of or change of benefits.

   (1) Any change in the status of the head of household or members of household which renders such persons ineligible shall result in the cancellation of benefits.

   (2) Any change in income may result in a change in base rent/carrying charges.

   (3) It is the obligation of both the recipient of benefits under this program and the housing company to notify HPD of any change in status or income which may affect eligibility.

   (4) Failure of a senior citizen receiving benefits to recertify on an annual basis will result in termination of benefits.

   (5) If an audit or other means of verification discloses that an exemption is excessive, the amount of tax payable by reason of such disclosure and the statutory penalty thereon, shall be a lien upon the property as of the due date of the tax for which the excessive exemption was claimed. In the event the excessive exemption was not due to any willful fault of the housing company, the amount of tax payable by reason of the disclosure shall be a lien upon the property as of the date for payment of taxes next following certification of such corrected order by HPD.

  1. Portability of benefits.

   (1) When a head of household receiving a SCRIE subsidy moves his or her principal residence to another dwelling unit eligible under this program, the head of household may apply to HPD for a SCRIE subsidy relating to the subsequent dwelling unit which shall provide that the head of household shall be exempt from paying that portion of the maximum rent for the subsequent dwelling unit which is the least of the following:

      (i) The amount by which the rent for the subsequent dwelling unit exceeds the established base rent actually required to be paid in the original dwelling unit;

      (ii) the amount of rent abated in the most recent month in the original dwelling unit; or

      (iii) the amount by which the maximum rent of the subsequent dwelling unit exceeds one-third of the continued income of all members of the household.

   (2) A senior citizen seeking to transfer his or her rent exemption must complete and submit a SCRIE application and portability request prescribed and made available by HPD. In addition to submission of the application form and portability request, proof of income and proof of previous rent and subsidy are required.

  1. Procedures for applications for SCRIE subsidies for charges attributable to capital assessments and voluntary capital contributions.

   (1) This subdivision implements the provisions of §§ 26-605 and 26-615 of the Administrative Code regarding SCRIE subsidies for charges attributable to capital assessments and project-wide voluntary capital contributions, which are approved by HPD, where applicable.

   (2) i) A head of household who receives an increase in carrying charges based upon a charge attributable to capital assessments or voluntary capital contributions shall make an application for such certificate to HPD on a form prescribed and made available by HPD.

      (ii) In addition to the application, a head of household must submit any other documentation necessary to assist HPD in its review.

   (3) HPD shall review the application and any supporting documentation to determine the eligibility of the head of household. HPD shall approve or disapprove applications, and, if it approves, shall issue a written notification to such head of household and to the affected housing company indicating the total amount of SCRIE subsidy available pursuant to this subdivision. If the application is disapproved, HPD shall issue a written notification of disapproval to such head of household indicating the reasons for the disapproval.

   (4) Upon receipt of notification of eligibility, the housing company shall provide the decrease in charges applicable to the capital assessment or voluntary capital contribution, and HPD shall reimburse the affected housing company in accordance with the procedures provided in subdivision (d) of this section in an amount equal to the total capital assessment or capital contribution.

   (5) i) Documentation of imposition of a capital assessment or voluntary capital contribution shall be provided by the affected housing company to HPD, in addition to any further information required by HPD to make a determination of eligibility under this subdivision.

      (ii) A housing company which imposes a capital assessment or voluntary capital contribution shall provide notice to all persons affected by such capital assessment or voluntary capital contribution of the potential availability of a SCRIE subsidy pursuant to this subdivision. Such notice shall be included in the notice to such person of the imposition of such capital assessment or voluntary capital contribution.

   (6) i) Notification and documentation of any transfer of shares by an eligible head of household who has received a SCRIE subsidy under this subdivision shall be provided in writing to HPD by the affected housing company immediately upon the closing date of such transfer except in cases involving a succession of rights claim, in which case notification shall be made in writing within five days of approval of the succession claim.

      (ii) The affected housing company shall be entitled to deduct from the amount to be paid to such eligible head of household for the sale of such shares all amounts previously covered by a SCRIE subsidy which are attributable to a capital assessment or voluntary capital contribution. Where there is a transfer of shares through succession rights and where the successor is not entitled to a SCRIE subsidy under this subdivision, the affected housing company shall be entitled to receive a payment from the successor in an amount equal to all SCRIE subsidies attributable to a capital assessment or voluntary capital contribution.

      (iii) Such housing company shall not approve the transfer of shares unless it has received the payment required by subparagraph (ii) of this paragraph, or made the deduction therein authorized.

      (iv) Payment by such housing company of the amount attributable to the capital assessment or voluntary capital contribution set forth in subparagraph (ii) of this subdivision shall be made to the Department of Finance through an adjustment in tax abatement status issued to the Department of Finance by HPD, or by remittance by such housing company of such amount directly to the Department of Finance and written notification to HPD of such payment by the housing company within 90 days of the collection thereof. Payments due to the City in accordance with this subparagraph shall be deemed a tax lien and may be enforced in any manner authorized for the collection of delinquent taxes on real property.

   (7) The provisions of this section shall be applicable to an application pursuant to this subdivision except where in conflict with this subdivision, in which case, the provisions of this subdivision shall control.

§ 3-20 Assignment of tax. [Repealed]

(a)  General. Certain limited profit housing companies have been refinanced under § 223(f) of the National Housing Act through the New York City Housing Development Corporation (HDC). Such housing companies remain subject to the provisions of the Private Housing Finance Law and the rules and regulations governing city-aided limited profit housing companies, except as provided otherwise by agreement with, or regulations of, the U.S. Department of Housing and Urban Development (HUD). In general, all matters involving management, maintenance, and operation shall be supervised by HUD except as otherwise set forth by statute or in this section. Compliance with the requirements of the Private Housing Finance Law shall continue to be supervised by HPD. To the extent that HUD should relinquish authority over matters such as rent setting and management supervision, those responsibilities shall revert back to HPD.
  1. Tenant/cooperator income and eligibility requirements. Tenant/cooperator income and eligibility standards, as set forth in the Private Housing Finance Law and 28 RCNY § 3-02 apply to housing companies refinanced under § 223(f). This includes, but is not limited to, rules regarding filing of applications, tenant/cooperator eligibility, maintenance of waiting lists, occupancy priorities, income verification at admission and during occupancy, occupancy standards and primary residence requirements. Refinanced housing companies shall not be required, however, to submit applications to HPD for its prior approval. Instead, a post-audit of applications shall be conducted by HPD. Notwithstanding the foregoing, HPD reserves the right, where violations of law or of HPD rules are found, to reinstitute temporarily or permanently, a requirement of prior review and approval of all applications for admission to or transfer within a development. In addition, HPD and/or the housing company shall conduct income verification audits periodically either as a result of a spot check or other procedures. Tenant/cooperators and members of their household selected for audit shall be required to provide certified copies of IRS or New York State income tax returns, as requested and shall assume the cost of such copies. In refinanced housing companies which have “236” mortgage interest subsidy contracts, the housing companies are required to meet HUD income limits, where they differ from HPD, and any other federal law or regulation which may apply unless they are violative of New York State laws. HPD rules must be met regarding such things as waiting lists and submission of rent rolls. HUD does not prescribe the form of waiting list for “236” developments. If a “236” housing company maintains a single bound waiting list in chronological order, it shall also be required to maintain lists by bedroom size in chronological order for HPD.
  2. Surcharge billing, collection and remittance. Refinanced housing companies are obligated to bill and collect surcharges. HPD will continue to supervise the billing and collection of surcharges as required by the Private Housing Finance Law and 28 RCNY § 3-03. All agreements with managing agents must include a provision that it is the responsibility of the managing agent to bill and collect surcharges. Refinanced housing companies are obligated to recognize hardship cases as set forth in 28 RCNY § 3-03.
  3. Housing company funds and bonds. The provisions of 28 RCNY § 3-04 apply to § 223(f) housing companies.
  4. Resale of cooperative shares. The provisions of the Private Housing Finance Law and 28 RCNY § 3-06 apply to mutual housing companies refinanced under § 223(f). These include, but are not limited to, the provision that a mutual company electing to amend its by-laws regarding sale of shares, shall submit to HPD for its approval, a Board of Directors Resolution certified and acknowledged by the Secretary of the Corporation setting forth the adoption of the amendment and a fully executed copy of a by-law amendment certified by the Secretary of the Corporation. In the case of § 223(f) refinanced mutual housing companies, where the appliances were included as security for the insured mortgage, the outgoing shareholder shall be required to leave behind the appliances which were in place at the time of refinancing or to replace them with appliances of equal size and amenities.
  5. Occupancy rights of family members and applicability of § 235-f of the Real Property Law. The provisions of 28 RCNY § 3-02(o) and (p) apply to housing companies refinanced under § 223(f).
  6. Joint ownership of shares. The provisions of 28 RCNY § 3-06(c) apply to housing companies refinanced under § 223(f).
  7. Bequeathing of apartments. In no event may the right of occupancy in a unit in a refinanced housing company be bequeathed to another. Upon the death of the tenant/cooperator, the shares must be returned to the mutual housing company which will arrange for a sale pursuant to 28 RCNY § 3-06(a). Notwithstanding the foregoing, eligible members of the tenant/cooperator’s immediate family in occupancy may acquire such shares if they meet the requirements of 28 RCNY § 3-02(p).
  8. Billing and collection of amounts due on subordinate mortgages. HPD shall bill and collect amounts due pursuant to the terms and conditions of the Subordinate Mortgage executed by each housing company in connection with its § 223(f) refinancing. Each housing company is required to submit on a timely basis an annual audited financial statement. Such statement shall indicate whether or not surplus cash, as defined in the Regulatory Agreement, is available. If surplus cash is available, and is required to be paid to the City of New York pursuant to the Disbursement Agreement, a payment equal to the amount of surplus cash shall accompany the submission of the audited financial statement.
  9. Submissions. The following documents are required to be submitted to HPD and HDC on a timely basis:

   (1) Audited Financial Statement

   (2) Annual Budget (HDC only)

   (3) Surcharge Tabulation Sheets (HPD only)

   (4) Income Affidavits (HPD only)

   (5) Waiting Lists and Internal Transfer Lists (HPD only)

   (6) Original Insurance Policies to HDC

   (7) Copies of excess rent reports as required in the Federal 236 interest reduction subsidy program

   (8) Data relating to Senior Citizen Rent Increase Exemption Program (HPD only)

   (9) Rent Roll (at request of HPD)

   (10) Data relating to compliance by the housing company with any applicable law, rules, regulation or administrative order of the city, state or federal government (at request of HPD)

   (11) Amendments to Certificates of Incorporation, by-laws, and partnership agree- ments

   (12) Any and all books and records of the housing company which HPD directs to be made available

  1. Rent or carrying charge increases. HUD will be responsible for the approval of all rent/carrying charge increases with respect to all refinanced developments. HPD and HDC shall be notified by the housing company of its request for a rent/carrying charge increase. HUD shall notify HPD and HDC of its approval of any rent/carrying charge increase. A revised rent/carrying charge roll shall be submitted to HPD and HDC subsequent to implementation of an increase.
  2. Distributions of surplus cash. All distributions of surplus cash by any housing company require the prior written approval by HPD.
  3. Reserve requirements. Reserve requirements and releases from reserve accounts are subject to HUD supervision and approval.
  4. Annual physical inspection. HPD reserves the right to conduct a physical inspection of each development at any time. A copy of any inspection report prepared by HDC will be provided to HPD.
  5. Shelter rent certification. HPD shall continue to certify Shelter Rent pursuant to § 33(1)(d) of the Private Housing Finance Law. All housing companies must make timely submission of all data required to enable HPD to make such certification.
  6. Notifications. Notification of changes in Board of Directors, officers, managing agents, attorneys and accountants shall be provided promptly to HPD and HDC.
  7. Transfer of ownership interests in rental developments. All transfers of ownership interests in rental developments including changes in general partners are subject to prior written approval of HPD and HDC.
  8. Terms of subordinate mortgage and disbursement agreement. Nothing contained in these rules shall limit obligations of housing companies pursuant to the Private Housing Finance Law or pursuant to the mortgage closing documents applicable to each development, including, without limitations, the terms and conditions of the Subordinate Mortgage and of the Disbursement Agreement.
  9. Managing agents agreements. All managing agents’ contracts must be sent to HDC for written approval HDC will review and approve the selection of and agreements with managing agents of refinanced developments, including self-management, and renewals or extensions of prior managing agents’ agreements. If HDC approves a managing agent’s agreement, HDC will evidence its consent by letter or by executing the managing agent’s agreement. HDC will submit the executed agreement to HUD for approval. HPD reserves the right, in conjunction with HDC, to review and approve agreements with managing agents of refinanced developments. If HDC disapproves a managing agent’s agreement, HDC will advise the owner of the refinanced project and HUD of the reasons for the disapproval.
  10. Structural changes and major capital improvements. In order to remodel, add to, alter, remove or demolish the project or any portion thereof, the owner of a refinanced project must

   (1) notify HUD, HDC and HPD in writing, and

   (2) obtain the prior written consent of HDC and HUD (and, where necessary, HPD) except that such notification and consent is not required to perform such minor repairs as do not require a permit from the City of New York Department of Buildings or to perform emergency repairs.

  1. Lease terminations and renewals. HPD will apply the procedures set forth in 28 RCNY § 3-18 to all refinanced projects so that no eviction proceeding may be instituted against any tenant/cooperator continuing to pay his or her rent/carrying charges without the issuance by HPD of a certificate of eviction.
  2. Notification of legal proceedings. The housing company or managing agent shall notify HPD, HDC and the Tenants Association of any litigation by or against the housing company which would have a material effect upon the financial condition of the housing company. Failure to notify HPD or the Tenants Association shall in no event be deemed to afford a defense to litigation.
  3. Removal of Board of Directors. The provisions of the Private Housing Finance Law and 28 RCNY § 3-13 apply to housing companies refinanced under § 223(f).
  4. Tenants Association. The provisions of the Private Housing Finance Law and 28 RCNY § 3-17 apply to rental housing companies refinanced under § 223(f).
  5. Senior citizen rent increase exemption program. The provisions of the Private Housing Finance Law and 28 RCNY § 3-19 apply to housing companies refinanced under § 223(f).
  6. Insurance. Refinanced housing companies must meet insurance requirements of HUD, HDC and HPD. HPD shall be named as an Additional Insured.

§ 3-22 Form of Residential Lease.

The form of residential lease including occupancy agreements utilized by housing companies is subject to the approval of HPD and shall be submitted to HPD, if requested. All leases shall be for a minimum term of one year. Failure to comply with the foregoing requirement shall in no event be deemed to afford a defense to the enforcement of a lease by a housing company.

§ 3-23 Equal Opportunity Policy.

All housing companies shall comply with all applicable Federal, state and local laws, rules and regulations concerning equal opportunity in housing.

§ 3-24 Special Powers.

Notwithstanding any other provisions of this chapter, HPD may authorize special emergency measures in any instance in which it is determined by HPD that a development is in serious financial difficulty.

§ 3-25 Miscellaneous Provisions.

(a)  HPD Discretion. All determinations to be made by HPD in accordance with this chapter shall be in the sole discretion of HPD.

(a-1) Waiver. Rules may be waived in exceptional circumstances upon the initiative of the commissioner if, in the opinion of the commissioner, their application to a specific case, or under an emergency condition, may be shown to effect undue hardship.

  1. Statutory Authority Not Limited. Nothing in this chapter shall be deemed to limit HPD’s authority pursuant to applicable laws.
  2. Technical Violations. Provided that there has been a good faith effort to comply with this chapter, technical violations of this chapter by HPD shall not invalidate any action taken pursuant to this chapter, nor shall such technical violations give rise to any rights, claims or causes of action against HPD or the City of New York. The Commissioner, upon good cause shown, may alter the timing or sequence of the actions described in this chapter, provided all affected parties are given reasonable notice.
  3. Severability. If any clause, sentence, paragraph, section or part of this chapter should be adjudged by any court of competent jurisdiction, to be invalid, such judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, section or part thereof correctly involved in the controversy in which such judgment shall have been rendered.

Chapter 4: Companies Formed Pursuant To the Redevelopment Companies Law of the State of New York [Repealed]

§ 4-01 Reports. [Repealed]

*§ 4-02 Limitations. [Repealed]* ::

§ 4-03 Limitations on Sale of Shares. [Repealed]

*§ 4-04 Verification of Tenant-Income Limitations. [Repealed]* ::

§ 4-05 Surcharges (Rental Procedure). [Repealed]

*§ 4-06 Schedule of Fees. [Repealed]* ::

Chapter 5: J51 Tax Exemption and Tax Abatement

§ 5-01 Scope and Construction.

(a)  Scope. This chapter governs the granting of tax exemption and tax abatement pursuant to § 489 of the Real Property Tax Law of the State of New York, § 11-243, formerly § J51-2.5 of the Administrative Code of the City of New York, and Chapter 61 of the New York City Charter, including the procedure for filing an application for tax exemption and tax abatement and the issuance of Certificates of Eligibility and Reasonable Cost by the Office of Tax Incentive Programs of the Department of Housing Preservation and Development.
  1. Construction. This chapter is to be construed to secure the effectuation of the purposes of § 489 of the Real Property Tax Law and § 11-243 of the Administrative Code and in accordance with the general principal of law that exemption statutes are strictly construed against the taxpayer applying for the exemption. Except as hereinafter provided, this chapter, as amended, applies to all applications pending on or submitted after the effective date.

§ 5-02 Definitions.

As used in this chapter, the following terms have the meanings indicated below.

Act. “Act” means § 11-243 of the Administrative Code as amended.

Actual Assessed Value. “Actual Assessed Value” means the value of a property for real property tax purposes as determined by assessors as defined in Real Property Tax Law § 102(1).

Administrative Code. “Administrative Code” means the Administrative Code of the City of New York, as amended.

Alterations or improvements. “Alterations” or “improvements” means only those physical changes to an existing dwelling set forth in 28 RCNY § 5-08.

Attorney General. “Attorney General” means the Attorney General of the State of New York.

Bedroom. “Bedroom” means any living room as defined in § 27-2004 of the Housing Maintenance Code and § 4 of the Multiple Dwelling Law, after excluding the primary living room and the kitchen, except as provided in 28 RCNY § 5-03(e)(2)(ii) and in 28 RCNY § 5-03(e)(2)(iv).

BLDS. “BLDS” means HPD’s Division of Building and Land Development Services or any successor unit.

BLDS Inspection. “BLDS Inspection” means an inspection by BLDS of the items of work that are claimed in an application submitted pursuant to 28 RCNY § 5-05.

Building. “Building” means a complete or substantially complete permanent improvement for occupancy or use within prior to the commencement of construction of alterations, improvements or conversion, provided such improvement is permanently affixed to the land, and that such improvement, exclusive of the land, has an assessed valuation of more than one thousand dollars ($1,000) for the fiscal year immediately preceding the commencement of construction, provided that such assessed valuation test shall not apply to alterations, improvements or conversions is carried out with substantial governmental assistance.

Building Permit. “Building Permit” means a permit that is issued by the Department of Buildings to authorize work on Conversions, Alterations or Improvements.

Certificate of Eligibility and Reasonable Cost. “Certificate of Eligibility and Reasonable Cost” means the certificate issued by the Office pursuant to 28 RCNY § 5-05(g)(3).

Certificate of Occupancy. “Certificate of Occupancy” means a Temporary Certificate of Occupancy or a Permanent Certificate of Occupancy.

Certified reasonable cost or CRC. “Certified reasonable cost” or “CRC” means the cost of a conversion or alterations or improvements certified by the Office to be eligible for the benefits of the Act pursuant to the procedures set forth in this chapter, as evidenced by the issuance by the Office of a “Certificate of Eligibility and Reasonable Cost.”

City. “City” means the City of New York.

Class A multiple dwelling. “Class A multiple dwelling” means a Class A multiple dwelling as defined in § 4 of the Multiple Dwelling Law, and shall include a garden-type maisonette dwelling project as defined below. A “Class A multiple dwelling used for single room occupancy” means a dwelling occupied pursuant to § 248 of the Multiple Dwelling Law.

Class B multiple dwelling. “Class B multiple dwelling” means a Class B multiple dwelling as defined in § 4 of the Multiple Dwelling Law.

Commencement of Construction.

   (a) For work requiring a permit, “Commencement of Construction” means:

      (1) the date of issuance of a Building Permit, or

      (2) if physical alterations commenced prior to obtaining a required Building Permit, the actual start date, or

      (3) for projects eligible pursuant to 28 RCNY § 5-03(a)(1), (3), (4), (9) or (10), the actual Commencement of Construction in good faith based on prior issuance of a Building Permit. Demolition work does not constitute “Commencement of Construction.”

   (b) If the issuance of a Building Permit is not required by law, Commencement of Construction means the date any physical operation has commenced solely for the purpose of making eligible Alterations or Improvements. The Office shall require that the Commencement of Construction date be confirmed by an affidavit of a registered architect or licensed professional engineer, along with such other information as the Office may require to substantiate such date, including, but not limited to, an affidavit from the owner, a copy of the work contract, invoices, cancelled checks and a contractor’s affidavit. If an application contains a series of Major Capital Improvements, the Commencement of Construction date is that of the first Major Capital Improvement for which benefits are claimed.

Commissioner. “Commissioner” means the Commissioner of the Department of Housing Preservation and Development or his or her designee.

Common area. “Common area” means the area in an existing dwelling other than the area which is within the interior walls of individual dwelling units.

Completion of Construction. “Completion of Construction” means the earlier of:

   (i) the date of issuance or reissuance of a Permanent Certificate of Occupancy;

   (ii) the date of issuance of a Temporary Certificate of Occupancy for all of the dwelling units therein, provided the only work remaining to secure a Permanent Certificate of Occupancy is work to be performed or completed in space to be used exclusively for non-residential purposes; or

   (iii) the date of the issuance of a sign-off by the Department of Buildings as evidenced by the J-3, a computer printout or such other official documentation as may be required by the Department of Buildings and is acceptable to the Office if issued in connection with an eligible Conversion, Alteration or Improvement; provided, however, that

      (a) if none of the documents set forth above are required by law, “Completion of Construction” means that date on which physical operations to undertake Alterations or Improvements are concluded as confirmed by the submission of an affidavit of a registered architect or licensed professional engineer, along with such other information as the Office may require to substantiate such date, including, but not limited to, an affidavit from the owner, a copy of the work contract, invoices, cancelled checks and a contractor’s affidavit;

      (b) if the applicant is a Limited Profit Housing Company which owns and operates a planned unit development consisting of at least fifteen thousand (15,000) dwelling units, “Completion of Construction” means that date on which physical operations to undertake Alterations or Improvements are concluded as confirmed by the submission of an affidavit of a registered architect or licensed professional engineer, along with such other information as the Office may require to substantiate such date, including, but not limited to, an affidavit from the owner, a copy of the work contract, invoices, cancelled checks and a contractor’s affidavit. Notwithstanding the foregoing, all required sign-offs including, but not limited to, the J-3 issued by the Department of Buildings, must be submitted to the Office before it issues a Certificate of Eligibility and Reasonable Cost pursuant to 28 RCNY § 5-05(g)(3) to such an applicant; and

      (c) if an Alteration Type-1 Permit was issued to any applicant other than an applicant who is a Limited Profit Housing Company which owns and operates a planned unit development consisting of at least fifteen thousand (15,000) dwelling units, the only acceptable evidence of Completion of Construction shall be a Certificate of Occupancy.

Condominium. “Condominium” means any dwelling unit that is owned pursuant to the Condominium Act and is situated in a Class A Multiple Dwelling that either (a) has had an Offering Plan accepted for filing by the Attorney General, (b) has received a “no action” letter from the Attorney General, or (c) has demonstrated that it is not subject to the requirements of § 352(e) of the General Business Law.

Condominium Act. “Condominium Act” means Article IX-B of the Real Property Law.

Conversion. “Conversion” means only those items of work set forth in 28 RCNY § 5-08 which are necessary for the conversion of any building not a Class A multiple dwelling, into a Class A multiple dwelling. For purposes of eligibility for benefits, an interim multiple dwelling claiming benefits for conversion based on compliance with the standards of safety and fire protection set forth in Article 7-B of the Multiple Dwelling Law shall be deemed a Class A multiple dwelling.

Cooperative. “Cooperative” means any Building which is operated exclusively for the benefit of persons or families who are entitled to occupancy in dwelling units by reason of ownership of stock, membership, or other evidence of ownership in the corporate owner of the Building, or for the benefit of such persons or families entitled to occupancy in dwelling units under applicable provisions of law without ownership of stock, membership, or other evidence of ownership in the corporate owner of the Building, where such Building either (a) has had an Offering Plan accepted for filing by the Attorney General, (b) has received a “no action” letter from the Attorney General or (c) has demonstrated that it is not subject to the requirements of § 352(e) of the General Business Law.

Department of Buildings. “Department of Buildings” means the Department of Buildings of the City.

Department of Environmental Protection. “Department of Environmental Protection” means the Department of Environmental Protection of the City.

Department of Finance. “Department of Finance” means the Department of Finance of the City.

Designated historic district or landmark site or structure. “Designated historic district or landmark site or structure” means an historic district or landmark site or landmark structure as designated by the Landmarks Preservation Commission of the City.

DHCR. “DHCR” means the New York State Division of Housing and Community Renewal.

Disposition of Funds Statement. “Disposition of Funds Statement” means written confirmation of funds actually advanced for construction under a building loan agreement made pursuant to Article 8, 8-a, 11, 12, 15 or 22 of the Private Housing Finance Law, or § 312 of the United States Housing Act of 1964 (42 U.S.C. § 1452b), or the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. §§ 12701 et seq.) or § 696-a or § 99(h) of the General Municipal Law, or any other City-supervised housing program, or, in the discretion of the Office, other governmentally supervised housing programs.

Existing dwelling. “Existing dwelling” means a Class A multiple dwelling, including a garden-type maisonette dwelling project, or one or two Class A dwelling units in a building over space used for commercial occupancy which was in existence prior to the commencement of construction of alterations or improvements for which tax exemption or tax abatement is claimed under the terms of the Act, provided that a valuation for the improvement of more than one thousand dollars ($1,000), exclusive of the land, appears on the annual record of assessed valuation of the City for the fiscal year immediately preceding the commencement of construction of alterations or improvements, and provided further that such assessed valuation test shall not apply if the alterations, improvements or conversion are carried out with substantial governmental assistance.

Fannie Mae. “Fannie Mae” means the Federal National Mortgage Association.

Floor Area. “Floor Area” of a Building means the gross square footage of all of the floors and the accessory structures of the Building on the same lot, as measured from the exterior faces of exterior walls or from the center line of party walls. “Floor Area” of a dwelling unit in a Building means the gross square footage within the dwelling unit measured from the interior faces of the demising partitions or party walls.

Garden-type maisonette dwelling project. A “garden-type maisonette dwelling project” shall mean a project consisting of a series of dwelling units which together and in their aggregate were arranged or designed to provide three or more apartments and are provided as a group collectively with all essential services such as, but not limited to, water supply, house sewers and heat, and which are in existence and operated as a unit under single ownership on the date upon which an application for the benefits of the Act is received by the Office, even though Certificates of Occupancy may have been issued for portions thereof as private dwellings.

General Business Law. “General Business Law” means the General Business Law of the State of New York.

Gross cubic content. “Gross cubic content” of a building means the volume within the exterior faces of the perimeter walls (or center line of party walls), above legal grade, and below the roof level, plus any legal residential space below grade level. Roof bulkheads or roof penthouses used exclusively for machinery or equipment shall not be included. New exterior stair towers or elevator shafts shall not be included, unless they substitute for existing stair or elevator space which is converted to residential space.

HDFC. “HDFC” means a housing development fund company organized pursuant to Article XI of the Private Housing Finance Law.

Hotel. “Hotel” shall mean those buildings defined as Hotels by 28 RCNY § 5-03(f)(4).

Housing Maintenance Code. “Housing Maintenance Code” means the Housing Maintenance Code of the City, constituting §§ 27-2001 et seq. of the Administrative Code, as amended.

HPD. “HPD” means the Department of Housing Preservation and Development of the City.

HUD. “HUD” means the United States Department of Housing and Urban De- velopment.

Increase in gross cubic content. “Increase in gross cubic content” means any portion of a building that results from new construction as distinguished from alterations or improvements to the gross cubic content in existence immediately prior to commencement of construction.

Institutional lender. “Institutional lender” means any municipal, federal or state agency and any savings or commercial bank, life insurance company, public real estate investment company, pension fund or any other entity having assets in excess of fifty million dollars ($50,000,000), whose mortgage loans are subject to regulation of a federal or state agency.

Itemized Cost Breakdown Schedule. “Itemized Cost Breakdown Schedule” means the schedule set out in 28 RCNY § 5-08.

Landmark. “Landmark” means an improvement which has been designated as a landmark by the Landmarks Preservation Commission of the City or which is within the boundaries of a historic district designated by the Landmarks Preservation Commission of the City.

Limited Profit Housing Company. “Limited Profit Housing Company” means a limited profit housing company organized pursuant to Article II of the Private Housing Finance Law.

Major capital improvement or MCI. “Major capital improvement” or “MCI” means only those items of work designated as major capital improvements (MCI’s) and set forth, preceded by an asterisk, in 28 RCNY § 5-08.

Minimum tax zone. “Minimum tax zone” means the area within the Borough of Manhattan in which tax abatement benefits are limited as set forth in 28 RCNY § 5-06(e)(2).

Moderate rehabilitation. “Moderate rehabilitation” means a scope of work in a substantially occupied Class A multiple dwelling which includes a major capital improvement in not less than one of the five categories set forth in 28 RCNY § 5-03(a)(6), and in which the certified reasonable cost, calculated as set forth in 28 RCNY § 5-03(a)(6), equals or exceeds $2,500 (two thousand five hundred dollars) per dwelling unit, and meets the notice and filing requirements set forth in 28 RCNY § 5-03(h)(1).

Mutual company. “Mutual company” shall have the same meaning as set forth in section two of the Private Housing Finance Law.

Mutual Redevelopment Company. “Mutual Redevelopment Company” means a Redevelopment Company that is a corporation operating exclusively for the benefit of the persons or families who are entitled to occupancy in a project of such Redevelopment company by reason of ownership of shares in such Redevelopment Company.

Non-targeted Area. “Non-targeted Area” means a geographic area in the city of New York that is not located in a Targeted Area.

Offering Plan. “Offering Plan” means an offering statement or plan with respect to a Condominium or Cooperative as required by § 352-e of the General Business Law.

Office. “Office” means the Office of Tax Incentive Programs of HPD, or any successor thereto authorized to administer this chapter.

Ordinary repairs. “Ordinary repairs” means those items of work listed in the Itemized Cost Schedule as ordinary repairs, i.e., those items not preceded by an asterisk.

Permanent Certificate of Occupancy. “Permanent Certificate of Occupancy” means a permanent certificate of occupancy that is issued by the Department of Buildings with respect to a Class A Multiple Dwelling for all dwelling units contained therein.

Permanent residential use. “Permanent residential use” shall mean the lease of all residential units for residential purposes as set forth in 28 RCNY § 5-03(f)(4).

Private dwelling. “Private dwelling” means any building or structure which is either:

   (1) exclusively designed and occupied for residential purposes by not more than two families or

   (2) for which the Department of Buildings has issued a Certificate of Occupancy which describes the building as intended exclusively for not more than two families. Private dwelling shall also be deemed to include a series of one or two-family dwelling units each of which faces or is accessible to a legal street or public thoroughfare, if each dwelling unit is equipped as a separate dwelling unit with all essential services, and if each such unit is arranged so that it may be approved as a legal one-family or two-family dwelling.

Private Housing Finance Law. “Private Housing Finance Law” means the Private Housing Finance Law of the State of New York.

Reasonable cost. “Reasonable cost” means the cost of a conversion, alteration or an improvement as conclusively determined and certified by the Office pursuant to this chapter.

Redevelopment Company. “Redevelopment Company” means a company organized pursuant to Article V of the Private Housing Finance Law.

Rehabilitation schedule. “Rehabilitation schedule” means the Itemized Cost Breakdown Schedule.

Rules. “Rules” means this chapter of the Rules of the City of New York.

Single room occupancy. “Single room occupancy” means occupancy in a multiple dwelling by one or more persons of a room or rooms without a private kitchen or kitchenette or a private bathroom or separate means of egress for occupants thereof to the public areas of the multiple dwelling.

Substantial governmental assistance. “Substantial governmental assistance” shall mean a project carried out with grants, loans or subsidies from any federal, state or local agency or instrumentality, including, without limitation, financing or insurance provided by the State of New York Mortgage Agency and New York City Residential Mortgage Insurance Corporation, but shall not include (1) taxable bonds issued by a federal, state, or local agency or instrumentality, (2) purchase money mortgages from a federal, state or local agency or instrumentality, or (3) any grant, loan or subsidy from a federal, state or local agency or instrumentality which does not specifically require a program of affordable housing (e.g., energy conservation grants). In the discretion of the Office, a below market sale by a Federal, state or local agency or instrumentality or a written agreement with a Federal, state or local agency or instrumentality for development of affordable housing shall qualify as a subsidy.

Substantial interest. “Substantial interest” as used in 28 RCNY § 5-03(h)(2) shall mean ownership of an interest of ten percent (10%) or more in a property or entity owning property or sponsoring a conversion, alteration or improvement.

Substantial rehabilitation. “Substantial rehabilitation” means any rehabilitation of a Class A multiple dwelling where the scope of work includes at least four of the systems listed in 28 RCNY § 5-03(a)(6)(i), or where, for City-owned buildings or buildings conveyed by deed from the Commissioner of Finance eligible for benefits under 28 RCNY § 5-03(a)(9), the scope of work includes rehabilitation work in at least four major systems in elevator buildings or three major systems in non-elevator buildings, and where major systems include heating, plumbing, electricity, elevator, windows and roof (replacement or covering with a new roof of at least seventy-five percent (75%) of the aggregate roof area), provided further that work done during City ownership or work financed by a City program but not eligible for benefits because outside of the required time limits, may be counted toward the required systems if the work was done and the system has a substantial remaining useful life at the time of application as evidenced by a certification by the Commissioner which may be based on such information as permits, sign-offs, disposition of funds statements, inspections or other program records.

Substantially occupied. “Substantially occupied” shall mean that at least sixty percent (60%) of the units in a building are occupied by permanent residential tenants immediately prior to the start of rehabilitation, during the entire period of rehabilitation (except for temporary periods of relocation in substantially governmentally assisted projects) and immediately subsequent to completion of construction of the rehabilitation.

Successor in interest. “Successor in interest” shall mean an institutional lender which originates or acquires an interest in a loan to finance alterations, improvements or a conversion eligible for benefits under this chapter and which acquires title to the alterations, improvements or conversion as result of the original owner’s default on such loan, whether by mortgage foreclosure or deed in lieu of foreclosure.

Supervising agency. “Supervising agency” shall have the same meaning as set forth in section two of the Private Housing Finance Law.

Targeted Area. “Targeted Area” means a geographic area in the city of New York in the zip code listed below that has been determined by the department of health and mental hygiene to have high rates of children with environmental intervention blood lead levels:

~

Bronx 10458 Belmont-Fordham-Bedford Park
Bronx 10468 University Heights-Kingsbridge
Brooklyn 11205 Fort Greene-Clinton Hill
Brooklyn 11206 Williamsburg-Bedford Stuyvesant
Brooklyn 11216 Bedford Stuyvesant
Brooklyn 11217 Park Slope-Boerum Hill
Brooklyn 11218 Kensington-Windsor Terrace
Brooklyn 11221 Bushwick-Bedford Stuyvesant
Brooklyn 11222 Greenpoint
Brooklyn 11225 Crown Heights-Prospect Lefferts
Brooklyn 11226 Flatbush
Brooklyn 11230 Midwood
Brooklyn 11233 Stuyvesant Heights-Ocean Hill
Brooklyn 11235 Sheepshead Bay-Brighton Beach
Brooklyn 11237 Bushwick
Brooklyn 11238 Prospect Heights
Manhattan 10026 South Central Harlem
Manhattan 10027 Manhattanville-Harlem
Manhattan 10031 Hamilton Heights
Manhattan 10032 South Washington Heights
Manhattan 10033 Middle Washington Heights
Queens 11102 Old Astoria
Queens 11385 Ridgewood-Glendale

~

Tax abatement exclusion zone. “Tax abatement exclusion zone” means the area within the Borough of Manhattan in which tax abatement benefits are limited as set forth in 28 RCNY § 5-06(e)(3).

Temporary Certificate of Occupancy. “Temporary Certificate of Occupancy” means a temporary certificate of occupancy that is issued by the Department of Buildings with respect to a Class A multiple dwelling for all dwelling units contained therein.

Zoning Resolution. “Zoning Resolution” means the Zoning Resolution of the City, as amended.

§ 5-03 Eligible Projects and Eligibility Requirements.

(a)  Eligible projects. Subject to the limitations relating to single room occupancy and permanent residential use set forth in 28 RCNY §§ 5-03(f)(4), 5-04(a)(4) and 5-07(f)(1), the following classes of projects may be granted tax exemption and tax abatement:

   (1) Conversion of any building or structure classified as a Class B multiple dwelling or a Class A multiple dwelling used for single room occupancy into a Class A multiple dwelling, but only if the conversion is carried out with substantial governmental assistance.

   (2) Conversion of residential units covered by Article 7-C of the Multiple Dwelling Law in buildings classified as interim multiple dwellings pursuant to such article and registered with the New York City Loft Board to units which are in compliance with the standards of safety and fire protection set forth in Article 7-B of the Multiple Dwelling Law or to units which have a Certificate of Occupancy as part of a Class A multiple dwelling. Provided, that if only a portion of a building is eligible as an interim multiple dwelling, benefits shall be pro-rated between such portion and the remaining part of the building.

   (3) Conversion permitted as of right by the Zoning Resolution of any non-residential Building or structure situated in the borough of Manhattan into a Class A Multiple Dwelling, provided that the Conversion was completed prior to December 31, 2011.

   (4) Conversion permitted as of right by the Zoning Resolution of any non-residential Building or structure situated in the boroughs of the Bronx, Brooklyn, Queens or Staten Island into a Class A Multiple Dwelling, provided that the Conversion was completed prior to December 31, 2011.

   (5) Alterations or improvements to the exterior of a building visible from a public street, provided the alterations or improvements are made pursuant to a Permit for Minor Work, Certificate of Appropriateness, or Certificate of No Effect issued by the Landmarks Preservation Commission with respect to a landmark and the building or structure is otherwise eligible and either an existing dwelling or a building other than a private dwelling, which is being converted into a Class A multiple dwelling. Such alterations are eligible for the full amount spent on the required work whether or not the work qualifies as an MCI, provided, however, that each item of work must appear on the Itemized Cost Breakdown Schedule as set forth in 28 RCNY § 5-08.

   (6) Alterations or improvements constituting a moderate rehabilitation of a substantially occupied Class A multiple dwelling, provided the project meets all the conditions set forth below:

      (i) The scope of work must includes a major capital improvement in not less than one of the following five categories designated below:

         (A) Elevators:

            (a) Replacement of existing unit in its entirety;

            (b) Replacement of traction machine;

            (c) Replacement of one or two-speed controller; or

            (d) Conversion of manual to automatic.

         (B) Heating:

            (a) Boiler and/or burner replacement; or

            (b) Piping, heat, mains, risers, branches in all dwelling units.

         (C) Plumbing:

            (a) Piping (gas), risers and branches in all dwelling units;

            (b) Piping (waste and vent), mains, risers branches in all dwelling units;

            (c) Piping (water-main and risers), mains, risers, branches in all dwelling units; or

            (d) Sprinklers, in entire building.

         (D) Wiring:

            (a) Adequate in all dwelling units; or

            (b) New in all dwelling units.

         (E) Window and trim replacement: provided that all the windows are replaced in at least ninety percent (90%) of all residential units; and

      (ii) The scope of work must have an average certified reasonable cost of not less than two thousand five hundred dollars ($2,500) for each dwelling unit in existence at the commencement of construction of the rehabilitation, comprised exclusively of major capital improvements, exclusive of any certified reasonable cost for ordinary repairs.

      (iii) For the purpose of moderate rehabilitation, a Class A multiple dwelling is substantially occupied if at least sixty percent (60%) of the units are occupied by permanent residential tenants immediately prior to the start of rehabilitation, during the entire period of rehabilitation (except, in substantially governmentally assisted projects, for temporary periods of relocation pursuant to a governmentally supervised plan of temporary relocation) and immediately subsequent to completion of construction of the rehabilitation.

   (7) Alterations or improvements to an existing dwelling; provided that such items of work are set forth in 28 RCNY § 5-08 and are necessary to eliminate presently existing unhealthy or dangerous conditions or to replace inadequate and obsolete sanitary facilities, including asbestos abatement to the extent required by any federal, state or local law.

   (8) Alterations or improvements designated as energy conservation items in 28 RCNY § 5-08. In order to be eligible pursuant to this paragraph the building being altered or improved must be an existing dwelling.

   (9) Alterations or improvements commenced on or after September 1, 1987 constituting a substantial rehabilitation of a Class A multiple dwelling or a conversion of a building or structure into a Class A multiple dwelling as part of a program to provide housing for low and moderate income households, provided that:

      (i) such alterations or improvements or conversions shall be aided by a grant, loan or subsidy from any federal, state or local agency or instrumentality. For purposes of this paragraph, the term “low and moderate income households” shall mean households having an annual household income no greater than one hundred sixty-five percent (165%) of area median income for the Metropolitan Statistical Area as determined by HUD. Notwithstanding the foregoing sentence, HPD shall grant benefits to a building if no more than eighty percent (80%) of units are rented to households having an annual household income no greater than one hundred eighty percent (180%) of such area median income, provided at least twenty percent (20%) of the units in such building are rented to households with an annual household income no greater than eighty percent (80%) of such area median income.

      (ii) [Reserved.]

   (10) Conversion of a property classified under the zoning resolution as a non-profit institution with sleeping accommodations into a Class A multiple dwelling, but only if such conversion is carried out with substantial governmental assistance.

   (11) Alterations or improvements to any private dwelling, or conversion of any private dwelling to a Class A multiple dwelling, or conversion of any multiple dwelling to a private dwelling, provided that in each instance the alterations, improvements or conversion are carried out with substantial governmental assistance.

  1. Eligible items of work: major capital improvements.

   (1) Items of work designated as major capital improvements in the itemized cost breakdown schedule contained in 28 RCNY § 5-08 shall be eligible for tax benefits. Except for purposes of 28 RCNY § 5-03(c)(1)(iii), any item of work set forth in 28 RCNY § 5-08 shall also be considered a major capital improvement if done pursuant to an Alteration Type-I Permit issued by the Department of Buildings or if it is part of the scope of work of a moderate rehabilitation.

   (2) An existing dwelling shall not be eligible to receive tax abatement or tax exemption for any item of work designated as a major capital improvement if it is receiving tax abatement or tax exemption for the same or a similar major capital improvement at the time of application for tax benefits, except as provided in 28 RCNY § 5-04(b)(4).

  1. Eligible items of work: ordinary repairs.

   (1) Ordinary repairs are those items of work listed in the Itemized Cost Breakdown Schedule which are not preceded by an asterisk. The replacement of any component part of any item of work listed in 28 RCNY § 5-08 is also an ordinary repair. Ordinary repairs are not eligible for tax abatement unless they are:

      (i) Made to a common area; and are

         (A) Certified to have been started and completed within a twelve month period by an affidavit:

            (a) of a registered architect or a licensed professional engineer; or

            (b) by the applicant. Certification by the applicant must be substantiated to the satisfaction of the Office by cancelled checks or such other proof of payment as the Office shall require, contractors’ affidavits and/or such other information as may be required by the Office to substantiate such completion of construction; and

         (B) Made concurrently with a major capital improvement to such common area which requires a permit by the Department of Buildings. Ordinary repairs are made concurrently with a major capital improvement if they are started no earlier than sixty days before and no later than sixty days after the issuance of a building permit for the major capital improvement; or

      (ii) Done pursuant to an Alteration Type-I Permit issued by the Department of Buildings; or

      (iii) Done as part of a moderate rehabilitation pursuant to 28 RCNY § 5-03(a)(6) provided, however, that only major capital improvements shall be counted to meet the requirement of 28 RCNY § 5-03(a)(6)(ii) that the CRC for a moderate rehabilitation must equal or exceed an average of two thousand five hundred dollars ($2,500) per dwelling unit; or

      (iv) In the case of projects described in 28 RCNY § 5-03(a)(9), done pursuant to an Alteration Type-II Permit.

   (2) The certified reasonable cost for ordinary repairs may not exceed twice the amount actually expended on the designated concurrent major capital improvement, exclusive of any such ordinary repairs.

   (3) An existing dwelling is not eligible to receive tax abatement for any item of work designated as an ordinary repair if the existing dwelling was receiving tax abatement for ordinary repairs pursuant to the Act as of the December thirty-first of the calendar year preceding the date of the application to the Office, unless the ordinary repair independently qualifies under this subdivision (c) as eligible for tax benefits. Tax abatement may not be received for repairs to any item for which benefits of tax abatement are already being received.

  1. Time Requirements.

   (1) In order to receive tax benefits pursuant to the Act, eligible projects, except for conversions described in 28 RCNY § 5-03(a)(2), must be completed as follows:

      (A) for eligible projects that are completed prior to December 31, 2011, within thirty-six months following the Commencement of Construction;

      (B) for eligible projects that are completed on or after December 31, 2011, within thirty months following the Commencement of Construction; or

      (C) for eligible projects carried out with Substantial Governmental Assistance or Alterations or Improvements undertaken by an HDFC which are carried out in a property transferred from the City if such Alterations or Improvements are completed within eighty-four months after the date of transfer, within sixty months following the Commencement of Construction. Notwithstanding the foregoing, all such Conversions, Alterations or Improvements must be completed prior to June 30, 2015.

   (2) In a project with multiple Buildings, if all Buildings are not completed prior to December 31, 2011 and within the thirty-six month period following Commencement of Construction, or on or after December 31, 2011 and within the thirty-month period following Commencement of Construction, as applicable, applications for benefits may be filed for separate Buildings or separate groups of Buildings which are on the same tax block and lot and are completed within the applicable time period, provided that separate Building Permits are in effect for each such filing.

   (2-a) For a project with multiple Buildings eligible for the sixty-month completion period established pursuant to subparagraph (C) of paragraph one of this subdivision in which all of the Buildings in such project are not completed within such period, separate applications for benefits may be filed either for: (A) different items of governmentally-assisted work completed within such sixty-month period, or (B) benefits for separate Buildings or separate groups of Buildings that are on the same tax block and lot and are completed within such sixty-month period, provided that separate Building Permits are in effect for each such filing.

   (3) In order to receive the tax benefits pursuant to the Act, an application for a Certificate of Eligibility and Reasonable Cost must be filed with the Office after the Completion of Construction and (A) for Conversions, Alterations or Improvements completed before December 31, 2011, not later than forty-eight months following the Commencement of Construction, (B) for Conversions, Alterations or Improvements completed on or after December 31, 2011, not later than thirty-six months following the Commencement of Construction, or (C) for applications for benefits pursuant to 28 RCNY § 5-03(a)(2), not later than twelve months following the Completion of Construction.

   (4) At the discretion of the Commissioner, the time to file an application for a Certificate of Eligibility and Reasonable Cost may be extended to not later than seventy-two months following the Commencement of Construction for any project that is carried out with Substantial Governmental Assistance.

   (5) An application for a Certificate of Eligibility and Reasonable Cost must contain all documentation required by 28 RCNY § 5-05 and be completed and filed with the Office as follows:

      (A) for Conversions, Alterations or Improvements that are completed before December 31, 2011, within twenty-four months of the initial filing date with the Office;

      (B) for Conversions, Alterations or Improvements that are completed on or after December 31, 2011, within twelve months of the initial filing date with the Office; or

      (C) for projects carried out with Substantial Governmental Assistance that have received a Temporary Certificate of Eligibility and Reasonable Cost, within one year of the Completion of Construction. If the application is not completed in accordance with subparagraphs (A)-(C) of this paragraph five, it shall be deemed withdrawn at the end of the tax quarter in which the application completion deadline set forth above falls, and no tax benefits shall be authorized for the Conversion, Alterations or Improvements made thereunder. The applicant is referred to 28 RCNY § 5-05 for detailed filing requirements. Applicants must notify the Office of any change of address and/or change of ownership of the property, and any change in the designated filing agent.

   (6) Notwithstanding the provisions contained in paragraph five of this subdivision, if the applicant is a Limited Profit Housing Company that owns and operates a planned unit development consisting of at least fifteen thousand (15,000) dwelling units, an application for a Certificate of Eligibility and Reasonable Cost must contain all documentation required by 28 RCNY § 5-05 and be completed and filed with the Office within twenty-four months of the initial filing date with the Office. If such application is not so completed and filed with the Office within twenty-four months of the initial filing date, the application shall be deemed withdrawn at the end of the tax quarter in which the twenty-fourth (24th) month falls, and no tax benefits shall be authorized for the Conversion, Alterations or Improvements made thereunder.

  1. Construction and maintenance requirements.

   (1) In order to be eligible for tax benefits a building must be structurally sound and must comply with applicable laws including, but not limited to, the Building Code, the Multiple Dwelling Law, the Housing Maintenance Code and the Zoning Resolution.

   (2) The following subparagraphs set forth the minimum number of bedrooms required by the Act.

      (i) Buildings converted to Class A multiple dwellings, buildings where the configuration has been altered to increase the number of units, and existing dwellings which have been substantially rehabilitated must contain bedrooms in a number equal to seventy-five (75%) percent of the dwelling units contained therein in order to be eligible to receive tax benefits.

      (ii) The bedroom count requirement set forth in subparagraph (i) above is not applicable to non-residential buildings or structures converted to Class A multiple dwellings when the resulting dwelling units therein contained an average floor area of one thousand square feet or more.

      (iii) A substantial rehabilitation of an existing dwelling shall be exempt from the provisions of this paragraph (2) in the event that (A) the number of dwelling units in such existing dwelling is not thereby increased and (B) the number of bedrooms in such existing dwelling is not thereby reduced.

      (iv) For purposes of the bedroom count requirement set forth in subparagraphs (i) and (ii) above, dwelling units which contain a combined living/dining/kitchen space in excess of three hundred and twenty-five square feet may be deemed to include both a kitchen and living room, so that any additional rooms may be considered bedrooms, under subparagraphs (i) and (ii) above.

   (3) No building shall be eligible to receive benefits pursuant to the Act unless all of the dwelling units contained therein are Class A dwelling units as defined in § 4 of the Multiple Dwelling Law, and have complete sanitary facilities and a complete kitchen or kitchenette for the exclusive use of the person or family residing in such unit, provided, however, if a building contains both Class A and Class B units, benefits may be pro-rated as set forth in 28 RCNY § 5-03(f)(4). Class B units may be eligible to apply to the Office for tax benefits pursuant to § 11-244 of the Administrative Code.

  1. Rent regulatory requirements.

   (1) Rent regulation generally mandatory. In order to be eligible to receive tax benefits under the Act and for at least so long as a building is receiving the benefits of the Act, except for dwelling units which are exempt from such requirement pursuant to paragraph (2) below, all dwelling units in buildings or structures converted, altered or improved shall be subject to rent regulation pursuant to:

      (i) the City Rent and Rehabilitation Law (§§ 26-401 et seq. of the Administrative Code); or

      (ii) the Rent Stabilization Law of 1969 (§§ 26-501 et seq. of the Administrative Code); or

      (iii) the Private Housing Finance Law; or

      (iv) any federal law providing for rent supervision or regulation by HUD or any other federal agency; or

      (v) the Emergency Tenant Protection Act of 1974.

   (2) Exemption from rent regulation.

      (i) Notwithstanding paragraph (1) above, dwelling units in multiple dwellings which are owned as cooperatives or condominiums and which are not regulated pursuant to any of such laws shall not be required to be subject to rent regulation.

      (ii) Newly created dwelling units in a building for which a prospectus for condominium or cooperative formation has been submitted to the Attorney General at the time of application for benefits to the Office shall not be required to registered with DHCR, unless a plan of cooperative or condominium ownership has not been declared effective within fifteen (15) months of the date of the acceptance for filing of the plan of cooperative or condominium ownership with the Attorney General.

   (3) Deregulation of units.

      (i) With respect to a dwelling unit in any building receiving benefits under the Act,

         (A) such unit shall remain subject to rent regulation until the occurrence of the first vacancy after tax benefits are no longer being received for the building at which time the unit shall be deregulated, unless the unit is otherwise subject to rent regulation; or

         (B) if each lease and renewal thereof for such unit for the tenant in residence at the time of the expiration of the tax benefits has included a notice in at least twelve point type informing such tenant that the unit shall become subject to deregulation upon the expiration of the tax benefits and stating the approximate date on which tax benefits are to expire, such dwelling unit shall be deregulated after tax benefits are no longer being received for the building, unless the unit is otherwise subject to rent regulation.

      (ii) As provided in 28 RCNY § 39-03, rent regulation shall not be terminated by the waiver or revocation of tax benefits.

      (iii) Rent regulation of dwelling units shall not be exempted or terminated other than as set forth in this subdivision (f) as long as benefits are in force.

   (4) Permanent residential use. All dwelling units must be leased for permanent residential purposes for a term of not less than one year so long as tax benefits are in effect. Permanent residential use shall not include use as a hotel, dormitory, employee residence or facility, fraternity or sorority house, resort housing or any similar type of non-permanent housing. For purposes of this chapter, a “hotel” shall mean (i) any Class B multiple dwelling, as such term is defined in the Multiple Dwelling Law, (ii) any structure or part thereof containing living or sleeping accommodations which is used or intended to be used for transient occupancy, (iii) any apartment hotel or transient hotel as defined in the Zoning Resolution, or (iv) any structure or part thereof which is used to provide short term rentals or owned or leased by an entity engaged in the business of providing short term rentals. For purposes of this definition, a lease, sublease, license or any other form of rental agreement for a period of less than six months shall be deemed to be a short term rental. Notwithstanding the foregoing, (i) a structure or part thereof owned or leased by a not-for-profit corporation for the purpose of providing governmentally funded emergency housing shall not be considered a hotel for purposes of this chapter, and (ii) benefits may be pro-rated by deducting out work attributable to Class B units in a building containing both Class A and Class B units, provided that all units in a building are registered with DHCR as rent stabilized or rent controlled units, and are utilized for permanent residential use.

   (5) Escalation clauses in leases. Except for the notice referred to in subparagraph (i)(B) above, no lease for dwelling units which are registered with DHCR shall contain escalation clauses for real estate taxes or any other provisions for increasing the rent set forth in the lease, other than permitting an increase in rent pursuant to an order of DHCR or the Rent Guidelines Board.

   (6) Partial waiver of rent adjustments attributable to major capital improvements.

      (i) As a requirement for claiming or receiving any tax abatement attributable to a major capital improvement, the owner of the property shall file with the Office, on the date any application for benefits is made, a declaration stating that in consideration of any tax abatement benefits which may be received pursuant to such application for alterations or improvements constituting a major capital improvement, such owner agrees to waive the collection of a portion of the total annual amount of any rent adjustment attributable to such major capital improvement which may be granted by DHCR pursuant to the rent stabilization code equal to one-half of the total annual amount of the tax abatement benefits which the property receives pursuant to such application with respect to such alterations or improvements. For example, an owner receiving a total rent adjustment over eighty-four months equal to $100,000 for a major capital improvement along with tax abatement of $100,000 for the same improvement would waive collection of $50,000 during such period. Such waiver shall commence on the date of the first collection of such rent adjustment, provided that, in the event that such tax abatement benefits were received prior to such first collection, the amount waived shall be increased to account for such tax abatement benefits so received. The entire amount shall be applied against the first annual rent adjustment, including any retroactive rent adjustments which may be granted by the applicable DHCR order, unless the amount exceeds such adjustments, in which event the excess shall be carried forward. The calculation of the amount attributable to the waiver shall be against the total rent adjustment for the eighty-four month period prior to the application of any annual percentage limitation applied by DHCR to defer collection of the total rent adjustment. In calculating rental adjustments pursuant to Rent Guidelines Board orders the amount of the waived rent shall not be included in the base rent. Following the expiration of a tax abatement for alterations or improvements constituting a major capital improvement for which a rent adjustment has been granted by DHCR, the owner may collect the full amount of annual rent permitted pursuant to such rent adjustment. A copy of such declaration shall be filed simultaneously with DHCR. Such declaration shall be binding upon such owner, and his or her successors and assigns.

      (ii) The provisions of subparagraph (i) shall not apply to substantial rehabilitation of buildings vacant when alterations or improvements are commenced or to buildings rehabilitated with substantial governmental assistance.

  1. Eligibility rules for Cooperatives and Condominiums.

   (1) Buildings owned as Cooperatives or Condominiums are eligible for tax exemption pursuant to the Act, provided that the work is eligible pursuant to 28 RCNY § 5-03(a).

   (2) Eligibility for tax abatement is limited to: (i) Alterations or Improvements completed prior to or within thirty-six months following the date (a) of the first closing of a Condominium unit to a bona fide purchaser or (b) on which the first shares allocable to a Cooperative unit are conveyed to a bona fide purchaser, or

      (ii) Any Cooperative or Condominium in which dwelling units have been newly created by the Substantial Rehabilitation of a vacant Building or the Conversion of a non-residential Building if such Conversion is completed prior to December 31, 2011, or

      (iii) [Reserved.]

      (iv) Alterations or Improvements in any Cooperative or Condominium for work completed prior to December 31, 2011 which meets the following requirements:

         (A) the Actual Assessed Value of such Cooperative or Condominium shall not exceed an average of forty thousand dollars ($40,000) per dwelling unit at the time of the Commencement of Construction, and

         (B) during the three years immediately preceding the Commencement of Construction, the average per room sale price of the dwelling units or the stock allocated to such dwelling units shall have been no greater than thirty-five percent (35%) of the maximum mortgage amount for a single family home eligible for purchase by Fannie Mae, provided that if an amount less than ten percent (10%) of the dwelling units or an amount of stock less than the amount allocable to ten percent (10%) of such dwelling units has not been transferred during such preceding three year period, then eligibility for benefits shall be conditioned upon the Cooperative or Condominium having an Actual Assessed Value per dwelling unit of no more than forty thousand dollars ($40,000) at the time of the Commencement of Construction.

         (C) [Reserved.]

         (D) The maximum amount of tax abatement which may be applied against taxes due in any tax year by any cooperative or condominium claiming benefits under this 28 RCNY § 5-03(g)(2)(iv) shall be limited to two thousand five hundred dollars ($2,500) per dwelling unit.

         (E) Notwithstanding anything to the contrary contained in this subparagraph (iv), the availability of any benefits pursuant to the Act to any multiple dwelling, Building or structure owned and operated by a Limited Profit Housing Company or a Redevelopment Company shall not be conditioned upon the Actual Assessed Value of such multiple dwelling, Building or structure, including land, as calculated as an average dollar amount per dwelling unit, at the time of Commencement of Construction, provided, that such Limited Profit Housing Company or Redevelopment Company (1) is organized and operating as a Mutual Company or a Mutual Redevelopment Company, respectively, (2) continues to be organized and operated as a Mutual Company or a Mutual Redevelopment Company, respectively, and to own and operate the multiple dwelling, Building or structure receiving such benefits, and (3) has entered into a binding and irrevocable agreement with the commissioner of housing of the state of New York, the Supervising Agency, the New York city housing development corporation, or the New York state housing finance agency prohibiting, respectively, either (A) the dissolution or reconstitution of such Limited Profit Housing Company pursuant to section thirty-five of the Private Housing Finance Law for not less than fifteen years from the date of commencement of such benefits, or (B) the dissolution or reconstitution of such Redevelopment Company pursuant to section one hundred twenty-three of the Private Housing Finance Law until the earlier to occur of fifteen years from the date of commencement of such benefits, or the expiration of any tax exemption granted to such Redevelopment Company pursuant to section one hundred twenty-five of the Private Housing Finance Law.

      (v) For purposes of determining the number of rooms in applying the limitations contained in 28 RCNY § 5-03(g)(2)(iv), the number of zoning rooms shall be used unless there is no filing with the Department of Buildings indicating the number of zoning rooms, in which case the number shall be:

         (A) the number of rooms as evidenced in the Offering Plan, or

         (B) at the discretion of the Office, the number of rooms as certified by a licensed architect.

      (vi) Where the Building is occupied in part for residential purposes and in part for non-residential purposes, the Actual Assessed Value of the property shall be allocated by the Office between the residential and the non-residential portions based on pro rata Floor Area, unless the non-residential portion is on a separately assessed tax lot, in which case only the amount of Actual Assessed Value allocated to the residential portion shall be considered in computing the Actual Assessed Value per dwelling unit for purposes of 28 RCNY § 5-03(g)(2)(iv).

  1. Special requirements for moderate rehabilitation and special non-harassment provisions.

   (1) Special requirements for moderate rehabilitation.

      (i) In order to be eligible for tax benefits pursuant to 28 RCNY § 5-03(a)(6), an applicant must:

         (A) Not more than one hundred eighty days nor less than thirty days prior to the commencement of construction of rehabilitation, complete form MR-1 (notice to tenants) and send it by registered or certified mail, return receipt requested, to all tenants residing in the building to be rehabilitated and post a copy conspicuously in the building lobby; and

         (B) Complete form MR-2 (affidavit that MR-1 was mailed) and file it with the Office not less than thirty days prior to the start of rehabilitation.

      (ii) If more than one hundred eighty days elapse between the date Form MR-1 is mailed to any tenant and the date rehabilitation actually commences, new Forms MR-1 and MR-2 must be completed and mailed and posted and filed as required by subparagraphs (i) and (ii) of this paragraph (1) provided that, in the case of a loan program supervised by HPD, notice to HPD shall be unnecessary, and further provided that HPD may itself provide the required notice to tenants prior to commencement of construction in lieu of the MR-1 written notice and MR-2 affidavit.

      (iii) In the discretion of the Office, in lieu of the requirements established by subparagraphs (i) and (ii) of this paragraph (1), the applicant may establish by proof satisfactory to the Office that it has provided notice to HPD and to the tenants residing in the building to be rehabilitated of (A) the proposed work prior to commencement of such work, (B) the identity of the owner’s representative, and (C) the tenants’ rights under applicable law with respect to such work.

   (2) Special non-harassment provisions. In order to be eligible for any tax exemption pursuant to the Act, irrespective of the cost of the conversion, alteration or improvement, or to be eligible for tax abatement when the CRC per dwelling unit exceeds seven thousand five hundred dollars ($7,500) (including the cost of any conversion, alteration or improvement for which an abatement was approved within four years prior to commencement of construction of the contemplated project), the owner of the property shall file with the Office, not less than thirty days before the commencement of construction of the conversion, alteration or improvement (the “cut-off date”), an affidavit, or, at the time of application, a late filing affidavit or, where any information referred to in 28 RCNY § 5-03(h)(2)(i) below changes prior to applying for or claiming any benefit under this subdivision (h), an amended affidavit, setting forth the following information:

      (i) every owner or record and owner of a substantial interest in the property or entity owning the property or sponsoring the conversion, alteration or improvement;

      (ii) a statement that none of such persons had, within the five years prior to the cut-off date, been found to have harassed or unlawfully evicted tenants by judgment or determination of a court or agency (including a non-governmental agency having appropriate legal jurisdiction) under the penal law, any state or local law regulating rents or any state or local law relating to harassment of tenants or unlawful eviction; and

      (iii) any change in the information required to be set forth.

   (3) No conversion, alteration or improvement subject to paragraph (2) of this subdivision (h) shall be eligible for tax exemption or tax abatement under the Act where:

      (i) any affidavit required under paragraph (2) has not been filed; or

      (ii) any such affidavit contains a willful misrepresentation or omission of any material fact; or

      (iii) any person referred to in 28 RCNY § 5-03(h)(2)(i) has been found to have harassed or unlawfully evicted tenants until and unless the finding is reversed on appeal, provided that any such finding after the cut-off date shall not apply to or affect any tax abatement or exemption for the conversion, alteration or improvement covered by the affidavit.

§ 5-04 Ineligible Projects, Items of Work.

(a)  Ineligible projects. The tax benefits of the Act are not available to:

   (1) Any tax lot which is receiving tax exemption or tax abatement under any other provision of state or local law for rehabilitation or new construction, including but not limited to § 420-c, § 421-a, § 421-b, § 421-g, and § 488-a of the Real Property Tax Law, but not including the provisions of the Private Housing Finance Law as of the date that the Certificate of Eligibility is issued.

   (2) Any building for which real estate taxes, water or sewer charges, payments in lieu of taxes, emergency repair or relocation liens are due and owing or not satisfied of record as of the last day of the tax quarter preceding the submission date of the Certificate of Eligibility to the Department of Finance, provided that a property rehabilitated by a loan pursuant to Article 8 or Article 15 of the Private Housing Finance Law shall not be ineligible pursuant to this section if there are no real estate taxes or water and sewer charges due and owing as of the last day of a tax quarter preceding commencement of construction of such rehabilitation. The benefits of tax exemption and tax abatement shall not be denied to any property pursuant to this section on account of unpaid real estate taxes, water or sewer charges provided the applicant or his predecessor in title has entered into an installment agreement with the City pursuant to §§ 11-401 et seq. of the Administrative Code and all payments required by said installment agreement have been paid when due.

   (3) Any multiple dwelling which results from the conversion of a private dwelling except as provided in 28 RCNY § 5-03(a)(11).

   (4) The conversion, alteration or improvement, commenced on or after July 1, 1982, of any Class B multiple dwelling or Class A multiple dwelling used in whole or in part for single room occupancy regardless of the status or use of the building after the conversion, alteration or improvement, unless such conversion, alteration or improvement is carried out with substantial governmental assistance.

   (5) Any property for which the improvement is assessed at one thousand dollars ($1,000) or less at the commencement of construction of alterations, improvements or conversion, provided that such assessed valuation test shall not apply if the alterations, improvements or conversion is carried out with substantial governmental assistance.

   (6) Any building or structure that results from new construction as distinguished from rehabilitation, alterations, improvements or conversion, as evidenced by issuance of a building permit for new construction. In order for a building to be characterized as rehabilitated, altered, improved or converted, one of the following conditions must be met before, during and after construction:

      (i) At least seventy-five percent (75%) of the total area of the original perimeter walls, but in any event at least fifty percent (50%) of the total area of the original non-party perimeter walls, must remain in place as perimeter walls in the building for which benefits are claimed; or

      (ii) At least eighty percent (80%) of the original structural floor area of the building must remain in place as structural floor in the building for which benefits are claimed.

   (7) The conversion of any building, or portion thereof.

      (i) which is located within any district in the County of New York where a floor area ratio, as that term is defined in the Zoning Resolution, of fifteen or greater is permitted by said resolution, or

      (ii) located in the City where residential conversion as-of-right is not permitted by said resolution, unless construction actually commenced in the County of New York prior to January 1, 1982, or in the Counties of Kings, Queens, Richmond or the Bronx prior to October 1, 1983, pursuant to an alteration permit, or unless the building is eligible for the benefits of the Act pursuant to 28 RCNY § 5-03(a)(2).

   (8) Any conversion commenced on or after June 28, 1988 of any property classified under the Zoning Resolution as a non-profit institution with sleeping accommodations, unless such conversion is carried out with substantial governmental assistance.

  1. Ineligible items of work. The tax benefits of the Act are not available for:

   (1) Alterations or improvements done in connection with the refinancing of a housing project pursuant to § 223(f) of the National Housing Act, as amended.

   (2) Any portion of a building that results from new construction as distinguished from alterations or improvements or which represents an increase in the gross cubic content of a building from the gross cubic content in existence immediately prior to commencement of construction.

   (3) Any portion of a building occupied by stores, professional offices, community facilities or otherwise used for commercial or non-residential purposes pursuant to the classifications set forth in the Zoning Resolution.

   (4) Any item of work if a building is receiving tax abatement for the same or a similar item of work at the time of application for the benefits of the Act, provided, however, that if an item or a system which was previously repaired is replaced in its entirety while the building is still receiving the benefits of the Act for such repair, tax benefits for the replacement shall be granted only to the extent that the certified reasonable cost of the replacement exceeds the amount of the previously granted certified reasonable cost attributable to the repair.

   (5) An existing dwelling is not eligible to receive tax abatement for any item of work designated as an ordinary repair if the existing dwelling was receiving tax abatement for ordinary repairs pursuant to the Act as of the December thirty-first of the calendar year preceding the date of the application to the Office, unless the ordinary repair independently qualified under 28 RCNY § 5-03(c) as eligible for tax benefits. Tax abatement may not be received for repairs to any items for which benefits of tax abatement are already being received.

§ 5-05 Application Procedure: Documentation.

(a)  Application forms and filing. Prescribed forms and applications are available from the Department of Housing Preservation and Development, Office of Tax Incentive Programs, 100 Gold Street, 1st Floor, New York, New York 10038. All applications must be submitted to the Office on forms approved by the Office. Only applications complete in all detail will be considered for certification of eligibility and reasonable cost. All forms must be filled out fully and legibly by the applicant and shall be typewritten or inscribed in permanent ink. Applications and supporting documentation may only be submitted to the Office for review and approval after the completion of construction of work.
  1. Preliminary application. All applicants who intend to apply for tax exemption and tax abatement when they complete conversion, alteration or improvements must file a notice of intent form (form J-11) with the Department of Finance which describes the work for which tax benefits will be claimed, estimates the cost of the work for which tax benefits will be claimed and estimates the cost of the work which will be eligible for tax benefits. Such form must be filed not less than 45 days prior to the commencement of construction. If the scope of the work or the estimated cost changes materially, applicants must file a revised form with the Department of Finance. Applicants who fail to comply with the provisions of this subdivision (b) must pay a penalty at the time of issuance of a Certificate of Eligibility and Reasonable Cost of five hundred dollars ($500) plus an amount equal to one percent (1%) of the amount stated on the Certificate of Eligibility and Reasonable Cost in excess of ten thousand dollars ($10,000), provided that HPD may waive the penalty for projects receiving substantial governmental assistance. The penalty prescribed by this 28 RCNY § 5-05(b) is in addition to the normal filing fees prescribed in 28 RCNY § 5-05(f). Notwithstanding the foregoing, an applicant who performs an abatement of lead-based paint hazards shall not be required to file a notice of intent form (form J-11) with the Department of Finance prior to commencement of work, and no additional fee or penalty shall be due and owing HPD at the time of issuance of a certificate of eligibility and reasonable cost for failure to file such notice of intent.
  2. Documentation required of all applicants. All applicants must maintain documents relating to claimed costs as specified in 28 RCNY § 39-06(a), and all completed applications for final tax benefits must include the following documentation of the applicant’s actual expenditures properly organized and collated in time sequence:

   (1) Original and four copies of the application form; and

   (2) one copy of the following:

      (i) a report by an independent certified public accountant on the cost of the Conversion, Alterations or Improvements, in a form prescribed by the Office and in accordance with standards approved by the Office and based upon the books and records of the owner provided that the original records are retained as set forth in 28 RCNY § 5-07(e)(3) and 28 RCNY § 39-06(a) and are available for audit purposes; or

      (ii) A Disposition of Funds Statement or certification by the Commissioner of the cost of the work based upon other program records where the Conversion, Alterations or Improvements are undertaken aided by a loan made pursuant to Article 8, 8-a, 11, 12, 15 or 22 of the Private Housing Finance Law or § 312 of the United States Housing Act of 1964 (42 U.S.C. § 1452b), or the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. §§ 12701 et seq.) or § 696-a or § 99(h) of the General Municipal Law, or any other City-supervised housing program, or, in the discretion of the Office, other governmentally-supervised housing program; or

      (iii) In the discretion of the Office, paid bills, cancelled checks, installment agreements, and the work contract and any change orders, indicating work, location of Building, and quantity in appropriate unit of measurement all in a form corresponding to the individual items on the Itemized Cost Breakdown Schedule so that the claimed costs can be audited by HPD against the specific items and allowances contained in such schedules; or

      (iv) In the case of applications for Buildings under 28 RCNY § 5-03(a)(9), a designated special application form may be submitted including the general contract (if applicable), trade payment breakdown schedule and an HPD inspection report or an HPD-approved construction monitor’s certificate of completion. The Office, upon receipt of appropriate documentation, may determine that each such project has incurred eligible costs of at least twenty thousand dollars ($20,000) in CRC per unit and grant a Certificate of Eligibility and Reasonable Cost for one hundred and fifty percent (150%) of such amount, i.e., thirty thousand dollars ($30,000) in CRC per unit; and

   (3) Plans and amendments, if any, approved by the Department of Buildings; and

   (4) Proof of Commencement of Construction:

      (i) Copy of a Building Permit; or

      (ii) The Office shall require that the date of Commencement of Construction be confirmed by an affidavit of a registered architect or licensed professional engineer, together with, at the discretion of the Office, such other information as the Office may require to substantiate such date, including, but not limited to, an affidavit from the owner, a copy of the work contract, invoices, cancelled checks or such other proof of payment as the Office shall require, and a contractor’s affidavit. If an application contains a series of Major Capital Improvements, the Commencement of Construction date is that of the first Major Capital Improvement for which benefits are claimed; and

   (5) Proof of Completion of Construction:

      (i) A Permanent Certificate of Occupancy; or

      (ii) A Temporary Certificate of Occupancy for all of the dwelling units therein, and an affidavit from a registered architect or licensed professional engineer and the owner that the only work remaining to secure a Permanent Certificate of Occupancy is work to be performed or completed in space to be used exclusively for non-residential purposes; or

      (iii) A sign-off by the Department of Buildings as evidenced by the J-3, a computer printout or such other official documentation as may be required by the Department of Buildings and is acceptable to the Office if issued in connection with an eligible Conversion, Alteration or Improvement; or

      (iv) If none of the above are required by law, Completion of Construction must be confirmed by the submission of an affidavit of a registered architect or a licensed professional engineer, along with such other information as may be required by the Office, including, but not limited to, an affidavit from the owner, a copy of the work contract, invoices, cancelled checks or such other proof of payment as the Office shall require, Disposition of Funds Statements, certification by the Commissioner based on program records or inspection, and a contractor’s affidavit which confirm such Completion of Construction date to the satisfaction of the Office.

   (6) Proof of Compliance with the Housing Maintenance Code. For applications for which a Certificate of Occupancy has not been issued within one year of the date of submission of such application for all units for which benefits are claimed: If a search by the Department of Housing Preservation and Development dated no earlier than ninety days prior to the date of submission of such application indicates that there are any violations of record which are classified as hazardous or immediately hazardous, the applicant must either clear the violations of record or submit affidavits:

      (i) from a registered architect, or a licensed professional engineer, certifying that the architect or engineer has inspected the premises and that work necessary to remove any hazardous or immediately hazardous violations has been completed. If a violation classified as hazardous or immediately hazardous was caused by a tenant and the tenant refuses to grant access to the applicant to correct the tenant-related violation, such violation will not preclude eligibility provided the applicant can establish these facts with clear and convincing evidence; and

      (ii) from the owner, certifying that the architect or engineer has inspected the premises and that work necessary to remove any hazardous or immediately hazardous violations has been completed. If a violation classified as hazardous or immediately hazardous was caused by a tenant and the tenant refuses to grant access to the applicant to correct the tenant-related violation, such violation will not preclude eligibility provided the applicant can establish these facts with clear and convincing evidence.

   (7) Applications for benefits pursuant to 28 RCNY §§ 5-03(a)(2), (3) or (4) must provide proof of compliance with the relocation requirements of § 11-243(z) of the Act.

   (8) Department of Buildings Certification for Tax Exemption and Tax Abatement (Form J-3) or, if no permits from the Department of Buildings are required, at the option of the Office, alternative documentation to prove absence of Building Code violations.

   (9) Proof that the building has been registered with HPD in accordance with the provisions of article two of subchapter four of the Housing Maintenance Code.

   (10) (i) For applications received on or after March 19, 2006, an affidavit from the owner certifying that whenever any household appliance in any dwelling unit, or any household appliance that provides heat or hot water for any dwelling unit in the multiple dwelling, is installed or replaced with a new household appliance on or after March 19, 2006, such new appliance shall be certified as Energy Star. If applicable, such affidavit may instead certify (A) that an appropriately-sized Energy Star certified household appliance is not manufactured, such that movement of walls or fixtures would be necessary to create sufficient space for such appliance, and/or (B) that an Energy Star certified boiler or furnace of sufficient capacity is not manufactured.

      (ii) For purposes of this paragraph (10), (A) “household appliance” shall mean any refrigerator, room air conditioner, dishwasher or clothes washer, within a dwelling unit in the multiple dwelling that is provided by the owner, and any boiler or furnace that provides heat or hot water for any dwelling unit in the multiple dwelling, and (B) “Energy Star” shall mean a designation from the United States Environmental Protection Agency or Department of Energy indicating that a product meets the energy efficiency standards set forth by the agency for compliance with the Energy Star program.

  1. Additional documentation for buildings owned as cooperatives or as condominiums. Buildings owned as cooperatives or condominiums must submit the following additional documentation:

   (1) An opinion of counsel which states that the building is a legal cooperative or condominium and which has a prospectus accepted for filing by the Attorney General, or was formed prior to the date of prospectus was required by law, or is exempt for other reasons from the filing requirements; and

   (2) If benefits are claimed under 28 RCNY § 5-03(g)(2)(i), evidence of the first sale of a condominium unit or shares of stock allocable to a cooperative unit in a form required by the Office; and

   (3) A copy of the prospectus or offering plan which has been accepted for filing by the Attorney General, and all subsequent amendments which become effective prior to the time the Office issues a Certificate of Eligibility and Reasonable Cost for any cooperative or condominium eligible for tax abatement pursuant to 28 RCNY § 5-03(g).

   (4) Provided, however, if benefits are being claimed under 28 RCNY § 5-03(g)(2)(iii) or (g)(2)(iv), evidence shall be submitted with respect to assessed valuation per unit and the average per room sale price during the three years preceding the application in a form prescribed by the Office.

  1. Additional documentation for certain alterations or improvements. Certain alterations and improvements require the approval of designated agencies and such additional documentation as the Office shall require. The “Schedule of Required Information, Permits and Sign-offs” set forth in 28 RCNY § 5-09 contains a list of the documentation that the Office requires for specific alterations and improvements.
  2. Filing Fees.

   (1) Applicants must submit a non-refundable application fee with each application in the amount of five hundred ($500) dollars. Upon notification of a determination of reasonable cost in excess of ten thousand dollars ($10,000) and prior to issuance of the Certificate of Reasonable Cost, the applicant must pay an additional fee in an amount equal to one percent (1%) of the reasonable cost in excess of ten thousand dollars ($10,000). If applicable, the penalty prescribed by 28 RCNY § 5-05(b) must also be paid at this time.

   (2) If a Code Violation Search report is not submitted with an application submitted on or before December 30, 2004 in accordance with 28 RCNY § 5-05(c)(6)(a), an additional non-refundable filing fee equal to the fee charged by the HPD Division of Code Enforcement, currently thirty dollars ($30), must be submitted to cover the cost of processing such search. This fee must be submitted simultaneously with the five hundred dollar ($500) application fee.

   (3) Payment of all fees must be made by certified or cashier’s check or a check from an attorney or owner/agent payable to the “NYC Department of Finance NYCJ51 Fee”. In the event a check is returned unpaid, the applicant shall be assessed a fifty dollar ($50) processing fee and all further payments with respect to the application shall be made by certified or cashier’s check.

(f-1) BLDS Inspections. Except as otherwise provided in Section 489 of the Real Property Tax Law, Section 11-243 of the Administrative Code or these Rules, the filing of an application for a Certificate of Eligibility and Reasonable Cost is deemed a representation by such applicant that, with respect to all items of work claimed in such application, there has been Completion of Construction. Unless the aggregate cost of the items of work claimed in such application is less than ten thousand dollars ($10,000) or a designated special application form has been submitted in accordance with subparagraph (iv) of paragraph two of subdivision (c) of this section, all such items of work are subject to a BLDS Inspection prior to HPD’s issuance of a Certificate of Eligibility and Reasonable Cost. Any Certificate of Eligibility and Reasonable Cost issued with respect to such application shall not include items of work claimed therein where, as determined by such BLDS Inspection, there has not been Completion of Construction.

  1. Issuance of a certificate of eligibility.

   (1) The Office shall review each application to determine if it is eligible for tax benefits in accordance with the provisions of these rules and the Act. The Office will inform an applicant if the file is incomplete; however, it is the applicant’s responsibility to complete the application within twenty-four months of the initial filing date as provided in 28 RCNY § 5-03(d)(5). Provided, however, that for projects carried out with substantial governmental assistance and which have received a Temporary Certificate of Eligibility, the applicant must complete the application within one year of the completion of construction.

   (2) The certified reasonable cost for all eligible items of work shall be calculated as follows:

      (i) The certified reasonable cost for all eligible items of work shall be the lesser of the applicant’s actual cost, or the allowance set forth in the Itemized Cost Breakdown Schedule.

      (ii) The certified reasonable cost for all eligible items of work shall be reduced where such items are allocable in whole or part to, or service, ineligible portions of the building, if any, in the same ratio as the ineligible space bears to the aggregate floor area of the building.

      (iii) For buildings eligible for enriched abatement as provided in 28 RCNY § 5-06(c)(1) the total certified reasonable cost shall not exceed the lesser of the owner’s total actual expenditure or one hundred fifty percent (150%) of the total of the Itemized Cost Breakdown Schedule amounts set forth in 28 RCNY § 5-08.

      (iv) For buildings subject to the dollar limit set forth in 28 RCNY § 5-06(d), the aggregate certified reasonable cost may not exceed the maximum eligible CRC set forth therein.

      (v) [Repealed.]

   (3) The Office shall issue a Certificate of Eligibility and Reasonable Cost for all approved applications. Failure to produce satisfactory supporting documentation of the cost of an alteration, improvement or conversion, or any part thereof, or any of the items specified in this chapter may result in the denial of a Certificate of Eligibility and Reasonable Cost.

  1. Filing procedure with the Department of Finance.

   (1) For cooperatives and condominiums with an average transitional assessed valuation per dwelling unit of less than forty thousand dollars ($40,000), in order to receive tax abatement beginning on the first day of any tax quarter, the applicant must file a Certificate of Eligibility and Reasonable Cost with the appropriate borough Office of the Real Property Assessment Bureau of the Department of Finance during the third month preceding the start of such tax quarter; i.e.: January 1 through January 31 for the tax quarter beginning April 1, April 1 through April 25 for the tax quarter beginning July 1, July 1 through July 31 for the tax quarter beginning October 1, October 1 through October 31 for the tax quarter beginning January 1.

   (2) For cooperatives and condominiums with an average transitional assessed valuation per dwelling unit of forty thousand dollars ($40,000) or more, and for all other buildings receiving benefits, in order to receive tax abatement beginning on the first day of January or July of any year, the applicant must file a Certificate of Eligibility and Reasonable Cost with the appropriate borough office of the Real Property Assessment Bureau of the Department of Finance during the third or sixth month preceding the start of such tax period; i.e.: January 1 through January 31 or April 1 through April 25 for the tax period beginning July 1, or July 1 through July 31 or October 1 through October 31 for the tax period beginning January 1.

   (3) The following documents must be filed with the Certificate of Eligibility and Reasonable Cost during the time periods indicated above:

      (i) Department of Buildings Certification for Tax Exemption and Tax Abatement (Form J-3) or, if no permits from the Department of Buildings are required, at the option of the Office, alternative documentation to prove absence of Building Code violations;

      (ii) Certified Tax Search or copy of Installment Agreement;

      (iii) Department of Finance Application for Tax Exemption and Tax Abatement.

§ 5-06 Tax Exemption/Tax Abatement Commencement: Duration and Amount.

(a)  Tax Exemption.

   (1) Except as provided in § 489(9) of the Real Property Tax Law, for a period of fourteen years, or thirty-four years if the eligible project was a moderate rehabilitation or a project eligible under 28 RCNY § 5-03(a)(9), any increase in assessed valuation of properties which receive a Certificate of Eligibility and Reasonable Cost shall be exempt from taxation on any increase in assessed valuation resulting from the certified reasonable cost of the alteration, improvement or conversion performed pursuant to the Act. If the conversion, alteration or improvement results in an increase in the gross cubic content of the building, the portion of the building which represents the additional cubic content shall not be exempt from any increase in assessed valuation. In the case of fourteen year exemptions, any increase in assessed value which results from an alteration, improvement or conversion shall be fully exempt for ten years and such exemption shall be reduced by twenty per cent (20%) in each succeeding year. In the case of thirty-four year exemptions, any increase in assessed value which results from an alteration, improvement or conversion shall be fully exempt for thirty years and such exemption shall be reduced by twenty per cent (20%) in each succeeding year.

   (2) The land improved by a building with a Certificate of Eligibility and Reasonable Cost shall not be exempt from an increase in assessed valuation. An increase in assessed valuation resulting from an alteration, improvement or conversion other than one made pursuant to the Act shall not be exempt.

   (3) Tax exemption shall commence on the first day of July following the commencement of tax abatement with the following exceptions:

      (i) If tax abatement commences on July first, tax exemption shall start at the same time;

      (ii) Tax exemption may commence on the first day of any tax quarter designated by the Office following the commencement of construction if the property is:

         (A) Aided by a loan made pursuant to Article 8, 8-a or 15 of the Private Housing Finance Law; or

         (B) Aided by a loan made pursuant to § 312 of the United States Housing Act of 1964 (42 U.S.C. § 1452b); or

         (C) Started after July 1, 1983 by a housing development fund company organized under Article 11 of the Private Housing Finance Law and carried out either

            (a) with substantial governmental assistance or

            (b) in a property transferred from the City where alterations and improvements are completed within seven years of the date of such transfer; or

         (D) Started after July 1, 1988 by or on behalf of a company not qualified under any of the above provisions, which is a not-for-profit corporation qualified pursuant to § 501(c)(3) of the Internal Revenue Code and which has entered into a regulatory agreement with the HPD requiring operation of the property as housing for low and moderate income persons and families; or

         (E) Started after July 1, 1992, and aided by a loan or grant under Article 11, 12 or 22 of the Private Housing Finance Law, § 696-a (Article 16) or § 99(h) of the General Municipal Law, or the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. §§ 12701 et seq.).

      (iii) A Temporary Certificate of Eligibility may be issued in the discretion of the Office for projects eligible for tax benefits pursuant to 28 RCNY § 5-06(a)(3)(ii) above.

  1. Tax exemption limitation.

   (1) Except for special circumstances enumerated in paragraph (4) of this subdivision (b), property in the Borough of Manhattan south of or adjacent to the south side of one hundred tenth street with an average assessed valuation per dwelling unit of thirty-eight thousand dollars ($38,000) or more after completion of construction, calculated by dividing the amount of the total assessed valuation of the residential portion of the property as determined under the Real Property Tax Law by the number of dwelling units in the building after completion of construction of the conversion, alteration or improvement, shall not be eligible for a tax exemption. The amount of assessed valuation that will be exempt from taxation shall be calculated pursuant to the following table:

Average Assessment per Dwelling Unit After Completion of Construction Percent of Increased Assessment Exempt
$18,000 or less 100%
$18,001 – $22,000 75%
$22,001 – $26,000 50%
$26,001 – $30,000 25%
$30,001 – $37,999 0%
$38,000 or more No exemption granted

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   (2) In calculating the amount of assessed valuation that will be exempt from taxation pursuant to the formula in paragraph (1) above, the full amount of total assessed valuation that does not represent increased assessed valuation shall be applied in such formula prior to the inclusion of any amount of increased assessed valuation.

   (3) Where the real property is occupied in part for residential purposes and in part for non-residential purposes, unless the non-residential portion is on a separately-assessed tax lot, the assessed valuation of the property shall be allocated by the Office between the residential and non-residential portions based on pro rata square footage. In computing the total assessed valuation per dwelling unit under paragraph (1) above, only the amount of valuation so allocated to the residential portion shall be considered.

   (4) Exception to Assessed Valuation Limitation to Allow Additional Affordable Housing Units.

      (i) Notwithstanding the provisions in paragraph (1), the Office may reduce or remove the limitations on the exemption from taxation provided in such paragraph with respect to a particular property undergoing alteration or improvement, upon application of the property owner and a determination by the Commissioner that the increased benefit will increase the number of dwelling units that will be affordable to persons of low and moderate income, and the increased benefit is necessary to make economically viable units or to improve the quality of dwelling units that will be affordable to persons of low or moderate income.

      (ii) As used in this paragraph (4), the term “persons of low or moderate income” shall mean persons who would qualify for housing subsidies pursuant to section two hundred thirty-five (§ 235) of the National Housing Act, as amended, at one hundred thirty-five percent (135%) of the income limitations provided therein. The term “affordable,” when used in connection with persons of low or moderate income, shall mean that such persons shall not be required to spend more than thirty percent of their adjusted annual income for housing.

      (iii) Upon receiving an application under this paragraph (4) in proper form, the Office shall immediately submit it to the community board for the area in which the project is located, which may, within forty-five days of receiving it and after a public hearing, make recommendations to the Office as to the application. The Office shall act on the application within sixty days of receiving it from the property owner in proper form, but not before expiration of the time for the community board to make its recommendations, unless the board has acted sooner.

      (iv) The Office will not approve any application under this paragraph (4), unless the owner enters into an agreement with the City which guarantees that at least thirty percent (30%) of the apartments in the building receiving tax benefits shall be rented or sold to persons of low or moderate income at rentals or carrying charges not exceeding thirty percent (30%) of their annual income, and that such apartments will, on vacancy, be re-rented or re-sold to persons of low or moderate income for a period of no less than fifteen (15) years. Such units must be rehabilitated or newly created units resulting from substantial rehabilitation or conversion.

   (5) For purposes of this subdivision (b), the assessed valuation shall be the actual assessed valuation not transitional assessed valuation.

   (6) Further exceptions to assessed valuation limit. The following conversions, alterations, and improvements are not subject to the limitations set forth in paragraphs (1) and (2) of this subdivision (b).

      (i) Alterations or improvements under 28 RCNY § 5-03(a)(6); and

      (ii) Conversions of residential units covered by Article 7-C of the Multiple Dwelling Law under 28 RCNY § 5-03(a)(2); and

      (iii) Alterations or improvements under paragraphs (5), (7) or (8) of 28 RCNY § 5-03(a) when carried out:

         (A) with substantial governmental assistance, or with the aid of grants, loans or subsidies from any not-for-profit philanthropic organization one of whose primary purposes is providing housing affordable to persons of low or moderate income as defined in 28 RCNY § 5-06(b)(4)(ii); or

         (B) with mortgage insurance by the New York City Residential Mortgage Insurance Corporation or the State of New York Mortgage Agency; or

         (C) within the areas in New York County set forth in 28 RCNY § 5-10; or

         (D) pursuant to a program established by the Federal Housing Administration, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association for the rehabilitation of existing multiple dwellings for persons of low or moderate income, or a program of mortgage insurance for the rehabilitation of existing multiple dwellings pursuant to § 223(f) of the National Housing Act, as amended, or a program of mortgage insurance established by the Federal Housing Administration for the rehabilitation of existing multiple dwellings for persons of low or moderate income; provided that properties receiving benefits under such programs are located in a neighborhood strategy area, as defined by HUD (24 C.F.R. Part 881), or in one of the neighborhood preservation areas listed in 28 RCNY § 5-10.

   (7) Assessed valuation limits for projects commenced prior to June 1, 1986. Conversions, alterations and improvements commenced after September 15, 1983 and before June 1, 1986 are subject to the exemption limitations set forth in 28 RCNY § 5-06(b) whether they are located in Manhattan or in any other Borough of the City, unless they qualify under one of the exceptions to the assessed valuation limit set forth in 28 RCNY § 5-06(b)(6), or are located in a designated neighborhood preservation area, as listed in 28 RCNY § 5-06(d)(3)(iii)(C). For purposes of this subdivision (b), the Clinton neighborhood preservation area is exempt from the assessed valuation limits of 28 RCNY § 5-06(b) only for conversions, alterations and improvements commenced prior to June 28, 1988.

  1. Tax abatement.

   (1) Enriched abatement. In the case of

      (i) alterations or improvements carried out pursuant to 28 RCNY § 5-03(a)(6) which are carried out with substantial governmental assistance or with the aid of grants, loans or subsidies from any not-for-profit philanthropic organization one of whose primary purposes is providing low or moderate income housing or financed with mortgage insurance by the New York City Residential Mortgage Insurance Corporation or the State of New York Mortgage Agency or pursuant to a program established by the Federal Housing Administration for rehabilitation of existing multiple dwellings in a neighborhood strategy area, as defined by HUD (24 C.F.R. Part 881); or

      (ii) any conversion, alteration or improvement of property located in census tracts in which seventy-five percent (75%) or more of the population live in households which earn fifty percent (50%) or less of the median household income of the City, involving substantial governmental assistance; or

      (iii) any alteration, improvement or conversion carried out pursuant to 28 RCNY § 5-03(a)(9); the abatement of taxes on such property, including the land shall not exceed the lesser of the total actual cost of the alterations, improvements or conversion or one hundred fifty percent (150%) of the total certified reasonable cost of the alterations or improvements, and the annual abatement of taxes shall not exceed twelve and one-half percent (12.5%) of such certified reasonable cost.

   (2) Maximum annual and aggregate abatement.

      (i) In all cases not qualifying for the enriched abatement described in 28 RCNY § 5-06(c)(1), the maximum annual and aggregate abatement for each of the eligible projects listed in 28 RCNY § 5-03(a) is as follows:

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  28 RCNY § 5-03(a)(1) 8 1/3% of CRC 90% of CRC
28 RCNY § 5-03(a)(1) 8 1/3% of CRC 50% of CRC
  28 RCNY § 5-03(a)(2) 8 1/3% of CRC 90% of CRC
** 28 RCNY § 5-03(a)(2) 8 1/3% of CRC 50% of CRC
  28 RCNY § 5-03(a)(3) 8 1/3% of CRC 50% of CRC
  28 RCNY § 5-03(a)(4) 8 1/3% of CRC 90% of CRC
*** 28 RCNY § 5-03(a)(5) 8 1/3% of CRC 90% of CRC
  28 RCNY § 5-03(a)(6) 8 1/3% of CRC 100% of CRC
  28 RCNY § 5-03(a)(7) 8 1/3% of CRC 90% of CRC
  28 RCNY § 5-03(a)(8) 8 1/3% of CRC 90% of CRC*
  28 RCNY § 5-03(a)(10) 8 1/3% of CRC 90% of CRC
  28 RCNY § 5-03(a)(11) 8 1/3% of CRC 90% of CRC
  28 RCNY § 5-03(a)(6) 12 1/2% of CRC 150% of CRC
  28 RCNY § 5-03(a)(9) 12 1/2% of CRC 150% of CRC

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*   Conversions within the County of New York on any tax lot bordering on or south of 96th Street.

**   Conversions within the County of New York.

***   Only work specified on the Itemized Cost Breakdown Schedule is eligible for tax benefits. However, the CRC for such qualifying work shall be equal to the actual cost of the work. Notwithstanding the foregoing, the maximum allowable abatement may not exceed 50% of CRC if done in connection with a non-residential conversion located within the County of New York.

****    Non governmentally-assisted moderate rehabilitation.

*    Only eligible for 50% of CRC if done in connection with a non-residential conversion located within the County of New York.

**    Pursuant to 28 RCNY § 5-06(c)(1): governmentally-assisted moderate rehabilitation and substantial rehabilitation.

      (ii) In cases qualifying for the enriched abatement described above in 28 RCNY § 5-06(c)(1), the maximum aggregate and annual abatement is:

   (3) Tax abatement shall commence as follows:

      (i) for cooperatives and condominiums with an average transitional assessed valuation per dwelling unit of less than forty thousand ($40,000) dollars, on the first day of the tax quarter following the filing of the Certificate of Eligibility and Reasonable Cost with the Real Property Assessment Bureau of the Department of Finance, except as provided in subparagraphs (ii) and (iii) below:

      (ii) for cooperatives and condominiums with an average transitional assessed valuation per dwelling unit of forty thousand ($40,000) dollars or more, and for all other buildings, on the first day of January or July, whichever date next follows the filing of the Certificate of Eligibility and Reasonable Cost with the Real Property Assessment Bureau of the Department of Finance;

      (iii) for property aided by a loan made pursuant to the authorities listed below or owned by a type of corporation listed below, on the first day of any tax quarter designated by the Office following the commencement of construction:

         (A) Article 8, 8-a, or 15 of the Private Housing Finance Law or § 312 of the United States Housing Act of 1964 (42 U.S.C. § 1452b), or

         (B) if commencement of construction occurred after July 1, 1988, by or on behalf of a not-for-profit corporation qualified pursuant to § 501(c)(3) of the Internal Revenue Code and which has entered into a regulatory agreement with HPD requiring operation of the property as housing for low and moderate income persons and families, or

         (C) if commencement of construction occurred after July 1, 1992, Article 11, 12 or 22 of the Private Housing Finance Law or § 696-a (Article 16) or § 99(h) of the General Municipal Law or the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. §§ 12701 et seq.).

   (4) Taxes may be abated each year by the amount specified in the 28 RCNY § 5-06(c), provided that in no event may taxes be abated for more than twenty years nor may the abatement in any twelve month period exceed the amount of taxes payable in such twelve month period.

  1. Tax abatement limitations.

   (1) Dollar limit. For conversions, alterations or improvements commenced on or after September 15, 1983, except in special circumstances enumerated in paragraphs (2) and (3) of this subdivision (d), the certified reasonable cost of a conversion, alteration or improvement eligible for abatement shall not exceed the amounts specified in the following table:

Number of Rooms Per Dwelling Units Maximum Eligible CRC
2 1/2 $12,600
3 1/2 $15,000
4 1/2 $17,400
5 1/2 $19,800

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   (2) Enriched dollar limit. An abatement may exceed the limitations set forth in paragraph (1) of this subdivision (d) by a maximum of twenty-five percent (25%) of the applicable limitation if, upon written request of the applicant, the Office determines that:

      (i) in the case of a conversion pursuant to paragraphs (1), (2), (3) or (4) of 28 RCNY § 5-03(a), the increased cost is necessary to comply with applicable law; or

      (ii) in the case of an alteration or improvement pursuant to 28 RCNY § 5-03(a)(7), the increased cost is necessary to eliminate unhealthy or dangerous conditions or replace inadequate and obsolete sanitary facilities in a satisfactory manner; or

      (iii) in the case of an alteration or improvement pursuant to 28 RCNY § 5-03(a)(8), the increased cost is necessary to conserve energy in a satisfactory manner; or

      (iv) in the case of an alteration or improvement pursuant to 28 RCNY § 5-03(a)(5), the increased cost, to the extent such cost is not offset by any and all tax credits received as a result of the alteration or improvement, is necessary to comply with any provision of law regulating historic or landmark buildings or structures.

   (3) Exceptions to dollar limit. The following conversions, alterations, and improvements are not subject to the limitations set forth in paragraphs (1) and (2) of this subdivision (d), but are subject to the limitations of paragraph (4) of this subdivision (d).

      (i) alterations or improvements under 28 RCNY § 5-03(a)(6); and

      (ii) conversions of residential units covered by Article 7-C of the Multiple Dwelling Law under 28 RCNY § 5-03(a)(2); and

      (iii) alterations or improvements under paragraphs (5), (7) and (8) of 28 RCNY § 5-03(a) when carried out:

         (A) with substantial governmental assistance or with the aid of grants, loans or subsidies from any not-for-profit philanthropic organization one of whose primary purposes is providing housing affordable to persons of low or moderate income as defined in 28 RCNY § 5-06(b)(4)(ii); or

         (B) with mortgage insurance provided by the New York City Residential Mortgage Insurance Corporation or the State of New York Mortgage Agency; or

         (C) within the areas set forth in 28 RCNY § 5-10; or

         (D) pursuant to a program established by the Federal Housing Administration, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association for the rehabilitation of existing multiple dwellings for persons of low or moderate income, or a program of mortgage insurance for the rehabilitation of existing multiple dwellings pursuant to § 223(f) of the National Housing Act as amended, or a program of mortgage insurance established by the Federal Housing Administration for the rehabilitation of existing multiple dwellings for persons of low or moderate income; provided that properties receiving benefits under such programs are located in a neighborhood strategy area, as defined by HUD (24 C.F.R. Part 881), or in one of the neighborhood preservation areas listed in 28 RCNY § 5-10.

   (4) (i) Tax abatement for a multiple dwelling shall be available only if:

         (A) for alterations and improvements commenced after June 28, 1988 and on or prior to June 15, 1993, the actual assessed valuation of such multiple dwelling, including land, does not exceed an average of thirty thousand dollars ($30,000) per dwelling unit at the time of commencement of construction of the alterations or improvements; or

         (B) for alterations and improvements commenced after June 15, 1993, the actual assessed valuation of such multiple dwelling, including land, does not exceed an average of forty thousand dollars ($40,000) per dwelling unit at the time of commencement of construction of the alterations or improvements. Unless the non-residential portion is a separately-assessed parcel, when the building is occupied in part for residential purposes and in part for non-residential purposes, the assessed valuation of the property shall be allocated by the Office between the residential and the non-residential portions based on pro rata square footage, and only the amount of valuation so allocated to the residential portion shall be considered in computing the assessed valuation per dwelling unit.

      (ii) The limitations set forth in this paragraph (4) shall not apply to:

         (A) multiple dwellings owned as a cooperative or condominium; or

         (B) multiple dwellings in which units have been newly created by substantial rehabilitation of vacant buildings or conversions; or

         (C) alterations or improvements under 28 RCNY § 5-03(a)(6); or

         (D) conversions of residential units covered by Article 7-C of the Multiple Dwelling Law under 28 RCNY § 5-03(a)(2); or

         (E) alterations or improvements under paragraphs (5), (7) and (8) of 28 RCNY § 5-03(a) when carried out: (a)  with substantial governmental assistance or with the aid of grants, loans or subsidies from any not-for-profit philanthropic organization one of whose primary purposes is providing housing affordable to persons of low or moderate income as defined in 28 RCNY § 5-06(b)(4)(ii); or (b)  with mortgage insurance provided by the New York City Residential Mortgage Insurance Corporation or the State of New York Mortgage Agency; or (c)  within the areas set forth in 28 RCNY § 5-10; or (d)  pursuant to a program established by the Federal Housing Administration, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association for the rehabilitation of existing multiple dwellings for persons of low or moderate income, or a program of mortgage insurance for the rehabilitation of existing multiple dwellings pursuant to § 223(f) of the National Housing Act as amended, or a program of mortgage insurance established by the Federal Housing Administration for the rehabilitation of existing multiple dwellings for persons of low or moderate income; provided that properties receiving benefits under such programs are located in a neighborhood strategy area, as defined by HUD (24 C.F.R. Part 881), or in one of the neighborhood preservation areas listed in 28 RCNY § 5-10.

   (5) Tax abatement benefits shall not be available to any limited-profit housing company established pursuant to article two of the Private Housing Finance Law to reduce taxes beneath the applicable statutory minimum tax, provided however, the benefits of the Act shall apply to alterations and improvements commenced after June 1, 1986 by any such company provided the project is otherwise eligible. Such multiple dwelling shall be eligible for benefits where at least one building-wide major capital improvement as set forth in 28 RCNY § 5-03(a)(6)(i) or a new roof (at least seventy-five percent (75%) of the aggregate roof area is replaced or covered with new roofing) or building-wide submetering of all individual dwelling units is part of the application for benefits. Furthermore, to the extent that such alterations or improvements are financed with grants, loans or subsidies from any federal, state or local agency or instrumentality, such multiple dwelling, building or structure, shall be eligible for benefits only if the limited-profit housing company has entered into a binding and irrevocable agreement with the commissioner of housing of the state of New York, the supervising agency, the New York city housing development corporation, or the New York state housing finance agency prohibiting the dissolution or reconstitution of such limited-profit housing company pursuant to section thirty-five of the Private Housing Finance Law for not less than fifteen years from the commencement of benefits. The abatement of taxes on such property, including the land, shall not be an amount greater than ninety percent (90%) of the certified reasonable cost of such alterations or improvements, nor greater than eight and one-third percent (8 1/3%) of such certified reasonable cost in any twelve month period, nor be effective for more than twenty years. The annual abatement of taxes in any twelve month period shall in no event exceed fifty percent (50%) of the applicable exemption granted pursuant to article two of the Private Housing Finance Law or other applicable laws or fifty percent (50%) of payments required to be made in lieu of taxes in such twelve month period. Notwithstanding the foregoing, the annual abatement of taxes for alterations or improvements commenced prior to June 1, 1986, may not be applied to reduce the amount of taxes payable or the amount of payments required to be made in lieu of taxes in any twelve month period to an amount less than the minimum amount of taxes required to be paid pursuant to § 3 of the Private Housing Finance Law (ten percent (10%) of shelter rent or assessed value at time of acquisition of the property by the housing company, whichever is higher).

  1. Restricted eligibility projects.

   (1) The following buildings shall be eligible for limited tax benefits as set forth herein

      (i) For any building:

         (A) in which conversion, alteration or improvement commences on or after January 1, 1982, and

         (B) which is located in the County of New York within an area designated herein as a minimum tax zone, the benefits of the Act shall not be applied to abate or reduce the taxes upon the land portion of such real property, which shall continue to be taxed based upon the assessed valuation of the land and the applicable tax rate at the time such taxes are levied; provided, however, that the foregoing limitation with respect to abatement of taxes shall not apply: (a)  to any multiple dwelling which is eligible for benefits based upon moderate rehabilitation pursuant to 28 RCNY § 5-03(a)(6) or (b)  to any conversion, alteration or improvement which is carried out with substantial governmental assistance.

      (ii) For any building:

         (A) in which conversion, alteration or improvement commenced on or after January 1, 1982, and

         (B) which is located in the County of New York within an area designated herein as a tax abatement exclusion zone, the benefits of the Act shall not be applied to abate or reduce the taxes upon such real property, which shall continue to be taxed based upon the assessed valuation of the land and the improvements and the applicable tax rate at the time such taxes are levied; provided, however, that the foregoing limitation shall not deprive such real property of any benefits of exemption from taxation of an increase in assessed valuation to which it is entitled pursuant to the Act, and provided further that the foregoing limitation with respect to abatement of taxes shall not apply: (a)  to any Alteration or Improvement designated herein as a major capital improvement, provided that the maximum amount of tax abatement which may be applied against taxes due in any tax year by any such multiple dwelling for any such alterations and improvements shall be limited to an amount not in excess of two thousand five hundred dollars ($2,500) per dwelling unit, or (b)  to any conversion, alteration or improvement which is carried out with substantial governmental assistance.

   (2) The minimum tax zone in the County of New York is as follows: all tax lots now existing or hereafter created within the following designated area or adjacent or contiguous to either side of any street forming the boundary of such designated area, which area is bounded and described as follows: beginning at Central Park West and 86th Street; thence easterly along 86th Street to the East River; thence southerly along the easterly boundary of New York County to 23rd Street; thence westerly along 23rd Street to Third Avenue; thence southerly along Third Avenue to 14th Street; thence westerly along 14th Street to Broadway; thence southerly along Broadway to Houston Street; thence westerly along Houston Street to West Street; thence northerly along West Street to 14th Street; thence easterly along 14th Street to 9th Avenue; thence northerly along 9th Avenue to 57th Street; thence westerly along 57th Street to the Hudson River; thence northerly along the westerly boundary of New York County to 72nd Street; thence easterly along 72nd Street to Central Park West; thence northerly along Central Park West to 86th Street and Central Park West, which is the place of beginning.

   (3) The tax abatement exclusion zone in the County of New York is as follows: all tax lots within the following designated area or adjacent or contiguous to either side of any street forming the boundary of such designated area or adjacent or contiguous to either side of any street designated as included in such area, which area is bounded and described as follows: beginning at the intersection of 96th Street and Central Park West; thence easterly to Park Avenue; thence southerly along Park Avenue to the intersection of Park Avenue and 72nd Street; thence easterly along 72nd Street to York Avenue; thence northerly along York Avenue to the Franklin Delano Roosevelt Drive; thence north-westerly along the Franklin Delano Roosevelt Drive to as far as 96th Street; thence easterly to the easterly border of New York County; thence southerly along such border to 34th Street; thence westerly along 34th Street to 8th Avenue; thence northerly, along 8th Avenue and Central Park West as far as 96th Street, which is the place of beginning. Additionally, the following north/south and east/west thoroughfares shall be included in the tax abatement exclusion zone; 96th Street between Central Park West and the East River; 86th Street between Central Park West and the East River; 79th Street between West End Avenue and the East River; 72nd Street between West End Avenue and the East River; West End Avenue from 72nd Street to 86th Street; and Riverside Drive from 72nd Street to 96th Street.

§ 5-07 Revocation of Tax Exemption/Tax Abatement for Failure to Substantiate Claimed Costs and Declaratory Rulings.

(a) [Reserved.]
  1. [Reserved.]
  2. [Reserved.]
  3. [Reserved.]
  4. Revocation or reduction of tax exemption and tax abatement for failure to substantiate claimed costs. All applications are subject to post-audit by HPD.

   (1) In addition to the basis for revocation of tax benefits provided in chapter thirty-nine of this title, the Commissioner may reduce or revoke past or future tax exemption or tax abatement if he or she finds that the application for tax exemption or tax abatement, including all affidavits submitted in connection with the application, contains a false statement or false information as to a material matter or omits a material matter relating to claimed costs. It is the responsibility of the recipient of the benefits, whether the original applicant or any subsequent owner, including any condominium or cooperative, to document all claimed costs in a manner acceptable to HPD and in accordance with generally accepted auditing standards so that original checks or such other proof of payment as the Office shall require can be properly matched against the items on the Itemized Cost Breakdown Schedule and so that the auditors may examine original documentation for the cost of all supplies and the cost of all subcontracts. If a recipient of tax benefits hereunder fails to substantiate claimed costs to the satisfaction of HPD, the CRC shall be reduced or revoked as applicable. In the event that HPD determines on the basis of the total available evidence that the application contains a false statement or false information as to a material matter, or omits a material matter, relating to claimed costs, all benefits hereunder shall be revoked.

   (2) Tax benefits will not be revoked for failure to substantiate the amount of claimed costs after the expiration of six years from the later of the date of the approval of the Certificate of Eligibility and Reasonable Cost as stated therein or the date upon which the tax benefits commence, except that (1) where an audit has been initiated within the six-year period, but a final determination has not been rendered, or (2) where the applicant has not made payment in full for the work comprising the project within two years after the applicant has collected the Certificate of Eligibility, then such benefits may be revoked subsequent to such six year period.

   (3) All books, records and documents, which in accordance with generally accepted auditing standards, may be used to substantiate entries in the applicant’s books and records relating to claimed costs, shall be kept at all times available for inspection by the Office and shall be retained for a period of at least six years from the later of the date of the approval of the Certificate of Eligibility and Reasonable Cost as stated therein or the date upon which the tax benefits commence except that (1) where an audit has been initiated and a final determination has not been rendered, such records shall be retained until such determination has been made and (2) where an applicant has entered into an installment arrangement with respect to payment for work comprising all or a part of the project, such records shall be retained until the later of (i) three years from the date on which the applicant collects the Certificate of Eligibility and Reasonable Cost, and (ii) one year following payment in full for the work comprising the project.

   (4) If an institutional lender has become a successor in interest to the original owner of such building or structure, and, after diligent efforts to obtain original contracts, checks and other records normally reviewed by the Office to verify claimed costs, is unable to obtain part or all of such records, the Office shall permit the substitution, in whole or in part, of documentation certified by the institutional lender showing the amounts advanced by the institutional lender pursuant to the mortgage loan to finance such alterations or improvements along with such other documentation as the Office may require.

   (5) The revocation of tax exemption and/or abatement for failure to substantiate claimed costs hereunder shall be conducted in accordance with the procedures established pursuant to chapter thirty-nine of this title. Notwithstanding the foregoing, if, after HPD delivers an Initial Notice in accordance with chapter thirty-nine of this title, the Taxpayer fails to submit documentation to substantiate claimed costs during the Comment Period as defined in such Initial Notice, HPD shall deliver a Determination Notice to the Taxpayer in accordance with such chapter.

  1. [Reserved.]
  2. [Reserved.]
  3. [Reserved.]
  4. Declaratory rulings. A declaratory ruling with respect to an analysis of a specific or hypothetical site, project, fact pattern or document or an interpretation of the applicability of a specific provision of § 489 of the Real Property Tax Law or § 11-243 of the Administrative Code or these rules to an actual or hypothetical site, project, fact pattern or document or any other issue related to eligibility may be given in the discretion of the Office upon payment of a non-refundable fee in the amount of seven hundred fifty dollars ($750) payable at the time such declaratory ruling is requested in writing. In no event shall a declaratory ruling bind the Office as to the overall eligibility of a project for J-51 benefits. At the discretion of the Commissioner, this fee may be waived for projects supervised or funded by HPD or any other New York City or New York State agency or instrumentality.
  5. [Reserved.]
  6. As provided in 28 RCNY 39-03, the revocation of benefits for noncompliance with the Act or this chapter shall not exempt any unit from continued compliance with the requirements of the Act or this chapter.

§ 5-07.1 New Eligibility Requirements for Conversions, Alterations or Improvements Completed On or After December 31, 2011.

(a) Definitions. For purposes of this 28 RCNY § 5-07.1, the following terms shall have the following meanings:

   Program for the Development of Affordable Housing. “Program for the Development of Affordable Housing” means housing that complies with the requirements of a grant, loan or subsidy from any federal, state or local agency or instrumentality and of the Act or these Rules to provide the requisite percentage of its units as units affordable to and available for occupancy by individuals whose incomes do not exceed a specified limit.

   Exempt Cooperatives and Condominiums. “Exempt Cooperatives and Condominiums” means multiple dwellings, Buildings and structures (a) owned and operated by Mutual Companies, (b) owned and operated by Mutual Redevelopment Companies, (c) developed as a planned community and owned as two separate Condominiums containing a total of ten thousand or more dwelling units, or (d) Cooperatives or Condominiums that have an average assessed value of less than thirty thousand dollars ($30,000) per dwelling unit. Inspection Fee.

   “Inspection Fee” means two times the actual cost of inspecting any Conversion, Alteration or Improvement claimed in an application for benefits pursuant to this chapter.

   Substantial Governmental Assistance. “Substantial Governmental Assistance” means (a) grants, loans or subsidies from any federal, state or local agency or instrumentality in furtherance of a program for the development of affordable housing approved by HPD, including, without limitation, financing or insurance provided by the state of New York mortgage agency or the New York city residential mortgage insurance corporation; or (b) a written agreement between an HDFC and HPD limiting the income of persons entitled to purchase shares or rent housing accommodation therein.

  1. With respect to Conversions, Alterations or Improvements completed on or after December 31, 2011:

   (1) any multiple dwelling, Building or structure that is owned as a Cooperative or Condominium other than Exempt Cooperatives and Condominiums shall only be eligible for benefits pursuant to these Rules if the Alterations or Improvements for which such multiple dwelling, Building or structure has applied for such benefits were carried out with Substantial Governmental Assistance;

   (2) no benefits shall be granted for the Conversion of a non-residential Building or structure into a Class A Multiple Dwelling unless such Conversion was carried out with Substantial Governmental Assistance; and

   (3) if such Conversions, Alterations or Improvements are not completed on the date upon which HPD inspects the items of work claimed in an application for benefits pursuant to these Rules, the applicant must pay the Inspection Fee for each additional inspection required to confirm that such Conversions, Alterations or Improvements have been completed.

  1. Except as otherwise provided in paragraph one of subdivision (b) of this 28 RCNY § 5-07.1, the provisions contained in subparagraphs (iv), (v) and (vi) of paragraph two of subdivision (g) of 28 RCNY § 5-03 shall apply to any multiple dwelling, Building or structure that is owned as a Cooperative or Condominium (other than Exempt Cooperatives and Condominiums) seeking benefits pursuant to the Act for Alterations or Improvements completed on or after December 31, 2011.

§ 5-08 Itemized Cost Breakdown Schedule.

The following allowances apply to Conversions, Alterations or Improvements for which the Commencement of Construction occurred after June 1, 1997 and which were completed prior to December 31, 2011. For Conversions, Alterations or Improvements for which Commencement of Construction occurred on or before June 1, 1997, the Itemized Cost Breakdown Schedule in effect as of the date of such Commencement of Construction shall apply, except in the case of asbestos abatement, for which the allowance set forth below shall apply to all applications pending on or submitted after November 1, 1997.

Maximum Allowance for All Buildings

  1. General Construction.
       
  Item   Units Allowance
# *   (1) Asbestos abatement1   See table
# *   (2) Boiler room enclosure sq. ft. 7.50
# *   (3) Bulkhead sq. ft. 8.50
    (4) Ceiling, cellar (fireproof gyp bd) sq. ft. 1.60
    (5) Ceilings, gypsum board or plaster rooms
# *   (6) Cement wash or parge waterproofing sq. ft. 1.00
    (7) Ceramic tile, bathroom2 bathrooms
# *   (8) Chimney, masonry floors 1,200.
   *   (9) Compactor, see Item 39. Refuse    
#
Concrete, structural slab3 cu. yd.
#
Concrete, structural foundation3 cu. yd.
#
Concrete, flatwork4 sq. ft. 4.00
   *
Abatement of lead-based paint hazards5   See Itemized Cost Breakdown Schedule for Abatement of Lead-Based Paint Hazards in (h) below
 
Demolition & removal allowance6 rooms
    Doors (incl. frame and hardware)    
   *
Main entrance and lobby set 4,000.
   *
Hollow metal doors
 
Wood Swing doors
 
Bi-fold closet Bi-fold
 
Sliding closet (2 doors) set
   **
Storm doors
 
Dumbwaiters converted to closets units
 
Dumbwaiters sealed units
 
Entrance, stoops, steps, concrete risers
   *
Fire escapes Flights 2,000.
#
Floor joists (incl. sub floor)3 joists
 
Flooring, finished wood rooms
 
Flooring, resilient w/underlayment rooms
   **
Insulation, wall (thermal only) sq. ft. 0.50
   **
Insulation, roof (thermal only) sq. ft. 0.85
# *
Leaders and gutters floors
   *
Lintel replacement units
   *
Mailboxes d.u.
# *
Masonry sq. ft. 7.50
# *
Parapet including coping lin. ft.
 
Partitions, gypsum board or plaster rooms
 
Partitions, framing rooms
# *
Pointing7 sq. ft. 2.00
# *
Railings, roof lin. ft.
   *
Refuse    
   *   chute, complete floors
   *   compactor, central unit compactors 6,800.
   *   recycling, base separating unit (turntable &/or diverter) chutes 17,000.
   *   recycling, floor control panel floors
# *
Roof surface sq. ft. 1.25
 
Skylight including screens8 units 1,300.
 
Stairs, steel flights 2,200.
#
Structural steel3 lbs. 1.50
   *
Window, single pane glass9 units
   **
Window, insulating glass units 175
   **
Window, insulating glass over 24 sf sq. ft.
   **
Window, storm with screen units
   *
Window guards, approved security units 175
   *
Window guards, childproof units

~

  1. Elevator.
       
  Item   Units Allowance
   *   (1) New elevator, complete unitsfloors 45,000+7,000
   *   (2) Convert manual to automatic10 units 7,000.
    Elevator, partial    
   *   (3) Motor11 motor 3,500.
   *   (4) Traction machine11 units 10,000.
   *   (5) One-speed controller11 controller 6,200.
   *   (6) Two-speed or variable controller11 controller 8,000.
   *   (7) Cables floors
   *   (8) Shaftway floor doors
   *   (9) Floor call station floors
   *
Interlocks interlocks
   *
Door operator units 2,500.
   *
Car    
   *   Reline cab units 4,200.
   *   Top of car safety device units 2,800.

~

  1. Plumbing.
       
  Item   Units Allowance
    (1) Bathtubs12 tubs
# *   (2) Hot water heater/tank (input) MBH See table
# **   (3) Insulation, pipe (also for heating) lin. ft. 2.50
    (4) Kitchen sink13 sink
    (5) Lavatory12 lavs
    Piping    
   *   (6) Water main, risers, branches d.u. 1,700.
   *   (7) Waste and vent (complete) d.u. 1,500.
# *   (8) Water service, street connect14 lin. ft.
# *   (9) Sewer, street connection lin. ft.
   *
Gas, risers and connections d.u.
   *
Sprinklers, heads only heads
   *
Sprinklers, piping and heads heads
# *
Standpipe floor
   *
Tank, water storage gallon 1.50
 
Water closets12 units
 
Food waste disposers13 units

~

  1. Heating.
       
  Item   Units Allowance
# **   (1) Boiler-burner (output)15 MBH See table
# **   (2) Boiler (output) MBH See table
# **   (3) Burner (output)15 MBH See table
    (4) Convectors or radiators units 250
# *   (5) Electronic boiler control system units 2,500.
    (6) Exhaust duct (int. kit & bath only) unit
# *   (7) Metal boiler stack floors
# *   (8) Oil tank gallon See table
   *   (9) Piping, heat mains, risers, branch rooms

~

  1. Electric.
       
  Item   Units Allowance
   *   (1) All new apartment wiring d.u.+room 400.+420.*
   *   (2) Apartment wiring only, adequate(risers and meters separate)16 d.u.
   *   (3) Service equipment and risers16    
    Electric service equipment    
   *   with individual meter entry+d.u. 1,500.+160.
   *   with master meter entry+d.u. 1,500+110.
   *   Apartment panel d.u.
    Risers    
   *   with individual meter16 d.u.
   *   with master meter16 d.u.
   *   (4) Intercom, door opener d.u.
    (5) Outlet on new circuit circuit
   *   (6) Smoke detectors, hard wired d.u.
   *   (7) Submetering installation17 d.u.
#   (8) Cogeneration equipment19 kilowatt 400

~

  1. Moderate Rehabilitation Only.
       
  Item   Units Allowance
    (1) Kitchen cabinets18 lin. ft.
    (2) Kitchen cabinets, base & counter18 lin. ft.
    (3) Medicine cabinets inc. mirror12 units
    (4) Range (minimum 24 in. width)13 units
    (5) Refrigerator (min. 12 cf nominal)13 units
    (6) Steam or chemical cleaning sq. ft. 0.80

~

  1. Landmarks Projects Only

   Items of work listed on this schedule only per 28 RCNY § 5-03(a)(5)

Boiler/Burner Table(maximum allowance)      
Item Output in MBH (thousand BTU per hour)    
  0 - 2,000 MBH 2,000 - 6,000 MBH > 6,000 MBH
Boiler-burner15 $1,500.16.50/MBH 20,000.7.25/MBH 47,600.2.65/MBH
Burner15 $500.4.75/MBH 6000.2.00/MBH 8,300.1.65/MBH
Boiler (existing burner) $1,000.11.75/MBH 14,000.5.25/MBH 39,300.1.00/MBH

~

Domestic Hot Water Table(maximum allowance)  
Input in MBH Allowance
 0 - 600 $460.  9.10/MBH
>600 $1,900.  6.70/MBH

~

Oil Tank Table(maximum allowance)  
Size in Gallons Allowance
0 - 4,000 $500.  l.10/gal.
>4,000 $2,900.  .50/gal.

~

Asbestos Abatement Table(maximum allowance)  
Internal Linear Feet $1,600. + $10./linear ft.
Internal Square Feet $1,600. + $10./sq. ft.

~

  1. Abatement of Lead-Based Paint Hazards5
         
    Item Units Allowance for Non-targeted Areas Allowance for Targeted Areas
# *
Inspection for Lead-Based Paint Hazards20 d.u.commonarea21
# *
Risk Assessment of Lead-Based Paint Hazards20 d.u.commonarea22
# *
Ceilings, lamination rooms
# *
Ceilings, common area, lamination sq. ft. 1.80 2.50
# *
Doors (incl. frame and hardware), main entrance and lobby set 4,600. 5,000.
# *
Doors (incl. frame and hardware), hollow metal doors
# *
Doors (incl. frame and hardware), wood swing doors
# *
Doors (incl. frame and hardware), bi-fold closet bi-fold
# *
Sliding closet (2 doors, incl. frame and hardware) set
# *
Flooring, finished wood rooms
1,250.
# *
Flooring, resilient w/underlayment rooms
# *
Partitions, gypsum board or plaster rooms
1,170.
# *
Partitions, common area sq. ft. 1.80 2.50
# *
Stairs, steel (incl. risers, pans, railings, stringers, & newel posts), stripped steps
# *
Window, insulating glass units
# *
Window, insulating glass over 24 sf sq. ft.
# *
Convectors or radiators, new units
# *
Convectors or radiators, stripped units
# *
Risers, stripped lin. ft.
# *
Kitchen cabinets18 lin. ft.
# *
Kitchen cabinets, base & counter18 lin. ft.
# *
Medicine cabinets (incl. mirror)23 units
# *
Remove and install window sill units
# *
Remove and install baseboard, wood molding lin. ft. 2.50 3.50
# *
Remove and install closet shelf and pole set

~

*  Denotes Major Capital Improvement (MCI).

**  Denotes Energy Conversation Items which shall also be considered Major Capital Improvements.

#  Denotes that the item allowance may be reduced by proportion of non-residential space where the item serves both residential and non-residential space. (Items wholly within or serving the non-residential space receive no allowance.)

1.  For (1) removal or encapsulation of any friable asbestos when done as part of a substantial rehabilitation requiring an alteration permit, or (2) for removal of asbestos Thermal System Insulation (TSI) on other rehabilitation or (3) for removal of other friable asbestos (and not roofing, siding or flooring) pursuant to a report from a certified asbestos inspector describing condition, quantity and location of asbestos containing materials to be removed including microscopic analysis. TSI shall mean insulation applied to heating, ventilation or air conditioning systems, hot or cold domestic water systems for the purpose of preventing heat transfer or water condensation. TSI shall include insulation on boilers, water tanks, air handling equipment and ducts, piping, pipe fittings or valves.

  1. For bathroom with ceramic tile floor and full tile wainscot. Maximum one per apartment unless the apartment has two or more bedrooms. This item is eligible as an MCI if new water main, riser, and branch piping is installed throughout and if new ceramic tile and at least two new bathroom fixtures are installed in at least 90 percent of the bathrooms.
  2. This item requires an affidavit from an engineer or architect certifying that he has personal knowledge of the installation and that the quantity claimed was installed. It also requires site photographs or other evidence satisfactory to HPD documenting the installation of the item.

4.  This item includes inner walkways, courtyards, cellar slabs and the public sidewalk.

5.  For construction commenced on or after August 2, 2004, requires (a) “an abatement” of lead-based paint hazards, as defined in 40 Code of Federal Regulations part 745 or any successor regulations, in any existing dwelling, including any vacant or occupied dwelling unit or any common area, and (b) proof of lead-based paint hazards pursuant to an “inspection” and/or “risk assessment”, as defined in 40 Code of Federal Regulations part 745 or any successor regulations. Notwithstanding the foregoing, no such benefit shall be given for (a) any abatement performed to comply with a notice of violation issued for a violation of article fourteen of subchapter two of chapter two of title 27 of the Administrative Code, or (b) any abatement performed in a dwelling unit or in the common areas in such dwelling unless all of the lead-based paint hazards identified in such dwelling unit or in all of the common areas in such dwelling have been abated. Furthermore, the deleading of lead-based paint hazards pursuant to a NYC Dept. of Health and Mental Hygiene order that is commenced prior to August 2, 2004 will continue to be eligible for J-51 benefits provided that there is an approved contract and sign-off. The allowance for such deleading of lead-based paint hazards will be per contract.

6.  For substantial alterations and conversions only. The maximum quantity for this item is the number of new rooms created in the space where the demolition was done.

  1. Not eligible if brickwork is covered by cement wash or other coating.
  2. For skylights over 16 sq. ft. The maximum allowance for eligible skylights under 16 sq. ft. shall be 50 percent of allowance listed.
  3. Not eligible without new or existing storm window.
  4. Plus all other applicable partial elevator items listed.
  5. For buildings over eight stories the approved quantity shall be equal to the actual quantity increased by 10 percent for each floor over eight.
  6. Maximum of one per apartment unless the apartment has two or more bedrooms. This item is eligible as an MCI if new water main, riser, and branch piping is installed throughout and if new ceramic tile and at least two new bathroom fixtures are installed in at least 90 percent of the bathrooms.
  7. Maximum of one per apartment.
  8. For water service 2 1/2” in diameter or greater than approved length shall be equal to one and one-half times the actual installed length.
  9. Oil, gas, or combination burner. 16.  The “Adequate Wiring” MCI as set forth in the prior Rules has been divided into its components which consist of “Apartment wiring only, adequate,” and “Service equipment and risers.”

17.  For submetering, the owner must comply with the rent decrease requirements of DHCR, and the project must consist of a building-wide submetering in all individual dwelling units.

18.  The eligible length cannot exceed 8 feet in any apartment.

19.  This item requires an affidavit from an engineer or architect certifying the installation of a natural gas-fired electric cogeneration system or the conversion or modification of an existing oil-fired cogeneration system to a natural gas-fired electric cogeneration system. Such affidavit also must provide that the waste heat from the cogeneration unit is used for heating domestic hot water or space heating or cooling of the residential units.

20  In order to qualify for benefits for Inspection for Lead-Based Paint Hazards or Risk Assessment of Lead-Based Paint Hazards, (a) the inspection or risk assessment must be an “inspection” or “risk assessment” as defined in 40 Code of Federal Regulations part 745 or any successor regulations, (b) the inspection or risk assessment must have determined that lead-based paint hazards exist in such dwelling, including any vacant or occupied dwelling unit or any common area, and (c) an “abatement” of lead-based paint hazards, as defined in 40 Code of Federal Regulations part 745 or any successor regulations, must have been performed in response to such inspection or risk assessment determination. Notwithstanding the foregoing, no such benefit shall be given for the inspection or risk assessment of a dwelling unit or common area if (a) any abatement performed in a dwelling unit or common area in response to such inspection or risk assessment determination was also performed to comply with a notice of violation issued for a violation of article fourteen of subchapter two of chapter two of title 27 of the Administrative Code, or (b) all of the lead-based paint hazards identified in such dwelling unit or in all of the common areas in such dwelling by such inspection or risk assessment have not been abated. Furthermore, such benefits for inspection or risk assessment of lead-based paint hazards shall only be given for such inspections or risk assessments commenced on or after August 2, 2004.

21  For dwellings with no more than three stories, the allowance for both non-targeted areas and targeted areas for inspection of all of the common areas in such dwelling is $400. For dwellings with four to six stories, the allowance for both non-targeted areas and targeted areas for inspection of all of the common areas in such dwelling is $800. For dwellings with at least seven stories, the allowance for both non-targeted areas and targeted areas for inspection of all of the common areas in such dwelling is $1,200.

22  For dwellings with no more than three stories, the allowance for both non-targeted areas and targeted areas for risk assessment of all of the common areas in such dwelling is $250. For dwellings with four to six stories, the allowance for both non-targeted areas and targeted areas for risk assessment of all of the common areas in such dwelling is $300. For dwellings with at least seven stories, the allowance for both non-targeted areas and targeted areas for risk assessment of all of the common areas in such dwelling is $400.

23  Maximum of one per apartment unless the apartment has two or more bathrooms.

The following allowances apply to Conversions, Alterations or Improvements that are completed on or after December 31, 2011.

Maximum Allowance for All Buildings

  1. General Construction.
         
  Item   Units Allowance  
Non-SGA Condo/Coops1 Rentals & SGA Condo/Coops2        
# *
Asbestos abatement3   See table See table
# *
Boiler room enclosure sq. ft. 7.50 7.50
# *
Bulkhead sq. ft. 8.50 12.39
 
Ceiling, cellar (fireproof gyp bd) sq. ft. 1.60 1.60
 
Ceilings, gypsum board or plaster rooms 280.00 280.00
# *
Cement wash or parge waterproofing sq. ft. 1.00 1.00
# *
Chimney, masonry floors 1,200.00 1,319.18
#
Concrete, structural slab4 cu. yd. 500.00 500.00
#
Concrete, structural foundation4 cu. yd. 250.00 250.00
#
Concrete, flatwork5 sq. ft. 4.00 4.00
Abatement of lead-based paint hazards6   See Itemized Cost Breakdown Schedule for Abatement of Lead-Based Paint Hazards in (g) below See Itemized Cost Breakdown Schedule for Abatement of Lead-Based Paint Hazards in (g) below
 
Demolition & removal allowance7 rooms 200.00 200.00
  Doors (incl. frame and hardware)        
Main entrance and lobby set 4,000.00 4,000.00
Hollow metal doors 475.00 475.00
**
Storm doors 180.00 180.00
 
Dumbwaiters sealed units 110.00 110.00
 
Entrance, stoops, steps, concrete risers 225.00 225.00
Fire escapes flights 2,000.00 2,000.00
#
Floor joists (incl. sub floor)4 joists 165.00 165.00
**
Insulation, wall (thermal only) sq. ft. 0.50 0.50
# *
Leaders and gutters floors 40.00 72.10
Lintel replacement units 250.00 250.00
# *
Masonry sq. ft. 7.50 7.50
# *
Parapet including coping lin. ft. 135.00 135.00
 
Partitions, gypsum board or plaster rooms 600.00 600.00
 
Partitions, framing rooms 350.00 350.00
# *
Pointing8 sq. ft. 2.00 2.64
# *
Railings, roof lin. ft. 25.00 30.14
Refuse chute, complete floors 750.00 750.00
# *
Roof surface sq. ft. 1.25 1.25
 
Skylight including screens9 units 1,300.00 1,300.00
 
Stairs, steel flights 2,200.00 4,620.00
#
Structural steel4 lbs. 1.50 1.50
**
Window, insulating glass units 175.00 367.50
**
Window, insulating glass over 24 sf sq. ft. 10.00 21.00
**
Window, storm with screen units 65.00 65.00
Window guards, approved security units 175.00 175.00
Window guards, childproof units 25.00 25.00
           
  1. Elevator.
         
  Item   Units Allowance  
Non-SGA Condo/Coops1 Rentals & SGA Condo/Coops2        
New elevator, complete units + floors 45,000.00 + 7,000.00 45,000.00 + 7,000.00
Convert manual to automatic10 units 7,000.00 7,000.00
  Elevator, partial        
Motor11 motor 3,500.00 3,500.00
Traction machine11 units 10,000.00 10,000.00
Two-speed or variable controller11 each 8,000.00 8,000.00
Cables floors 400.00 400.00
Shaftway floor doors 800.00 800.00
Floor call station floors 200.00 200.00
Interlocks each 280.00 280.00
Door operator units 2,500.00 2,500.00
Car reline cab units 4,200.00 4,200.00
           
  1. Plumbing.
         
  Item   Units Allowance  
Non-SGA Condo/Coops1 Rentals & SGA Condo/Coops2        
# *
Hot water heater/tank (input) MBH See table See table
# **
Insulation, pipe (also for heating) lin. ft. 2.50 2.50
  Piping        
Water main, risers, branches d.u. 1,700.00 3,570.00
Waste and vent (complete) d.u. 1,500.00 1,500.00
# *
Water service, street connect12 lin. ft. 110.00 110.00
# *
Sewer, street connection lin. ft. 200.00 200.00
Gas, risers and connections d.u. 275.00 287.70
Sprinklers, piping and heads heads 220.00 220.00
# *
Standpipe floor 600.00 1,260.00
Tank, water storage gallon 1.50 1.50
           
  1. Heating.
         
  Item   Units Allowance  
Non-SGA Condo/Coops1 Rentals & SGA Condo/Coops2        
# **
Boiler-burner (output)13 MBH See table See table
# **
Boiler (output) MBH See table See table
# **
Burner (output)13 MBH See table See table
 
Convectors or radiators units 250.00 306.60
# *
Electronic boiler control system units 2,500.00 2,500.00
# *
Metal boiler stack floors 400.00 535.92
# *
Oil tank gallon See table See table
Piping, heat mains, risers, branch rooms 220.00 352.10
           
  1. Electric.
         
  Item   Units Allowance  
Non-SGA Condo/Coops1 Rentals & SGA Condo/Coops2        
All new apartment wiring d.u. + room 400.00 + 420.00* 400.00 + 420.00*
Apartment wiring only, adequate(risers and meters separate) d.u. 370.00 370.00
Service equipment and risers      
    Electric service equipment      
  with individual meter entry + d.u. 1,500.00 + 160.00 1,500.00 + 160.00
  with master meter entry + d.u. 1,500.00 + 110.00 1,500.00 + 110.00
  Apartment panel d.u. 300.00 300.00
    Risers      
  with individual meter d.u. 500.00 500.00
  with master meter d.u. 350.00 350.00
 
Outlet on new circuit circuit 100.00 100.00
Smoke / carbon monoxide detector combination (hard wired) d.u. 100.00 100.00
Submetering installation14 d.u. 280.00 280.00
#
Cogeneration equipment15 kilowatt 400.00 400.00

~

  1. Landmarks Projects Only.

Items of work listed on this schedule only per 28 RCNY § 5-03(a)(5)

Boiler/Burner Table(maximum allowance)      
Non-SGA Condo/Coops1 Output in MBH (thousand BTU per hour)    
Items 0 - 1,999 MBH 2,000 - 5,999 MBH ≥ 6,000 MBH
Boiler-burner13 $1,500 + $16.50/MBH $20,000 + $7.25/MBH $47,600 + $2.65/MBH
Burner13 $500 + $4.75/MBH $6,000 + $2.00/MBH $8,300 + $1.65/MBH
Boiler (existing burner) $1,000 + $11.75/MBH $14,000 + $5.25/MBH $39,300 + $1.00/MBH

~

Rentals & SGA Condo/Coops2 Output in MBH (thousand BTU per hour)      
Items 0 - 749 MBH 750 - 1,999 MBH 2,000 - 5,999 MBH ≥ 6,000 MBH
Boiler-burner13 $8,895 + $13.90/MBH $8,895 + $13.90/MBH $19,700 + $8.50/MBH $19,700 + $8.50/MBH
Burner13 $3,450 + $0.82/MBH $500 + $4.75/MBH $6,000 + $2.00/MBH $8,300 + $1.65/MBH
Boiler (existing burner) $5,445 + $13.08/MBH $8,395 + $9.15/MBH $13,700 + $6.50/MBH $11,400 + $6.85/MBH

~

Domestic Hot Water Table(maximum allowance)  
Non-SGA Condo/Coops1  
Input in MBH Allowance
0 - 600 $460 + 9.10/MBH
> 600 $1,900 + 6.70/MBH
Rentals & SGA Condo/Coops2  
Input in MBH Allowance
0 - 599 $2,700 + $30.49/MBH
> 600 $13,326.51 + $10.90/MBH

~

Oil Tank Table(maximum allowance)  
Non-SGA Condo/Coops1  
Size in Gallons Allowance
0 - 4,000 $500 + $1.10/gal.
> 4,000 $2,900 + $0.50/gal.
Rentals & SGA Condo/Coops2  
Size in Gallons Allowance
0 - 3,999 $3,775 + $1.60/gal.
≥ 4,000 $6,975 + $0.80/gal.

~

Asbestos Abatement Table(maximum allowance)  
Non-SGA Condo/Coops1  
Removal Units Allowance
Internal Linear Feet $1,600 + $11/lin. ft.
Internal Square Feet $1,600 + $11/sq. ft.
Rentals & SGA Condo/Coops2  
Removal Units Allowance
Internal Linear Feet $1,600 + $11/lin. ft.
Internal Square Feet $1,600 + $11/sq. ft.

~

  1. Abatement of Lead-Based Paint Hazards6
         
  Item   Units Allowance  
Non-targeted Areas Targeted Areas        
Inspection for Lead-Based Paint Hazards16 d.u. common area17 400.00 400.00
Risk Assessment of Lead-Based Paint Hazards16 d.u. common area18 250.00 250.00
Ceilings, lamination rooms 320.00 420.00
Ceilings, common area, lamination sq. ft. 1.80 2.50
Doors (incl. frame and hardware), main entrance and lobby set 4,600.00 5,000.00
Doors (incl. frame and hardware), hollow metal doors 550.00 800.00
Doors (incl. frame and hardware), wood swing doors 155.00 350.00
Doors (incl. frame and hardware), bi- fold closet bi-fold 125.00 300.00
Sliding closet (2 doors, incl. frame and hardware) set 145.00 300.00
Flooring, finished wood rooms 575.00 1,250.00
Flooring, resilient w/underlayment rooms 515.00 585.00
Partitions, gypsum board or plaster rooms 690.00 1,170.00
Partitions, common area sq. ft. 1.80 2.50
Stairs, steel (incl. risers, pans, railings, stringers, & newel posts), stripped steps 45.00 60.00
Window, insulating glass units 200.00 425.00
Window, insulating glass over 24 sf sq. ft. 12.00 30.00
Convectors or radiators, new units 260.00 275.00
Convectors or radiators, stripped units 115.00 150.00
Risers, stripped lin. ft. 15.00 20.00
Kitchen cabinets19 lin. ft. 65.00 75.00
Kitchen cabinets, base & counter19 lin. ft. 80.00 105.00
Medicine cabinets (incl. mirror)20 units 95.00 125.00
Remove and install window sill units 115.00 150.00
Remove and install baseboard, wood molding lin. ft. 2.50 3.50
Remove and install closet shelf and pole set 55.00 75.00

~

*  Denotes Major Capital Improvement (MCI).

**  Denotes Energy Conversation Items which shall also be considered Major Capital Improvements.

# Denotes that the item allowance may be reduced by proportion of non-residential space where the item serves both residential and non-residential space. (Items wholly within or serving the non-residential space receive no allowance.)

1  The Maximum CRC contained in this column is available to multiple dwellings, Buildings or structures that are owned as a Cooperative or Condominium and that have an average assessed value of less than thirty thousand dollars per dwelling unit.

2  The Maximum CRC contained in this column is available to multiple dwellings, Buildings or structures that are (a) owned and operated as rental developments, (b) owned and operated by Mutual Companies, (c) owned and operated by Mutual Redevelopment Companies, (d) developed as a planned community and owned as two separate Condominiums containing a total of ten thousand or more dwelling units, or (e) owned as a Cooperative or Condominium for which the Alterations or Improvements for which such multiple dwelling, Building or structure has applied for J-51 benefits were carried out with Substantial Governmental Assistance as such term is defined in 28 RCNY § 5-07.1(a).

3  For (1) removal or encapsulation of any friable asbestos when done as part of a substantial rehabilitation requiring an alteration permit, or (2) for removal of asbestos Thermal System Insulation (TSI) on other rehabilitation or (3) for removal of other friable asbestos (and not roofing, siding or flooring) pursuant to a report from a certified asbestos inspector describing condition, quantity and location of asbestos containing materials to be removed including microscopic analysis. TSI means insulation applied to heating, ventilation or air conditioning systems, hot or cold domestic water systems for the purpose of preventing heat transfer or water condensation. TSI shall include insulation on boilers, water tanks, air handling equipment and ducts, piping, pipe fittings or valves.

4  This item requires an affidavit from an engineer or architect certifying that he has personal knowledge of the installation and that the quantity claimed was installed. It also requires site photographs or other evidence satisfactory to HPD documenting the installation of the item.

5  This item includes inner walkways, courtyards, cellar slabs and the public sidewalk.

6  “For construction commenced on or after August 2, 2004, requires (a) “”an abatement”” of lead-based paint hazards, as defined in 40 Code of Federal Regulations part 745 or any successor regulations, in any existing dwelling, including any vacant or occupied dwelling unit or any common area, and (b) proof of lead-based paint hazards pursuant to an “inspection” and/or “risk assessment”, as defined in 40 Code of Federal Regulations part 745 or any successor regulations. Notwithstanding the foregoing, no such benefit shall be given for (a) any abatement performed to comply with a notice of violation issued for a violation of article fourteen of subchapter two of chapter two of title 27 of the Administrative Code, or (b) any abatement performed in a dwelling unit or in the common areas in such dwelling unless all of the lead-based paint hazards identified in such dwelling unit or in all of the common areas in such dwelling have been abated.

Furthermore, the deleading of lead-based paint hazards pursuant to a NYC Dept. of Health and Mental Hygiene order that is commenced prior to August 2, 2004 will continue to be eligible for J-51 benefits provided that there is an approved contract and sign-off. The allowance for such deleading of lead-based paint hazards will be per contract.”

7  For substantial alterations and conversions only. The maximum quantity for this item is the number of new rooms created in the space where the demolition was done.

8  Not eligible if brickwork is covered by cement wash or other coating.

9  For skylights over 16 sq. ft. The maximum allowance for eligible skylights under 16 sq. ft. shall be 50 percent of allowance listed.

10  Plus all other applicable partial elevator items listed.

11  For buildings over eight stories the approved quantity shall be equal to the actual quantity increased by 10 percent for each floor over eight.

12  For water service 2 1/2” in diameter or greater than approved length shall be equal to one and one-half times the actual installed length.

13  Oil, gas, or combination burner.

14  For submetering, the owner must comply with the rent decrease requirements of DHCR, and the project must consist of a building-wide submetering in all individual dwelling units.

15  This item requires an affidavit from an engineer or architect certifying the installation of a natural gas-fired electric cogeneration system or the conversion or modification of an existing oil-fired cogeneration system to a natural gasfired electric cogeneration system. Such affidavit also must provide that the waste heat from the cogeneration unit is used for heating domestic hot water or space heating or cooling of the residential units.

16  In order to qualify for benefits for Inspection for Lead-Based Paint Hazards or Risk Assessment of Lead-Based Paint Hazards, (a) the inspection or risk assessment must be an “inspection” or “risk assessment” as defined in 40 Code of Federal Regulations part 745 or any successor regulations, (b) the inspection or risk assessment must have determined that lead-based paint hazards exist in such dwelling, including any vacant or occupied dwelling unit or any common area, and (c) an “abatement” of lead-based paint hazards, as defined in 40 Code of Federal Regulations part 745 or any successor regulations, must have been performed in response to such inspection or risk assessment determination. Notwithstanding the foregoing, no such benefit shall be given for the inspection or risk assessment of a dwelling unit or common area if (a) any abatement performed in a dwelling unit or common area in response to such inspection or risk assessment determination was also performed to comply with a notice of violation issued for a violation of article fourteen of subchapter two of chapter two of title 27 of the Administrative Code, or (b) all of the leadbased paint hazards identified in such dwelling unit or in all of the common areas in such dwelling by such inspection or risk assessment have not been abated. Furthermore, such benefits for inspection or risk assessment of lead-based paint hazards shall only be given for such inspections or risk assessments commenced on or after August 2, 2004.

17  For dwellings with no more than three stories, the allowance for both non-targeted areas and targeted areas for inspection of all of the common areas in such dwelling is $400. For dwellings with four to six stories, the allowance for both non-targeted areas and targeted areas for inspection of all of the common areas in such dwelling is $800. For dwellings with at least seven stories, the allowance for both non-targeted areas and targeted areas for inspection of all of the common areas in such dwelling is $1,200.

18  For dwellings with no more than three stories, the allowance for both non-targeted areas and targeted areas for risk assessment of all of the common areas in such dwelling is $250. For dwellings with four to six stories, the allowance for both non-targeted areas and targeted areas for risk assessment of all of the common areas in such dwelling is $300. For dwellings with at least seven stories, the allowance for both non-targeted areas and targeted areas for risk assessment of all of the common areas in such dwelling is $400.

19  The eligible length cannot exceed 8 feet in any apartment.

20  Maximum of one per apartment unless the apartment has two or more bathrooms.

§ 5-09 Additional Documentation for Certain Alterations or Improvements.

Applications for alterations requiring a new or amended Certificate of Occupancy must include: (a) PW-1, PW-1A, PW-1B and Initial Work Permits; and (b) final Certificate of Occupancy; (c) such additional documentation as may be applicable or re- quested. The following major capital improvements require the approval of designated agencies on the forms indicated below, and such additional documentation as the Office shall require. The forms listed herein may be revised or added to by the Department of Buildings, in which case the Office will require the forms as revised. If a Borough Office was not using any of the referenced forms when documentation was obtained, the Office may require the forms then in effect or as listed in the prior Rules and Regulations.

  1. Asbestos abatement.

   (1) Asbestos Inspection Report (ACP-7) or Asbestos Removal Plan.

  1. Adequate wiring, new wiring or new service.

   (1) DOB Certificate of Electrical Inspection or contractor’s affidavit if the Certificate is not applicable.

  1. Boiler/burners: boiler and oil burner replacement.

   (1) Notice of Proposed Steam or Hot Water Boiler Installation for boilers serving 6 units or more and over 350,000 BTUs (B form 900A signed by a boiler inspector, DOB); and

   (2) Initial Work Permit or PW-2 (DOB); and

   (3) For boilers with a capacity of 350,000 BTUs or more, approved Application for Certificate of Operation (APC 5-0, stamped) or Certificate of Registration (APC 501), (Bureau of Air, Noise and Hazardous Materials, DEP); and

   (4) DOB Certificate of Electrical Inspection or contractor’s affidavit if the Certificate is not applicable (e.g., if boiler only); and

   (5) Certificate of Approval for Oil Burning Installation (B Form 16A, Sign-off, DOB).

  1. Boiler/burners: boiler and gas burner or boiler and combination gas and oil burner.

   (1) Schedule B Plumbing (PW-1B) and/or Notice of Proposed Steam or Hot Water Boiler I installation (B form 900A signed by a boiler inspector) (DOB); and

   (2) Initial Work Permit or PW-2 (DOB); and

   (3) For boilers with a capacity of 350,000 BTUs or more, approved Application for Certificate of Operation (APC 5-0, stamped) or Certificate of Registration (APC 501), (Bureau of Air, Noise and Hazardous Materials, DEP); and

   (4) DOB Certificate of Electrical Inspection or contractor’s affidavit if the Certificate is not applicable.

  1. Boiler/burners: boiler only.

   (1) If burner is oil-fired, documents (1) through (5) in paragraph (c) above; or

   (2) If burner is gas-fired, documents (1) through (4) of paragraph (d) above; or

   (3) If burner is gas- and oil-fired, documents (1) through (4) of paragraph (d) above.

  1. Boiler/burners: burner upgrading.

   (1) Approved Application for Certificate of Operation (APC 5-0, stamped, Bureau of Air, Noise and Hazardous Materials, DEP).

  1. Boiler/burners: new central heating system.

   (1) Plan/Work Approval Application with Schedule C Heating & Combustion Equipment for oil or Schedule B Plumbing for gas (PW-1 with PW-1C or PW-1B), or computer printout showing scope of work (DOB); and

   (2) Initial Work Permit or PW-2 (DOB); and

   (3) DOB Certificate of Electrical Inspection or contractor’s affidavit if the Certificate is not applicable; and

   (4) Approved Application for Certificate of Operation (APC 5-0, stamped, Bureau Air, Noise and Hazardous Materials, DEP); and

   (5) Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

  1. Boiler enclosure.

   (1) Initial Work Permit or PW-2 (DOB); and

   (2) Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

  1. Chimney.

   (1) Initial Work Permit or PW-2 (DOB); and

   (2) Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

  1. Compactor: conversions to central and upgrading of incinerators.

   (1) Initial Work Permit or PW-2 (DOB); and

   (2) Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

   (3) For replacement compactor, submit affidavit attesting to the replacement.

  1. Compactor: new or refuse chute.

   (1) Initial Work Permit or PW-2 (DOB); and

   (2) Computer print-out showing plumbing sign-off or B Form 505 (DOB) or Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

  1. Deleading (removal of lead paint).

   (1) Violation Notice, Approved Contract and Violation Dismissal (Department of Health)

  1. Elevator installation: replacement or upgrading (except replacement of hoist cables).

   (1) Approved Elevator application/Permit (ELV-1, DOB); and

   (2) Sign-off by a DOB inspector (Form 73), or a stamped Elevator Inspection/Test Report by Approved Private Elevator Inspection Agency (ELV-3, DOB); and

  1. Fire escapes.

   (1) Initial Work Permit or PW-2 (DOB); and

   (2) Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

  1. Hot water heater or hot water tank.

   (1) Plan/Work Approval Application with Schedule B Plumbing (PW-1 with PW-1B), or computer printout showing scope of work (DOB); and

   (2) Initial Work Permit or PW-2 (DOB); and

   (3) Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

   (4) For boilers with a capacity of 350,000 BTUs or more, approved Application for Certificate of Operation (APC 5-0, stamped) or Certificate of Registration (APC 501), (Bureau of Air, Noise and Hazardous Materials, DEP).

  1. Landmarks preservation work permit.

   (1) Permit for Minor Work or Certificate of Appropriateness as applicable and Notice of Compliance (Landmarks Preservation Commission); and

   (2) Description of Landmarks Preservation work listed on or attached to the R-2 form available from the J-51 Office.

  1. Oil tank installation.

   (1) Plan/Work Approval Application with Schedule C Heating & Combustion Equipment (PW-1 with PW-1C), or computer printout showing scope of work (DOB); and

   (2) Initial Work Permit or PW-2 (DOB); and

   (3) Certificate of Approval for Oil Burning Installation (B Form 16A, Sign-off, DOB).

  1. Piping: gas.

   (1) Plan/Work Approval Application with Schedule B Plumbing (PW-1 with PW-1B) or computer printout showing scope of work (DOB); and

   (2) Initial Work Permit or PW-2 (DOB); and

   (3) Computer printout showing plumbing sign-off or B Form 505 (DOB); and

   (4) Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

  1. Piping: waste and vent.

   (1) Plan/Work Approval Application with Schedule B Plumbing (PW-1 with PW-1B) or computer printout showing scope of work, (DOB); and

   (2) Initial Work Permit or PW-2 (DOB); and

   (3) Computer printout showing plumbing sign-off or B Form 505 or Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

  1. Piping: water mains and risers.

   (1) Plan/Work Approval Application with Schedule B (PW-1 with PW-1B) or computer printout showing scope of work, (DOB); and

   (2) Initial Work Permit or PW-2 (DOB); and

   (3) Computer printout showing plumbing sign-off or B Form 505 (DOB) or Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

  1. Sealing dumbwaiters.

   (1) Initial Work Permit or PW-2 or Plan/Work Approval Application or computer printout showing scope of work (PW-1, DOB); and

   (2) Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

  1. Sewer (street connection).

   (1) Street Opening Permit from the Bureau of Sewers (DEP) or Bureau of Highways (Department of Transportation) as applicable.

  1. Sprinkler (new or relocated) plumbing and drainage.

   (1) Plan/Work Approval Application with Schedule B Plumbing (PW-1 with PW-1B) or computer printout showing scope of work, (DOB); and

   (2) Initial Work Permit or PW-2 (DOB); and

   (3) Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

  1. Standpipes.

   (1) Plan/Work Approval (PW-1) or computer printout showing scope of work, (DOB); and

   (2) Initial Work Permit or PW-2 (DOB); and

   (3) Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

  1. Structural items not physically verifiable.

   (1) Affidavit from an architect or engineer specifying the nature, quantity and location of work done (e.g. number of floor joists installed, cubic yards of structural concrete used, pounds of structural steel used, etc.). In addition, length, size and placement of steel beams may be required. Photographs of new floor joists in place are recommended.

  1. Water service (street connection).

   (1) Street-Opening Permit (Bureau of Highways, DOT)

(aa) New water storage tank (no permit required for replacement, submit affidavit attesting to replacement).

   (1) Plan/Work Approval Application with Schedule B Plumbing (PW-1 with PW-1B) or computer printout showing scope of work DOB); and

   (2) Initial Work Permit or PW-2 (DOB); and

   (3) Letter of Completion for DIR. 14 on work done pursuant to permit or computer printout showing the sign-off date (DOB).

§ 5-10 Neighborhood Preservation Program Areas.

AREAS IN THE COUNTY OF BRONX:

MOTT HAVEN: The area bounded by East 159th Street; Third Avenue; East 161st Street; Prospect Avenue; East 149th Street; Jackson Avenue; Bruckner Expressway; Major Deegan Expressway; Morris Avenue; East 149th Street and Park Avenue.

ALDUS GREEN: The area bounded by East 169th Street; East 167th Street; Westchester Avenue; Sheridan Expressway; Longfellow Avenue; Randall Avenue; Tiffany Street; Longwood Avenue; Bruckner Expressway; East 149th Street; and Prospect Avenue.

MORRISANIA: The area bounded by Cross Bronx Expressway; Park Avenue; East 174th Street; Washington Avenue; Cross Bronx Expressway; Arthur Avenue; Crotona Park North; Waterloo Place; East 175th Street; Southern Boulevard; Cross Bronx Expressway; Sheridan Expressway; East 167th Street; East 169th Street; Prospect Avenue; East 161st Street; Third Avenue; East 159th Street; Park Avenue; and Webster Avenue.

HIGHBRIDGE-CONCOURSE: The area bounded by Washington Bridge-Cross Bronx Expressway; Webster Avenue; Park Avenue; East 149th Street; and the Harlem River.

WEST TREMONT: The area bounded by West Fordham Road; East Fordham Road; Webster Avenue; Cross Bronx Expressway; George Washington Bridge; and the Harlem River.

BELMONT-BRONX PARK SOUTH: The area bounded by Southern Boulevard; Bronx Park South; Boston Road; East 180th Street; Bronx River Parkway; Cross Bronx Expressway; Crotona Parkway; East 175th Street; Waterloo Place; Crotona Park North; Arthur Avenue; Cross Bronx Expressway; Washington Avenue; East 174th Street; Park Avenue; Cross Bronx Expressway; and Webster Avenue.

KINGSBRIDGE: The area bounded by Van Cortlandt Park South; West Gun Hill Road; Jerome Avenue; Bainbridge Avenue; East 211th Street and its prolongation; Conrail right of way; Bedford Park Boulevard; Webster Avenue; East Fordham Road; West Fordham Road; the Harlem River; Marble Hill Avenue; West 230th Street; Riverdale Avenue; Greystone Avenue; Waldo Avenue; Manhattan College Parkway; and Broadway.

SOUND VIEW: The area bounded by the Cross Bronx Expressway; Bronx River Parkway; East Tremont Avenue; White Plains Road; Randall Avenue; Olmstead Avenue; Lacombe Avenue; Westchester Creek; East River; Bronx River; Westchester Avenue; and Sheridan Expressway.

PELHAM PARKWAY: The area bounded by Adee Avenue; Mathews Avenue; Williamsbridge Road; Pelham Parkway South; Yates Avenue; Lydig Avenue; Williamsbridge Road; Neil Avenue; Bogart Avenue; East Tremont Avenue; Bronx River Parkway; and Bronx Park East.

AREAS IN THE COUNTY OF KINGS (BROOKLYN):

WILLIAMSBURG: The area bounded by Metropolitan Avenue; Union Avenue; Conselyea Street; Wood Point Road; Frost Street; Morgan Avenue; Meserole Street; Bushwick Avenue; Flushing Avenue; Union Avenue; Division Avenue; and the East River.

BEDFORD-STUYVESANT: The area bounded by Myrtle Avenue; Broadway; Ralph Avenue; Atlantic Avenue; and Nostrand Avenue.

BUSHWICK: The area bounded by Flushing Avenue; Cypress Avenue; Menahan Street; St. Nicholas Avenue; Gates Avenue; Wyckoff Avenue; Eldert Street; Irving Avenue; Chauncey Street; Central Avenue; property line of the Cemetery of the Evergreens; Conway Street; and Broadway.

EAST-NEW YORK: The area bounded by Jamaica Avenue; Elderts Lane; Atlantic Avenue; Fountain Avenue; New Lots Avenue; and Sheffield Avenue.

SOUTH BROOKLYN (A): The area bounded by The Buttermilk Channel; Congress Street; Hicks Street; Hamilton-Gowanus Parkway; the Gowanus Canal; and the Gowanus Bay.

SOUTH BROOKLYN (B): The area bounded by Fourth Avenue; Pacific Street; Flatbush Avenue; Sixth Avenue; and 15th Street.

SUNSET PARK: The area bounded by the Upper New York Bay; the Gowanus Bay; 15th Street; Prospect Park S.W.; Coney Island Avenue; Caton Avenue; Fort Hamilton Parkway; 37th Street; Eighth Avenue; Long Island Railroad right of way; Gowanus Expressway; 64th Street; Shore Parkway; and the Long Island Railroad right of way.

CROWN HEIGHTS: The area bounded by Pacific Street; Vanderbilt Avenue; Atlantic Avenue; Ralph Avenue; East New York Avenue; Utica Avenue; Winthrop Street; Flatbush Avenue; Parkside Avenue; Ocean Avenue; Empire Boulevard; Washington Avenue; Eastern Parkway; Grand Army Plaza; and Flatbush Avenue.

CONEY ISLAND: The area bounded by the Coney Island Creek; Stillwell Avenue; the Boardwalk West; and West 37th Street.

FLATBUSH: The area bounded by Parkside Avenue; Flatbush Avenue; Winthrop Street; New York Avenue; Clarendon Road; East 31st Street; Newkirk Avenue; Nostrand Avenue; Foster Avenue; New York Avenue; Avenue H; Flatbush Avenue; Avenue K; and Coney Island Avenue.

EAST FLATBUSH: The area bounded by Clarkson Avenue; Utica Avenue; East New York Avenue; East 98th Street; Church Avenue; Ralph Avenue; Clarendon Road; and New York Avenue.

BROWNSVILLE: The area bounded by Broadway; Rockaway Avenue; Atlantic Avenue; East New York Avenue; Christopher Avenue; Glenmore Avenue; Powell Street; Sutter Avenue; Van Sinderen Avenue; Dumont Avenue; Junius Street; Livonia Avenue; Stone Avenue; Linden Boulevard; Rockaway Avenue; Hegeman Avenue; Hopkinson Avenue; Riverdale Avenue; East 98th Street; East New York Avenue; Ralph Avenue; Atlantic Avenue; and Saratoga Avenue.

AREAS IN THE COUNTY OF NEW YORK (MANHATTAN):

LOWER EAST SIDE: The area bounded by East 14th Street; the East River; Delancey Street; Chrystie Street; East Houston Street; and Avenue A.

MANHATTAN VALLEY: The area bounded by Cathedral Parkway (West 110th Street); Central Park West; West 100th Street; and Broadway.

EAST HARLEM: The area bounded by East 142nd Street; the Harlem River; East 96th Street; and Fifth Avenue.

CENTRAL HARLEM: The area bounded by West 145th Street; the Harlem River; Fifth Avenue; Cathedral Parkway (West 110th Street); Morningside Avenue; West 123rd Street; St. Nicholas Avenue; West 141st Street; and Bradhurst Avenue.

HAMILTON HEIGHTS: The area bounded by West 155th Street; Bradhurst Avenue; West 141st Street; Convent Avenue; West 140th Street; Amsterdam Avenue; West 133rd Street; and Riverside Drive.

WASHINGTON HEIGHTS: The area bounded by the Harlem River; Teunissen Place; West 230th Street; Marble Hill Lane; the Harlem River; West 155th Street; and the Hudson River.

AREAS IN THE COUNTY OF QUEENS:

HALLETS POINTS: The area bounded by the East River-East Channel, Hallets Cove and Pot Cove; Hoyt Avenue South; 21st Street; 31st Avenue; Vernon Boulevard; and 35th Avenue.

JACKSON HEIGHTS-CORONA-EAST ELMHURST: The area bounded by Grand Central Parkway; Long Island Railroad right of way; 110th Street; Corona Avenue; Long Island Expressway; Junction Boulevard; Roosevelt Avenue; and Brooklyn-Queens Expressway East.

RIDGEWOOD: The area bounded by Grand Avenue; Rust Street; 59th Drive; 60th Street; Bleecker Street; Forest Avenue; Myrtle Avenue; the Long Island Railroad right of way; and Queens-Brooklyn boundary line.

JAMAICA SOUTH: The area bounded by the Long Island Railroad right of way; New York Boulevard; Southern Parkway (Sunrise Highway) and Van Wyck Expressway.

FAR ROCKAWAY: The area bounded by the Jamaica Bay-Mott Basin; Queens-Nassau boundary line; Far Rockaway Beach; Beach 32nd Street; and Norton Drive.

AREAS IN THE COUNTY OF RICHMOND (STATEN ISLAND):

PORT RICHMOND: The area bounded by the Kill Van Kull; Jewett Avenue and its prolongation; Forest Avenue; and the Willow Brook Expressway.

NEW BRIGHTON: The area bounded by the Kill Van Kull; Westervelt Avenue; Brook Street; Castleton Avenue; and North Randall Avenue and its prolongation.

STAPLETON: The area bounded by Victory Boulevard; the Upper New York Bay; Vanderbilt Avenue; Van Duzer Street; Cebra Avenue; and St. Pauls Avenue.

FOX HILLS: The area bounded by Vandervilt Avenue; the Upper New York Bay; the Staten Island Rapid Transit Railway right of way; and the Staten Island Expressway.

Chapter 6: Tax Exemption Pursuant to § 421-a(1) Through § 421-a(15) of the Real Property Tax Law and §§ 11-245, 11-245.1 and 11.245.1-b* of the Administrative Code of the City of New York

§ 6-01 Scope; Construction; Definitions.

(a) Scope of rules. This chapter governs the grant of tax exemption pursuant to § 421-a of the Real Property Tax Law of the State of New York, including the procedure for filing an application for tax exemption and the issuance of Preliminary and Final Certificates of Eligibility by the Office of Development of the Department of Housing Preservation and Development. Upon issuance of the Certificate of Eligibility, the calculation and implementation of the tax exemption are under the jurisdiction of the Department of Finance.
  1. Construction. This chapter is to be construed to secure the effectuation of the purposes of § 421-a of the Real Property Tax Law and § 11-245 of the Administrative Code and in accordance with the general principle of law that exemption statutes are to be strictly construed against the taxpayer applying for the exemption.
  2. Definitions. As used in this chapter, the following terms shall have the following meanings:

   Act. “Act” shall mean § 421-a of the Real Property Tax Law, as amended.

   Adjusted monthly rent. “Adjusted monthly rent” shall mean the rent payable per month as provided in the first effective lease upon initial occupancy of a rental dwelling unit of a multiple dwelling after completion of construction assisted by exemption under the Act, not inclusive of charges for parking or electricity, gas, cooking fuel and other utilities other than heat and hot water.

   Administrative Code. “Administrative Code” shall mean the Administrative Code of the City of New York.

   Affordable units. “Affordable units” shall mean units created and rented in accordance with 28 RCNY § 6-08.

   Aggregate floor area. “Aggregate floor area” shall mean the sum of the gross horizontal areas of all of the floors of a dwelling or dwellings and accessory structures on a lot measured from the exterior faces of exterior walls or from the center line of party walls.

   Annual schedule of reasonable costs. “Annual schedule of reasonable costs” shall mean the amounts determined by the Department to be reasonable for the maintenance and operation of a multiple dwelling in such categories and classifications attached to these rules as Appendix A.

   Certificate of Eviction. “Certificate of Eviction” shall mean a certificate of eviction granted by the city rent agency pursuant to § 26-408 of the Administrative Code.

   Commencement of construction. “Commencement of construction” shall mean the date upon which excavation and the construction of initial footings and foundations commences in good faith. An architect or professional engineer licensed in the State of New York shall certify that such construction commenced on such date and that such construction was thereafter completed without undue delay. Notwithstanding the foregoing, construction shall not commence prior to issuance by the Department of Buildings of either (i) a building or alteration permit for the construction of an entirely new multiple dwelling, the footprint of which consisted entirely of vacant and unimproved land upon such date, or (ii) an alteration permit for the construction of a new multiple dwelling above, and on an entirely separate tax lot from, one or more existing structures which are to be retained, provided that only the floor area attributable to the new multiple dwelling, and any eligible commercial, community facility or accessory use space within such new structure shall be eligible for benefits under the Act. Any such new multiple dwelling shall comply with all other applicable statutory and regulatory requirements.

   Commissioner. “Commissioner” shall mean the Commissioner of the Department of Housing Preservation and Development, or his or her designee, or the chief executive officer of any successor agency thereto authorized to administer these rules.

   Completion of construction. “Completion of construction” shall mean the date upon which either a Temporary Certificate of Occupancy is issued for all residential areas in the multiple dwelling or a Permanent Certificate of Occupancy is issued for the entire building.

   Construction. “Construction” shall mean the construction of a new building which is a Class A multiple dwelling.

   Covered Project. “Covered Project” shall mean a “covered project” as defined in subparagraph (i) of paragraph (a) of subdivision six of § 421-a of the Real Property Tax Law. For purposes of clause (B) of such subparagraph, two or more buildings shall be considered part of one contiguous development if such buildings are located on tax lots existing on or after June 21, 2005 that (1) are adjacent for at least ten linear feet, or (2) but for the intervention of streets, sidewalks or street intersections, would be adjacent for at least ten linear feet. All tax lots apportioned from such tax lots shall be deemed part of one contiguous development.

   Demolished. “Demolished” shall mean the total destruction of a building or structure by razing or otherwise.

   Department. “Department” shall mean the Department of Housing Preservation and Development of the City of New York or any successor agency or department thereto.

   Department of Buildings. “Department of Buildings” shall mean the Department of Buildings of the City of New York or any successor agency or department thereto.

   Eligible debt-financed project. “Eligible debt-financed project” shall mean a project that may be encumbered by a lien or mortgage, where (A) such project is not obtaining low income housing tax credits pursuant to § 42(b)(1)(A) of the Internal Revenue Code of 1986, as amended (nine percent (9%) reservation), (B) any lien or mortgage encumbering such project provides that it is expressly subject and subordinate to the Written Agreement entered into with the Department, and (C) the average household income of the units in such project does not exceed eighty percent (80%) of median income.

   Floor area of commercial, community facilities, and accessory use space. “Floor area of commercial, community facilities, and accessory use space” shall mean the gross horizontal areas of all the floors or any portion thereof of a multiple dwelling or dwellings and accessory structures or spaces on a lot measured from the exterior faces of exterior walls of commercial or community facilities or accessory uses as such uses are defined in the Zoning Resolution; (See Article 1, Chapter 2). Notwithstanding the foregoing, accessory use space shall not include (a) parking areas which are not part of the building such as uncovered outdoor parking areas and open space beneath a building (including access roads), (b) for properties for which a final certificate of eligibility is issued on or after November 3, 1995, accessory parking space located not more than twenty-three feet above the curb level, (c) for properties for which a final certificate of eligibility is issued on or after May 8, 2013, accessory off-street parking spaces located not more than twenty-three feet above the curb level which (i) are located in the Manhattan Core, as defined in Section 12-10 of the Zoning Resolution, and (ii) meet the requirements of Section 13-21 of the Zoning Resolution.

   Geographic exclusion area. “Geographic exclusion area” shall mean that area of Manhattan described in 28 RCNY § 6-02(c)(10).

   Hotel. “Hotel” shall mean (i) any Class B multiple dwelling, as such term is defined in the Multiple Dwelling Law, (ii) any structure or part thereof containing living or sleeping accommodations which is used or intended to be used for transient occupancy, (iii) any apartment hotel or transient hotel as defined in the Zoning Resolution, or (iv) any structure or part thereof which is used to provide short term rentals or owned or leased by an entity engaged in the business of providing short term rentals. For purposes of this definition, a lease, sublease, license or any other form of rental agreement for a period of less than six months shall be deemed to be a short term rental. Notwithstanding the foregoing, a structure or part thereof owned or leased by a not-for-profit corporation for the purpose of providing governmentally funded emergency housing shall not be considered a hotel for purposes of this chapter.

   Low and moderate income. “Low and moderate income” shall mean a household income not exceeding 100 percent of median income. For purposes of this chapter, low income households shall be deemed to be those at 60 percent or less of median income and moderate income households shall be those between 60 and 100 percent of median income, provided, however, that the average household income in any group of affordable units shall not exceed 80 percent of median income.

   Median income. “Median income” shall be calculated in accordance with the regulations of the United States Department of Housing and Urban Development governing eligibility for occupancy as a lower income family, by size of family, in the metropolitan statistical area, which includes the City of New York, for purposes of § 8 of the United States Housing Act of 1937, as amended.

   Multiple dwelling or building. “Multiple dwelling” or “building” shall mean a dwelling which is, or is to be, lawfully occupied as the residence or home of three or more families living independently of one another, whether individual dwelling units herein are rented or owned as a cooperative or condominium.

   Negotiable Certificate. “Negotiable Certificate” shall mean a document issued by the Department which certifies that the bearer is entitled to the benefits of the Act for a specified number of units within the geographic exclusion area, provided that all program requirements have been met.

   Office. “Office” shall mean the Office of Tax Incentive Programs of the New York City Department of Housing Preservation and Development or any successor thereto.

   Prior assessed valuation. “Prior assessed valuation” shall mean the taxable assessed valuation in effect pursuant to § 1805-(3) of the Real Property Tax Law, exclusive of any exemption, of a tax lot (land and improvements) during the tax year preceding the tax year of Commencement of Construction.

   Program for the development of affordable housing. “Program for the development of affordable housing” shall mean housing which complies with the requirements of a grant, loan or subsidy from any federal, state or local agency or instrumentality to provide no less than twenty percent of its units as units affordable to and occupied by or affordable to and available for occupancy by individuals or families whose incomes do not exceed a specified limit and which has been approved by the commissioner pursuant to this chapter.

   Public project. “Public project” shall mean a building developed with substantial governmental assistance or a building developed pursuant to a regulatory agreement with a Federal, state or local agency or instrumentality requiring the development of affordable housing.

   Residential building. “Residential building” shall mean a structure or part thereof lawfully occupied in whole or part as the home, residence or sleeping place of one or more persons.

   Room Count. “Room Count” shall be calculated in the following manner: Each dwelling unit with at least one room which either (i) contains no cooking facilities and measures at least one hundred and fifty (150) square feet, or (ii) contains cooking facilities and measures at least two hundred and thirty (230) square feet, shall count as two and one-half rooms. Every other room in the dwelling unit separated by either walls or doors, including bedrooms, shall count as an additional room, plus one-half room for a balcony, provided, however, that kitchens, cooking facilities, bathrooms or corridors shall not count as an additional room. To be included in the calculation of “room count,” a room must meet the requirements of habitability as provided in Administrative Code §§ 27-746 and 27-751.

   Single room occupancy. “Single room occupancy” shall mean occupancy in a multiple dwelling by one or more persons of a room or rooms either without a lawful kitchen or kitchenette or without a lawful bathroom or without separate means of egress for occupants thereof to the public areas of the multiple dwelling.

   Substantial governmental assistance. “Substantial governmental assistance” shall mean grants, loans or subsidies provided to any building or buildings on the same zoning lot or, if only a portion of such zoning lot is being granted benefits pursuant to the Act, to any building or buildings on such portion of such zoning lot, by any federal, state or local agency or instrumentality pursuant to a program for the development of affordable housing, provided that (1) as determined by the commissioner, each of the buildings on such zoning lot or portion thereof is part of the same project, (2) each of the buildings on such zoning lot or portion thereof is part of the same application for benefits pursuant to the Act, (3) the periods of construction and final real property tax exemption benefits granted pursuant to the Act for all of the buildings on such zoning lot or portion thereof being granted benefits pursuant to the Act shall commence simultaneously, and (4) no final real property tax exemption benefits shall be granted pursuant to the Act for any buildings on such zoning lot or any portion thereof being granted benefits pursuant to the Act until receipt of a certificate of occupancy or a temporary certificate of occupancy for the residential portions of the building or buildings on such zoning lot containing the units affordable to and occupied by or affordable to and available for occupancy by individuals or families whose incomes do not exceed a specified amount. Such subsidies may include allocations of low income housing tax credits and, in the discretion of the Department, below market sales or sales subject to evaporating purchase money mortgages by a federal, state or local agency or instrumentality, but shall not include permanent financing provided through the State of New York Mortgage Agency, purchase money mortgages, or mortgage insurance.

   Written Agreement. “Written Agreement” shall mean a document issued by the Department pursuant to 28 RCNY § 6-08(l).

   Zoning lot. “Zoning lot” shall mean a “zoning lot” as defined in § 12-10 of the Zoning Resolution.

   Zoning Resolution. “Zoning Resolution” shall mean the Zoning Resolution of the City of New York, as amended.

§ 6-02 Eligibility.

(a) Eligibility. Partial tax exemption will only be granted to multiple dwellings which are eligible projects and which meet all the eligibility requirements of this section.
  1. Eligible projects. The tax benefits of the Act are available to:

   (1) new multiple dwellings located outside the geographic exclusion area containing not less than three (3) dwelling units provided construction is commenced before December 31, 2007;

   (2) new multiple dwellings located in the geographic exclusion area if the commencement of construction occurred on or before November 29, 1985 and if such building is completed no later than December 31, 2000 and only to the extent the building receives a permanent Certificate of Occupancy indicating that it was built pursuant to architectural, structural, and mechanical plans approved by the Department of Buildings on or before November 29, 1985; and

   (3) new multiple dwellings located in the geographic exclusion area if the commencement of construction occurred after November 29, 1985 and before December 28, 2010, only if construction is carried out with substantial governmental assistance or if affordable units are created in accordance with the requirements of 28 RCNY § 6-08.

  1. Ineligible projects. The tax benefits of the Act are not available to:

   (1) Any building or structure which is receiving tax exemption and/or tax abatement under any other provision of state or local law for new construction, conversion or rehabilitation, including but not limited to, §§ 488-a and 489 of the Real Property Tax Law and §§ 11-243 and 11-244 of the Administrative Code, and Article 16 of the General Municipal Law; provided however, that if a building or structure is divided into condominium units, and a condominium unit within the building is entitled to receive permanent tax exemption under any statute under which exemption is granted based on the exempt status of the owner, the granting of such an exemption shall not prevent the remaining condominium unit or units from receiving § 421-a exemption.

   (2) Any multiple dwelling which results from the conversion or rehabilitation of any building or structure;

   (3) Any building or portion thereof which after the completion of construction is used as a hotel, as that term is defined herein;

   (4) Any building or portion thereof which after the completion of construction is used for single room occupancy, as that term is defined herein;

   (5) Any multiple dwelling situated on land which is mapped as a public park provided, however, that this exclusion from eligibility for exemption shall not apply to any land which has been mapped as a public park but which, for a period of ten years or more after the date of such mapping, has not been acquired by the state or the city in which such land is located and with respect to which land the Department of Parks and Recreation has determined that such land is not required for public park purposes, and that such department has no intention of acquiring such land and that no funds have been allocated for such purpose;

   (6) Any multiple dwelling situated on land which was utilized for ten or more consecutive years immediately prior to October first, nineteen hundred seventy-one as a “private park” as hereinafter defined. A private park is a privately owned zoning lot in a densely developed area having a minimum size of four thousand square feet, free of all developments and containing only trees, grass, benches, walkways and passive recreational facilities including structures incidental thereto which has been used and maintained during said period for such passive recreational activity by the general public without charge with the consent and participation of the owner thereof;

   (7) Any multiple dwelling, or portion thereof, the construction of which commenced on or after November twenty-ninth, nineteen hundred eighty-five and which is located within any district in the county of New York where a maximum base floor area ratio, as that term is defined in the Zoning Resolution, of fifteen or greater was permitted as of right by provisions of such resolution in effect on April fourteenth, nineteen hundred eighty-two; provided, however, that this rule shall not be applicable to the extent to which such restriction is modified or repealed by State or local law.

   (8) Any multiple dwelling the footprint of which is located in whole or in part within any area in the county of New York designated by the Zoning Resolution in effect on the date of commencement of construction as either a manufacturing district or a mixed-use district except to the extent that such multiple dwellings in a mixed-use district could be constructed for residential purposes, as of right, pursuant to the Zoning Resolution, unless construction actually commenced prior to January first, nineteen hundred eighty-two; this restriction is in accordance with City policy of preservation of these districts for mainly non-residential purposes: provided, however, that this restriction shall not apply to multiple dwellings for which construction commenced after the effective date of these rules.

   (9) For purposes of paragraphs (7) and (8) above, the obtaining of a variance or special permit to allow residential construction in a manufacturing or mixed-used district shall not render the newly constructed Class A multiple dwelling eligible for tax benefits under the Act. In addition, to the extent the zoning lot of a project includes any building or structure located in such non-eligible district that is not to be demolished, the partial tax exemption shall be reduced by an amount equal to the area of the portion of the zoning lot which is located in such ineligible area.

   (10) Except for multiple dwellings qualifying for the benefits of the Act pursuant to 28 RCNY § 6-08:

      (i) any project commenced, as that term is defined herein, after November 29, 1985 and before March 7, 2006 within the geographic exclusion area, bounded and described as follows: Beginning at the intersection of the bulkhead line in the Hudson River and 96th Street extended; thence easterly to 96th Street and continuing along 96th Street to its easterly terminus; thence easterly to the intersection of 96th Street extended and the bulkhead line in the East River; thence southerly along said bulkhead line to the intersection of said bulkhead line and 14th Street extended; thence westerly to 14th Street and continuing along 14th Street to Broadway; thence southerly along Broadway to Houston Street; thence westerly along Houston Street to Thompson Street; thence southerly along Thompson Street to Spring Street; thence westerly along Spring Street to Avenue of the Americas; thence northerly along Avenue of the Americas to Vandam Street; thence westerly along Vandam Street to Varick Street; thence northerly along Varick Street to Houston Street; thence westerly along Houston Street and continuing to its westerly terminus; thence westerly to the intersection of Houston Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the intersection of said bulkhead line and 11th Avenue extended; thence northerly to 11th Avenue and continuing along 11th Avenue to 14th Street; thence easterly along 14th Street to 10th Avenue; thence northerly along 10th Avenue to 28th Street; thence easterly along 28th Street to 9th Avenue; thence northerly along 9th Avenue to 33rd Street; thence easterly along 33rd Street to 8th Avenue; thence northerly along 8th Avenue to 34th Street; thence easterly along 34th Street to 7th Avenue; thence northerly along 7th Avenue to 41st Street; thence westerly along 41st Street and continuing to its westerly terminus; thence westerly to the intersection of 41st Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the place of beginning;

      (ii) any project commenced, as that term is defined herein, on or after March 7, 2006 and before May 11, 2007 within the geographic exclusion area, bounded and described as follows: Beginning at the intersection of the bulkhead line in the Hudson River and 96th Street extended; thence easterly to 96th Street and continuing along 96th Street to its easterly terminus; thence easterly to the intersection of 96th Street extended and the bulkhead line in the East River; thence southerly along said bulkhead line to the intersection of said bulkhead line and 14th Street extended; thence westerly to 14th Street and continuing along 14th Street to Broadway; thence southerly along Broadway to Houston Street; thence westerly along Houston Street to Thompson Street; thence southerly along Thompson Street to Spring Street; thence westerly along Spring Street to Avenue of the Americas; thence northerly along Avenue of the Americas to Vandam Street; thence westerly along Vandam Street to Varick Street; thence northerly along Varick Street to Houston Street; thence westerly along Houston Street and continuing to its westerly terminus; thence westerly to the intersection of Houston Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the intersection of said bulkhead line and 11th Avenue extended; thence northerly to 11th Avenue and continuing along 11th Avenue to 14th Street; thence easterly along 14th Street to 10th Avenue; thence northerly along 10th Avenue to 30th Street; thence westerly along 30th Street to 11th Avenue; thence northerly along 11th Avenue to 41st Street; thence westerly along 41st Street and continuing to its westerly terminus; thence westerly to the intersection of 41st Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the place of beginning; or

      (iii) any project commenced, as that term is defined herein, on or after May 11, 2007 and before July 1, 2008 within the geographic exclusion area, bounded and described as follows: Beginning at the intersection of the bulkhead line in the Hudson River and 96th Street extended; thence easterly to 96th Street and continuing along 96th Street to its easterly terminus; thence easterly to the intersection of 96th Street extended and the bulkhead line in the East River; thence southerly along said bulkhead line to the intersection of said bulkhead line and 14th Street extended; thence westerly to 14th Street and continuing along 14th Street to Broadway; thence southerly along Broadway to Houston Street; thence westerly along Houston Street to Thompson Street; thence southerly along Thompson Street to Spring Street; thence westerly along Spring Street to Avenue of the Americas; thence northerly along Avenue of the Americas to Vandam Street; thence westerly along Vandam Street to Varick Street; thence northerly along Varick Street to Houston Street; thence westerly along Houston Street and continuing to its westerly terminus; thence westerly to the intersection of Houston Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the intersection of said bulkhead line and 30th Street extended; thence easterly along 30th Street to 11th Avenue; thence northerly along 11th Avenue to 41st Street; thence westerly along 41st Street and continuing to its westerly terminus; thence westerly to the intersection of 41st Street extended and the bulkhead line in the Hudson River; thence northerly along said bulkhead line to the place of beginning; or

      (iv) any project commenced on or after July 1, 2008 within the geographic exclusion area as defined pursuant to 28 RCNY § 6-09 except as otherwise provided in such 28 RCNY § 6-09.

  1. Duration of exemption. Eligible buildings may receive a ten, fifteen, twenty or twenty-five year tax exemption, as described herein. In order to qualify for such benefits, the multiple dwelling must meet the eligibility requirements described below for each level of exemption.

   (1) Only the ten year exemption is available to buildings located within the geographic exclusion area described in 28 RCNY § 6-02(c)(10), above, and such buildings shall be eligible to receive such benefits only if each building meets one of the following conditions:

      (i) construction is carried out with substantial governmental assistance, or

      (ii) the Department has imposed a requirement or has certified pursuant to 28 RCNY § 6-08 that 20 percent (20%) of the units are affordable to persons of low and moderate income, or

      (iii) pursuant to an agreement with the Department, in conformity with the requirements of 28 RCNY § 6-08, housing units affordable to persons of low and moderate income are either newly constructed or substantially rehabilitated off-site.

   (2) The ten year exemption is available to buildings located outside the geographic exclusion area but in Manhattan on tax lots south of or adjacent to either side of 110th Street, the construction of which commenced on or after July 1, 1985, except that the fifteen year exemption shall be available to such buildings if:

      (i) construction is carried out with substantial governmental assistance; or

      (ii) the Department has imposed a requirement or has certified pursuant to herein that 20 percent (20%) of the units are affordable to persons of low and moderate income.

   (3) The fifteen year exemption is available to buildings located in the boroughs of the Bronx, Brooklyn, Queens, Staten Island and in Manhattan north of 110th Street, the construction of which commenced on or after July 1, 1985, unless such multiple dwellings are eligible for the twenty-five year exemption described in (5) below.

   (4) The twenty year exemption is available in the borough of Manhattan for buildings on tax lots now existing or hereafter created south of or adjacent to either side of one hundred tenth street which commenced construction after July 1, 1992 and before December 28, 2010, only if:

      (i) construction is carried out with substantial governmental assistance; or

      (ii) the Department has imposed a requirement or has certified pursuant to 28 RCNY § 6-08 that 20 percent (20%) of the units are affordable to families of low and moderate income.

   (5) The twenty-five year exemption is available to buildings located in the boroughs of the Bronx, Brooklyn, Queens, Staten Island or Manhattan north of 110th Street, the construction of which commenced on or after July 1, 1985, if the multiple dwelling:

      (i) is located in one of the following areas:

         (A) Neighborhood Preservation Program Areas as determined by the Department as of June 1, 1985, or

         (B) Neighborhood Preservation Areas as determined by the New York City Planning Commission as of June 1, 1985, or

         (C) an area eligible for mortgage insurance provided by the Rehabilitation Mortgage Insurance Corporation (REMIC) as of May 1, 1992, or

         (D) an area receiving funding for a neighborhood preservation project pursuant to the Neighborhood Reinvestment Corporation Act (42 U.S.C. §§ 180 et seq.) as of June 1, 1985, or

      (ii) meets one of the following conditions:

         (A) is constructed with substantial governmental assistance, or

         (B) is a building where the Department has imposed a requirement or has certified that 20 percent (20%) of the units contained in that multiple dwelling are affordable to persons of low and moderate income, exclusive of those units created pursuant to 28 RCNY § 6-08.

  1. Construction requirements. To be eligible for partial tax exemption, a multiple dwelling must meet the following requirements:

   (1) It shall contain at all times not less than the number of dwelling units specified in 28 RCNY § 6-02(b)(1). A multiple dwelling containing the requisite number of dwelling units may include: garden type maisonette dwelling projects containing a series of attached dwelling units which are provided as a group collectively with all essential services such as, but not limited to, water supply and house sewers, and which units are located on a site or plot under common ownership, including ownership as a condominium; and buildings erected at the same time with common exterior walls, provided that in each case such buildings are operated as a unit under a single ownership, notwithstanding that Certificates of Occupancy were issued by the Department of Buildings for separate portions thereof covering less than the requisite number of units.

   (2) If a multiple dwelling contains more than one hundred dwelling units, not less than ten percent of the dwelling units in such multiple dwelling shall contain at least four and one-half rooms and, in addition, not less than fifteen percent shall contain at least three and one-half rooms. The number of rooms in a dwelling unit shall be computed in accordance with the definition of “room count” contained in subdivision (c) of 28 RCNY § 6-01. Those units consisting of four and one-half rooms or more, to the extent that they comprise ten percent of all units in the multiple dwelling, shall not be included as part of the units which must contain three and one-half rooms, comprising a total of fifteen percent of all the units in the multiple dwelling. This room count requirement may be waived in writing at the discretion of the Department:

      (i) where the multiple dwelling is to provide housing for the elderly; or

      (ii) upon the filing of adequate documentation from which the Department determines that compliance with the room count requirement would impose an undue and unreasonable economic hardship. The necessity of alteration of existing construction shall not in itself be deemed such a hardship.

   (3) If construction of a new multiple dwelling commences on or after August 1, 1981 and such construction takes place on land which, immediately prior to the commencement of construction, was improved with a residential building or buildings that have since been substantially demolished, and the new building or buildings contain more than twenty dwelling units, then such new building or buildings shall contain at least five dwelling units for each Class A dwelling unit in existence immediately prior to the demolition preceding construction. The calculation of the ratio of new to old units shall be made based on the entire site included in the 421-a application. For purposes of this paragraph, “immediately prior to the commencement of construction” shall be deemed to be a date which is one month prior to the commencement of construction.

  1. Site requirements.

   (1) To be eligible for partial tax exemption, the land upon which an eligible project is located must have been vacant, predominantly vacant, under-utilized, or improved with a non-conforming use on the operative date. The operative date shall be:

      (i) thirty-six months prior to the commencement of construction, if construction commences on or after August 1, 1981; or

      (ii) October 1, 1971, if construction commenced before August, 1981.

   (2) If only part of the land upon which an otherwise eligible project is located satisfies the requirement set forth in paragraph (1), above, or if only part of a building or structure on said land would satisfy that requirement, partial tax exemption shall be available in accordance with the following formula:

      (i) If fifty-one percent (51%) or more of the area of the land satisfies the requirement set forth above, then the partial tax exemption shall be reduced by an amount equal to the percent of the area of the site which does not satisfy that requirement;

      (ii) If less than fifty-one percent (51%) of the area of the land satisfies the requirement set forth above, then the entire site is ineligible for partial tax exemption hereunder.

   (3) Definitions. For the purpose of this subdivision (f), the following definitions are applicable:

      Actual Assessed Valuation. “Actual assessed valuation” shall mean the assessed valuation of a tax lot without reference to § 1805(3) of the Real Property Tax Law.

      Land improved with a non-conforming use. “Land improved with a nonconforming use” is defined in the same manner as that term was defined in the Zoning Resolution in effect on the operative date.

      Predominantly vacant. “Predominantly vacant” land is a plot of land on which not more than fifteen percent (15%) of the lot area contained enclosed, permanent, improvements. Fences, sheds, garage attendant’s booths, pier bulkheads, lighting fixtures and similar items, or any improvement having an Actual Assessed Value of less than $2,000 shall not constitute an enclosed, permanent improvement.

      Under-utilized. “Under-utilized” land is land or space which was under-utilized by virtue of the fact that:

         (A) It was improved with a residential building or buildings

            (a) whose room count in occupied dwelling units numbered not more than seventy percent of the room count in dwelling units in the new building or buildings; or

            (b) whose aggregate floor area was no greater than seventy percent of the aggregate floor area of the new building or buildings.

            (c) provided, however, that buildings commenced prior to the effective date of these rules shall be governed by the rules in effect at the time of commencement.

         (B) It consisted of air rights above a public roadway, waterway, railroad right of way, public buildings, or other similar property used by the general public, provided that the public building was used by the general public on the operative date and continues to be so used and classified after the completion of the eligible construction, and provided further that “public building” shall mean structures or parts of structures in which persons congregate for civic, political, educational, religious or recreational purposes, or in which persons are harbored to receive medical, charitable or other care or treatment, or in which persons are held or detained by reason of public or civic duty, or for correctional purposes, including among others, court houses, schools, colleges, libraries, museums, exhibition buildings, lecture halls, churches, assembly halls, lodge rooms, club houses with more than five sleeping rooms, dance halls, theatres, bath houses, hospitals, asylums, armories, fire houses, police stations, jails and passenger depots; or

         (C) Construction commenced on or after November 29, 1985 and before May 12, 2000 on land that was improved with a non-residential building or buildings

            (a) each of which contained:

               (1) no more than the permissible floor area ratio for non-residential buildings in the zoning district in question, and

               (2) a floor area ratio which was twenty percent (20%) or less of the maximum floor area ratio for residential buildings for such zoning district, or

            (b) each of which had an actual assessed valuation equal to or less than twenty percent (20%) of the actual assessed valuation of the land on which the building or buildings were situated, or (c)  which, by reason of the building’s configuration or substantial structural defects not brought about by deferred maintenance practices or intentional conduct, could no longer be functionally or economically utilized, on the operative date, in the capacity in which it was formerly utilized.

         (D) Except as provided in subparagraph (E) of this paragraph, commencement of construction occurred on or after May 12, 2000 and before October 30, 2002 on land that was improved with a non-residential building or buildings

            (a) each of which contained:

               (1) no more than the permissible floor area ratio for non-residential buildings in the zoning district in question, and

               (2) a floor area ratio which was seventy-five percent (75%) or less of the maximum floor area ratio for residential buildings for such zoning district, or

            (b) each of which had an actual assessed valuation equal to or less than seventy-five percent (75%) of the actual assessed valuation of the land on which the building or buildings were situated, or

            (c) which, by reason of the building’s configuration, or substantial structural defects not brought about by deferred maintenance practices or intentional conduct, could no longer be functionally or economically utilized, on the operative date, in the capacity in which it was formerly utilized.

         (E) Commencement of construction occurred on or after May 12, 2000 and before October 30, 2002 on a tax lot now existing or hereafter created which is located south of or adjacent to either side of 110th Street in the borough of Manhattan and on land that was improved with a non-residential building or buildings

            (a) each of which contained:

               (1) no more than the permissible floor area ratio for non-residential buildings in the zoning district in question, and

               (2) a floor area ratio which was fifty percent (50%) or less of the maximum floor area ratio for residential buildings in such zoning district, or

            (b) each of which had an actual assessed valuation equal to or less than fifty percent (50%) of the actual assessed valuation of the land on which the building or buildings were situated, or

         (c) which, by reason of the building’s configuration, or substantial structural defects not brought about by deferred maintenance practices or intentional conduct, could no longer be functionally or economically utilized, on the operative date, in the capacity in which it was formerly utilized.

         (F) Except as provided in subparagraph (G) of this paragraph, commencement of construction occurred on or after October 30, 2002 on land that was improved with a nonresidential building or buildings

            (a) each of which contained:

               (1) no more than the permissible floor area ratio for non-residential buildings in the zoning district in question, and

               (2) (i) a floor area ratio which was seventy-five percent (75%) or less of the maximum floor area ratio for residential buildings in such zoning district, or

                  (ii) if the land was not zoned to permit residential use on the operative date, had a floor area ratio which was seventy-five percent (75%) or less of the floor area ratio of the residential building which replaces such non-residential building; or

            (b) each of which had an actual assessed valuation equal to or less than seventy-five percent (75%) of the actual assessed valuation of the land on which the building or buildings were situated, or

            (c) which, by reason of the building’s configuration, or substantial structural defects not brought about by deferred maintenance practices or intentional conduct, could no longer be functionally or economically utilized, on the operative date, in the capacity in which it was formerly utilized.

         (G) Commencement of construction occurred on or after October 30, 2002 on a tax lot now existing or hereafter created which is located south of or adjacent to either side of 110th Street in the borough of Manhattan and on land that was improved with a non-residential building or buildings

            (a) each of which contained:

               (1) no more than the permissible floor area ratio for non-residential buildings in the zoning district in question, and

               (2) (i) a floor area ratio which was fifty percent (50%) or less of the maximum floor area ratio for residential buildings in such zoning district, or

                  (ii) if the land was not zoned to permit residential use on the operative date, had a floor area ratio which was fifty percent (50%) or less of the floor area ratio of the residential building which replaces such non-residential building; or

            (b) each of which had an actual assessed valuation equal to or less than fifty percent (50%) of the actual assessed valuation of the land on which the building or buildings were situated, or

            (c) which, by reason of the building’s configuration, or substantial structural defects not brought about by deferred maintenance practices or intentional conduct, could not longer be functionally or economically utilized, on the operative date, in the capacity in which it was formerly utilized.

      Vacant. “Vacant” land is land, including land under water, which contains no enclosed, permanent improvement. Fences, sheds, garage attendant’s booths, piers, bulkheads, lighting fixtures, and similar items, or any improvement having an Actual Assessed Value of less than $2,000 shall not constitute an enclosed, permanent improvement.

  1. Rent regulatory requirements. To be eligible for partial tax exemption the land upon which the eligible project is located must meet the following letting, rental and occupancy requirements:

   (1) If a building which, on December 31, 1974, contained more than twenty-five occupied dwelling units administered under the City Rent and Rehabilitation Law, the Rent Stabilization Law of nineteen hundred sixty-nine, or the Emergency Tenant Protection Act of nineteen hundred seventy-four, is displaced, or any unit therein is displaced, the new multiple dwelling will be eligible for partial tax exemption only if a Certificate of Eviction was issued for at least one dwelling unit in the displaced building. If only one unit is displaced as the result of eligible construction, the Certificate of Eviction must pertain to that displaced unit. Notwithstanding the foregoing, the sale, transfer or utilization of air rights over residential buildings which were not demolished shall not be construed as a displacement within the purview of this subdivision (g).

   (2) Notwithstanding the provisions of any local law for the stabilization of rents in multiple dwellings or the Emergency Tenant Protection Act of 1974, the rents of a unit shall be fully subject to regulation under such local law or such Act, unless exempt under such local law or such act from regulation by reason of the cooperative or condominium status of the unit, for the entire period during which the property is receiving tax benefits pursuant to the Act, or for the period any such applicable local law or such Act is in effect, whichever is shorter. Thereafter, such rents shall continue to be subject to such regulation to the same extent and in the same manner as if this subdivision (g) had never applied thereto, except that for dwelling units in buildings completed, as that term is defined herein, on or after January 1, 1974, such rents shall be deregulated if:

      (i) with respect to dwelling units located in multiple dwellings completed after January 1, 1974 such unit becomes vacant after the expiration of the lease for the unit in effect when such benefit period or applicable law or Act expires, provided, however, such unit shall not be deregulated if the Commissioner of the New York State Division of Housing and Community Renewal or a court of competent jurisdiction finds the unit became vacant because the owner thereof or any person acting on his or her behalf engaged in any course of conduct, including but not limited to, interruption or discontinuance of essential services which interfered with or disturbed or was intended to interfere with or disturb the comfort, repose, peace or quiet of the tenant in his use or occupancy of such unit, and that upon such finding in addition to being subject to any other penalties or remedies permitted by law, the owner of such unit shall be barred from collecting rent for such unit in excess of that charged to the tenant, if the tenant so desires, in which case the rent of such tenant shall be established as if such tenant had not vacated such unit, or compliance with such other remedy, including, but not limited to, all remedies provided for by the emergency tenant protection act of nineteen seventy-four for rent overcharge or failure to comply with any order of the Commissioner of the New York State Division of Housing and Community Renewal, as shall be determined by said Commissioner to be appropriate; provided, however, that if a tenant fails to accept any such offer of restoration of possession, such unit shall return to rent stabilization at the previously regulated rent.

      (ii) with respect to dwelling units located in multiple dwellings with became subject to the rent stabilization provisions of the Act on or after July 1, 1984, the lease for the unit expires after such tax benefit period expires, provided that each lease and renewal thereof for such unit for the tenant entitled to a lease at the time of such deregulation contained a notice in at least twelve (12) point type informing such tenant that the unit shall be subject to deregulation upon the expiration of such benefit period and stated the approximate date on which such benefit period was expected to expire. If each lease and renewal thereof has not contained such notice, a unit covered by such lease shall be subject to subdivision (i) above even though it became subject to the rent stabilization provisions of the Act on or after July 1, 1984. This subdivision (ii) shall not apply to any unit in any multiple dwelling which was subject to the rent stabilization provisions of the Act prior to July 1, 1984, notwithstanding any contrary provision in any lease or renewal thereof.

   (3) Notwithstanding paragraph (2) above, dwelling units in multiple dwellings owned as cooperatives or condominiums which are exempt from such provisions of law shall not be required to be subject to the provisions of law set forth in that paragraph (2) during the time period specified therein. Newly created dwelling units in a building for which a prospectus for condominium or cooperative formation has been submitted to the Attorney General at the time of application for benefits to the Office, shall not be required to be registered with the New York State Division of Housing and Community Renewal, provided that an affidavit has been filed with the Office stating that the sponsor will register the building and all units as they become occupied, with the New York State Division of Housing and Community Renewal within fifteen months from the date of issuance of a Final Certificate of Eligibility if a cooperative or condominium plan has not been declared effective by that time.

   (4) The offering by the owner to all tenants in rental dwelling units in the multiple dwelling, of an initial lease of at least two years; unless the dwelling unit’s rent is regulated by local laws, such as § 26-401 of the Administrative Code, which do not provide for the offering of leases for fixed terms. This requirement shall not preclude a shorter lease where requested by the tenant, or where a lease of at least two years is specifically prohibited by the terms of a Department of Housing and Urban Development regulatory agreement for an insured subsidized project, or where, through foreclosure, title to a building eligible for partial tax exemption pursuant to the Act is held subsequently by the Department of Housing and Urban Development.

   (5) No lease for dwelling units subject to the Rent Stabilization Law or Emergency Tenant Protection Act which are registered with the New York State Division of Housing and Community Renewal shall contain escalation clauses for real estate taxes or any other provisions for increasing the rent set forth in the lease other than permitting an increase in rent pursuant to an order of the New York State Division of Housing and Community Renewal or the Rent Guidelines Board; or an increase of 2.2 percent pursuant to 28 RCNY § 6-04(b).

§ 6-03 Local Community Planning Board Review.

(a) Submission of application to local community board. An applicant for partial tax exemption pursuant to the Act whose project contains more than twenty dwelling units shall send a complete copy of the application for a Preliminary Certificate of Eligibility and supporting papers by certified mail or hand delivery to the local Community Planning Board for the area in which such project is located within ten days of submission of the application to the Department. A copy of the receipt shall be hand delivered or mailed to the Department for annexation to the application no later than ten days after the date appearing on such receipt.
  1. Standards for review. The local Community Board shall have a forty-five day period after receipt of such application and supporting papers to file objections with the Department as to the applicant’s eligibility for partial tax exemption hereunder. Such objections, if any, may only be based upon an applicant’s eligibility under subdivision two of § 421-a of the Real Property Tax Law or the applicant’s failure to comply with the eligibility requirements in 28 RCNY § 6-02. The local Community Board may, in its own discretion and within the forty-five day period, hold a public hearing to determine whether any objections as to eligibility should be filed. Nothing contained in this section shall preclude a final determination of ineligibility of an applicant by the Department prior to the expiration of the forty-five day period.
  2. Notification to community board. In the event the local Community Board files objections, the Department shall make a determination thereon and notify such Community Board within forty-five days after receipt of the objections.
  3. Review of projects containing more than one hundred fifty dwelling units. Where a project contains more than one hundred fifty dwelling units, the local Community Board may, within thirty days of the receipt of a copy of an applicant’s notification, request the Department to hold a public hearing solely on the question of the applicant’s eligibility under subdivision two of § 421-a of the Real Property Tax Law or the applicant’s failure to comply with the eligibility requirements in 28 RCNY § 6-02. If such request is made, the Department shall hold a hearing before the Commissioner or other person or persons whom he or she may designate, make a determination, and notify the Community Board within forty-five days after such hearing.

§ 6-04 Determination of Initial Rent; Rent Increases.

(a) Determining the initial adjusted monthly rent and the comparative adjusted monthly rent for rental dwelling units. No certification of eligibility shall be issued by the Department until the Department determines the initial adjusted monthly rent to be paid by tenants residing in rental dwelling units contained within the multiple dwelling. Except for affordable units, the initial adjusted monthly rent is determined in accordance with the provisions of paragraph (3) below.

   (1) The total expenses of the multiple dwelling shall be determined by the Department in order to calculate the initial adjusted monthly rent. Total expenses shall mean the annual total of the following:

      (i) An amount for the annual cost of operation and maintenance, as established pursuant to the Annual Schedule of Reasonable Costs; plus,

      (ii) An amount for vacancies, contingency reserves and management fees as established pursuant to the Annual Schedule of Reasonable Costs; plus,

      (iii) Projected real property taxes to be levied on the multiple dwelling and the land on which it is situated at the time of estimated initial occupancy; plus,

      (iv) Fourteen percent of the total project cost, as determined pursuant to 28 RCNY § 6-05(b)(1)(i) and the Annual Schedule of Reasonable Costs, which amount will include debt service; less,

      (v) The estimated annual income to be derived from any Floor Area of Commercial, Community Facilities, and Accessory Use Space in the multiple dwelling.

   (2) The adjusted monthly rent per room shall be determined by the Department by dividing the total expenses as determined pursuant to paragraph (1) above by twelve (12) and then dividing that amount by the Room Count as defined in subdivision (c) of 28 RCNY § 6-01 of this chapter; i.e.,

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   (3) The The initial adjusted monthly rent for each dwelling unit shall be determined by the Department by multiplying the adjusted monthly rent per room to be determined pursuant to paragraph (2) above by the Room Count, as defined in subdivision (c) of 28 RCNY § 6-01, of each rental dwelling unit. Adjustments to the initial adjusted monthly rent per room to be determined pursuant to paragraph (2) above by the Room Count, as defined in subdivision (c) of 28 RCNY § 6-01, of each rental dwelling unit. Adjustments to the initial adjusted monthly rent for any dwelling unit may be allowed by the Department provided that the total of the rentals charged in the multiple dwelling do not exceed the total expenses of such multiple dwelling, as determined pursuant to paragraph (1) above; i.e.,

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  1. Rent increases. The owner of a multiple dwelling receiving partial tax exemption may insert in each lease to be effective during the period of gradual diminution of tax exemption, as defined in 28 RCNY § 6-06(e), a provision for an annual rent increase over the initial adjusted monthly rental at a rate not to exceed 2.2 percent per annum on the anniversary date of the first lease for the unit provided, however, that no increase shall be permitted pursuant to this subdivision (b) unless specifically provided for in each affected lease, and provided further that no more than one such increase per unit may be charged or collected in each given year regardless of the number of lease renewals or new leases which may pertain to that unit. The initial 2.2 percent escalation and all subsequent escalations shall be based solely on the actual rental amount in effect (regardless of whether the legal regulated rent may be greater) at the commencement of the period during which the increase may be charged and shall not be compounded from year to year but rather shall remain constant based on said rent. In addition, the increase shall be independent of any other escalation authorized by the Rent Guidelines Board and shall not be considered or included when a Rent Guidelines Board increase is effected, making the latter increase effective upon the base rent, excluding the 2.2 percent escalation. The maximum increase permitted by this subdivision (b) is 19.8 percent over the actual rental amount in effect at the commencement of the period during which the increase may be charged. The maximum increase permitted by this subdivision (b) may be charged in each year following the expiration of the tax benefit period, but shall not exceed 19.8 percent, or that amount charged in the last year of the exemption period, and shall not become part of the base rent.
  2. Annual rent schedule. Each year the owner shall make available to the Office a schedule of rents for each unit in the building.

§ 6-05 Application Procedure; Documentation.

(a) Application forms. All prescribed forms and applications must be obtained from the Department of Housing Preservation and Development, Office of Tax Incentive Programs, 3rd Floor, 150 William Street, New York, New York 10038. All applications shall be submitted to the Department on such form or forms as shall be prescribed by the Department. Only applications complete in all detail shall be considered for a Certificate of Eligibility. All forms must be filled out fully and legibly by the applicant and shall be typewritten or inscribed in permanent ink.
  1. Preliminary Certificate of Eligibility; documentation. An application for a Preliminary Certificate of Eligibility must be made to the Office after the commencement of construction but prior to the issuance of either a Temporary Certificate of Occupancy for all residential areas or a Permanent Certificate of Occupancy. For a public project, the Department may grant an extension of up to four years for filing the application for a Preliminary Certificate of Eligibility. The application for a Preliminary Certificate of Eligibility shall consist of an affidavit in the form required by the Office and shall include the following:

   (1) A sworn statement by the owner (if the owner is other than an individual, the statement must be certified by the chief executive officer or managing partner of the owner), together with certifications by certified public accountants, appraisers, engineers and architects where required by this chapter, attesting to the accuracy of information provided to the Department concerning the eligibility of a project under 28 RCNY § 6-02 and the initial adjusted monthly rent required by the Act for each rental dwelling unit contained within the multiple dwelling. This sworn statement shall include, as a minimum, a statement of the following:

      (i) Total project cost of the newly constructed building and a breakdown of the costs:

         (A) Land acquisition cost or purchase price shall be certified to by an independent certified public accountant or by an appraisal of value of the land and any improvements thereon prepared by an independent appraiser found to be qualified by the Department if the land was purchased more than two years prior to the date of the commencement of construction or in the event that the land was obtained by other than purchase; provided further that in the event the land is leased and not purchased, rent attributable to the development period shall be included in total project cost.

         (B) Site preparation costs not covered by an appraisal in subparagraph (A) above shall be certified to by an affidavit from a licensed architect or engineer on a date not more than ninety days prior to the filing of an application for a Preliminary Certificate of Eligibility, and an estimate of the balance of such costs to be incurred prepared by such a licensed engineer or architect. The application for a Final Certificate of Eligibility shall contain a statement of all site preparation costs incurred, which shall be certified to by an independent certified public accountant. Site preparation costs may include, but are not limited to, costs expended to demolish structures. Site preparation costs may also include relocation expenses, which may be independently certified to by the owner or applicant;

         (C) A good faith estimate of construction costs as well as an estimate prepared by a licensed engineer of any abnormal, unique or special foundation costs which may be incurred;

         (D) An allowance for off-site costs, including but not limited to legal, engineering, and architectural fees, insurance, interest and taxes during construction, title and mortgage fees;

         (E) Specific other amounts which would ordinarily and customarily be incurred in connection with the construction of an eligible project.

      (ii) Compliance with eligibility requirements including:

         (A) Statement of the conditions of the site as of thirty-six months prior to the commencement of construction, or as of October 1, 1971, as required by this chapter, along with sufficient documentation to demonstrate the conditions of the site to the satisfaction of the Department;

         (B) A statement of the number of occupied dwelling units in existence on the site on December 31, 1974;

         (C) A statement, if the construction is to include more than twenty dwelling units, that the building will provide no less than five Class A dwelling units for each Class A dwelling unit in existence on the site immediately prior to the commencement of new construction; as required by this chapter;

         (D) A statement that the new multiple dwelling will contain not less than three dwelling units;

         (E) A statement that not less than ten percent of the dwelling units in the new multiple dwelling will contain at least four and one-half rooms and that no less than fifteen percent of such dwelling units will contain at least three and one-half rooms, as determined pursuant to 28 RCNY § 6-02(d), if the multiple dwelling is to contain more than one hundred dwelling units, unless such requirements are waived in writing by the Department;

         (F) The submission to the Department of one set of plans approved by the Department of Buildings, as evidenced by a seal of the Department of Buildings thereon or an architect’s affidavit that such plans are so approved.

         (G) If construction commenced on or before November 29, 1985, sufficient documentation to demonstrate to the satisfaction of the Department the condition of the site on November 29, 1985.

         (H) If construction commenced after November 29, 1985 and is located within the geographic exclusion area,

            (a) written certification by the Department in accordance with 28 RCNY § 6-08, that 20 percent (20%) of the units contained in that building will be affordable to persons of low and moderate income; or

            (b) written certification by the Department, in accordance with 28 RCNY § 6-08, that construction is being carried out with substantial governmental assistance; or

            (c) a copy of a written agreement with the Department for the construction or substantial rehabilitation of housing units affordable to persons of low and moderate income on another site, such agreement expressly providing that the creation of said units is intended to meet the requirements of 28 RCNY § 6-08; or,

            (d) Negotiable Certificates issued pursuant to §28 RCNY § 6-08, evidencing the bearer’s entitlement to the benefits of the Act for the units for which the applicant is seeking tax benefits.

      (iii) The date upon which it is estimated that initial occupancy will commence.

   (2) A statement of intention that the owner will register all rental units with the New York State Department of Housing and Community Renewal prior to initial occupancy and will offer initial leases of not less than two years to tenants of such stabilized units, or such shorter term as the tenant requests, or a statement that the multiple dwelling is to be owned as a cooperative or condominium.

   (3) A certified copy of a Certificate of Eviction, if required by 28 RCNY § 6-02(f).

   (4) A schedule of proposed initial rents for each rental dwelling unit in the building. No requests for revision of this schedule will be considered once a Final Certificate of Eligibility has been issued for the building in question.

  1. Filing fees. A non-refundable deposit toward a non-refundable filing fee for each multiple dwelling for which application is made for benefits hereunder shall be paid at the time of the filing of the application for a Preliminary Certificate of Eligibility. The deposit shall be in the amount of one hundred ($100) dollars and shall form part of the non-refundable filing fee of four-tenths (4/10) of one percent (.4%) of the total project cost as determined pursuant to 28 RCNY § 6-05(b), or four-tenths (4/10) of one percent (.4%) of the total project sell-out price, if the building will be owned as a cooperative or condominium, as stated in the last amendment to the offering plan accepted for filing by the New York State Attorney General, at the option of the applicant, less any fees paid to the Department pursuant to 28 RCNY § 6-08(k)(3), which resulted in the issuance of a written agreement. Payment of the balance of this fee shall be made no later than ninety days after approval of the application for a Preliminary Certificate of Eligibility. If payment is not made within such time, a late fee of an additional one-tenth (1/10) of one percent (.1%) of the total project cost, as determined pursuant to 28 RCNY § 6-05(b) shall be charged. In no event shall any Preliminary Certificate of Eligibility be issued prior to full payment of all filing fees deemed by the Department to be outstanding. These fees shall apply to all applications where the first Certificate of Eligibility, for such application, whether Preliminary or Final, is issued after the effective date of these rules. All other applications shall be subject to the fees defined by the rules in effect immediately prior to promulgation of these rules. Payment shall be made by a certified or cashier’s check payable to the Commissioner of the Department of Finance of the City of New York. If the application for a Final Certificate of Eligibility includes an increase in the amount of the total project cost, an additional filing fee shall be paid based upon such increase in the total project cost as is approved by the Department.
  2. Final Certificate of Eligibility: documentation.

   (1) The owner must file an application for a Final Certificate of Eligibility which shall consist of an affidavit in the form required by the Commissioner and shall include the following:

      (i) A sworn statement of the actual total project cost of the newly constructed building. Such actual project cost may be approved by the Department as the total project cost of such building provided all of the items comprising such actual total project cost are certified to by a certified public accountant licensed by the State of New York, and further provided that such actual total project cost does not exceed the specific costs determined by the Department pursuant to its promulgated Annual Schedule, plus any allowable abnormal, unique or special foundation costs which may be incurred. In the event that costs relating to commercial portions of the building are incomplete, an estimate of such costs may be accepted tentatively by the Office, provided a supplemental accountant’s certification is provided after such costs have been determined. If additional fees are owed on the basis of such supplemental certification, benefits are subject to revocation pursuant to chapter thirty-nine of this title if the fees are not paid. Where such costs differ from the original cost certification filed with the application for a Preliminary Certificate of Eligibility, such sworn statement shall include

         (A) the difference in costs, and

         (B) the reason or basis for such difference in costs;

      (ii) A revised schedule of proposed initial rents, if any, containing any modification of the original schedule filed with the application for a Preliminary Certificate, for each rental dwelling unit in the building. No requests for revision to this schedule will be considered once a Final Certificate of Eligibility has been issued for the building in question;

      (iii) (A)  Evidence satisfactory to the Office in a form approved by the Department that the owner of rental dwelling units has registered the building and any occupied units with the New York State Division of Housing and Community Renewal, and, if the building is not fully occupied, an affidavit stating that the owner shall register all remaining units as they become occupied and shall submit proof of such registration of all remaining units in a form approved by the Department upon the earlier to occur of (1) the occupancy of the last remaining unit, or (2) one year from the date of Completion of Construction; or (B) if the project is to be owned and operated as a cooperative or a condominium, a statement by the owner that if the prospective cooperative or condominium plan has not been declared effective for filing at a time fifteen months after the issuance of a Final Certificate of Eligibility, such owner will register these rental units with the New York State Division of Housing and Community Renewal no later than fifteen calendar days after such fifteen month period.

      (iv) A statement of the date of completion of the building.

      (v) If construction commenced after November 29, 1985 within the geographic exclusion area, and construction was not carried out with substantial governmental assistance, a copy of the Written Agreement and proof of compliance with the requirements of 28 RCNY § 6-08, including a Permanent Certificate of Occupancy for all new or substantially rehabilitated units or a Temporary Certificate of Occupancy for the entire residential portion of a building or buildings located outside the geographic exclusion area which was constructed or rehabilitated pursuant to an agreement with the Department to qualify the building located within the geographic exclusion area for the benefits of the Act. Proof of compliance shall include the requisite number of Negotiable Certificates in accordance with the ratios set forth in 28 RCNY § 6-08(b).

      (vi) In the event that through no fault of the applicant, and due to unforeseen circumstances which are beyond the control of the applicant, construction of the off-site units which was promptly commenced and has been diligently proceeding has not been completed before the completion of the building applying for benefits pursuant to the Act, the Department, in its sole discretion, may permit the applicant to submit a Letter of Credit equal to 150 percent of the Department approved estimate of the cost of completing the off-site units. The written agreement with the Department will be amended to provide a new completion date, after which the Department shall have the authority to use the proceeds of the Letter of Credit to complete the construction.

      (vii) Proof that the multiple dwelling has been registered with the Department in accordance with the provisions of article two of subchapter four of the Housing Maintenance Code.

      (viii) A) For applications received on or after December 19, 2006, an affidavit from the owner certifying that whenever any household appliance in any dwelling unit, or any household appliance that provides heat or hot water for any dwelling unit in the multiple dwelling, is installed or replaced with a new household appliance on or after December 19, 2006, such new appliance shall be certified as Energy Star. If applicable, such affidavit may instead certify (a) that an appropriately-sized Energy Star certified household appliance is not manufactured, such that movement of walls or fixtures would be necessary to create sufficient space for such appliance, and/or (b) that an Energy Star certified boiler or furnace of sufficient capacity is not manufactured.

         (B) For purposes of this subparagraph (viii), (a) “household appliance” shall mean any refrigerator, room air conditioner, dishwasher or clothes washer, within a dwelling unit in the multiple dwelling that is provided by the owner, and any boiler or furnace that provides heat or hot water for any dwelling unit in the multiple dwelling, and (b) “Energy Star” shall mean a designation from the United States Environmental Protection Agency or Department of Energy indicating that a product meets the energy efficiency standards set forth by the agency for compliance with the Energy Star program.

      (ix) For applications received for any projects that commence construction on or after December 28, 2007, an affidavit from the owner certifying that either (A) all building service employees employed or to be employed at the building shall receive the applicable prevailing wage for the duration of such building’s tax exemption pursuant to the Act, or (B) such project contains less than fifty dwelling units, or (C) at initial occupancy, at least fifty percent (50%) of the dwelling units in the multiple dwelling will be affordable to individuals or families with a gross household income at or below one hundred twenty-five percent (125%) of the area median income and that any such rental units will remain affordable for the entire period during which they receive benefits pursuant to this Act.

      (x) For applications received for any projects that commence construction on or after the effective date of the amendment that added this subparagraph, an affidavit from the owner certifying that all units that are affordable to persons of low and moderate income that qualify buildings outside of the geographic exclusion area for a twenty-five year exemption will be marketed by the Department pursuant to a fair and open process in accordance with the Department’s marketing guidelines or will be marketed in accordance with the marketing guidelines of another federal, state or local agency or instrumentality that provided substantial governmental assistance for the construction of such units.

   (2) The application for a Final Certificate of Eligibility must be filed as follows:

      (i) for a multiple dwelling to be owned as a rental, the application must be filed prior to occupancy of the building, but no earlier than the date of the application for a Preliminary Certificate of Eligibility.

      (ii) for a multiple dwelling to be owned as a condominium or a cooperative, the application must be filed prior to the first taxable status date following the completion of construction. In the event such application is not timely filed, benefits of the Act shall be revoked pursuant to 28 RCNY § 6-07(e)(5) only where the failure to file such application has resulted in the extension of the construction benefit period beyond the actual period of construction.

      (iii) (A) For a public project, the Department may grant an extension of up to four years for filing the application for a Final Certificate of Eligibility, provided that to the extent to which the failure to file such application has resulted in the extension of the construction benefit period beyond the actual period of construction for such public project, the construction benefit period shall be retroactively adjusted so that it is coterminous with the actual construction period.

         (B) For a building which is not a public project, the Department may grant an extension of up to two years for filing the application for a Final Certificate of Eligibility where the applicant has established that it reasonably relied upon the representations of third parties that the benefits of the Act would be available, provided that to the extent to which the failure to file such application has resulted in the extension of the construction benefit period beyond the actual period of construction for such building, the construction benefit period shall be retroactively adjusted so that it is coterminous with the actual construction period.

      (iv) Notwithstanding the provisions contained in subparagraphs (i) through (iii) of this paragraph, the deadlines for filing an application for a Final Certificate of Eligibility shall not apply to any property for which the Department issued a Preliminary Certificate of Eligibility and which has received tax benefits pursuant to the Act on or after January 1, 1990.

   (3) The applications for a Final Certificate of Eligibility must be completed by the applicant as follows:

      (i) for a multiple dwelling containing one hundred units or less, within ninety days following the issuance of a permanent certificate of occupancy or a temporary certificate of occupancy covering all residential space.

      (ii) for a multiple dwelling containing more than one hundred units, within one hundred and eighty days following the issuance of a permanent certificate of occupancy or a temporary certificate of occupancy covering all residential space.

      (iii) where an extension has been granted under paragraph (2)(iii) of this subdivision, the application must be completed (A) within ninety days of the filing thereof for a multiple dwelling containing one hundred units or less, or (B) within one hundred and eighty days of the filing thereof for a multiple dwelling containing more than one hundred units.

   (4) [Reserved.]

   (5) In the event that all the required documents are not timely filed, benefits of the Act may be revoked in accordance with the procedures established pursuant to chapter thirty-nine of this title. An application shall be deemed complete when all items delineated in 28 RCNY § 6-05 have been submitted, as well as any other documents which the Office may request.

   (6) Notwithstanding the provisions contained in paragraph (3) of this subdivision, the Office may grant an extension to complete an application for a Final Certificate of Eligibility for good cause shown.

  1. Issuance of a Certificate of Eligibility.

   (1) Upon receipt of the application for a Preliminary Certificate of Eligibility the Department shall determine the initial adjusted monthly rent and the comparative adjusted monthly rent with respect to rental dwelling units contained within the multiple dwelling pursuant to 28 RCNY § 6-04(a). Upon the Commissioner’s determination that a multiple dwelling is entitled to partial tax exemption hereunder the Department shall issue a Preliminary Certificate of Eligibility to be delivered by the applicant to the appropriate borough officer of the Property Division of the Department of Finance together with his, her or its application to the Department of Finance for partial tax exemption. Such certification shall be conditioned upon the filing and approval of an application for a Final Certificate of Eligibility as herein provided.

   (2) Upon receipt of the application for a Final Certificate of Eligibility and either a Temporary Certificate of Occupancy for all residential areas in the multiple dwelling or a Permanent Certificate of Occupancy, and upon the Commissioner’s determination that a multiple dwelling is entitled to partial tax exemption hereunder, the Department shall issue a Final Certificate of Eligibility to be delivered by the owner to the appropriate borough officer of the Property Division of the Department of Finance between February 1st and March 15th, together with his, her or its application to the Department of Finance for partial tax exemption.

  1. Voluntary withdrawal. Once an application for a Preliminary Certificate of Eligibility or a Final Certificate of Eligibility has been approved, an owner may withdraw the application only if (i) all taxes which would have been owed absent the exemption are paid to the City, with all interest accrued thereon, and (ii) the building for which the application was made is substantially incomplete or unoccupied by residential tenants.
  2. Declaratory rulings. A declaratory ruling with respect to an analysis of a specific or hypothetical site, project, fact pattern or document or an interpretation of the applicability of a specific provision of the 421-a statute or Rules to an actual or hypothetical site, project, fact pattern or document or any other issue related to eligibility may be given in the discretion of the Office upon payment of a non-refundable fee in the amount of $1,500 payable at the time such declaratory ruling is requested in writing. In no event shall a declaratory ruling bind the Office as to the overall eligibility of a project for 421-a benefits.

§ 6-06 The Tax Exemption.

(a) Taxes on prior assessed valuation not subject to exemption. Taxes on the assessed value of land receiving benefits under this section, and any improvements thereon, during the tax year preceding the commencement of construction are not eligible for exemption under the Act. Tax exemption under the Act is not available until the tax year following the first year taxable status date following commencement of construction. The Prior Assessed Valuation remains subject to taxation at the prevailing rate from year to year.
  1. Diminution of tax exemption for excess commercial space. As of July 1, 1975, in the event the multiple dwelling contains Floor Area of Commercial, Community Facility and/or Accessory Use Space which exceeds twelve percent (12%) of the Aggregate Floor Area, there shall be a diminution of the tax exemption in an amount equal to the ratio of Floor Area of Commercial, Community Facility and/or Accessory Use Space in excess of twelve percent (12%) of the Aggregate Floor Area to the Aggregate Area. Where a project contains a separately assessed parcel such as a residential condominium located above a separately owned commercial space, the proportionate reduction of tax exemption resulting from Commercial, Community Facility and Accessory Use Space in excess of twelve percent (12%) shall be allocated entirely to the non-residential parcel or parcels up to the point that no exemption exists for any such parcel before applying the reduction in exemption to the residential space, provided, however, that such allocation shall only be made with respect to properties for which a preliminary application for benefits is received after July 26, 1993 or for which a final application is received after such date if no preliminary application was received.
  2. Exemption during construction. Multiple Dwellings which satisfy all of the requirements set forth herein and have received a Preliminary Certificate of Eligibility shall be exempt from real property taxes, other than assessments for local improvements, upon any increase in assessed valuation over the Prior Assessed Valuation during the statutorily defined period of construction, or for a period of three years, whichever is less, provided that taxes shall be paid in each tax year in which full or partial exemption is in effect on the Prior Assessed Valuation, as defined in 28 RCNY § 6-01(c).
  3. Exemption after construction. After the first taxable status date immediately following the completion of construction any increase in assessed valuation over the Prior Assessed Valuation of eligible multiple dwellings which have received a Final Certificate of Eligibility shall be exempt from real property taxes, other than assessments for local improvements, for either ten, fifteen, twenty or twenty-five consecutive tax years, as provided in 28 RCNY § 6-02(d), pursuant to the following schedules. In addition, owners must pay full taxes on the Prior Assessed Valuation, as defined in 28 RCNY § 6-01)(c).
TEN YEAR EXEMPTION  
Year Percent of Increased Assessed Valuation Which is Exempt
First 100%
Second 100%
Third 80%
Fourth 80%
Fifth 60%
Sixth 60%
Seventh 40%
Eighth 40%
Ninth 20%
Tenth 20%
Eleventh 0%

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FIFTEEN YEAR EXEMPTION  
Year Percent of Increased Assessed Valuation Which is Exempt
First through Eleventh 100%
Twelfth 80%
Thirteenth 60%
Fourteenth 40%
Fifteenth 20%
Sixteenth  0%

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TWENTY YEAR EXEMPTION  
Year Percent of Increased Assessed Valuation Which is Exempt
First through Twelfth 100%
Thirteenth and Fourteenth 80%
Fifteenth and Sixteenth 60%
Seventeenth and Eighteenth 40%
Nineteenth and Twentieth 20%
Twenty-first 0%

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TWENTY-FIVE YEAR EXEMPTION  
Year Percent of Increased Assessed Valuation Which is Exempt
First through twenty-first 100%
Twenty-second 80%
Twenty-third 60%
Twenty-fourth 40%
Twenty-fifth 20%
Twenty-sixth 0%

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  1. Period of gradual diminution of tax exemption. Solely for purposes of 28 RCNY § 6-04(b), the period of gradual diminution of tax exemption shall be the following:

   (1) For the ten year benefit period, the ten years beginning in the first year of exemption after completion of construction.

   (2) For the fifteen year benefit period, the five years beginning in the eleventh year of exemption after completion of construction.

   (3) For the twenty year benefit period, the eight years beginning in the thirteenth year after completion of construction.

   (4) For the twenty-five year benefit period, the five years beginning in the twenty-first year of exemption after completion of construction.

§ 6-07 Record Keeping; Revocation of Tax Exemption; Discrimination Prohibited. [Repealed]

(a) Multiple dwellings affected. Within the geographic exclusion area described in 28 RCNY § 6-02(c)(10), the benefits of the Act are available only to multiple dwellings which would otherwise be eligible for benefits of the Act pursuant to the provisions of these rules and where construction commenced on or before November 29, 1985, unless such construction is carried out with substantial governmental assistance, or the owner thereof complies with the requirements of this section.
  1. Number of affordable units required to be created. A multiple dwelling located in the geographic exclusion area which would otherwise be eligible pursuant to the provisions of these rules and not constructed with substantial government assistance may qualify for benefits under the Act by the method described in either paragraph (1), (2), (3), (4), (5), or (6) of this 28 RCNY § 6-08(b). The ratio of the number of affordable units to be created to the number of units in a multiple dwelling located within the geographic exclusion area seeking the benefits of the Act are listed below.
Paragraph Ratio
28 RCNY § 6-08(b)(1) 1:5
28 RCNY § 6-08(b)(2) 1:5
28 RCNY § 6-08(b)(3)(i) 1:4
28 RCNY § 6-08(b)(3)(ii) 1:3.3
28 RCNY § 6-08(b)(4)(i) 1:5
28 RCNY § 6-08(b)(4)(ii) 1:4
28 RCNY § 6-08(b)(4)(iii) 1:6
28 RCNY § 6-08(b)(5)(i) 1:2.3
28 RCNY § 6-08(b)(5)(i) 1:2

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   (1) Obtaining the certification of the Department that twenty percent (20%) of the units contained in the multiple dwelling applying for benefits pursuant to the Act shall be rented to persons of low and moderate income as defined by this chapter at rents to be determined by the Department pursuant to this section.

   (2) Entering into a written agreement with the Department on or before December 31, 1990 to create through new construction on a site or sites meeting the requirements of 28 RCNY § 6-02(f), Class A dwelling units to be rented to persons of low and moderate income as defined by this chapter at rents to be determined by the Department pursuant to this section numbering at least twenty percent (20%) of the units in the multiple dwelling located within the geographic exclusion area seeking benefits pursuant to the Act.

   (3) Entering into a written agreement with the Department on or before December 31, 1990 to substantially rehabilitate an existing Class A multiple dwelling, the residential portion of which is vacant, to be rented to persons of low and moderate income as defined by this chapter at rents to be determined by this section. The number of units to be substantially rehabilitated shall be in accordance with the following ratios:

      (i) twenty-five percent (25%) of the number of units contained in the multiple dwelling or dwellings located within the geographic exclusion area which will be owned as a rental; or

      (ii) thirty percent (30%) of the number of units contained in the multiple dwelling or dwellings located within the geographic exclusion area which will be owned as a cooperative or condominium.

   (4) Entering into a Written Agreement with the Department on or after January 1, 1991 to create Class A dwelling units through new construction on a site or sites meeting the requirements of 28 RCNY § 6-02(f) to convert an existing non-residential building to a Class A multiple dwelling, or to substantially rehabilitate an existing Class A multiple dwelling building, the residential portion of which is vacant and has been entirely vacant for not less than three years, to be rented to:

      (i) persons of low income as defined by this chapter at the rents to be determined by the Department pursuant to this chapter numbering at least twenty percent (20%) of the units in the multiple dwelling located within the geographic exclusion area seeking benefits pursuant to the Act.

      (ii) persons of moderate income as defined by this chapter at rents to be determined by this section numbering at least twenty-five percent (25%) of the units in the multiple dwelling located within the geographic exclusion area seeking benefits pursuant to the Act.

      (iii) homeless persons are referred by the Department or by the Human Resources Administration, numbering at least sixteen and six-tenths percent (16.6%) of the units in the multiple dwelling located within the geographic exclusion area seeking benefits pursuant to the Act.

   (5) Entering into a written agreement with the Department to create through new construction or substantial rehabilitation Single Room Occupancy units to be rented to persons of low and moderate income as defined by these rules at rents to be determined by the Department pursuant to this section. The number of units to be created shall be in accordance with the following ratios:

      (i) forty-two percent (42%) of the number of units contained in the multiple dwelling or dwellings located within the geographic exclusion area which will be owned as a rental; or

      (ii) fifty-one percent (51%) of the number of units contained in the multiple dwelling or dwellings located within the geographic exclusion area which will be owned as a cooperative or condominium.

   (6) If the average size of the residential units contained in the multiple dwelling or dwellings located within the geographic exclusion area seeking benefits pursuant to the Act exceeds 1,200 square feet, the Department shall increase the number of affordable units which must be created pursuant to paragraphs (2), (3), (4) or (5) of 28 RCNY § 6-08(b) by multiplying that number of units by the ratio of the average square footage to 1,200 square feet unless the average square footage per unit of the low and moderate income units is equal to those of the multiple dwelling in the geographic exclusion area and the developer is the same for the geographic exclusion area units and the affordable units.

   (7) If the number of low and moderate income units to be created exceeds 130, two out of every three units in excess of 130 must be rented to moderate income households as defined in this chapter, and must number twenty-five percent (25%) of the number of the units in the multiple dwelling located within the geographic exclusion area seeking the benefits of the Act; and one out of every three units in excess of 130 must be rented to low income households as defined in this section, and must number twenty percent (20%) of the number of units in the multiple dwelling located within the geographic exclusion area seeking the benefits of this Act.

  1. Location of affordable units. Dwelling units created to satisfy the requirements of this section must be contained in a multiple dwelling located on a site or sites outside of the geographic exclusion area, except those affordable units contained in the multiple dwelling, located within the geographic exclusion area, seeking benefits of the Act. In addition, where a written agreement was executed on or after January 1, 1991, dwelling units created to satisfy the requirements of this chapter may also be located on a site or sites within the geographic exclusion area. Sites outside of the geographic exclusion area may be either privately owned or owned by the City of New York. The development of City owned sites must be carried out pursuant to the provisions of 28 RCNY § 6-08(d).
  2. Development of City-owned sites.

   (1) An applicant for benefits pursuant to this Act who wishes to create the required number of low and moderate income units on a vacant City-owned site may be offered a site or sites pursuant to a method to be established by the Department. Such method shall make available parcels which will yield the necessary number of low and moderate income units.

   (2) The following procedures apply to the substantial rehabilitation or conversion of City-owned sites or to new construction on vacant City-owned parcels:

      (i) All construction shall be performed by the developer under a license agreement with the City. At no time will title to the multiple dwelling be conveyed to the developer. All hard and soft development costs will be borne by the developer.

      (ii) After a permanent Certificate of Occupancy has been issued for the multiple dwelling or dwellings, the Department shall convey title to the multiple dwelling or dwellings to a qualified not-for-profit organization in whose catchment area the project is located. Disposition will be for $1 per multiple dwelling through ULURP or UDAAP. If the building is located in the catchment area for more than one local and/or city-wide qualified not-for-profit group, the Department will select the group to whom the building will be sold.

      (iii) one hundred percent (100%) of the units in the multiple dwelling or dwellings must be affordable units.

      (iv) ten percent (10%) of the units must be provided for homeless families. Referrals will be made by HPD/HRA by agreement with the not-for-profit organization, which shall provide the not-for-profit organization with the ability to screen prospective tenants.

  1. Ownership of affordable units.

   (1) All affordable units created pursuant to this section must be owned as rentals, for either 20 years or as long as the building containing the affordable units receives real estate tax benefits, whichever is longer.

   (2) Buildings containing affordable units created on privately owned sites may be owned by either a for-profit or a qualified not-for-profit organization.

      (i) In the event ownership of the affordable units is retained by a for-profit owner, the owner of the building receiving the benefits of the Act as a result of satisfaction of the requirements of this section shall have the ongoing responsibility for insuring the continuing maintenance and operation of the affordable units in a habitable condition. Should an owner fail to maintain such units as affordable or in a habitable condition, benefits of the Act received by the multiple dwelling located in the geographic exclusion area shall be revoked retroactive to the start of construction. Such revocation shall be conducted in accordance with the procedures established pursuant to chapter thirty-nine of this title.

      (ii) The developer of the affordable units on privately owned sites may elect to transfer ownership of the off-site units to a qualified not-for-profit organization is a New York State corporation experienced in the management of low income housing and approved in writing by the Department in accordance with the purpose of this section. In that event, the developer must convey title to a qualified not-for-profit for $1.00 per multiple dwelling. The not-for-profit owner shall assume the ongoing responsibility for insuring the continuing maintenance and operation of the affordable units in a habitable condition. Failure of the not-for-profit to maintain such units as affordable or in a habitable condition shall not result in a revocation of the tax benefits received by the multiple dwellings located in the geographic exclusion area.

      (iii) A developer creating affordable units on a privately-owned site with the assistance of the Federal Low Income Housing Credit under § 42 of the Internal Revenue Code of 1986 may retain ownership of such units if the developer enters into a management contract with a qualified managing agent approved in writing by the Department and conforms to the requirements of this section. Failure of the managing agent to maintain such units as affordable or in a habitable condition shall not result in a revocation of the tax benefits received by the multiple dwelling located in the geographic exclusion area.

         (A) The management contract must be approved by the Department and shall be for twenty years or for the length of the real estate tax benefits on the affordable units, whichever is longer. The developer must obtain the prior written approval of the Department to substitute another qualified managing agent if, during the term of the contract, the relationship with the original manager is severed for any reason.

         (B) The affordable units must remain as rent stabilized units for twenty years or the length of the real estate tax benefits on such affordable units, whichever is longer. Thereafter, upon each vacancy the affordable units may be deregulated according to the following schedule:

~

One 0%
Two 0%
Three 20%
Four 20%
Five 40%
Six 40%
Seven 60%
Eight 60%
Nine 80%
Ten 80%
Eleven 100%

~

         (C) The developer shall enter into an agreement with the Department to fund two reserve funds. The first shall create sufficient funds for maintenance and operation of the affordable housing units to the extent to which maintenance and operating expenses exceed income available from the rent roll, and shall be created in accordance with 28 RCNY § 6-08(f). The second covers capital improvement costs and will require the developer to deposit with the City a Capital Improvement Escrow Fund equal to 1 percent (1%) of total development costs. The developer will be required to replenish the fund within sixty (60) days of any drawing down. Interest will accrue to such Fund, which will be held by the Department. The not-for-profit can draw on this escrow fund upon authorization by the Department if the developer fails to make necessary capital repairs. Neither the Department nor the City shall have any liability as Escrow Agent; the Department’s determination of withdrawal of funds shall be binding on all parties.

         (D) If HPD approves a not-for-profit manager, the developer must enter into a purchase option contract with the not-for-profit for the period of the affordable housing plan. This option contract shall state that the not-for-profit manager may purchase the affordable units for $1 if the owner abandons the project. Evidence of abandonment shall include failure by the developer to meet the maintenance and operating expenses, failure to replenish the Capital Improvement Escrow Fund, or failure to make necessary repairs. Further, if during the time of the Federal Low Income Housing Credit, such credit is revoked and recaptured due to failure by the developer to comply with the applicable provisions of the Internal Revenue Code and any applicable regulations, then the not-for-profit may exercise the purchase option listed above. If the developer retains ownership through the end of the affordable housing plan, then the Capital Improvement Escrow Fund is paid to the developer upon expiration of the affordable housing plan. If the developer abandons the development before the end of the expiration of the affordable housing plan, then the Capital Improvement Escrow Fund is transferred to the not-for-profit. The purchase option contract may provide for an automatic termination of the contract if HPD approves termination of the not-for-profit as managing agent. In the absence of a not-for-profit manager, HPD may require the owner to enter into a purchase option contract with a not-for-profit acceptable to HPD which would take effect in the event of abandonment.

  1. Special reserve account. The developer of affordable units necessary to qualify a multiple dwelling within the geographic exclusion area for benefits of the Act, which shall not be owned by the for-profit developer of such multiple dwelling, must create a special operating reserve fund. The fund shall be in the amount of $2.25 for each square foot of affordable housing contained in such new, newly converted or substantially rehabilitated multiple dwelling or dwellings, including a pro rata share of common space of buildings not entirely lower income. The fund shall be placed in a blocked account which will be administered by the Department. This reserve fund is separate from the normal building reserve fund built into the rent roll that will be accumulated over time and will be available only on a program-wide basis to cover unanticipated increases in the costs of operating and maintaining units in general. Once an expenditure from the fund has been authorized on a programmatic basis, the dollars can be drawn down on a project-by-project basis. There will be a separate account for each project. Notwithstanding the above, the reserve fund may also be drawn down, with the approval of the Department, in the event of unusual occurrences not normally covered by the normal building reserves.
  2. Construction requirements.

   (1) Affordable Class A dwelling units created through new construction must meet the standards set forth in the Department’s “Design Guidelines For Housing – New Construction” and “Standard Specifications” (“Design Guidelines”) (applicant should obtain the most recent edition of the Design Guidelines from the Department). In addition, such dwelling units must satisfy one of the following requirements:

      (i) Unless the affordable units are created under 28 RCNY § 6-08(b)(3) or (b)(5), 50 percent (50%) of the units must contain two or more bedrooms, and in all cases average square footage and bedroom mix must be equally distributed with respect to all income levels; or

      (ii) For multiple dwellings that commence construction before December 28, 2007, such affordable units must be located in the same building and must contain the same average square footage and bedroom mix of all residential units contained in such multiple dwelling. For multiple dwellings that commence construction on or after December 28, 2007, if the affordable units are created in accordance with 28 RCNY § 6-08(b)(1) and unless preempted by federal requirements, (A) all affordable units must have a comparable number of bedrooms and a unit mix proportional to the market rate units contained in such multiple dwelling, or (B) at least fifty percent (50%) of the affordable units must have two or more bedrooms and not more than fifty percent (50%) of the remaining affordable units can be smaller than one bedroom, or (C) the floor area of the affordable units must be no less than twenty percent of the total floor area of all dwelling units in such multiple dwelling.

   (2) Affordable Class A dwelling units created through substantial rehabilitation or conversion must meet the standards set forth in the Department’s “Design Guidelines For Housing – Substantial Rehabilitation” and “Standard Specifications.” (“Design Guidelines”) (applicant should obtain the most recent edition of the Design Guidelines from the Department).

      (i) In order for the rehabilitation of a vacant multiple dwelling or the conversion of a non-residential building to qualify under 28 RCNY § 6-08(b)(4), the scope of work must include but is not limited to the following:

         (A) Beam replacement, to the extent required by the Department

         (B) New subflooring

         (C) New partition framing

         (D) New sheetrock walls and ceilings

         (E) New windows

         (F) New finish flooring, roofing and insulation

         (G) New kitchen cabinets

         (H) New baths with ceramic tile finishes

         (I) New interior and exterior doors (wood and metal)

         (J) New finish carpentry

         (K) New plumbing

         (L) New heating

         (M) New electrical

         (N) New elevators (where applicable)

         (O) Masonry repairs, to the extent required by the Department

         (P) New fire escapes, to the extent required by the Department

         (Q) Concrete site work, to the extent required by the Department

      (ii) At least fifty percent (50%) of the affordable units created pursuant to this paragraph shall contain two or more bedrooms each, except that the Department may reduce the bedrooms requirements when, in the sole opinion of the Department, existing structural elements preclude compliance. If the Department approves a reduction in the number of bedrooms, the developer will be required to rehabilitate or create through conversion additional units in a room and bedroom configuration which is acceptable to the Department, to compensate for the number of bedrooms and square footage which would have been obtained had the bedroom requirement been met. For the purposes of computation, the Department will require three studios or two one-bedroom units to be built for every two-bedroom unit lost. The Department will seek the solution which results in creating apartments with the highest bedroom count possible, consistent with the Department’s policy of creating housing which meets the needs of families.

   (3) Single Room Occupancy Units created to conform to 28 RCNY § 6-08(b)(5) must conform to the Department’s Single Room Occupancy Guidelines (applicant should obtain the most recent edition of the Guidelines from the Department).

  1. Income and occupancy requirements. All units created pursuant to this section must, at initial occupancy, be affordable to low and moderate income households, as defined in this chapter. Such units must be rented to households earning no more than four times the annual rent for the dwelling unit established pursuant to 28 RCNY § 6-08(i), and must be rented to households that consist of the minimum number of people as specified below:
Bedroom Size Minimum Number of People
0 1
1 1
2 2
3 4

~

  1. Initial rents; re-rentals.

   (1) For projects permitted to assume debt pursuant to 28 RCNY § 6-08(o)(2), the Department shall establish initial rents for individual units as provided in subparagraph (i). For all other projects, initial rents shall be established as provided in subparagraph (ii).

      (i) Units rented to persons of low income are not to exceed 30% of 55% of median income. Units rented to persons of moderate income are not to exceed the average of 30% of 75% of median income, provided that no initial annual rent will be established for any unit in a moderate or mixed income project which exceeds 30% of 95% of annual median income. The Department shall establish a total rent roll for units created pursuant to this section based upon program-wide standards for the amount necessary for maintenance, operation, administration, creation of normal reserve accounts, debt service, and in consideration of the income level to be served. For the purpose of determining median income, the following family sizes shall be imputed:

Number of Bedrooms Imputed Family Size
0 1.0
1 1.5
2 3.0
3 4.5
4 6.0

~

      (ii) The Department shall establish a total rent roll for units created pursuant to this section based upon program-wide standards for the amount necessary for maintenance, operation, administration and the creation of normal reserve accounts, and in consideration of the income level to be served. For affordable units being constructed under any of the options in this section, the managing agent may set rents higher than the allowable rent roll only with the prior written approval of the Department and only as long as no household is charged more than thirty percent (30%) of their annual income for rent. Such rents shall be the higher of the rents in effect when the Written Agreement for Creation of Affordable Housing is entered into or when construction of the affordable housing units commences. The initial rents for individual units will be determined by the managing entity, and must be affordable to low and moderate income families, as defined in this chapter. In no case shall the initial rent of any affordable unit exceed 30% of 100% of median income.

   (2) Upon initial occupancy, all units created pursuant to this section must be registered with the New York State Division of Housing and Community Renewal. Such units must remain rent stabilized for the entire period during which such units receive real estate tax benefits under any New York State or New York City tax abatement and/or exemption programs, or for 20 years, whichever is longer.

   (3) Future rent increases may not exceed the increases established by the Rent Guidelines Board.

   (4) Upon vacancy, units must be re-rented at no more than the legal stabilized rent. All units must be rented to families earning no more than four times such annual rent.

   (5) Tenants holding a lease and in occupancy of any unit created pursuant to this section at the expiration of the rent stabilization period pursuant to paragraph (2) of this subdivision (i) shall have the right to remain as rent stabilized tenants for the duration of their occupancy. Once units become vacant after termination of benefits, the owner of such units shall have the option to de-stabilize such rents.

   (6) Tenant incomes and rents must be certified to the Department by the owner of the multiple dwelling containing the affordable units following initial rent up. Thereafter, the owner of such multiple dwelling must certify to the Department tenant incomes and rents for all re-rentals after vacancies on an annual basis, but no later than January 31 for each calendar year ending December 31.

   (7) For the purposes of this subsection (i), “rent” shall mean gross rent, as defined for the purposes of the federal low income housing tax credit program, and shall include utilities. In the event that utilities are charged separately, gross rent shall be reduced accordingly.

  1. Second tier rents. As an additional protection against future insolvency of units created pursuant to this section and owned by a qualified not-for-profit organization, the Department will also register with the New York State Division of Housing and Community Renewal a second level of rents. This second tier of rents will be set by the Department at or very close to the maximum rents affordable to moderate income families as defined in this chapter. Implementing the second tier of rents for any unit will be allowed on vacancy only with the Department’s written permission. The Department will give its permission after a finding that the project has been efficiently managed and the need for second tier rents are a result of factors outside the control of the not-for-profit owner, but in any event, in the following cases only:

   (1) When the project’s financial feasibility is threatened by a significant unanticipated rise in maintenance and operating expenses that cannot be covered by the rent roll and available reserves; or

   (2) When a significant, unanticipated expense occurs in the building that cannot be covered by the rent roll and available reserves; or

   (3) When rents rise faster than the income of the tenants who are paying 30 percent (30%) of their income in rent and where the increased rent(s) on the vacant unit(s) are used to maintain the rents for existing tenants at 30 percent (30%) of their income.

  1. Time requirements; filing fees.

   (1) The written agreement with the Department for the creation of affordable units pursuant to this section must be entered into prior to the commencement of construction of such affordable units.

   (2) Such written agreement may be entered into after the commencement of construction of the multiple dwelling or dwellings located in the geographic exclusion area seeking benefits of this Act.

   (3) Any request for a written agreement pursuant to 28 RCNY § 6-08(l) shall be accompanied by a filing fee of $100 for each proposed unit of affordable housing, which fee shall be non-refundable but shall be applied to the filing fee for the tax benefits for the affordable units, as established by 28 RCNY § 6-05(c) and 28 RCNY § 5-05(f) governing tax exemption and abatement pursuant to § 11-243 of the Administrative Code (J-51).

  1. Request for written agreement. The following shall be required to be submitted to the Department with any request for a written agreement. Once approved, all documents will be incorporated into the agreement, the complete package to be referred to as The 421-a Written Agreement for Creation of Affordable Housing:

   (1) A cover sheet identifying:

      (i) the applicant

      (ii) if a corporate entity, the principals in that entity

      (iii) the location of the affordable housing units

      (iv) the location, if known, of the multiple dwelling located within the geographic exclusion area seeking benefits of the Act.

   (2) A statement that the units are intended to entitle a project to receive benefits of the Act and that such units will be rented in compliance with all provisions of this chapter.

   (3) Proof of control of the site of the affordable units including:

      (i) if privately owned, deed or contract of sale; or

      (ii) if a city-owned building is to be rehabilitated or converted,

         (A) proof of selection of site; and

         (B) endorsed license agreement with the City to permit the rehabilitation or con- version.

   (4) Preliminary building plans as approved by the Department, indicating a site plan of the low and moderate income building, total size of the building and the size and configuration of the dwelling units to be contained in the building.

   (5) A scope of work indicating the extent of rehabilitation or scope of new construction or conversion.

   (6) Identification of the owner of the affordable units created on privately owned sites:

      (i) if a for-profit owner, the name of the ownership entity and principals.

      (ii) a not-for-profit owner, the name of not-for-profit and evidence of pre-qualification.

   (7) A marketing plan for tenant selection and apartment rental. The marketing plan shall identify specific organizations or institutions, such as Community Boards, not-for-profit organizations, senior citizen centers, religious institutions, etc., which shall advertise the availability of the affordable units and must be in accordance with the Department’s marketing guidelines, which can be obtained from the Department. All marketing efforts must meet equal opportunity and fair housing guidelines.

   (8) A statement that a rental multiple dwelling located within the geographic exclusion area which qualified for benefits under the Act pursuant to 28 RCNY § 6-08(b)(3), (4) or (6) of this section will not be converted to cooperative or condominium ownership during the period of partial tax exemption. Conversion may be permitted by the Department subsequent to the expiration of the period of partial tax exemption where the affordable units are owned by a for-profit organization only if the conversion sponsor:

      (i) enters into a Written Agreement with the Department to provide for the maintenance and operation of the affordable units for the remainder of the 20 years or the period during which such units receive tax benefits under any New York State or New York City tax abatement or exemption program, whichever is longer, or

      (ii) transfers the ownership of the affordable units to a not-for-profit organization qualified by the Department.

   (9) Where affordable units are created pursuant to 28 RCNY § 6-08(b)(1), a statement that such units will not be converted to condominium or cooperative ownership for 20 years, or as long as the buildings containing the affordable units receive tax benefits under any tax abatement or tax exemption program from the State of New York or the City of New York, whichever is longer.

   (10) Where the affordable units will be owned by for-profit organization, except those units meeting the requirements of 28 RCNY § 6-08, a statement that the recipient of the benefits of this Act will be responsible for the maintenance and operation of the units in a habitable condition. If the units will be owned by a not-for-profit organization as permitted under 28 RCNY § 6-08(e)(2)(iii), the developer shall be required to fund a reserve fund in the amount of $2.25 for each square foot of affordable housing provided, in the same manner as that described in 28 RCNY § 6-08(f), and a Capital Improvement Escrow Fund in accordance with 28 RCNY § 6-08(e)(2)(iii).

   (11) For units to be owned by a not-for-profit organization, an agreement to fund a blocked reserve account, in an amount specified by this section and administered by the Department, or to create such a fund should the units owned by a for-profit organization be transferred to a not-for-profit in the future.

   (12) An agreement to submit to the Department, within five days of their execution or issuance by another City agency:

      (i) a construction contract for the creation of the lower income units between the applicant and the entity chosen to carry out the construction;

      (ii) final approved plans by the Department of Buildings;

      (iii) the altered building application and alteration permit for substantial rehabilitations and conversions or the new building permit for new construction;

      (iv) a temporary certificate of occupancy for the entire residential portion of the building or the permanent certificate of occupancy.

   (13) An agreement that changes or amendments made to any document included in this plan must obtain the prior approval of the Department.

   (14) A filing fee in the amount of $100 for each proposed unit of affordable housing.

   (15) A financial statement describing proposed sources and uses of all funds for the project, as approved by the Department.

  1. Certification; negotiable certificates.

   (1) After the Department determines that a request for Written Agreement is complete and satisfies all requirements of this section, the Department shall approve the request for a Written Agreement. The Written Agreement will provide for the granting of benefits of this Act for a specified number of dwelling units contained in a multiple dwelling located within the exclusion area. Such Written Agreement must be submitted to the Department with the application for benefits of the Act for the multiple dwelling located in the geographic exclusion area. In the event benefits of the Act are granted based upon a Written Agreement, failure to satisfy the conditions contained in such Written Agreement will result in a revocation of any benefits received by the multiple dwelling located in the exclusion area.

   (2) Upon the submission to the Department of a permanent Certificate of Occupancy for, or the temporary Certificate of Occupancy for the entire residential portion of, the building containing the affordable units created pursuant to this section, the Department shall conduct a site inspection. Following that site inspection and upon satisfaction that all terms of the Written Agreement and of this section have been met, the Department shall issue the Negotiable Certificates representing the completion of the affordable units.

   (3) Such Negotiable Certificate shall be required prior to the issuance of the Final Certificate of Eligibility for a multiple dwelling located within the geographic exclusion area pursuant to 28 RCNY § 6-05(e), unless at the sole option of the Department, pursuant to 28 RCNY § 6-05(d)(l)(vi), a Letter of Credit has been submitted to the Department.

   (4) Such Negotiable Certificate shall provide that a specified number of dwelling units containing up to an average size of twelve hundred square feet to be constructed in the geographic exclusion area shall be eligible to receive benefits of the Act.

   (5) In the event that the benefits of the Act are to be transferred to more than one building located within the geographic exclusion area, and at the written request of the applicant, the Negotiable Certificate shall be “drawn down” by the amount required for each transfer, and a new Negotiable Certificate, endorsed by the applicant, shall be issued for each transfer. Application for the benefits of the Act must be accompanied by the original Negotiable Certificate and a copy of the Certificate of Completion.

  1. Governmental assistance to affordable units.

   (1) Affordable units created pursuant to 28 RCNY § 6-08(b) may not be the recipient of any other as-of-right or discretionary government benefit, consideration or assistance, excluding tax exempt financing, federal low income housing tax credits, and real estate tax benefits enumerated in paragraph (3) of this subdivision (n).

   (2) Affordable units created to satisfy the low and moderate income housing requirements of any other governmental benefit, consideration or assistance except tax exempt financing, federal low income housing tax credits, and real estate tax benefits enumerated in paragraph (3) of this subdivision (n) shall not be considered as being created to satisfy the requirements of this section. Units created pursuant to 28 RCNY § 6-08(b)(i) shall not also qualify as affordable units under this section.

   (3) In order to qualify a multiple dwelling located within the geographic exclusion area for benefits under the Act, affordable units created by rehabilitation or conversion must receive a Certificate of Eligibility for the benefits of § 11-243 or 11-244 of the Administrative Code or § 421-g of the Real Property Tax Law, and affordable units created by new construction must receive a Certificate of Eligibility for the benefits of the Act, unless such units obtain tax exemption pursuant to § 420-a or 420-b of the Real Property Tax Law, § 696 of the General Municipal Law, or § 577 of the Private Housing Finance Law.

   (4) Affordable units created pursuant to 28 RCNY § 6-08(b)(2) through (b)(5) of these rules may not be used, or have been used, to satisfy a requirement to create low or moderate income housing imposed by a federal, state, or local agency or instrumentality or pursuant to a court or administrative order or decree (unless such requirement is imposed solely as a condition to receiving bond financing or federal low income housing tax credits for the property containing the affordable units).

   (5) Notwithstanding anything to the contrary contained in this subdivision, affordable units created to satisfy the requirements of the inclusionary housing program established pursuant to the New York City Zoning Resolution may be used to qualify a multiple dwelling in the geographic exclusion area for the benefits of the Act provided that (i) at least twenty percent (20%) of the units contained in the multiple dwelling applying for such benefits are affordable to persons of low and moderate income as defined by this chapter, and (ii) such affordable units only generate floor area compensation for a compensated development on either (a) the same zoning lot as such affordable units, or (b) within a development site on which such affordable units are located where such development site involves several zoning lots that were reviewed and approved as a single unit pursuant to the New York City Zoning Resolution. For purposes of this paragraph (5), “floor area compensation” and “compensated development” shall have the meanings set forth in Section 23-911 of the New York City Zoning Resolution.

  1. Mortgage and debt limitations.

   (1) In the case of a project which qualifies for tax benefits pursuant to 28 RCNY § 6-08(b)(1), any lien or mortgage encumbering one or more low and moderate income units in such project shall expressly provide that it is subject and subordinate to the Written Agreement imposing the restrictions required by this 28 RCNY § 6-08, commencing upon issuance of a Final Certificate of Eligibility for such tax benefits.

   (2) Projects undertaken pursuant to either 28 RCNY § 6-08(b)(4)(i), (b)(4)(ii), or (b)(4)(iii) may be encumbered with a lien or mortgage, provided the amount of debt placed on the project permits rents for such units to comply with the provisions of 28 RCNY § 6-08(i) and such lien or mortgage expressly provides that it is subject and subordinate to the Written Agreement.

§ 6-09 New Eligibility Requirements.

(a) Definitions. For purposes of this 28 RCNY § 6-09, the following terms shall have the following meanings:

   Affordability requirement. “Affordability requirement” shall mean that not less than twenty percent of the onsite units in such multiple dwelling are GEA 60% AMI units or GEA SGA units.

   Applicable deadline. “Applicable Deadline” shall mean, unless otherwise exempted pursuant to the Act, (a) with respect to a multiple dwelling within the Geographic Exclusion Area, June 30, 2008, (b) with respect to the limitations on benefits imposed pursuant to paragraph five of subdivision b of this section, December 27, 2007, (c) with respect to the limitations on benefits imposed pursuant to paragraph six of subdivision b of this section, June 30, 2008, except for multiple dwellings that purchase negotiable certificates generated by a Written Agreement with the Department entered into prior to December 28, 2006, and (d) with respect to the limitations on benefits imposed pursuant to paragraph six of subdivision b of this section, for multiple dwellings that purchase negotiable certificates generated by a Written Agreement with the Department entered into prior to December 28, 2006, June 30, 2009.

   Building segment. “Building segment” shall have the meaning set forth in Section 12-10 of the Zoning Resolution.

   Commence. “Commence” shall mean:

      (a) (1) the later to occur of (i) the date upon which a new metal or concrete structure to be incorporated into the multiple dwelling that shall perform a load bearing function for such multiple dwelling is installed; or (ii) the date upon which a building or alteration permit for the multiple dwelling (based upon architectural and structural plans approved by the Department of Buildings) was issued by such department; or

         (2) if a project includes new residential construction and the concurrent conversion, alteration or improvement of a pre-existing building or structure, the later to occur of (i) the date upon which the actual construction of the conversion, alteration or improvement of the pre-existing building or structure begins; or (ii) the date upon which an alteration permit for the multiple dwelling (based upon architectural and structural plans approved by the Department of Buildings) on which the actual construction of the conversion, alteration or improvement takes place, was issued by such department;

      (b) provided, however, that

         (1) with respect to subparagraph (1) of paragraph (a), if piles or caissons are required, “commence” shall mean the later to occur of (i) the date upon which at least one fully driven pile or caisson is installed; or (ii) the date upon which a building or alteration permit for the multiple dwelling (based upon architectural and structural plans approved by the Department of Buildings) was issued by such department; and

         (2) with respect to both subparagraphs (1) and (2) of paragraph (a):

            (i) such installation of a new metal or concrete structure or such beginning of the actual construction of the conversion, alteration or improvement of the pre-existing building or structure, respectively, and such issuance of a building or alteration permit, must both have occurred in order for the multiple dwelling to meet this definition of “commence” and

            (ii) for multibuilding projects, each multiple dwelling in such multibuilding project shall be deemed to “commence” (A) with respect to subparagraph (1) of paragraph (a), on the later to occur of (1) the date upon which a new metal or concrete structure to be incorporated into the first multiple dwelling in such multibuilding project that shall perform a load bearing function for such multiple dwelling is installed; or (2) the date upon which a building or alteration permit for the first multiple dwelling in such multibuilding project (based upon architectural and structural plans approved by the Department of Buildings) was issued by such department, provided that all of the multiple dwellings in such multibuilding project have been issued by the Department of Buildings a building or alteration permit (based upon architectural and structural plans approved by such department) on or before the applicable deadline, and the periods of construction and final real property tax exemption benefits granted pursuant to the Act shall commence simultaneously for all of the multiple dwellings in such multibuilding project; and (B) with respect to subparagraph (2) of paragraph (a), on the later to occur of (1) the date upon which the actual construction of the conversion, alteration or improvement of the first pre-existing building or structure in such multibuilding project begins; or (2) the date upon which an alteration permit for the first multiple dwelling in such multibuilding project (based upon architectural and structural plans approved by the Department of Buildings) on which the actual construction of the conversion, alteration or improvement takes place, was issued by such department, provided that all of the multiple dwellings in such multibuilding project have been issued by the Department of Buildings a building or alteration permit (based upon architectural and structural plans approved by such department) on or before the applicable deadline, and the periods of construction and final real property tax exemption benefits granted pursuant to the Act shall commence simultaneously for all of the multiple dwellings in such multibuilding project; and

            (iii) for any multiple dwelling that was not located in the GEA on or before the Applicable Deadline, but is located in the GEA after the Applicable Deadline, or for any multiple dwelling that would not have been subject to the exemption cap pursuant to the provisions of subdivision 9 of the Act on or before the Applicable Deadline, but would be subject to such exemption cap after the Applicable Deadline, if the architectural and structural plans approved by the Department of Buildings in conjunction with the issuance of the first such building or alteration permit for such multiple dwelling are thereafter amended to provide for more than a thirty-five percent (35%) increase (the “35% standard”) in the floor area, as defined pursuant to the Zoning Resolution, of such multiple dwelling, the construction of such multiple dwelling shall be deemed to have commenced on the date upon which such amended plans are approved by such department, provided, however, that, the amendments to this clause (iii) that were adopted on [;insert effective date of CAPA rule]; shall only apply to multiple dwellings whose applications for a Preliminary Certificate of Eligibility are approved by the Department on or after May 1, 2014; and

            (iv) the construction of any such multiple dwelling also must be completed without undue delay. For purposes of this definition of “commence,”:

               (1) for any application for a Preliminary Certificate of Eligibility that is filed no later than June 24, 2012, or that is filed with respect to a project that was the subject of mortgage foreclosure proceedings or other lien enforcement litigation by a lender on or before June 24, 2012: (A) if a project consists of one multiple dwelling and such multiple dwelling is completed within seventy-two (72) months from the later to occur of (1) the date of the installation of a new metal or concrete structure or of the beginning of the actual construction of the conversion, alteration or improvement of the pre-existing building or structure, respectively, (2) the date upon which a building or alteration permit for the multiple dwelling (based upon architectural and structural plans approved by the Department of Buildings) was issued by such department, or (3) December 28, 2007, such multiple dwelling shall be deemed to have been completed without undue delay, and (B) if a project meets the requirements of clause (ii) of this paragraph (2), if all of the multiple dwellings in such multibuilding project are completed within seventy-two (72) months from the later to occur of (1) the date of the installation of a new metal or concrete structure for the first multiple dwelling in such multibuilding project or of the beginning of the actual construction of the conversion, alteration or improvement of the first pre-existing building or structure in such multibuilding project, respectively, (2) the date upon which a building or alteration permit for the first multiple dwelling (based upon architectural and structural plans approved by the Department of Buildings) was issued by such department, or (3) December 28, 2007, all of the multiple dwellings in such multibuilding project shall be deemed to have been completed without undue delay. Where construction is not completed within such seventy-two (72) month period and an architect or professional engineer has certified that such construction was completed without undue delay, the Department will not merely rely on such certification. In order to determine whether such construction was, in fact, completed without undue delay, the Department will consider the following factors: (i) the extraordinary size and/or complexity of the construction project; (ii) strikes or other unavoidable labor stoppages of substantial duration and severity; (iii) industry-wide shortages of construction materials of substantial duration and severity; (iv) substantial damage to completed construction work caused by fire or other casualty, and (v) mortgage foreclosure proceedings or other lien enforcement litigation by a lender with regard to such project. In each case, the Department will consider such factors and determine whether construction could reasonably have been completed in a materially shorter period of time.

               (2) for any application for a Preliminary Certificate of Eligibility that is filed after June 24, 2012, and that is not filed with respect to a project that was the subject of mortgage foreclosure proceedings or other lien enforcement litigation by a lender on or before June 24, 2012: (A) if a project consists of one multiple dwelling and such multiple dwelling is completed within thirty-six (36) months from the later to occur of (1) the date of the installation of a new metal or concrete structure or of the beginning of the actual construction of the conversion, alteration or improvement of the pre-existing building or structure, respectively, (2) the date upon which a building or alteration permit for the multiple dwelling (based upon architectural and structural plans approved by the Department of Buildings) was issued by such department, or (3) December 28, 2007, such multiple dwelling shall be deemed to have been completed without undue delay, and (B) if a project meets the requirements of clause (ii) of this paragraph (2), if all of the multiple dwellings in such multibuilding project are completed within thirty-six (36) months from the later to occur of (1) the date of the installation of a new metal or concrete structure for the first multiple dwelling in such multibuilding project or of the beginning of the actual construction of the conversion, alteration or improvement of the first pre-existing building or structure in such multibuilding project, respectively, (2) the date upon which a building or alteration permit for the first multiple dwelling (based upon architectural and structural plans approved by the Department of Buildings) was issued by such department, or (3) December 28, 2007, all of the multiple dwellings in such multibuilding project shall be deemed to have been completed without undue delay.

               (3) Notwithstanding anything to the contrary contained herein, if a multiple dwelling meets the affordability requirement or is located outside of the GEA, such multiple dwelling shall be deemed to have been completed without undue delay.

      (c) Where it is determined in accordance with this definition of “commence” that a multiple dwelling commenced construction on or after December 28, 2007 with respect to paragraph five of subdivision (b) of this section or July 1, 2008 with respect to paragraphs one, three or six of subdivision (b) of this section, respectively, this definition of “commence” shall supersede the definition of “commencement of construction” contained in 28 RCNY § 6-01.

   Commercial space. “Commercial space” shall mean any space within a building that is devoted to commercial, community facility or other non-residential use.

   Common area. “Common area” shall mean any space within a building to which the residents of two or more dwelling units have access without paying a usage fee and that is not located in a dwelling unit, in a commercial space or in a service area.

   Common charges or carrying charges. “Common charges or carrying charges” shall mean the estimated amounts contained in the offering plan accepted by the office of the Attorney General of the State of New York for filing.

   Contract Rents. “Contract Rents” shall mean the rent approved by the United States Department of Housing and Urban Development for dwelling units in a project with a HAP Contract.

   Geographic exclusion area or GEA. “Geographic exclusion area” or “GEA” shall mean the boundaries for any geographic exclusion areas set forth in § 421-a of the Real Property Tax Law and § 11-245 of the Administrative Code that are effective on or after July 1, 2008.

   GEA 60% limit. “GEA 60% limit” shall mean (A) for a multiple dwelling owned and operated as a rental, (1) incomes at the time of initial occupancy that do not exceed sixty percent of the area median incomes adjusted for family size, and (2) rents at the time of initial occupancy that do not exceed thirty percent of sixty percent of the area median incomes adjusted for family size, minus the amount of any applicable utility allowance, and (B) for a multiple dwelling owned and operated as a condominium or cooperative development by individual condominium unit owners or shareholders, (1) incomes at the time of initial occupancy that do not exceed sixty percent of the area median incomes adjusted for family size, and (2) sales prices at the time of initial sales that result in mortgage payments, including both principal and interest calculated at the prevailing rate and assuming that the mortgage constitutes 90% of the purchase price, and common charges or carrying charges, respectively, that collectively do not exceed thirty percent of sixty percent of the area median incomes adjusted for family size.

   GEA SGA limit. “GEA SGA limit” shall mean (A) for a multiple dwelling owned and operated as a rental, (1) incomes at the time of initial occupancy that do not exceed one hundred twenty percent of the area median incomes adjusted for family size and, where such a multiple dwelling contains more than twenty-five units, incomes at the time of initial occupancy that do not exceed an average of ninety percent of the area median incomes adjusted for family size, and (2) rents at the time of initial occupancy that do not exceed thirty percent of one hundred twenty percent of the area median incomes adjusted for family size, minus the amount of any applicable utility allowance, and, where such a multiple dwelling contains more than twenty-five units, rents at the time of initial occupancy that do not exceed an average of thirty percent of ninety percent of the area median incomes adjusted for family size, minus the amount of any applicable utility allowance, or (B) for a multiple dwelling owned and operated as a condominium or cooperative development by individual condominium unit owners or shareholders, (1) incomes at the time of initial occupancy that do not exceed one hundred twenty-five percent of the area median incomes adjusted for family size, and (2) sales prices at the time of initial sales that result in mortgage payments, including both principal and interest calculated at the prevailing rate and assuming that the mortgage constitutes 90% of the purchase price, and common charges or carrying charges, respectively, that collectively do not exceed thirty percent of one hundred twenty-five percent of the area median incomes adjusted for family size.

   GEA 60% AMI unit. “GEA 60% AMI unit” shall mean (A) if a multiple dwelling is owned and operated as a rental, a unit that, upon its initial rental and upon all subsequent rentals of the unit after a vacancy, complies with the GEA 60% limit, or (B) if a multiple dwelling is owned and operated as a condominium or cooperative development by individual condominium unit owners or shareholders, a unit that, upon the initial sale of such unit, complies with the GEA 60% limit.

   GEA SGA unit. “GEA SGA unit” shall mean (A) if a multiple dwelling is owned and operated as a rental, a unit that, upon its initial rental and upon all subsequent rentals of the unit after a vacancy, complies with the GEA SGA limit, or (B) if a multiple dwelling is owned and operated as a condominium or cooperative development by individual condominium unit owners or shareholders, a unit that, upon the initial sale of such unit, complies with the GEA SGA limit.

   HAP Contract. “HAP Contract” shall mean any project-based Section 8 housing assistance payments contract, governed by Subpart E of part 983 of Chapter IX of Subtitle B of Title 24 of the Code of Federal Regulations, covering units in the multiple dwelling, as may be amended or renewed.

   Multibuilding project. “Multibuilding project” shall mean a project that consists of more than one multiple dwelling where the multiple dwellings are located inside the GEA, do not meet the affordability requirement, are contiguous and are under common ownership. For purposes of this definition of “multibuilding project”, multiple dwellings shall be deemed to be (a) “contiguous” if such multiple dwellings are on tax lots that (1) are adjacent for at least ten linear feet, or, (2) but for the intervention of streets or street intersections, would be adjacent for at least ten linear feet and front the same street or intersection, and (b) “under common ownership” if at the date of commencement of construction, each of the multiple dwellings in such multibuilding project is owned and/or controlled directly or indirectly by the same individual or entity.

   Onsite. “Onsite” shall mean situated within a building or buildings on the same zoning lot, or, if only a portion of such zoning lot is being granted benefits pursuant to the Act, situated within a building or buildings on such portion of such zoning lot; provided, however, that (1) each of the buildings on such zoning lot or portion thereof is part of the same application for benefits pursuant to the Act, (2) the periods of construction and final real property tax exemption benefits granted pursuant to the Act for all of the buildings on such zoning lot or portion thereof being granted benefits pursuant to the Act shall commence simultaneously, and (3) no final real property tax exemption benefits shall be granted pursuant to the Act for any of the buildings on such zoning lot or any portion thereof being granted benefits pursuant to the Act until receipt of a certificate of occupancy or a temporary certificate of occupancy for the residential portions of the building or buildings on such zoning lot containing the GEA 60% AMI units and/or the GEA SGA units.

   Party in interest. “Party in interest” shall mean any person or entity holding an ownership, ground lease, mortgage, or other security interest, or holding any other interest which may be converted to such interest, in the real property containing the multiple dwelling receiving the benefits pursuant to the Act.

   Prevailing rate. “Prevailing rate” shall mean the single family mortgage rate for a thirty-year fixed rate loan established by the Federal Home Loan Mortgage Association and the Federal National Mortgage Association that is either (1) for purposes of the application for a Preliminary Certificate of Eligibility, quoted for the month in which the construction of such multiple dwelling commences, or (2) for purposes of the application for a Final Certificate of Eligibility, quoted for the month in which the first certificate of occupancy or temporary certificate of occupancy for the first unit in such multiple dwelling that is owned and operated as a condominium or cooperative development by individual condominium unit owners or shareholders, is issued.

   Section 8. “Section 8” shall mean a federal rental subsidy pursuant to the Section 8 project-based rental assistance program, or any successor programs under the United States Housing Act of 1937, as amended.

   Service area. “Service area” shall mean any space within a building that is utilized by the owner or manager of such building, and their respective employees, for purposes of building administration, and to which residential tenants do not normally have access.

   Story. “Story” shall have the meaning set forth in Section 12-10 of the Zoning Resolution.

   Utility allowance. “Utility allowance” shall mean an allowance set forth by the Department for the payment of utilities where the tenant of a GEA 60% AMI unit or a GEA SGA unit is required to pay all or a portion of the utility costs with respect to such unit in addition to any payments of rent.

  1. Multiple Dwellings Affected.

   (1) Unless otherwise exempted pursuant to the Act, a multiple dwelling within the geographic exclusion area that commences construction on or after July 1, 2008 and which would otherwise be eligible for the benefits of the Act, is only eligible if:

      (i) not less than twenty percent of the onsite units in such multiple dwelling are GEA 60% AMI units marketed by the Department pursuant to a fair and open process in accordance with the Department’s marketing guidelines; or

      (ii) the construction of such multiple dwelling is carried out with substantial governmental assistance provided pursuant to a program for the development of affordable housing and not less than twenty percent of the onsite units in such multiple dwelling are GEA SGA units; or

      (iii) such multiple dwelling has purchased negotiable certificates in order to entitle it to the benefits of the Act for a specified number of units in the geographic exclusion area; provided, however, that such negotiable certificates were generated by a Written Agreement with the Department entered into prior to December 28, 2007 pursuant to 28 RCNY § 6-08(b)(4).

   (2) For thirty-five years from the completion of construction, all GEA 60% AMI units and GEA SGA units in multiple dwellings must (i) if they are owned and operated as rentals, remain rent stabilized and allow tenants holding a lease and in occupancy at the expiration of such thirty-five year period to remain as rent stabilized tenants for the duration of their occupancy, (ii) comply with the affordability requirement, and (iii) upon the renewal of leases or at any time during the term of the lease, be rented to existing tenants for the lesser of (A) the rents permitted under the Rent Stabilization Law of 1969 and the Emergency Tenant Protection Act of 1974 and all regulations promulgated in connection thereto (collectively, “Rent Stabilization Laws”), or (B) 30% of the applicable income limit for such GEA 60% AMI unit or GEA SGA unit, respectively, minus the amount of any applicable utility allowance, provided, however, that no increase authorized pursuant to 28 RCNY § 6-04(b) and no exemption or exclusion from any requirement of the Rent Stabilization Laws, including, but not limited to, any exemption or exclusion from the rent limits, renewal lease requirements, registration requirements, or other provisions of the Rent Stabilization Laws due to (a) the vacancy of a unit where the rent exceeds a prescribed maximum amount, (b) the fact that tenant income and/or unit rent exceed prescribed maximum amounts, (c) the nature of the tenant, or (d) any other factor, may be applied to any such GEA 60% AMI unit or GEA SGA unit during such thirty-five year period. Furthermore, the lease for each such unit owned and operated as a rental and for the renewal thereof must contain a notice in at least twelve (12) point type stating the approximate date on which such thirty-five year period is expected to expire and informing such tenant that after such thirty-five year period, (i) the unit will no longer have to comply with the affordability requirement and (ii) if the tenant is holding a lease and in occupancy at the expiration of such thirty-five year period, such tenant shall have the right to remain as a rent stabilized tenant for the duration of such tenant’s occupancy. The rent stabilization and lease rider requirements contained in 28 RCNY § 6-02(g) shall continue to apply to the multiple dwellings owned and operated as a rental containing such GEA 60% AMI units or GEA SGA units to the extent that they do not conflict with this paragraph.

   (2-a) (i) Notwithstanding anything to the contrary contained in this section, rents for GEA 60% AMI units or GEA SGA units in multiple dwellings that are subject to a HAP Contract may exceed 30% of the applicable income limit for such GEA 60% AMI units or GEA SGA units, at initial occupancy and upon renewal of leases, if

         (A) such rents do not exceed one hundred twenty percent of the Contract Rents for such units,

         (B) such rents, less any rent subsidies pursuant to Section 8 of the United States Housing Act of 1937, do not exceed the lesser of (1) the GEA 60% limit or the GEA SGA limit, as applicable, or (2) the tenant’s maximum payment allowed under the HAP Contract, and

         (C) at least twenty percent (20%) of the GEA 60% AMI units or GEA SGA units, as applicable, in such multiple dwellings that are first rented to tenants on or after the effective date of this rule amendment either for initial occupancy or for re-rental upon a vacancy, are rented through referrals from the City of homeless households who meet the applicable income requirements and other eligibility criteria permitted by the marketing guidelines of the Department.

      (ii) Each year, upon annual registration of its rental dwelling units with the New York State Department of Housing and Community Renewal, the owner of a multiple dwelling subject to subparagraph (i) of this paragraph must file with the Department an affidavit in a form approved by the Department attesting that each lease of a GEA 60% AMI unit or GEA SGA unit, or renewal thereof, during the preceding year complied with the applicable rent requirements under subparagraph (i) of this paragraph at the time of execution of the lease, or renewal thereof, and providing other information regarding the leases for such units as the Department shall require in such affidavit.

      (iii) Subparagraph (i) of this paragraph shall only apply during the term of such multiple dwelling’s HAP Contract.

   (3) Unless otherwise exempted pursuant to the Act, the owner of a multiple dwelling that is located within the geographic exclusion area and that commences construction on or after July 1, 2008:

      (i) when filing an application for a Preliminary Certificate of Eligibility pursuant to 28 RCNY § 6-05(b), must submit (A) written certification that it meets the affordability requirement, or (B) if such multiple dwelling is qualifying for benefits pursuant to subparagraph (iii) of paragraph (2) of this subdivision, and subject to the provisions contained in 28 RCNY § 6-08(m)(1), submit either (a) a copy of a Written Agreement with the Department for the construction or substantial rehabilitation of housing units affordable to persons of low and moderate income on another site that meet the requirements of 28 RCNY § 6-08, or (b) the negotiable certificates issued pursuant to 28 RCNY § 6-08, evidencing the bearer’s entitlement to the benefits of the Act for the units for which the owner is seeking tax benefits.

      (ii) when filing an application for a Preliminary Certificate of Eligibility pursuant to 28 RCNY § 6-05(b) for a multiple dwelling that contains GEA 60% AMI units or GEA SGA units, submit evidence satisfactory to the Office that a restrictive declaration in a form satisfactory to the Office (A) has been executed by all parties in interest, (B) has been recorded against the real property containing the multiple dwelling receiving benefits pursuant to the Act, and (C) provides that the GEA 60% AMI units or the GEA SGA units in such building must for thirty-five years from the completion of construction (1) comply with the affordability requirement, (2) if such multiple dwelling is owned and operated as a rental, remain rent stabilized and allow tenants holding a lease and in occupancy at the expiration of such thirty-five year period to remain as rent stabilized tenants for the duration of their occupancy, and (3) if applicable, comply with the provisions of paragraph 2-a of this subdivision.

      (iii) when filing an application for a Final Certificate of Eligibility pursuant to 28 RCNY § 6-05(d) for a multiple dwelling that contains GEA 60% AMI units or GEA SGA units, submit an affidavit from the owner containing such information as the Department may require to certify that such units will be marketed pursuant to a fair and open process in accordance with the marketing guidelines of the Department or of another federal, state or local agency or instrumentality, and that (A) if the units will be marketed in accordance with the marketing guidelines of another federal, state or local agency or instrumentality, the owner has informed such agency or instrumentality of the requirement that residents of the community board where the multiple dwelling for which benefits are being granted pursuant to the Act is located shall, upon initial occupancy, have priority for the purchase or rental of 50% of the GEA 60% AMI units or 50% of the GEA SGA units, respectively, unless the community priority requirement is preempted by federal requirements, and (B) either (1) residents of the community board where the multiple dwelling for which benefits are being granted pursuant to the Act is located shall, upon initial occupancy, have priority for the purchase or rental of 50% of the GEA 60% AMI units or 50% of the GEA SGA units, respectively, or (2) such multiple dwelling does not have to comply with such community priority requirement because the community priority requirement is preempted by federal requirements that such owner has specified in such affidavit.

      (iv) in addition to the record keeping requirements contained in 28 RCNY § 6-07, must retain all books, records and documents relating to the GEA 60% AMI units or GEA SGA units, including an annual schedule of rents for each such rental unit for thirty-five years from the completion of construction of such multiple dwelling, and a schedule of the initial sales prices for each such home ownership unit for six years from the completion of construction of such multiple dwelling, and make them available for inspection by the Department.

   (4) For all multiple dwellings that commence construction on or after June 15, 2015, and on or before December 31, 2015, as determined pursuant to the definition of “commence” contained in §§ 421-a (2)(a)(iv)(A) and 421-a(2)(c)(ii) of the Real Property Tax Law, and that receive their first temporary or permanent certificate of occupancy covering all residential areas on or before December 31, 2019:

      (i) If a story contains one or more GEA 60% AMI units or GEA SGA units, not less than thirty percent of the dwelling units on such story shall be units that are neither GEA 60% AMI units nor GEA SGA units, provided, however, that the Department may waive such requirement where either (A) the GEA 60% AMI units and GEA SGA units comprise more than fifty percent of the units in a multiple dwelling, or (B) there is only one dwelling unit on a story in a multiple dwelling;

      (ii) Every building segment in a multiple dwelling must contain one or more GEA 60% AMI units or GEA SGA units; and

      (iii) All common areas in a multiple dwelling shall be open and accessible to the residents of all of the dwelling units in such multiple dwelling, including the residents of GEA 60% AMI units and GEA SGA units.

   (5) Unless otherwise exempted pursuant to the Act, any multiple dwelling that commences construction on or after December 28, 2007 and which would otherwise be eligible for the benefits of the Act, is only eligible if:

      (i) such multiple dwelling contains at least four dwelling units as set forth in the certificate of occupancy, unless the construction of such multiple dwelling is carried out with substantial governmental assistance provided pursuant to a program for the development of affordable housing; and

      (ii) if such new multiple dwelling is situated in (a) a Neighborhood Preservation Program Area as determined by the Department as of June 1, 1985, or (b) a Neighborhood Preservation Area as determined by the New York City Planning Commission as of June 1, 1985, or (c) an area that was eligible for mortgage insurance provided by the Rehabilitation Mortgage Insurance Corporation (REMIC) as of May 1, 1992, or (d) an area receiving funding for a neighborhood preservation project pursuant to the Neighborhood Reinvestment Corporation Act (42 U.S.C. §§ 8101 et seq.) as of June 1, 1985, such new multiple dwelling shall no longer be eligible for the benefits available pursuant to § 421-a(2)(a)(iii) of the Act unless either (a) the construction is carried out with substantial governmental assistance provided pursuant to a program for the development of affordable housing, or (b) the Department has imposed a requirement or has certified that at least twenty percent of the onsite units in such multiple dwelling are affordable to and occupied by or affordable to and available for occupancy by individuals or families whose incomes at the time of initial occupancy do not exceed eighty percent of the area median incomes adjusted for family size, provided, however, that of such units, no more than a number equal to five percent of the number of units which commenced construction in buildings receiving tax benefits pursuant to the Act in the previous calendar year shall be affordable to and occupied by or affordable to and available for occupancy by individuals or families whose incomes at the time of initial occupancy are between sixty percent and eighty percent of the area median incomes adjusted for family size.

   (6) Unless otherwise exempted pursuant to the Act, any multiple dwelling that commences construction on or after July 1, 2008 and which would otherwise be eligible for benefits pursuant to the Act, shall be subject to the provisions of subdivision 9 of the Act imposing an exemption cap on such multiple dwelling.

   (7) Eligible multiple dwellings that meet the requirements of paragraphs (1) or (5) (ii) of this subdivision (b) may receive a ten, fifteen, twenty or twenty-five year tax exemption, as described herein. In order to qualify for such benefits, the multiple dwelling must meet the eligibility requirements described below for each level of exemption.

      (i) Only the ten year exemption is available to multiple dwellings located in Manhattan on tax lots now existing or hereafter created south of or adjacent to either side of 110th street if such multiple dwelling meets the requirements of subparagraph (iii) of paragraph (1) of this subdivision (b).

      (ii) Only the fifteen year exemption is available to multiple dwellings located in the boroughs of the Bronx, Brooklyn, Queens, Staten Island and in Manhattan north of 110th Street if such multiple dwelling meets the requirements of subparagraph (iii) of paragraph (1) of this subdivision (b).

      (iii) The twenty year exemption is available in the borough of Manhattan for buildings on tax lots now existing or hereafter created south of or adjacent to either side of one hundred tenth street only if such multiple dwelling meets the requirements of subparagraph (i) or (ii) of paragraph (1) of this subdivision (b) or the requirements of subparagraph (ii) of paragraph (5) of this subdivision (b).

      (iv) The twenty-five year exemption is available to multiple dwellings located in the boroughs of the Bronx, Brooklyn, Queens, Staten Island or Manhattan north of 110th Street only if such multiple dwelling meets the requirements of subparagraph (i) or (ii) of paragraph (1) of this subdivision (b) or the requirements of subparagraph (ii) of paragraph (5) of this subdivision (b).

§ 6-10 Applicability of Certain Provisions.

Except as otherwise specifically provided therein, the amendments to this chapter six that became effective on June 19, 2008, shall only apply to multiple dwellings that commence construction on or after July 1, 2008. For purposes of determining when any such multiple dwelling has commenced construction, the definition of “commence” in such amendments shall apply and, where it is determined that such multiple dwelling commenced construction on or after July 1, 2008, the definition of “commence” in such amendments shall supersede the definition of “commencement of construction” contained in 28 RCNY § 6-01.

APPENDIX A ANNUAL SCHEDULE OF REASONABLE COSTS

Chapter 7: Partial Tax Exemption For Private Dwellings Pursuant To § 421-b of the Real Property Tax Law

§ 7-01 Definitions.

The following terms shall have the following meaning:

Act. “Act” means § 421-b of the Real Property Tax Law as amended.

Commencement of new construction. “Commencement of new construction” means the date upon which the foundation is started in good faith as certified in an affidavit by a licensed architect or professional engineer after the issuance of a new building permit by the Department of Buildings based upon plans approved by the Department of Buildings.

Commencement of reconstruction. “Commencement of reconstruction” means the date upon which work begins in good faith after the filing of a building notice with the Department of Buildings or the issuance of an alteration permit where required.

Commissioner. “Commissioner” means the Commissioner of the Department of Housing Preservation and Development of the City of New York or the chief executive officer of a successor thereto authorized to administer this chapter, or such representative of said Department as shall have been duly designated by the Commissioner to act on his behalf.

Completion of new construction. “Completion of new construction” means the date a Certificate of Occupancy is issued by the Department of Buildings for lawful residential use.

Completion of reconstruction. “Completion of reconstruction” means the date all work necessary to complete reconstruction is completed. Such completion may be confirmed by:

   (1) Issuance or reissuance of a Certificate of Occupancy; or

   (2) Issuance of a Letter of Completion by the Department of Buildings; or

   (3) Issuance of a Certificate of Completion or Compliance or other evidence of completion by a City agency other than the Department of Buildings; or

   (4) If none of the above is required by law, an affidavit by a registered architect, licensed professional engineer or attorney certifying to the date of completion or an affidavit by the applicant if the cost of work is less than five thousand ($5,000) dollars.

Department. “Department” means the Department of Housing Preservation and Development of the City of New York.

Office. “Office” means the Office of Development of the Department of Housing Preservation and Development of the City of New York or any successor thereto authorized to administer this chapter.

Prior assessed valuation. “Prior assessed valuation” means the total assessed value of a tax lot (land and improvements) during the tax year immediately preceding the tax year of Commencement of New Construction or Commencement of Reconstruction.

Private dwelling. “Private dwelling” means a building or structure, including the land upon which it is situated, which is designed and occupied exclusively for residence purposes by not more than two families living independently of each other with separate cooking facilities.

Reconstruction. “Reconstruction” means reconstruction, alteration or improvement of a Private Dwelling if the actual cost thereof is not less than forty (40%) percent of Prior Assessed Valuation.

§ 7-02 General Applicability.

(a) Eligible projects. As used herein, eligible projects means private dwellings which are newly constructed or reconstructed provided such construction or reconstruction commences after July 1, 1978 but before July 1, 1980 and is completed no later than April 1, 1982.
  1. Other tax exemptions. No private dwelling shall be eligible for tax exemption pursuant to this chapter if it is receiving tax exemption under any other provision of law.

§ 7-03 Amount and Duration of Tax Exemption.

(a) Taxes on prior assessed valuation not subject to exemption. Taxes on prior assessed valuation are not eligible for exemption under the Act. The prior assessed valuation is subject to taxes at the tax rate in effect from time-to-time.
  1. Exemption during construction or reconstruction.

   (1) Eligible projects which have received a Preliminary Certificate of Eligibility shall be exempt from taxes (other than assessments for local improvements) upon any increase in assessed valuation over the prior assessed valuation for the period specified in paragraph (2) of this 28 RCNY § 7-03(b).

   (2) The period of exemption shall commence upon the first day of the tax year immediately following the taxable status date (January 25th) after the commencement of construction or reconstruction and shall extend for two years after commencement of construction or reconstruction, unless construction or reconstruction is completed in less than two years in which case the period of exemption will terminate on the first day of the first tax year following completion of construction or reconstruction.

  1. Exemption after construction or reconstruction. Following the period specified in paragraph (2) of 28 RCNY § 7-03(b), an increase in assessed valuation over the prior assessed valuation of eligible projects which have received a Final Certificate of Eligibility shall be exempt from taxes (other than assessments for local improvements) for eight consecutive tax years pursuant to the following schedule:
Year Percentage of Exemption
First 100%
Second 100%
Third 75%
Fourth 62.5%
Fifth 50%
Sixth 37.5%
Seventh 25%
Eighth 12.5%

~

§ 7-04 Revocation of Tax Exemption. [Repealed]

(a) General requirements. All applicants must file an application for a Final Certificate of Eligibility. An application for a Preliminary Certificate of Eligibility must also be filed if tax exemption during new construction or reconstruction is requested. Applicants who do not file an application for a Preliminary Certificate of Eligibility shall be required to furnish the information required in an application for a Preliminary Certificate of Eligibility and pay the Preliminary Certificate of Eligibility filing fee at the time they submit their application for a Final Certificate of Eligibility. All applications must be filed with the Director of Tax Incentive Programs, 100 Gold Street, New York, N.Y. 10038 between March 16 and January 31. The Office will not accept applications between February 1 and March 15.
  1. New construction: Preliminary Certificate of Eligibility. An application for a Preliminary Certificate of Eligibility shall be filed within ninety (90) days of commencement of new construction and prior to the issuance of a Temporary Certificate of Occupancy or a Certificate of Occupancy. The application shall include:

   (1) A non-refundable filing fee in the amount of one hundred twenty-five ($125) dollars for each newly constructed private dwelling.

   (2) Applicant’s affidavit in the form required by the Department which shall certify that plans have been submitted to and approved by the Department of Buildings.

   (3) Proof to the satisfaction of the Office of the Eligible Project’s Prior Assessed Valuation.

   (4) An affidavit by a licensed architect or professional engineer as to the date of commencement of new construction.

  1. Reconstruction: Preliminary Certificate of Eligibility. An application for a Preliminary Certificate of Eligibility shall be filed within ninety (90) days of the date of Commencement of Reconstruction. The application shall include:

   (1) A non-refundable filing fee in the amount of ten ($10) dollars for each reconstructed private dwelling.

   (2) Applicant’s certification as to the date of commencement of reconstruction and that the cost of reconstruction will be not less than forty (40%) percent of the prior assessed valuation.

   (3) Applicant’s certification of the cost or estimated cost of reconstruction and prior assessed valuation.

  1. New construction: Final Certificate of Eligibility. An application for a Final Certificate of Eligibility shall be filed within ninety (90) days of issuance of a Certificate of Occupancy. The application shall include:

   (1) A copy of the building permit.

   (2) A copy of the Certificate of Occupancy.

  1. Reconstruction:Final Certificate of Eligibility. An application for a Final Certificate of Eligibility shall be filed within ninety (90) days of completion of reconstruction. The application shall include:

   (1) Confirmation of completion of reconstruction.

   (2) Proof to the satisfaction of the Office that the actual cost of reconstruction is not less than forty (40%) percent of the prior assessed valuation which shall include but not be limited to: copies of paid bills, cancelled checks and work contracts.

   (3) Copy of building permit or alteration permit where required.

  1. Filing with the Department of Finance. Upon receipt of the application for a Preliminary or Final Certificate of Eligibility, and upon the Office’s determination that a private dwelling is entitled to tax exemption pursuant to the Act, the Office shall issue a Preliminary or Final Certificate of Eligibility. Applicants shall file with the Preliminary Certificate of Eligibility and the Final Certificate of Eligibility with the appropriate Borough officer of the Real Property Assessment Bureau of the Department of Finance on the next following February 1 through March 15 filing period, together with an application to said Department for tax exemption.
  2. All applicants for a Preliminary or Final Certificate of Eligibility must, in addition to the timely filing of an application, provide all of the required documentation for such application on or before December 31, 2011.
  3. Notwithstanding anything to the contrary contained in this section, the Department may waive the filing deadlines for an application for a Final Certificate of Eligibility set forth in 28 RCNY § 7-05(d) and (e) if (1) the Department, in its sole discretion, determines that the owner of such private dwelling reasonably relied upon a representation by the seller of such private dwelling that the seller would file or had filed the application for the Final Certificate of Eligibility, and (2) the owner of such private dwelling provides all of the required documentation for such application on or before December 31, 2011.

Chapter 8: Tax Lien Sales and In Rem Foreclosure Affecting Distressed Properties and Certain Other Properties

§ 8-01 Scope; Definitions.

Administrative Code §§ 11-301 et seq. and Administrative Code §§ 11-401 et seq. establish a procedure for sale of tax liens and a procedure for the Commissioner of Finance to deliver a deed conveying a tax delinquent property to a qualified Third Party after final judgment is rendered in an in rem foreclosure action. These rules clarify the circumstances under which certain property may be removed from tax lien sales and how Third Parties may be qualified and selected to acquire property from the Commissioner of Finance pursuant to a judgment rendered in an in rem foreclosure action.

Affiliate. “Affiliate” shall mean (a) any Person that has, directly or indirectly, a five percent (5%) or greater ownership interest in a Third Party, or any Person in which a Third Party, any partner or shareholder of a Third Party, or any partner or shareholder of any Person that is a partner or shareholder of a Third Party, has a five percent (5%) or greater ownership interest, and (b) any individual who is a member of the immediate family (whether by birth or marriage) of an individual who is an Affiliate, which includes for purposes of this definition a spouse, a domestic partner as defined in City Charter § 1150(13), a brother or sister of the whole or half blood (including an individual related by or through legal adoption) of such individual or his/her spouse or domestic partner, a lineal descendant or ancestor (including an individual related by or through legal adoption) of any of the foregoing, or a trust for the benefit of any of the foregoing. Ownership of or by a Third Party referred to in this definition includes beneficial ownership effected by ownership of intermediate entities.

Distressed Property. “Distressed Property” shall mean any parcel of class one or class two real property that is subject to a tax lien or liens with a lien or liens to value ratio, as determined by the Commissioner of Finance, equal to or greater than fifteen percent and that meets one of the following two criteria:

  1. such parcel has an average of five or more hazardous or immediately hazardous violations of record of the Housing Maintenance Code per dwelling unit; or
  2. such parcel is subject to a lien or liens for any expenses incurred by HPD for the repair or the elimination of any dangerous or unlawful conditions therein, pursuant to Administrative Code § 27-2144, in an amount equal to or greater than one thousand dollars.

HPD. “HPD” shall mean the Department of Housing Preservation and Development.

Neighborhood Preservation Consultant. “Neighborhood Preservation Consultant” shall mean an organization under contract with HPD to undertake activities in connection with the Third Party Transfer Process within a particular area.

Person. “Person” shall mean any natural person, business entity, trust or estate, or any federal, state, county or municipal government or any bureau, department or agency thereof; and any fiduciary acting in such capacity on behalf of any of the foregoing.

Regulatory Agreement. “Regulatory Agreement” shall mean an agreement between HPD and a Third Party selected for conveyance of property pursuant to the Third Party Transfer Process that restricts or conditions the use of such property.

Rules. “Rules” shall mean these Rules.

Tenants. “Tenants” shall mean legal residential Tenants of a property that is subject to the Third Party Transfer Process. Squatters and other unlawful occupants are not Tenants.

Third Party. “Third Party” shall mean an entity or individual that may be deemed qualified and selected by the Commissioner of HPD as eligible to acquire a property pursuant to the Third Party Transfer Process.

Third Party Transfer Process. “Third Party Transfer Process” shall mean the process under which certain properties are transferred to Third Parties pursuant to Administrative Code §§ 11-401 et seq. and these Rules.

§ 8-02 Procedures for Distressed Property.

(a)  The Commissioner of Finance shall, not less than sixty days preceding the date of the sale of a tax lien or tax liens, submit to the Commissioner of HPD a description by block and lot, or by such other identification as the Commissioner of Finance may deem appropriate, of any parcel of class one or class two real property on which there is a tax lien that may be sold by the City. The Commissioner of HPD shall determine, and advise the Commissioner of Finance, not less than ten days preceding the date of the sale of a tax lien or tax liens, whether any such parcel is a Distressed Property as defined in 28 RCNY § 8-01. Any tax lien on a parcel so determined to be a Distressed Property shall not be included in such sale. In connection with a subsequent sale of a tax lien or tax liens, the Commissioner of Finance may, not less than sixty days preceding the date of the sale, resubmit to the Commissioner of HPD a description by block and lot, or by such other identification as the Commissioner of Finance may deem appropriate, of any parcel of class one or class two real property that was previously determined to be a Distressed Property pursuant to these Rules and on which there is a tax lien that may be included in such sale. The Commissioner of HPD shall determine, and advise the Commissioner of Finance, not less than ten days preceding the date of the sale, whether such parcel remains a Distressed Property. If the Commissioner of HPD determines that the parcel is not a Distressed Property, then the tax lien on the parcel may be included in such sale.
  1. The Commissioner of HPD may periodically review whether a parcel of class one or class two real property remains a Distressed Property. If the Commissioner determines that the parcel is not a Distressed Property as defined in these Rules, then the tax lien on the parcel may be included in a tax lien sale.
  2. The Commissioner of HPD may recommend to the Commissioner of Finance that a tax lien on a parcel of property other than a Distressed Property should not be included in a tax lien sale. The Commissioner of Finance, may, in his or her sole discretion, exclude such tax lien on such parcel from a tax lien sale, in accordance with the recommendation of the Commissioner of HPD.

§ 8-03 Qualification and Selection of a Third Party.

(a)  In an in rem foreclosure action, the court shall make a final judgment authorizing the award of possession of any parcel of class one or class two real property described in the list of delinquent taxes not redeemed or withdrawn from the in rem foreclosure action as provided in Chapter 4 of Title 11 of the Administrative Code and as to which no answer is interposed as provided in such chapter, and authorizing the Commissioner of Finance to prepare, execute and cause to be recorded a deed conveying full and complete title to such property either to the City or to a Third Party deemed qualified and selected by the Commissioner of HPD.
  1. Such Third Party shall be deemed qualified and shall be selected pursuant to such criteria as are established in these Rules. The Commissioner of HPD shall not deem qualified any Third Party who has been finally adjudicated by a court of competent jurisdiction, within seven years of the date on which such Third Party would otherwise be deemed qualified, to have violated any section of articles one hundred fifty (relating to arson), one hundred seventy-five (relating to offenses involving false written statements), one hundred seventy-six (relating to insurance fraud), one hundred eighty (relating to bribery not involving public servants, and related offenses), one hundred eighty-five (relating to fraud on creditors) or two hundred (relating to bribery involving public servants and related offenses) of the Penal Law or any similar laws of another jurisdiction, or who has been suspended or debarred from contracting with the City or any agency of the City pursuant to § 335 of the Charter, during the period of such suspension or debarment.
  2. Other bases for disqualification of a Third Party may include, but shall not be limited to, any of the following:

   (1) Record of Housing Maintenance Code violations, including, but not limited to class B and class C violations, legal proceedings to enforce the Housing Maintenance Code including, but not limited to, litigation by HPD’s Housing Litigation Bureau, or Emergency Repair Program charges with respect to any real property owned or managed by a Third Party or such Third Party’s spouse or domestic partner, as defined in City Charter § 1150(13), or by any Affiliate of such Third Party or of such Third Party’s spouse or domestic partner;

   (2) Arrears on taxes, water and sewer charges, or other governmental charges or tax, mortgage, or lien foreclosure or enforcement proceedings with respect to any real property owned by a Third Party or such Third Party’s spouse or domestic partner, as defined in City Charter § 1150(13), or by any Affiliate of such Third Party or of such Third Party’s spouse or domestic partner;

   (3) Arrears or defaults on other governmental obligations;

   (4) Default or poor performance on a government contract;

   (5) Re-designation or termination of negotiations after selection for a government project or contract;

   (6) Non-responsibility determination by a government agency;

   (7) Conviction or pending charges of fraud, bribery, grand larceny, any other felony, arson, or tenant harassment;

   (8) Any other similar facts which demonstrate to HPD that a Third Party is not qualified for selection.

  1. HPD may select a Third Party for conveyance of a property pursuant to the Third Party Transfer Process by any method which it determines will best meet the purposes of such process, including, without limitation, selection:

   (1) by a request for qualifications process;

   (2) by a request for proposals process;

   (3) from a pre-qualified list;

   (4) by a request for offer process; or

   (5) by a direct selection of an entity judged by HPD to be qualified.

  1. In selecting a Third Party, HPD shall consider:

   (1) residential management experience;

   (2) financial capacity;

   (3) rehabilitation experience;

   (4) ability to work with government and community organizations;

   (5) neighborhood ties;

   (6) ability to finance or obtain financing for the required rehabilitation;

   (7) whether the Third party is a not for profit organization or neighborhood-based-for-profit individual or organization;

   (8) intent and ability to improve, manage and maintain the property to be transferred; (9) whether an application has been submitted under sponsorship of a Third Party on behalf of the Tenants for eventual ownership by the Tenants of a property that is subject to an in rem judgment of foreclosure.

      (i) Such an application must be submitted to HPD in such form as HPD shall approve, on or before the date that is specified by HPD in the written notice to Tenants made pursuant to subdivision (c) of 28 RCNY § 8-04;

      (ii) Such application must be sponsored by a Third Party and accompanied by a letter from such Third Party indicating that the Third Party is applying for transfer of the foreclosed property, is prepared to acquire, manage and rehabilitate the foreclosed property, and is sponsoring the Tenants in their effort to eventually own such property; and

      (iii) Such application shall only be considered where: (A) the foreclosed property contains at least 10 residential units, (B) such property is at least 50 percent occupied; (C) the application is signed by 80% of the Tenant households of such property; and (D) such property was not owned by a cooperative corporation formed by a Housing Development Fund Corporation when the foreclosure proceeding commenced;

   (10) any other factors that HPD deems relevant to such selection.

§ 8-04 Third Party Transfer Process.

(a)  After the four-month period following the entry of a final in rem judgment with respect to a parcel of real property, but prior to expiration of the time set forth in Administrative Code §§ 11-401 et seq. for the conveyance of title to such real property to a Third Party following such judgment, HPD may:

   (1) request the Commissioner of Finance to execute a deed to a Third Party selected by HPD; or

   (2) take such other action as may be permitted by Administrative Code §§ 11-401 et seq. as HPD deems appropriate.

  1. If HPD selects a Third Party to acquire a property, HPD may arrange a closing date and may deliver the deed to the Third Party provided that the proposed conveyance has not been disapproved pursuant to Administrative Code § 11-412.2.
  2. HPD will provide a written notice to Tenants of properties that are the subject of an in rem judgment of foreclosure and eligible for the Third Party Transfer Program. Such notice will advise tenants of the foreclosure action, briefly describe the Third Party Transfer Program, and advise Tenants of an opportunity to apply for eventual ownership of such property under the sponsorship of a Third Party. Such notice shall be provided prior to entry of such judgment for such property and will be posted in a common area of the property, provided, however, that in the case of a property that is subject to a supplemental judgment of foreclosure due to a default in an installment agreement or a property that is subject to a summary judgment of foreclosure due to dismissal of an owner answer, such notice shall be provided prior to entry of such judgment or as soon as practicable thereafter. In addition, HPD will make an effort to place such notice beneath the doors of individual units in such properties.

§ 8-05 Operation After Third Party Transfer Process.

(a)  Regulatory Agreement. HPD may require that the Third Party selected for conveyance of property pursuant to the Third Party Transfer Process execute a Regulatory Agreement with HPD as a condition for such conveyance which shall be recorded and shall run with the land for the period set forth therein.
  1. Use Restrictions. Any conveyance of a property to a Third Party shall be for an existing use. HPD may impose additional restrictions upon the use of such property and may require a Third Party to agree to comply with such restrictions. Such use restrictions may be enforced by any means that HPD determines to be necessary or appropriate, including, but not limited to, provisions in any deed, land development agreement, regulatory agreement, note, mortgage, enforcement note, enforcement mortgage, security agreement, lien, restrictive declaration, or other legal document. HPD may require a Third Party to provide security for its compliance with use restrictions in such types and amounts as are determined by HPD to be necessary or desirable.

§ 8-06 Interim Evaluation Period.

(a) A property that has been transferred to a Third Party for which a Third Party has sponsored a Tenant application pursuant to 28 RCNY § 8-03(e)(9) shall be subject to an interim evaluation period during which progress toward eventual ownership by Tenants will be monitored by HPD.
  1. No later than ninety days after transfer to a Third Party of a property for which a Third Party has sponsored a Tenant application pursuant to 28 RCNY § 8-03(e)(9), such Third Party, or his or her designee, shall inform the Tenants that the property has entered into an interim evaluation period, and shall provide information to the Tenants about the process toward eventual ownership by the Tenants. Such Third Party shall make training available to such Tenants after such transfer. The training may include courses in building management, maintenance, and managing building finances. HPD may also provide notice to the Tenants regarding commencement of the interim evaluation period.
  2. The interim evaluation period shall include certain milestones for achievement which shall form the basis for HPD to either permit the property to move forward toward eventual ownership by Tenants, or to remove the property from the process toward such ownership. HPD shall evaluate progress toward eventual ownership by Tenants using the following milestones:

   (i) whether Tenants have cooperated with the Third Party in renewing leases or establishing new leases where none exists;

   (ii) whether at least 80% of the Tenants are actively paying rent;

   (iii) whether Tenants have cooperated with relocation plans, where applicable;

   (iv) whether Tenants have attended training programs offered by the Third Party; and

   (v) any additional factors that HPD considers appropriate in evaluating the Tenants’ progress toward ownership, provided that HPD notifies the Tenants of any such additional factors.

  1. Such interim evaluation period shall commence upon transfer of the property to the Third Party and shall continue upon the transfer of the property to any subsequent Third Party. Such interim evaluation period shall end when any required rehabilitation of the property has been completed and permanent loan conversion has taken place, or at the conclusion of such shorter period as HPD shall determine with notice to the Tenants.
  2. HPD shall evaluate compliance with the milestones listed in subdivision (c) of this section at regular intervals, and shall inform Tenants and the Third Party of its findings. HPD may at any time remove a property from the process toward eventual ownership by Tenants based upon its evaluation. If HPD has not removed the property from such process, at the completion of the interim evaluation period it shall make a determination for such property pursuant to 28 RCNY § 8-07.

§ 8-07 Transfer from Third Party to Tenant Ownership.

(a) Unless a determination has otherwise already been made, HPD shall make a determination whether or not to approve the transfer from a Third Party to Tenant ownership upon completion of the interim evaluation period. HPD will consider the following criteria when making such determination:

   (1) That an application was submitted to HPD pursuant to and in accordance with 28 RCNY § 8-03(e)(9);

   (2) The time period that has elapsed since transfer of the property to the Third Party;

   (3) Whether the property has been rehabilitated and permanent loan conversion has taken place;

   (4) The number of Tenants who have signed a petition affirming that there is a functioning Tenant organization, that they wish to own the property, and that they understand the extent of the responsibilities of ownership of the property;

   (5) The amount of time that a Tenant organization has been in existence at the property;

   (6) The number of members of the Tenant organization who have participated in any training offered by HPD, including, but not limited to, courses in building management, maintenance, and managing building finances;

   (7) The number of Tenants who have attended a presentation by HPD regarding ownership of the property;

   (8) The level of Tenant interest in ownership as indicated through subscriptions to buy units;

   (9) The record of payment of all existing loans, status of rent payments, and adequacy of management of the property;

   (10) HPD’s evaluation of the progress made toward Tenant ownership during the interim evaluation period as set forth in 28 RCNY § 8-06; and

   (11) Any other criteria that HPD deems relevant to the request, including, but not limited to, any information provided to it by the Third Party.

§ 8-08 Miscellaneous Provisions.

(a)  HPD Discretion. All determinations to be made by HPD in accordance with these Rules shall be in the sole discretion of HPD.
  1. Statutory Authority Not Limited. Nothing in these Rules shall be deemed to limit HPD’s authority pursuant to applicable laws.
  2. Technical Violations. Provided that there has been a reasonable good faith effort to comply with these Rules, technical violations of these Rules shall not invalidate any action taken pursuant to these Rules, nor shall such technical violation give rise to any rights, claims, or causes of action.

Chapter 9: Removal of Violations Issued Pursuant To the Housing Maintenance Code

§ 9-01 General Provisions.

The purpose of the Dismissal Request Program is to provide owners of multiple dwellings, private dwellings, and co-operative and condominium units, in New York City with a mechanism for obtaining re-inspections of their properties for the purpose of removing corrected housing code violations from the records of the Department.

§ 9-02 Eligible Applicants.

(a)  The Department will accept Dismissal Requests from owners, managing agents, or the authorized representatives of such owners or managing agents for re-inspections of properties in each of the five boroughs of the City of New York.

   (1) Owners and managing agents of multiple dwellings must be registered with the Department in accordance with the provisions of §§ 27-2097 through 27-2099 of the Housing Maintenance Code in order to submit a Dismissal Request.

   (2) Owners of co-operative and condominium units and private dwellings must submit proof of ownership satisfactory to the Department in order to submit a Dismissal Request.

   (3) Authorized representatives of owners or managing agents who are registered in accordance with the provisions of §§ 27-2097 through 27-2099 of the Housing Maintenance Code must submit proof of such authorization satisfactory to the Department in order to submit a Dismissal Request.

§ 9-03 Fee.

Each Dismissal Request must be accompanied by a certified check or money order, made payable to the New York City Commissioner of Finance, for a scheduled amount based on the dwelling classification and number of open violations at the time the Dismissal Request form is submitted to the Borough Code Enforcement Office, as follows:

Dwelling Classification Fee
Private Dwelling $250
Multiple Dwelling with 1 - 300 open violations $300
Multiple Dwelling with 301 - 500 open violations $400
Multiple Dwelling with 501 or more open violations $500

~

§ 9-04 Re-inspection.

(a)  The Department shall use its best efforts to re-inspect the premises within 45 business days of the date of receipt of the Dismissal Request and shall place in the mail to the applicant a copy of the inspection report indicating the results of such re-inspection within 45 business days of the date of receipt of the Dismissal Request in the Code Enforcement Borough Office, provided, however, that during the period of October 1st through May 31st, the Department shall use its best efforts to re-inspect the premises and place in the mail to the applicant a copy of the inspection report indicating results of re-inspection within 90 business days of the date of receipt of the Dismissal Request in the Code Enforcement Borough Office.
  1. In the event that the Department does not inspect and mail a copy of such inspection report within the aforementioned time periods, the fee shall, upon written application to the Department by the applicant, be returned to the owner. Notwithstanding the refund of the fee, the Dismissal Request shall continue to be processed in the regular course of business. A re-inspection of the property will be made and a copy of the inspection report indicating the results of the re-inspection will then be mailed to the owner.
  2. The applicant may request an inspection date that exceeds the aforementioned time periods, provided, however, that such a request and waiver of any refund for the fee be in writing signed by the applicant and received within 15 business days of the date of receipt of the Dismissal Request in the Code Enforcement Borough Office.

§ 9-05 Submission of Dismissal Requests.

(a)  A Dismissal Request must be submitted on a form that can be obtained at any Code Enforcement Borough Office, either in person or by mail request, or on the Department's website at hpd/nyc.gov.
  1. The Dismissal Request form, together with the fee, must be submitted either in person or by mail to the Borough Code Enforcement Office in the borough in which the property is located, provided, however, that for property located in Staten Island, such form may be submitted to the Manhattan Code Enforcement Office.

§ 9-06 Exceptions to the Dismissal Request Procedure.

(a)  The application for a Dismissal Request by an owner, managing agent, or the authorized representative of such owner or managing agent who is otherwise eligible to apply for a Dismissal Request pursuant to the foregoing provisions of these rules may be rejected by the Department where the building that is the subject of the application is a building for which:

   (1) there is pending Department-related litigation; or

   (2) there is an uncollected judgment arising from Department-related litigation; or

   (3) there is an unpaid emergency repair charge for repairs performed by or on behalf of the Department.

Chapter 10: Administration of Applications For Certifications of No Harassment

§ 10-01 Definitions.

Whenever used in this chapter:

Administrative Code. “Administrative Code” shall mean the New York City Administrative Code.

Access authorizer. “Access authorizer” shall mean the person who authorizes HPD to enter the property, which person shall be an individual natural person who either (i) has legal possession of all common areas of the property, or (ii) is authorized to sign on behalf of and bind the persons or entities who have legal possession of all common areas of the property.

Affidavit of no future harassment. “Affidavit of no future harassment” shall mean an affidavit affirming that no future harassment will occur at the property during the period for which a certification or waiver remains in effect.

Applicant. “Applicant” shall mean the person who executes an application, which person shall be an individual natural person who is either (i) an owner, or (ii) a principal or officer of an owner who is authorized to sign on behalf of and bind such owner.

Application. “Application” shall mean an application for a certification, waiver, or exemption submitted to HPD, unless the context clearly indicates reference to an application for a permit submitted to DOB.

Building loan contract. “Building loan contract” shall have the meaning set forth in § 22 of the Lien Law.

Certification. “Certification” shall mean a certification of no harassment.

Commencement of substantial work. “Commencement of substantial work” shall mean (i) if the alterations and/or demolition work for which a certification or waiver was granted is financed by a recorded building loan contract, the date upon which a lender has advanced funds in an amount that is not less than 50% of the total amount of such building loan contract and actual construction work has commenced at the property using such funds, or (ii) if the alterations and/or demolition work for which a certification or waiver was granted is not financed by a building loan contract, the actual performance and payment of not less than 50% of the total cost of such alteration and/or demolition work.

Commissioner. “Commissioner” shall mean the Commissioner of HPD or his or her designee.

DHCR. “DHCR” shall mean the Division of Housing and Community Renewal of the State of New York.

DOB. “DOB” shall mean the Department of Buildings of the City of New York.

Dwelling unit. “Dwelling unit” shall mean a dwelling unit or rooming unit, as such terms are defined in Administrative Code § 27-2004.

Exemption. “Exemption” shall mean a determination by HPD that a certification pursuant to the terms of the Administrative Code or the Zoning Resolution is not required.

Fee. “Fee” shall mean a sum in the amount of one hundred and sixty dollars ($160.00) per existing dwelling unit, which amount is a fee to offset all or part of the administrative cost to HPD of processing the application.

HPD. “HPD” shall mean the Department of Housing Preservation and Development of the City of New York.

Inquiry period. “Inquiry period” shall mean (i) with respect to an application submitted pursuant to any provision of the Zoning Resolution, the period of time therein defined as the inquiry period, and (ii) with respect to an application submitted pursuant to Administrative Code §§ 28-107.1 et seq. and Administrative Code § 27-2093, a period commencing three years prior to submission of the application and ending on the date that HPD issues a final determination on the application.

Luxury hotel. “Luxury hotel” shall mean a single room occupancy multiple dwelling in which the rent on May 5, 1983, exclusive of governmentally assisted rental payments, charged for 75% or more of the total number of occupied individual dwelling units was more than 55 dollars per day for each unit rented on a daily basis, or more than 250 dollars per week for each unit rented on a weekly basis or more than 850 dollars per month for each unit rented on a monthly basis. For computation purposes, the rental value of units which were vacant on May 5, 1983 shall be deemed to be the rent charged for comparable occupied units in the property on such date.

Owner. “Owner” shall mean (i) the holder of title to the property, (ii) a contract vendee of title to the property, (iii) the lessee pursuant to a net lease of the entire property with an unexpired term of not less than ten years from the date of submission of the application, (iv) a receiver who is authorized by court order to apply to HPD for a certification and to DOB for building permits, or (v) an administrator appointed pursuant to article 7A of the Real Property Actions and Proceedings Law who is authorized by court order to aply to HPD for a certification and to DOB for building permits.

Property. “Property” shall mean the real property that is the subject of an application.

Residential kitchen. “Residential kitchen” shall mean (i) a kitchen that is located within a dwelling unit, or (ii) a kitchen serving residential occupants that is not located within a dwelling unit.

Residential bathroom. “Residential bathroom” shall mean (i) a bathroom that is located within a dwelling unit, or (ii) a bathroom serving residential occupants that is not located within a dwelling unit.

Waiver. “Waiver” shall mean a waiver of the requirement for a certification pursuant to the terms of the Administrative Code.

Zoning Resolution. “Zoning Resolution” shall mean the New York City Zoning Resolution, as amended.

§ 10-02 Scope of Rule.

(a)  The requirements of this chapter apply to certifications, exemptions, and waivers pursuant to Administrative Code §§ 28-107.1 et seq., Administrative Code § 27-2093, Zoning Resolution § 96-110, Zoning Resolution § 93-90, Zoning Resolution § 98-70, Zoning Resolution § 23-013, and any subsequently enacted provision of the Administrative Code or Zoning Resolution which authorizes HPD to make determinations concerning certifications, exemptions, or waivers.
    1. With regard to single room occupancy multiple dwellings, a certification shall be required where mandated pursuant to Administrative Code §§ 28-107.1 et seq. and Administrative Code § 27-2093. In accordance with the authority of the Commissioner pursuant to Administrative Code § 28-107.3(4) to prescribe by regulation other types of alteration work, a certification shall be required where the application and plans filed with DOB seek to:

      (i) increase or decrease the number of dwelling units;

      (ii) alter the layout, configuration or location of any portion of a dwelling unit;

      (iii) increase or decrease the number of residential kitchens or residential bathrooms; (iv)  alter the layout, configuration or location of any portion of a residential kitchen or residential bathroom;

      (v) demolish or change the use or occupancy of any dwelling unit and/or any portion of the building serving the dwelling units.

   (2) Where the application and the accompanying plans submitted to DOB do not provide for any such changes, a certification shall not be required pursuant to Administrative Code § 28-107.3(4), but may be required pursuant to other provisions of Administrative Code §§ 28-107.1 et seq. or pursuant to the Zoning Resolution.

  1. With regard to properties located in the Special Clinton District defined in Article XI, Chapter 6 of the Zoning Resolution (§§ 96-00 et seq.), a certification shall be required where mandated pursuant to the terms of such Article and Zoning Resolution § 96-110.
  2. With regard to multiple dwellings located in the anti-harassment area defined in Zoning Resolution § 93-90 (Hudson Yards/Garment Center), a certification shall be required where mandated pursuant to the terms of such section.
  3. With regard to multiple dwellings located in the anti-harassment area defined in Zoning Resolution § 23-013 (Greenpoint-Williamsburg), a certification shall be required where mandated pursuant to the terms of such section and New York City Zoning Resolution § 93-90.
  4. With regard to multiple dwellings located in the anti-harassment area defined in Zoning Resolution § 98-70 (West Chelsea), a certification shall be required where mandated pursuant to the terms of such section and New York City Zoning Resolution § 93-90.

§ 10-03 Application.

(a)  An application shall contain such information, in such form, as HPD shall require.
  1. An application shall be executed by an applicant. If the applicant is not an access authorizer, the application shall also be executed by an access authorizer.
  2. An application may be submitted to HPD (i) by hand delivery on business days, during such hours and in such location as HPD shall determine, (ii) by mail, or (iii) by private courier.
  3. The submission of any application shall be accompanied by certified check, bank check, or money order in the amount of the fee made payable to New York City Department of Finance.
  4. Following the submission of an application, HPD may request any additional information that HPD determines is relevant to the certification. If HPD sends a written request for additional information to the applicant by regular or certified mail at the address of the applicant set forth in the application, and HPD does not receive such additional information within thirty days following the mailing of such request, HPD may (i) reject the application, or (ii) review the application without such information and draw a negative inference with respect to the missing information.
  5. An application shall be deemed to be complete when the completed application, the fee, and the necessary supporting documentation have been received and acknowledged as sufficient by HPD.
  6. If HPD determines at any time that an application contains a material misstatement of fact, HPD may reject such application and bar the submission of a new application for a period not to exceed three years.
  7. HPD may refuse to accept, or to act upon, an application for a certification pursuant to the Zoning Resolution where HPD finds at any time that (i) taxes, water and sewer charges, emergency repair program charges, or other municipal charges remain unpaid with respect to the multiple dwelling, (ii) the multiple dwelling has been altered either without proper permits from DOB or in a way that conflicts with the certificate of occupancy for the multiple dwelling (or, where there is no certificate of occupancy, any record of HPD indicating the lawful configuration of the multiple dwelling) and such unlawful alteration remains uncorrected; or (iii) HPD has previously denied an application pursuant to the Zoning Resolution.
  8. If any information stated in an application changes at any time before HPD makes a final determination, the applicant shall promptly update the application with such new information and submit it to HPD. If such changed information includes any facts that would render the original applicant ineligible to submit the application, HPD may require that the amended application be executed by an individual who is at that time eligible to submit the application.

§ 10-04 Investigation.

(a)  Except as otherwise provided in these rules, HPD shall conduct an investigation of each application for a certification.
  1. HPD shall publish a notice in The City Record and such other publications as HPD shall determine seeking public comment regarding whether there has been harassment of the lawful occupants of the property during the inquiry period.
  2. HPD shall send notices to the local Community Board and such other organizations as HPD shall determine seeking comments on any application for a certification.

§ 10-05 Initial Determination.

(a)  Upon the completion of the investigation of an application for a certification, HPD shall either (i) reject such application as provided in 28 RCNY § 10-03, (ii) determine that there is not reasonable cause to believe that harassment occurred during the inquiry period at the property, (iii) determine that there is reasonable cause to believe that harassment occurred during the inquiry period at the property, or (iv) determine that DHCR or a court having jurisdiction has found that there has been harassment, unlawful eviction, or arson at the property during the inquiry period.
  1. If HPD rejects an application as provided in 28 RCNY § 10-03, HPD shall send written notice of such determination to the applicant.
  2. If HPD determines that there is not reasonable cause to believe that harassment occurred during the inquiry period at the property, HPD shall (i) send written notice of such determination to the applicant, and (ii) grant the certification in accordance with the terms of 28 RCNY § 10-08.
  3. If HPD determines that there is reasonable cause to believe that harassment occurred during the inquiry period at the property, HPD shall send written notice of such determination to the applicant and shall comply with the procedures set forth in 28 RCNY §§ 10-06 and 10-07.
  4. If HPD determines that DHCR or a court having jurisdiction has found that there has been harassment, unlawful eviction, or arson at the property during the inquiry period, HPD may deny the certification without a hearing and issue a final determination in accordance with 28 RCNY § 10-07. In such event, HPD may combine the initial determination pursuant to this section and the final determination pursuant to 28 RCNY § 10-07 into a single document.

§ 10-06 Hearing.

(a)  When HPD has determined in accordance with 28 RCNY § 10-05(d) that there is reasonable cause to believe that harassment occurred at the property during the inquiry period, HPD shall schedule a hearing before the Office of Administrative Trials and Hearings at which the applicant will have an opportunity to challenge such determination.
  1. HPD shall serve a notice of hearing by regular mail upon the applicant and any other individual or entity as determined by HPD. Such notice shall state the date, time, and location of hearing and shall inform the applicant that he or she may be represented by counsel and may present witnesses and other evidence.
  2. Upon conclusion of such hearing, the hearing officer shall make a report and recommendation to the Commissioner whether an application should be granted or denied.
  3. Notwithstanding anything to the contrary in this section or these rules, an applicant may waive its right to a hearing before the Office of Administrative Trials and Hearings.

§ 10-07 Final Determination.

(a) When HPD has determined in accordance with 28 RCNY § 10-05(d) that there is reasonable cause to believe that harassment occurred at the property during the inquiry period and a hearing has been held before the Office of Administrative Trials and Hearings in accordance with 28 RCNY § 10-06, the Commissioner shall review the report and recommendation of the hearing officer and make a final determination to grant or deny the application.
  1. When HPD has determined in accordance with 28 RCNY § 10-05(d) that there is reasonable cause to believe that harassment occurred at the property during the inquiry period and the applicant has waived its right to a hearing before the Office of Administrative Trials and Hearings in accordance with 28 RCNY § 10-06(d), the Commissioner shall make a final determination to grant or deny the application.
  2. When HPD has determined in accordance with 28 RCNY § 10-05(e) that DHCR or a court having jurisdiction has found that there has been harassment, unlawful eviction, or arson at the property during the inquiry period, the Commissioner shall make a final determination to grant or deny the application. In such event, HPD may combine the initial determination pursuant to 28 RCNY § 10-05 and the final determination pursuant to this section into a single document.
  3. HPD shall provide the applicant with written notice of the final determination.

§ 10-08 Certification.

(a)  A certification shall be effective for three years from the date upon which such certification is signed by the Commissioner, which period shall be stated in such certification. Such certification shall apply to any plan approval, any alteration or demolition permit application, or any renewal of a permit issued for such plan approval, alteration or demolition permit application that is submitted to DOB during such period.
  1. HPD shall not issue a certification unless HPD has received an affidavit of no future harassment executed by one or more individual natural persons who are, at the time of execution of such affidavit, either (i) all of the owners of the property, or (ii) principals or officers of all of the owners of the property who are authorized to sign on behalf of and bind such owners.

§ 10-09 Waiver or Exemption.

(a)  Notwithstanding any provision of these rules to the contrary, if an application is for a waiver or exemption, (i) HPD may, but shall not be required to, waive the fee, and (ii) if HPD does not waive the fee, but subsequently grants such waiver or exemption, HPD may, but shall not be required to, return such check or money order to the applicant.
  1. Notwithstanding any provision of these rules to the contrary, HPD may grant a waiver or exemption at any point following the submission of an application therefor.
  2. A waiver or exemption shall be effective for such period and subject to such conditions as HPD shall determine, which period and conditions, if any, shall be stated in such waiver or exemption. Such waiver or exemption shall apply to any plan approval, any alteration or demolition permit application, or any renewal of a permit issued for such plan approval, alteration or demolition permit application that is submitted to DOB during such period which complies with such conditions, if any.
  3. HPD shall not issue a waiver unless, in accordance with Administrative Code § 27-2093(e), the current title holder of record of the property (i) was the title holder of record of the property prior to May 5, 1983, (ii) entered into a contract of sale for the purchase of the property which was recorded prior to May 5, 1983, (iii) held a mortgage on the property recorded prior to May 5, 1983 and thereafter acquired the property as a result of the foreclosure of such mortgage, or (iv) is a lending organization described in Administrative Code § 27-2093(e)(2)(ii), granted a mortgage commitment on the property recorded prior to May 5, 1983, thereafter granted a mortgage on the property pursuant to such commitment, and thereafter acquired the property as a result of the foreclosure of such mortgage.
  4. HPD shall not issue a waiver unless HPD has received an affidavit of no future harassment executed by one or more individual natural persons who are either (i) all of the owners of the property, or (ii) principals or officers of all of the owners of the property who are authorized to sign on behalf of and bind such owners.

§ 10-10 Suspension and Rescission.

(a)  HPD may rescind a certification, waiver, or exemption at any time if HPD determines that the application for such certification, waiver, or exemption contained a material misstatement of fact.
  1. If HPD determines that there is reasonable cause to believe that harassment has occurred after the date that HPD issued a certification or a waiver, HPD may suspend such certification or waiver. If the certification or waiver was granted solely pursuant to the Administrative Code, HPD shall not suspend such certification or waiver pursuant to the preceding sentence unless HPD determines that there is reasonable cause to believe that such harassment occurred before commencement of substantial work.

   (1) If HPD determines that there is reasonable cause to believe that harassment has occurred after the date that HPD issued a certification or a waiver, HPD shall deliver a notice of suspension to the applicant and to the owner and will refer the matter for hearing at the Office of Administrative Trials and Hearings.

   (2) HPD shall serve a notice of hearing by regular mail upon the applicant and any other individual or entity as determined by HPD. Such notice shall state the date, time, and location of hearing and shall inform the applicant that he or she may be represented by counsel and may present witnesses and other evidence.

   (3) Upon conclusion of such hearing, the hearing officer shall make a recommendation to the Commissioner whether or not the certification should be rescinded.

   (4) The Commissioner shall make a final determination whether to rescind such certification, and shall provide the applicant with written notice of such determination.

§ 10-11 Miscellaneous.

(a)  Any determination by HPD pursuant to this Chapter shall be in the sole discretion of HPD.
  1. An application may not be withdrawn after HPD issues either (i) an initial determination that there is reasonable cause to believe that harassment occurred during the inquiry period at the property, or (ii) a final determination that harassment occurred during the inquiry period at the property.

Chapter 11: [Lead-based Paint Abatement; Dwellings; Children]

§ 11-01 Definitions.

Whenever used in this chapter:

  1. Abatement. “Abatement” shall mean any set of measures designed to permanently eliminate lead-based paint or lead-based paint hazards. Abatement includes: (i) the removal of lead-based paint and dust lead hazards, the permanent enclosure or encapsulation of lead-based paint, the replacement of components or fixtures painted with lead-based paint, and the removal or permanent covering of soil-lead hazards; and (ii) all preparation, cleanup, disposal and post abatement clearance testing associated with such measures. Abatement does not include renovation, remodeling, landscaping or other activities, when such activities are not designed to permanently eliminate lead-based paint hazards, but, instead, are designed to repair, restore, or remodel a given structure or dwelling, even though these activities may incidentally result in a reduction or elimination of lead-based paint hazards. Furthermore, abatement does not include interim controls, operations and maintenance activities, or other measures and activities designed to temporarily, but not permanently, reduce lead-based paint hazards.
  2. Applicable age. “Applicable age” shall mean under seven years of age for at least one calendar year from August 2, 2004. Upon the expiration of such one year period, in accordance with the procedures by which the health code is amended, the board of health may determine whether or not the provisions of article 14 of the housing maintenance code should apply to children of age six, and based on this determination, may redefine “applicable age” for the purposes of some or all of the provisions of such article 14 to mean under six years of age. In the event that the board of health makes such determination, the term “applicable age” shall mean under six years of age.
  3. C.F.R.. “C.F.R.” shall mean the Code of Federal Regulations.
  4. Chewable surface. “Chewable surface” shall mean a protruding interior window sill in a dwelling unit in a multiple dwelling where a child of applicable age resides and which is readily accessible to such child. “Chewable surface” shall also mean any other type of interior edge or protrusion in a dwelling unit in a multiple dwelling, such as a rail or stair, where there is evidence that such other edge or protrusion has been chewed or where an occupant has notified the owner that a child of applicable age who resides in that multiple dwelling has mouthed or chewed such edge or protrusion.
  5. Commissioner. “Commissioner” shall mean the Commissioner of the New York city department of housing preservation and development or of its successor agency.
  6. Common area. “Common area” shall mean a portion of a multiple dwelling that is not within a dwelling unit and is regularly used by occupants for access to and egress from any dwelling unit within such multiple dwelling.
  7. Contractor. “Contractor” shall mean any person engaged to perform work that disturbs lead-based paint pursuant to this chapter.
  8. Department. “Department” shall mean the New York city department of housing preservation and development or its successor agency.
  9. Deteriorated subsurface. “Deteriorated subsurface” shall mean an unstable or unsound painted subsurface, an indication of which can be observed through a visual inspection, including, but not limited to, rotted or decayed wood, or wood or plaster that has been subject to moisture or disturbance.
  10. Disturb. “Disturb” shall mean any action taken, which breaks down, alters or changes lead-based paint. Lead-based paint disturbances shall include, but not be limited to wet sanding or scraping or routine painting and maintenance.
  11. Door. “Door” shall mean every door in a dwelling unit including, but not limited to, the entrance door to the unit, closet doors, and cabinet doors where such cabinets are affixed to the walls of the dwelling unit.
  12. Encapsulation. “Encapsulation” shall mean the application of a covering or coating that acts as a barrier between the lead-based paint and the environment and that relies for its durability on adhesion between the encapsulant and the painted surface, and on the integrity of the existing bonds between paint layers and between the paint and the substrate. Encapsulation may be used as a method of abatement if it is designed and performed so as to be permanent. Only encapsulants approved by the New York state department of health or by another federal or state agency or jurisdiction which the department has designated as acceptable may be used for performing encapsulation.
  13. Enclosure. “Enclosure” shall mean the use of rigid, durable construction materials that are mechanically fastened to the substrate in order to act as a barrier between lead-based paint and the environment.
  14. Firm. “Firm” shall mean a company, partnership, corporation, sole pro- prietorship, association, or other business entity that performs lead-based paint activities to which the United States environmental protection agency has issued a certificate of approval pursuant to 40 C.F.R. § 745.226(f).
  15. Friction surface. “Friction surface” shall mean any painted surface that touches or is in contact with another surface, such that the two surfaces are capable of relative motion and abrade, scrape, or bind when in relative motion. Friction surfaces shall include, but not be limited to, window frames and jambs, doors, and hinges.
  16. HEPA-vacuum. “HEPA-vacuum” shall mean a vacuum cleaner device equipped with a high efficiency particulate air filter capable of filtering out monodispersive particles of 0.3 microns or greater in diameter from a body of air at 99.97 percent efficiency or greater.
  17. Housing maintenance code. “Housing maintenance code” shall mean chapter two of title 27 of the administrative code of the city of New York.
  18. Impact surface. “Impact surface” shall mean any interior painted surface that shows evidence, such as marking, denting, or chipping, that it is subject to damage by repeated sudden force, such as certain parts of door frames, moldings, or baseboards.
  19. Lead-based paint hazard. “Lead-based paint hazard” shall mean any condition in a dwelling or dwelling unit that causes exposure to lead from lead-contaminated dust, from lead-based paint that is peeling, or from lead-based paint that is present on chewable surfaces, deteriorated subsurfaces, friction surfaces, or impact surfaces that would result in adverse human health effects.
  20. Lead-based paint. “Lead-based paint” shall mean paint or other similar surface coating material containing 1.0 milligrams of lead per square centimeter or greater, as determined by laboratory analysis, or by an x-ray fluorescence analyzer. If an x-ray fluorescence analyzer is used, readings shall be corrected for substrate bias when necessary as specified by the performance characteristic sheets released by the United States environmental protection agency and the United States department of housing and urban development for the specific x-ray fluorescence analyzer used. X-ray fluorescence readings shall be classified as positive, negative or inconclusive in accordance with the United States department of housing and urban development “Guidelines for the Evaluation and Control of Lead-Based Paint Hazards in Housing” and the performance characteristic sheets released by the United States environmental protection agency and the United States department of housing and urban development for the specific x-ray fluorescence analyzer used. X-ray fluorescence readings that fall within the inconclusive zone, as determined by the performance characteristic sheets, shall be confirmed by laboratory analysis of paint chips, results shall be reported in milligrams of lead per square centimeter and the measure of such laboratory analysis shall be definitive. If laboratory analysis is used to determine lead content, results shall be reported in milligrams of lead per square centimeter. Where the surface area of a paint chip sample cannot be accurately measured or if an accurately measured paint chip sample cannot be removed, a laboratory analysis may be reported in percent by weight. In such case, lead-based paint shall mean any paint or other similar surface-coating material.
  21. Lead-contaminated dust. “Lead-contaminated dust” shall mean dust containing lead at a mass per area concentration of 40 or more micrograms per square foot on a floor, 250 or more micrograms per square foot on window sills, and 400 or more micrograms per square foot on window wells, or such more stringent standards as may be adopted by the department of health and mental hygiene.
  22. Lead contaminated dust clearance test. “Lead contaminated dust clearance test” shall mean a test for lead-contaminated dust on floors, window wells, and window sills in a dwelling, that is made in accordance with § 27-2056.11 of the housing maintenance code.
  23. Peeling. “Peeling” shall mean that the paint or other surface-coating material is curling, cracking, scaling, flaking, blistering, chipping, chalking or loose in any manner, such that a space or pocket of air is behind a portion thereof or such that the paint is not completely adhered to the underlying surface.
  24. Permanent. “Permanent” shall mean an expected design life of at least 20 years.
  25. Remediation or Remediate. “Remediation” or “Remediate” shall mean the reduction or elimination of a lead-based paint hazard through the wet scraping and repainting, removal, encapsulation, enclosure, or replacement of lead-based paint, or other method approved by the commissioner of the department of health and mental hygiene.
  26. Removal. “Removal” shall mean a method of abatement that completely eliminates lead-based paint from surfaces.

(aa) Replacement. “Replacement” shall mean a strategy or method of abatement that entails the removal of building components that have surfaces coated with lead-based paint and the installation of new components free of lead-based paint.

(bb) Rule or rules. “Rule” or “rules” shall mean a rule or rules promulgated pursuant to § 1043 of the New York city charter.

  1. Stabilization. “Stabilization” means repairing any physical defect in the substrate of a painted surface that is causing paint deterioration, and removing loose paint and other material from the surface to be treated.

(dd) Substrate. “Substrate” shall mean the material directly beneath the painted surface out of which the components are constructed, including wood, drywall, plaster, concrete, brick or metal.

(ee) Turnover. “Turnover” shall mean the occupancy of a dwelling unit subsequent to the termination of a tenancy and the vacatur by a prior tenant of such dwelling unit. Such term shall not mean temporary relocation of an occupant for purposes of performing work pursuant to article 14 of the housing maintenance code.

(ff) Underlying defect. “Underlying defect” shall mean a physical condition in a dwelling or dwelling unit that is causing or has caused paint to peel or a painted surface to deteriorate or fail, such as a structural or plumbing failure that allows water to intrude into a dwelling or dwelling unit.

(gg) Wet sanding or wet scraping. “Wet sanding” or “wet scraping” shall mean a process of removing loose paint in which the painted surface to be sanded or scraped is kept wet to minimize the dispersal of paint chips and airborne dust.

(hh) Window. “Window” shall mean the non-glass parts of a window, including but not limited to any window sash, window well, window jamb, window sill, or window molding.

  1. Work. “Work” shall mean any activity performed in accordance with article 14 of the housing maintenance code that disturbs paint.

(jj) Work area. “Work area” shall mean that part of a building where paint is being disturbed.

§ 11-02 Owner’s Responsibility to Remediate.

An owner shall remediate all lead-based paint hazards and underlying defects in a dwelling unit where a child of applicable age resides in accordance with the applicable work practices set forth in 28 RCNY § 11-06.

§ 11-03 Notice Inquiring About the Residency of a Child of Applicable Age.

(a)  Notice upon signing of a lease, including a renewal lease, if any, or upon any agreement to lease or at the commencement of occupancy if there is no lease.

   (1) The owner of a multiple dwelling erected prior to January first, nineteen hundred sixty or of a multiple dwelling erected on or after January first, nineteen hundred sixty and before January first, nineteen hundred seventy-eight, where an owner has actual knowledge of the presence of lead-based paint, shall provide to an occupant of a dwelling unit at the signing of a lease, including a renewal lease, if any, or upon any agreement to lease, or at the commencement of occupancy if there is no lease, a notice in English and Spanish inquiring whether a child of applicable age resides or will reside therein. If there is a lease, such notice will be attached as a rider to the lease. In addition, such owner shall deliver to the occupant at the time the occupant signs a lease, if any, or upon any agreement to lease, or, at the commencement of occupancy if there is no lease, the pamphlet developed by the department of health and mental hygiene pursuant to § 17-179(b) of the administrative code of the city of New York. Such notice shall be printed on a single form, the content of which shall be as specified in Appendix A hereto, and shall be printed in not less than ten point type, and shall bear the title “Prevention of Lead-based Paint Hazards – Inquiry Regarding Child”. Such notice shall be in duplicate, one copy of which will be for the occupant’s records, and one copy of which will be returned to the owner. Such notice shall be kept for a period of ten years from the date of receipt by the owner or transferred to a subsequent owner and maintained by such subsequent owner during such time period, and made available to the department upon request. The notice provided at the signing of a lease, or upon any agreement to lease, or at the commencement of occupancy if there is no lease, shall also contain a statement, signed by such owner, stating that he or she has complied with the provisions concerning apartments at turnover pursuant to § 27-2056.8 of Article 14 of the housing maintenance code and 28 RCNY § 11-05, and that he or she has delivered such pamphlet developed by the department of health and mental hygiene to the occupant.

   (2) No occupant in a dwelling unit in such multiple dwelling shall refuse or unreasonably fail to provide accurate and truthful information regarding the residency of a child of applicable age therein, nor shall an occupant refuse access to the owner at a reasonable time and upon reasonable prior notice to any part of the dwelling unit for the purpose of investigation and repair of lead-based paint hazards.

   (3) Where an occupant has responded to the notice provided by the owner pursuant to paragraph (1) of this subdivision by indicating that no child of applicable age resides therein or has failed to respond to such notice, if a child of applicable age subsequently comes to reside in such dwelling unit at any time during the immediately following year prior to the delivery of the annual notice by the owner pursuant to subdivision (b) of this section, the occupant shall have the duty to inform the owner in writing that such child has come to reside therein.

  1. Annual Notice.

   (1) Each year an owner of a multiple dwelling erected prior to January first, nineteen hundred sixty shall cause to be delivered to each residential unit a notice in English and Spanish inquiring as to whether a child of applicable age resides therein and advising the occupant of his or her duty to report the presence of such child in writing.

   (2) Such notice shall be delivered as provided in § 27-2056.4(e) of article 14 of the housing maintenance code, no earlier than January first and no later than January sixteenth, provided, however, that if such notice is enclosed with the January rent bill, such notice may be delivered no sooner than December fifteenth and no later than January sixteenth.

   (3) Such notice shall be printed on a single form, the content of which shall be as specified in Appendix B hereto, and shall be printed in not less than ten point type, and shall bear the title “Prevention of Lead-based Paint Hazards – Inquiry Regarding Child”. Such notice may be combined with the annual window guard notice required by 24 RCNY Chapter 12 in a form approved by the department of health and mental hygiene. Such notice shall be in duplicate, one copy of which will be for the occupant’s records, and one copy of which will be returned to the owner. Such notice shall be kept for a period of ten years from the date of receipt by the owner or transferred to a subsequent owner and maintained by such subsequent owner during such time period, and made available to the department upon request.

   (4) Upon receipt of such notice, the occupant shall have the duty to deliver a written response to the owner indicating whether a child of applicable age resides in the dwelling unit, by February fifteenth of the year in which the notice is sent. Where an occupant has responded to the notice provided by the owner pursuant to paragraph one of this subdivision by indicating that no child of applicable age resides therein, or has failed to respond to such notice, if a child of applicable age subsequently comes to reside in such dwelling unit at any time prior to delivery of the next annual notice, the occupant shall have the duty to inform the owner in writing that such child has come to reside therein.

   (5) If, subsequent to the delivery of such annual notice, the owner does not receive a written response by February fifteenth, and does not otherwise have actual knowledge as to whether a child of applicable age resides therein, then the owner shall at reasonable times and upon reasonable notice inspect the occupant’s dwelling unit to ascertain whether a child of applicable age resides therein. Where, between February sixteenth and March first of that year the owner has made reasonable attempt to gain access to the dwelling unit and was unable to gain access, the owner shall notify the department of health and mental hygiene of that circumstance in writing.

  1. The wording of the notices specified in this section shall not be altered or varied in any manner, unless otherwise approved by the department or the department of health and mental hygiene, provided, however, that such owner may provide such notice in any languages in addition to English and Spanish as such owner believes will be of assistance in ensuring communication of the content of such notice to the occupants of the multiple dwelling.

§ 11-04 Investigation for Lead-Based Paint Hazards.

(a)  In any dwelling unit in a multiple dwelling erected prior to January first, nineteen hundred sixty where a child of applicable age resides, and in any dwelling unit in a multiple dwelling erected on or after January first, nineteen hundred sixty and before January first, nineteen hundred seventy-eight, where a child of applicable age resides and the owner has actual knowledge of the presence of lead-based paint, and in common areas of such multiple dwellings, the owner shall cause a visual inspection to be made for peeling paint, chewable surfaces, deteriorated subsurfaces, friction surfaces and impact surfaces. A visual inspection for lead-based paint hazards shall include every surface in every room in the dwelling unit, including the interiors of closets and cabinets. Such inspection shall be undertaken at least once a year and more often if necessary, such as when, in the exercise of reasonable care, an owner knows or should have known of a condition that is reasonably foreseeable to cause a lead-based paint hazard, or an occupant makes a complaint concerning a condition that is likely to cause a lead-based paint hazard or requests an inspection, or the department issues a notice of violation or orders the correction of a violation that is likely to cause a lead-based paint hazard.
  1. An owner shall maintain or transfer to a subsequent owner records of inspections of dwelling units performed pursuant to this section. Such records shall include the location of such inspection and the results of such inspection for each surface in each room, as specified in subdivision (a) of this section, and the actions taken as a result of such inspection pursuant to 28 RCNY § 11-02. If an owner claims an inability to gain access to the unit for such inspection, such records shall contain a statement describing the attempt made to gain access, including, but not limited to providing a written notice to the tenant, delivered by certified or registered mail, or by first class mail with proof of mailing from the United States Postal Service, informing the tenant of the necessity of access to the dwelling unit to perform the inspection, and the reason why access could not be gained. Such records shall be kept for a period of ten years from either the date of completion of the inspection, or from the date of the last attempt to gain access by the owner, or transferred to a subsequent owner and maintained by such subsequent owner during such time period, and made available to the department upon request. In addition, the owner shall make such records available to the occupant of such dwelling unit upon request.
  2. Nothing in this section shall be deemed to preclude an owner from conducting any additional types of inspections for lead-based paint hazards, provided, however, that such owner shall correct any lead-based paint hazards identified pursuant to such inspection in accordance with the work practices specified in 28 RCNY § 11-06.

§ 11-05 Turnover of Dwelling Units.

(a)  Upon turnover of any dwelling unit in a multiple dwelling erected prior to January first, nineteen hundred and sixty, or of a dwelling unit in a private dwelling erected prior to January first, nineteen hundred and sixty where each dwelling unit is to be occupied by persons other than the owner or the owner's family, the owner shall within such dwelling unit have the responsibility to:

   (1) remediate all lead-based paint hazards and any underlying defects, when such underlying defects exist;

   (2) make all bare floors, window sills, and window wells in the dwelling unit smooth and cleanable;

   (3) provide for the removal or permanent covering of all lead-based paint on all friction surfaces on all doors and door frames; and

   (4) provide for the removal or permanent covering of all lead-based paint on all friction surfaces on all windows, or provide for the installation of replacement window channels or slides on all lead-based painted friction surfaces on all windows.

  1. Such work shall be performed in the time period commencing with the vacancy of the unit and shall be completed prior to reoccupancy of such unit. All work performed pursuant to this section shall be performed using the applicable safe work practices set forth in 28 RCNY § 11-06(g)(3).
  2. An owner shall maintain or transfer to a subsequent owner records of work performed in dwelling units pursuant to this section in accordance with the recordkeeping requirements of 28 RCNY § 11-06(c). In addition, the owner shall make such records available to the new occupant of such dwelling unit upon request.
  3. An owner shall certify that he or she has complied with § 27-2056.8 of article 14 of the housing maintenance code and this section in the notice provided to an occupant upon signing of lease, if any, or upon any agreement to lease, or at the commencement of occupancy if there is no lease pursuant to subdivision (a) of 28 RCNY § 11-03.

§ 11-06 Safe Work Practices.

(a)  Filing procedures. Not less than ten days prior to commencement of work that will disturb lead-based paint pursuant to § 27-2056.11(a)(2)(ii) of article 14 of the housing maintenance code, an owner shall file with the department of health and mental hygiene a notice of the commencement of the work. Such notice shall be signed by the owner or by a representative of the firm performing the work. Where work is required to be commenced in a lesser period of time than that specified herein for the filing of a notice of commencement of work, then such filing shall be made as soon as practicable but prior to the commencement of work. Such notice shall be in a form satisfactory to or prescribed by the department of health and mental hygiene and shall set forth at a minimum the following information:

   (1) The name, address and telephone number of the owner of the premises in which the lead-based paint work is to be performed;

   (2) The address of the building and the specific location of the lead-based paint work within the building;

   (3) The name, address and telephone number of the firm who will be responsible for performing the work;

   (4) The date and time of commencement of the work, working or shift hours, and the expected date of completion;

   (5) A complete description and identification of the surfaces and structures, and surface areas, subject to the work; and

   (6) Any changes in the information contained in the notice required by this section shall be filed with the department of health and mental hygiene prior to commencement of work, or if work has already commenced, within 24 hours of any such change.

  1. Licensing and training.

   (1) Abatement. All work conducted as part of an abatement as defined in this chapter shall be performed by firms and personnel certified to perform lead-based paint activities in accordance with regulations issued by the United States environmental protection agency at subpart L of 40 C.F.R. Part 745 for the abatement of lead hazards, or successor rule.

   (2) Work ordered by the department to correct a lead-based paint hazard violation in accordance with § 27-2056.11(a)(1) of article 14 of the housing maintenance code, or work performed pursuant to § 27-2056.11(a)(2)(ii) of article 14 of the housing maintenance code, shall be performed in accordance with the following requirements:

      (i) Firm requirements. Firms conducting such work shall be certified to perform lead abatement by the United States environmental protection agency in accordance with subpart L of 40 C.F.R. Part 745 for the abatement of lead hazards, or successor rule.

      (ii) Worker requirements. Workers conducting such work shall be trained, at a minimum, in accordance with the regulations issued by the United States department of housing and urban development at 24 C.F.R. § 35.1330(a)(4), or successor rule, or under an equivalent program approved by the department or the department of health and mental hygiene.

      (iii) Clearance dust testing. No person shall perform a lead-contaminated dust clearance test pursuant to this section unless such person is a third party, who is independent of the owner and any individual or firm that performs such work. All personnel performing lead-contaminated dust clearance testing after completion of such work shall be trained, at a minimum, in accordance with regulations issued by the United States department of housing and urban development at 24 C.F.R. § 35.1340(b)(1), or successor rule, or under an equivalent program approved by the department or the department of health and mental hygiene.

   (3) Work performed in accordance with § 27-2056.11(a)(2)(i) of article 14 of the housing maintenance code, shall be performed in accordance with the following requirements:

      (i) Worker requirements. Workers conducting such work shall be trained under regulations issued by the United States department of housing and urban development at 24 C.F.R. § 35.1330(a)(4), or successor rule, or under an equivalent program approved by the department or the department of health and mental hygiene.

      (ii) Clearance dust testing. No person shall perform a lead-contaminated dust clearance test pursuant to this section unless such person is a third party, who is independent of the owner and any individual or firm that performs such work. Personnel performing lead-contaminated dust clearance testing after completion of such work shall be trained in accordance with regulations issued by the department of housing and urban development at 24 C.F.R. § 35.1340(b)(1), or successor rule, or under an equivalent program approved by the department or the department of health and mental hygiene.

   (4) Work performed in a dwelling unit upon turnover in accordance with § 27-2056.8 of article 14 of the housing maintenance code. No person shall perform a lead-contaminated dust clearance test pursuant to this paragraph unless such person is a third party, who is independent of the owner and any individual or firm that performs the work upon turnover. Personnel performing lead-contaminated dust clearance testing after completion of such work shall be trained in accordance with regulations issued by the department of housing and urban development at 24 C.F.R. § 35.1340(b)(1), or successor rule, or under an equivalent program approved by the department or the department of health and mental hygiene.

  1. Recordkeeping. An owner shall keep a record of the following information for all work performed pursuant to this section:

   (1) The name, address, and telephone number of the person or entity who performed the work; the start date and completion date for the work;

   (2) A copy of all licenses and training certificates, required pursuant to subdivision (b) of this section, for the firms and personnel who performed work and lead-contaminated dust clearance testing;

   (3) The location of the work performed in each room including a description of such work and invoices for payment for such work;

   (4) Results of lead-contaminated dust clearance tests analyzed by an independent laboratory certified by the state of New York;

   (5) Checklists completed pursuant to (g)(1)(ix)(F)(f) when occupants are allowed temporary access to a work area; and

   (6) Such records shall be maintained by such owner for a period of ten years from the date of completion of such work or transferred to a subsequent owner and maintained by such subsequent owner during such time period, and made available to the department upon request.

  1. Work methods.

   (1) Minimizing dust dispersion. Work that disturbs lead-based paint as defined in this chapter shall be carried out in such a manner as to minimize the penetration or dispersal of lead contaminants or lead-contaminated materials from the work area to other areas of the dwelling unit and building or adjacent outdoor areas.

   (2) An area designated as a clean changing area shall be segregated from the work area by a physical barrier to prevent the penetration or dispersal of lead contaminants or lead-contaminated materials from the work area to other areas of the dwelling unit and building and to prevent occupant exposure to materials containing lead.

   (3) Repair of lead-based paint hazard violations may be performed by wet sanding, wet scraping, removal, enclosure, encapsulation, replacement or abatement except where otherwise specified in article 14 of the housing maintenance code or these rules.

  1. Prohibited methods. The following methods shall not be used while performing work in accordance with these rules that disturbs lead-based paint or paint of unknown lead content:

   (1) Open flame burning or torching.

   (2) Machine sanding or grinding without HEPA local exhaust control.

   (3) Abrasive blasting or sandblasting without HEPA local exhaust control.

   (4) Heat guns operating above 1,100 degrees Fahrenheit or charring the paint.

   (5) Dry sanding or dry scraping.

   (6) Paint stripping in a poorly ventilated space using a volatile stripper that is a hazardous substance in accordance with regulations of the United States consumer product safety commission at 16 C.F.R. § 1500.3, and/or a hazardous chemical in accordance with the United States occupational safety and health administration regulations at 29 C.F.R. §§ 1910.1200 or 1926.59, as applicable to the work.

  1. Work practices and surface finishing.

   (1) All tools and materials used when disturbing paint shall be used in accordance with the manufacturer’s instructions.

   (2) Wet sanding, wet scraping, removal, enclosure, encapsulation, replacement, abatement and other maintenance and repair activities shall be performed using standard construction and treatment methods, and in accordance with manufacturer’s instructions, where applicable.

   (3) All surfaces where paint has been disturbed shall be sealed and finished with appropriate materials. Underlying surface substrates shall be dry and protected from future moisture before applying a new protective coating or paint, and all paints and coatings shall be applied in accordance with the manufacturer’s recommendations.

  1. Occupant protection.

   (1) Work ordered by the Department to correct a lead-based paint hazard violation in accordance with § 27-2056.11(a)(1) of article 14 of the housing maintenance code, or work performed pursuant to § 27-2056.11(a)(2)(ii) of article 14 of the housing maintenance code.

      (i) Postings. The following information shall be conspicuously posted no later than twenty-four hours prior to beginning work and shall remain in place until the work area has been cleared for re-occupancy:

         (A) Notice of commencement of work information submitted to the department of health and mental hygiene pursuant to § 27-2056.11(a)(2)(ii) of article 14 of the housing maintenance code. Such information shall be posted at the entrance to the dwelling and at the entrance to the dwelling unit.

         (B) A warning sign of at least 8 1/2” by 11” with letters at least one inch high, reading as follows: WARNING: LEAD WORK AREA – POISON – NO SMOKING OR EATING. Such information shall be posted adjacent to the work area.

      (ii) Pre-cleaning and protecting moveable items. All floors, moveable furniture, draperies, carpets, or other objects in the work area shall be HEPA-vacuumed or washed; all moveable items shall then be moved out of the work area or otherwise covered with two layers of six-mil disposable polyethylene sheeting before work begins. Such sheeting shall be taped together with waterproof tape, and taped to the floors or bottom of the walls or baseboards, so as to form a continuous barrier to the penetration of dust.

      (iii) Sealing vents. Forced-air systems within the room where work that disturbs lead-based paint is occurring shall be turned off and covered with two layers of six-mil polyethylene sheeting and waterproof tape to prevent lead contamination and lead dispersal to other areas.

      (iv) Affixing doorway entrance flap. After all moveable objects have been removed, the work area shall be sealed off from non-work areas by taping with waterproof tape, two layers of disposable, six-mil polyethylene sheeting over every entrance or doorway to the work area, as follows: To deter the dispersal of lead dust one sheet shall be taped along all sides of the doorway and a slit shall be cut down the middle of the sheeting, leaving intact at least six inches of sheeting on the top and six inches of sheeting on the bottom of the doorway. A second sheet of polyethylene large enough to cover the doorway, shall be attached to the top of the doorway in the room or area where work is being conducted and shall act as a flap opening into the work area.

      (v) Covering floors. The floor of the work area shall be covered with at least two sheets of disposable six-mil polyethylene sheeting. Such sheeting shall be taped together with waterproof tape, and taped to the bottom of the walls or baseboard, so as to form a continuous barrier to the penetration of dust to the floor. The furniture and non-moveable furnishings, such as counters, cabinets, and radiators in the work area shall be removed or covered with such taped sheeting.

      (vi) Sealing openings. All openings, including windows, except those required to be open for ventilation, not sealed off or covered in accordance with subdivision (g)(1)(iii) of the section, shall be sealed with two layers of six-mil polyethylene sheeting and waterproof tape to prevent the penetration or dispersal of lead contaminants or lead-contaminated material.

      (vii) Instructing occupants. Occupants shall be instructed by the owner and contractor to avoid entering the work area until final clearance levels have been achieved.

      (viii) Hazardous materials. All paints, thinners, solvents, chemical strippers or other flammable materials shall be delivered to the building and maintained during the course of the work in their original containers bearing the manufacturer’s labels, and all material safety data sheets, as may be required by law, shall be on-site and shall be made available upon request to the occupants of the dwelling unit.

      (ix) Clean-up and lead-contaminated dust clearance testing procedures.

         (A) Daily clean-up. At the completion of work each day, the work area shall be thoroughly wet-mopped or HEPA-vacuumed. No polyethylene sheeting, drop cloths, or other materials that are potentially hazardous to young children or infants shall be accessible outside the work area. In addition, any work area and other adjoining area exposed to lead or lead-contaminated materials shall be cleaned as follows: (a)  Large debris. Large demolition-type debris (e.g., door, windows, trim) shall be wrapped in six-mil polyethylene, sealed with waterproof tape, and moved to the area designated for trash storage on the property to be properly disposed of in a lawful manner. (b)  Small debris. Small debris shall be HEPA-vacuumed or wet swept and collected. Before wet sweeping occurs, the affected surfaces shall be sprayed with a fine mist of water to keep surface dust from becoming airborne. Dry sweeping is prohibited. The swept debris and all disposable clothing and equipment shall be placed in double four-mil or single six-mil plastic bags which shall be sealed and stored with other contaminated debris in the work area and shall be properly disposed of in a lawful manner. (c)  Clean-up adjacent to the work area. On a daily basis, as well as during final clean-up, the area adjacent and exterior to the work area shall be examined visually to ensure that no lead debris has escaped containment. Any such debris shall be wet swept and HEPA-vacuumed, collected and disposed of as described above. (d)  Supply storage. Upon finishing work for the day, all rags, cloths and other supplies used in conjunction with chemical strippers or other flammable materials, or materials contaminated with lead dust or paint shall be stored at the end of each work day in sealed containers or removed from the premises, in a lawful manner.

         (B) Final clean-up. Final cleaning shall be performed as follows, in the following sequence: (a)  The final cleaning process shall start no sooner than one (1) hour after lead-based paint disturbance activities have been completed, but before repainting, if necessary. (b)  First, all polyethylene sheeting shall be sprayed with water mist and swept prior to removal. Polyethylene sheeting shall be removed by starting with upper-level polyethylene, such as that on windows, cabinets and counters, folding the corners, ends to the middle, and placing in double four-mil or single six-mil plastic bags. Plastic bags shall be sealed and properly disposed of in a lawful manner. (c)  Second, all surfaces in the work area shall be HEPA-vacuumed. Vacuuming shall begin with ceilings and proceed down the walls to the floors and include furniture and carpets. (d)  Third, all surfaces in the work area shall be washed with a detergent solution. Washing shall begin with the ceiling and proceed down the walls to the floor. Wash water shall be properly disposed of in a lawful manner. (e)  Fourth, all surfaces exposed to lead dust generated by the lead-based paint disturbance process shall be HEPA-vacuumed again. Vacuuming shall begin with ceilings and proceed down the walls to the floors and include furniture and carpets. (f)  Fifth, all surfaces shall be inspected to ensure that all surfaces have been cleaned and all visible dust and debris have been removed. If all visible dust and debris have not been removed, affected surfaces shall be re-cleaned.

         (C) Final inspection. After final clean-up, and re-painting if necessary, has been completed, a final inspection shall be made by a third party retained by the owner who is independent of the owner and the contractor. The final clearance evaluation shall include a visual inspection and lead-contaminated dust clearance testing. Three wipe samples shall be collected and tested from each room or area where work has been conducted; one wipe sample contaminated dust clearance samples shall be collected and tested from the floor in rooms or areas immediately adjacent to the work area.

         (D) Clearance for re-occupancy. Lead-contaminated dust levels in excess of the following constitute contamination and require repetition of the clean-up and testing process in all areas where such levels are found. Areas where every lead-contaminated dust sample result is below the following levels may be cleared for re-occupancy:

Floors:  40 micrograms of lead per square foot.
Window Sills: 250 micrograms of lead per square foot.
Window Wells: 400 micrograms of lead per square foot.

~

Only upon receipt of laboratory test results showing that the above dust lead levels are not exceeded in the dwelling may the work area be cleared for permanent re-occupancy. However, temporary access to work areas may be allowed, provided that clean-up is completed and dust test samples have been collected in compliance with this section. The owner shall provide all lead-contaminated dust clearance test results to the occupants of the dwelling or dwelling unit.

         (E) Relocation. An owner shall request that an occupant temporarily relocate from a unit pending completion of work where it appears that work cannot be performed safely with occupants in residence. Such owner shall offer a suitable, decent, safe and similarly accessible dwelling unit that does not have lead-based paint hazards to such occupants for temporary relocation. Unreasonable refusal by such occupants to relocate pursuant to such offer shall constitute a refusal of access under housing maintenance code §§ 27-2009 and 27-2056.4(b), and, where applicable, 9 NYCRR § 2524.3(e). Relocation shall not be required provided that work can be done safely with occupants in residence, and provided further that at the end of each day of work, the work area is properly cleaned as specified in subdivision (g)(1)(ix)(A) of this section; occupants have safe access to areas adequate for sleeping; occupants have bathroom and kitchen facilities available to them; occupants have safe access to entry/egress pathways; and the work does not create other safety hazards (e.g., exposed electrical wiring or holes in the floor).

         (F) Temporary access to the work area when occupants not relocated. When occupants are not relocated, temporary access may be allowed to areas in which work is in progress after work has ceased for the day, provided that at the end of each work day:

            (a) Any work area to be accessed is properly cleaned as specified in the daily clean-up requirements of subdivision (g)(1)(ix)(B)(b) through (d) and (f);

            (b) There are no safety hazards (including, but not limited to, exposed electric wiring or holes in the floor) or covered vents;

            (c) Floor coverings containing leaded dust and debris and hazardous materials are removed;

            (d) Floors in the work area are re-covered with a non-skid floor covering securely taped to the floor;

            (e) Work areas are prepared in accordance with the requirements above when work recommences; and

            (f) At the end of each workday, and before access is permitted, a checklist indicating compliance with these conditions is completed and signed by the person responsible for overseeing the work. No person shall make a false, untrue or misleading statement or forge the signature of another person on any document or record required to be prepared pursuant to these rules.

            (g) Temporary access in accordance with these provisions may be allowed for no longer than five days. If work has not resumed within five days, temporary access may continue only if the person responsible for overseeing the work has repeated the actions required by clauses (a) through (f) of this subparagraph (F).

Nothing herein shall extend the time for compliance with any violation issued pursuant to article 14 of the housing maintenance code.

   (2) Work performed in accordance with § 27-2056.11(a)(2)(i) of article 14 of the housing maintenance code that disturbs lead-based paint.

      (i) Postings. A warning sign shall be posted in accordance with subdivision (g)(1)(i)(B) of this section and caution tape shall be placed across the entrance to the work area.

      (ii) Pre-cleaning and protecting moveable items. All floors, moveable furniture, draperies, carpets, or other objects in the work area shall be HEPA-vacuumed or washed; all moveable items shall then be moved out of the work area or otherwise covered with polyethylene plastic or equivalent sheeting. All plastic or equivalent sheeting used during the performance of the work shall be of sufficient thickness and durability to prevent tearing during the performance of the work. Such sheeting shall be of sufficient length and width to prevent dust and other debris generated by the work from spreading to areas unprotected by such sheeting. Such sheeting must be adequately secured to prevent movement of the sheeting during the performance of the work.

      (iii) Covering floors. The floor of the work area shall be covered with polyethylene plastic or equivalent sheeting. All plastic or equivalent sheeting used during the performance of the work shall be of sufficient thickness and durability to prevent tearing during the performance of the work. Such sheeting shall be of sufficient length and width to prevent dust and other debris generated by the work from spreading to areas unprotected by such sheeting. Such sheeting must be adequately secured to prevent movement of the sheeting during the performance of the work. Multiple layers of polyethylene sheeting shall be used as needed to prevent dust from contaminating the floor.

      (iv) Sealing openings. Where applicable, forced air systems in the work area shall be turned off and any openings in the work area shall be sealed with polyethylene or equivalent sheeting to prevent the penetration or dispersal of lead contaminants or lead-contaminated material.

      (v) Instructing occupants. Occupants shall be instructed by the owner and contractor to avoid entering the work area until final clean up has been completed.

      (vi) Hazardous materials. All paints, thinners, solvents, chemical strippers or other flammable materials shall be delivered to the building and maintained during the course of the work in their original containers bearing the manufacturer’s labels, and all material safety data sheets, as may be required by law, shall be on-site and shall be made available upon request to the occupants of the dwelling unit.

      (vii) Clean-up and lead-contaminated dust clearance testing shall be conducted in accordance with subdivision (g)(1)(ix) of this section.

      (viii) Relocation and temporary access to work areas when occupants are not relocated, where provided, shall be performed in accordance with (g)(1)(ix)(E) and (F) of this section.

   (3) Work performed in a dwelling unit on turnover in accordance § 27-2056.8 of article 14 of the housing maintenance code.

      (i) Preparation. The procedures described in subdivision (g)(2)(i)-(iv) of this section shall be followed.

      (ii) Clean-up. At the completion of work, the work area shall be thoroughly wet-mopped or HEPA-vacuumed and a visual examination shall be conducted in the work area and the area adjacent and exterior to the work area. Any noted lead-contaminated dust or debris shall be wet-mopped or HPEA-vacuumed. All rags, cloths and other supplies used in conjunction with chemical strippers or other flammable materials, or materials contaminated with lead dust or paint shall be stored at the end of each work day in sealed containers or removed from the premises, in a lawful manner.

      (iii) Lead-contaminated dust clearance testing. Lead-contaminated dust clearance testing shall be conducted in accordance with subdivision (g)(1)(ix)(C)-(D) of this section.

§ 11-07 Presumption.

(a)  In any multiple dwelling erected prior to January first, nineteen hundred sixty, it shall be presumed that the paint or other similar surface-coating material in any dwelling unit where a child of applicable age resides or in the common areas of such multiple dwelling is lead-based paint.
    1. The presumption established in this section may only be rebutted as provided in paragraph (2) of this subdivision by the registered owner, registered officer or director of a corporate owner or by a registered managing agent of such multiple dwelling by submitting to the department:

      (i) a sworn written statement, supported by lead-based paint testing or sampling results, including a description of the testing methodology and manufacturer and model of instrument used to perform such testing or sampling;

      (ii) a sworn written statement by the person who performed the testing if performed by an employee or agent of the owner which shall include a copy of the certificate of training as a certified lead-based paint inspector or risk assessor as provided in subdivision (d) of this section;

      (iii) a copy of the inspection report provided by the person who performed the testing or sampling which shall include a description of the surfaces in each room where such testing or sampling was performed; and

      (iv) a copy of the results of such testing and/or such laboratory tests of paint chip samples performed by an independent laboratory certified by the state of New York where such testing has been performed.

   (2) Such written statement and all supporting documentation shall be submitted to the department not later than six (6) days before the date set for correction in the notice of violation in accordance with paragraph (1) of this subdivision, and may only be submitted to rebut the presumption where the department has not performed an XRF test prior to issuing such violation. Receipt by the department of a complete application in accordance with this subdivision including such written statement and such supporting documentation shall toll the time period to correct the violation. Receipt of an incomplete application shall not toll the time period for correction of the violation.

   (3) The department shall notify the registered owner, registered officer or director of a corporate owner or registered managing agent of such multiple dwelling of its determination in writing, and, if the department determines that such presumption has not been rebutted, such notice shall set a date for correction of the violation.

  1. Where testing or sampling is performed to rebut the presumption established in this section, the performance of such testing shall be in accordance with the definition for lead-based paint established in 28 RCNY § 11-01(s) and § 27-2056.2(7) of article 14 of the housing maintenance code. Laboratory analysis for paint chip samples shall be permitted only where XRF tests fall within the inconclusive zone for the particular XRF machine or where the configuration of the surface or component to be tested is such that an XRF machine cannot accurately measure the lead content of such surface or component. Laboratory tests of paint chip samples, where performed, shall be reported in mg/cm2, unless the surface area of a paint chip sample cannot be accurately measured, or if an accurately measured paint chip sample cannot be removed, in which circumstance the laboratory test may be reported in percent by weight. Where paint chip sampling has been performed, the sworn written statement by the person who performed the testing shall include a statement that such sampling was done in accordance with 40 C.F.R. § 745.227 or successor provisions.
  2. Testing performed to rebut the presumption may only be performed by a person who has been certified as a lead-based paint inspector or risk assessor in accordance with subparts L and Q of 40 C.F.R. Part 745 or successor provisions and such testing shall be performed in accordance with 40 C.F.R. § 745.227(a) and (b) or successor provisions.

§ 11-08 Exemption from Presumption.

(a)  A registered owner or registered officer or director of a corporate owner or registered managing agent of a multiple dwelling erected prior to January first, nineteen hundred sixty or, where title to such multiple dwelling is held by a cooperative housing corporation or the units in such multiple dwelling are owned as condominium units, a representative of the corporation or the condominium board of managers may apply to the department, in writing, for an exemption of the application of the presumption established under article 14 of the housing maintenance code and 28 RCNY § 11-07 with respect to such multiple dwelling or any part thereof, provided further, that where title to such multiple dwelling is held by a cooperative housing corporation or the units in such multiple dwelling are owned as condominium units, the shareholder of record on the proprietary lease or the owner of record of such condominium unit, as is applicable, may apply to the department for such exemption for his or her individual unit where such presumption is or may become applicable.
  1. Except as otherwise provided in subdivision (c), such exemption shall be granted only where such owner or such other person specified in subdivision (a) of this section submits a written determination made by a lead-based paint inspector or risk assessor certified pursuant to subparts L and Q of 40 C.F.R. Part 745 or successor provisions, and in accordance with 40 C.F.R. § 745.227(b), or Chapter 7 of the department of housing and urban development’s Guidelines for Evaluation and Control of Lead-Based Paint Hazards in Housing that each tested surface and component in each dwelling unit in such multiple dwelling or in the individual dwelling unit, if applying for an exemption of a particular dwelling unit in such multiple dwelling, is free of lead-based paint as defined in 28 RCNY § 11-01(s) and § 27-2056.2(7) of article 14 of the housing maintenance code, or, that as a result of a substantial alteration of each dwelling unit such lead-based paint on each surface and component in each dwelling unit has been contained so that each surface tested is negative for such lead-based paint. Where surfaces or components within the dwelling unit can be demonstrated by the owner, to the satisfaction of the department, to have a common construction and painting history, the lead-based paint inspector or risk assessor performing such testing may test a sample of the surfaces and components having such common construction and painting history within the dwelling unit to make such determination, in accordance with 40 C.F.R. § 745.227(b), or Chapter 7 of the department of housing and urban development’s Guidelines for Evaluation and Control of Lead-Based Paint Hazards in Housing. For purposes of this section, the term “contained” shall mean that every surface containing lead-based paint has been permanently covered, enclosed and sealed with sheetrock or similar durable construction material to eliminate gaps which may allow access to or dispersion of dust or other matter from the underlying surface.
  2. For any surface within a dwelling unit or dwelling where encapsulation has been applied to a surface for the purpose of qualifying such dwelling unit or dwelling for an exemption under this section, in addition to the information required to be provided to the department pursuant to subdivision (d) of this section, such application shall include: the location of each surface that has been encapsulated; the name of the encapsulant that has been used, which shall be limited to those approved by the New York state department of health or by another federal or state agency or jurisdiction which the department has designated as acceptable; and a statement by the person who applied such encapsulant, who shall be certified to perform abatement pursuant to 40 C.F.R. Part 745 or successor provisions, that it has been applied in accordance with the manufacturer’s instructions. The surfaces to which such encapsulants are applied shall be subject to periodic monitoring by the owner to ensure that they remain undamaged and intact, provided further, that the owner of such dwelling unit or dwelling shall keep records of any monitoring of such encapsulated surfaces for a period of ten years and produced by the owner upon request by the department.
  3. In addition to the information required by subdivision (c) of this section, where applicable, an application for exemption shall include: the address of the multiple dwelling; the number of units; the dates, if known, when substantial alterations were made to the dwelling unit(s) and a description of the work performed; the date of the inspection resulting in the determination; and a copy of the inspection report. Such inspection report shall contain a description of the surfaces tested and the results of such testing. Such application shall also include a copy of the certificate of training of the person who performed such testing.
  4. Upon submission of a complete application for exemption to the department, such multiple dwelling or part thereof, or dwelling unit, shall be deemed to be exempt from application of the presumption established under article 14 of the housing maintenance code and 28 RCNY § 11-07. The department may revoke an exemption granted pursuant to this section where the department determines, after inspection, that a surface in any dwelling unit for which lead-based paint was contained or to which an encapsulant was applied is no longer intact or sealed or that such exemption was determined to be based upon fraud, mistake or misrepresentation. The department shall provide written notification to the owner upon making such determination. Absent fraud, mistake or misrepresentation in the initial application, an owner may reapply for the exemption by showing that the surface for which the lead-based paint was no longer contained or encapsulated has been repaired and resealed.
  5. Results of lead-based paint testing or evidence of application of encapsulants to surfaces performed prior to the effective date of these rules, that conforms with the requirements of this section, may be submitted to qualify for an exemption from the presumption pursuant to this section.

§ 11-09 Certification of Correction of Lead-Based Paint Hazard Violation.

(a)  A registered owner or registered officer or director of a corporate owner or registered managing agent shall submit a certification of correction of a lead-based paint hazard violation issued pursuant to § 27-2056.6 of article 14 of the housing maintenance code and these rules within five (5) days of the date set for correction in the notice of violation. Such certification shall be made in writing, under oath by the registered owner, a registered officer or director of a corporate owner or by the registered managing agent and shall include the following:

   (1) the date that the violation was corrected, and a statement that the violation was corrected in compliance with article 14 of the housing maintenance code and 28 RCNY § 11-06;

   (2) the results of laboratory tests performed by an independent laboratory certified by the state of New York for lead-contaminated dust clearance tests performed pursuant to § 27-2056.11(b) and (d) of the housing maintenance code and 28 RCNY § 11-06(g)(1)(ix)(C) and (D);

   (3) a copy of the certificate of training required pursuant to 28 RCNY § 11-06(b)(2)(iii) qualifying the person who performed the lead-contaminated dust clearance testing; and

   (4) a sworn statement by the person or firm who performed the work necessary to correct the violation that such work was performed in accordance with the applicable provisions of § 27-2056.11 of article 14 of the housing maintenance code and the applicable provisions of 28 RCNY § 11-06; and

   (5) a copy of the certification by the United States environmental protection agency of the firm that performed the work as required pursuant to 28 RCNY § 11-06(b)(2)(i).

  1. Certification of a lead-based paint hazard violation shall be rejected by the department unless the results of the laboratory tests for the required lead-contaminated dust clearance tests are submitted with the certification, and such laboratory test results comply with the standards specified in 28 RCNY § 11-06(g)(1)(ix)(D).
  2. Failure to file a certification of correction of such violation shall establish a prima facie case that such violation has not been corrected.

§ 11-10 Postponements.

(a)  An owner may apply to the department in writing for postponement of the time to correct a lead-based paint hazard violation issued pursuant to § 27-2056.6 of article 14 of the housing maintenance code within the five days preceding the date set for correction of such violation pursuant to § 27-2115(l)(1).
  1. Grant of a postponement shall be in the sole discretion of the department, and will be limited to circumstances where a showing has been made by the owner, to the satisfaction of the department, that such owner has taken steps to correct the violation promptly but that full correction could not be completed expeditiously because of the existence of a serious technical difficulty, inability to obtain necessary materials, funds or labor, or inability to gain access to the dwelling unit or other area of the building necessary to make the required repair. An application for postponement shall contain a detailed statement by the registered owner or agent, or registered managing agent, explaining the steps taken to correct the violation promptly and the specific circumstances surrounding the inability to fully correct the violation within the time set for correction of the violation. Where an owner claims inability to gain access, such application shall include a description of the steps taken to gain access, including but not limited to providing a written notice to the tenant, delivered by certified or registered mail, informing the tenant of the necessity of access to the dwelling unit to correct the violation and the reason why access could not be gained.
    1. The department shall make a determination in writing whether the post- ponement shall be granted or denied, and the reasons therefor. The department may include such other conditions as are deemed necessary to insure correction of the violation within the time set by the postponement. If the postponement is granted, a new date for correction shall be set, which shall not exceed fourteen days from the date set for correction in the notice of violation, provided, however, that the department may grant an additional postponement of fourteen days where the department determines that the conditions which is the subject of the violation has been stabilized.

   (2) The department may grant a postponement of the time to correct a lead-based paint hazard violation in excess of the twenty-eight days provided for in paragraph (1) of this subdivision, where the department determines that the work to be done to remediate the violation includes one or more substantial capital improvements to be made in conjunction with such work, and that such improvements will significantly reduce the presence of lead-based paint in such multiple dwelling or dwelling unit, provided that the paint which is the subject of the violation is stabilized. An owner who applies for such longer postponement shall submit an application within the time period specified in subdivision (a) of this section, and shall include with such application such documentation as the department may require to make its determination, which may include, but is not limited to, written contracts for work, building permits, plans filed with the department of buildings; invoices for materials purchased; and evidence that work has commenced and substantial progress has been made.

§ 11-11 Audit and Inspection by the Department.

(a)  Upon the issuance of a commissioner's order to abate by the commissioner of the department of health and mental hygiene pursuant to 24 RCNY Health Code § 173.13, the department shall require that an owner submit to it all records required to be kept by such owner pursuant to article 14 of the housing maintenance code and these rules. At such other times as the department may deem it necessary, the department may require that an owner submit to it all records required to be kept by such owner pursuant to article 14 of the housing maintenance code and these rules. If such order to abate has been issued, such records shall be submitted to the department within 45 days of written demand for such records by the department. In all other cases, the time period for submission shall be stated in writing to the owner, and shall be in the discretion of the department.
  1. The department may undertake any inspection and enforcement actions it deems necessary under applicable law and these rules based upon its review of the records submitted by an owner pursuant to subdivision (a) of this section. The department may also undertake any inspection or enforcement action authorized by law where an owner refuses or fails to produce any of the records required to be kept pursuant to article 14 of the housing maintenance code, these rules, and other applicable law.

§ 11-12 Dwelling Units in Cooperative Housing Corporations and Condominiums.

Where the department has issued a violation pursuant to article 14 of the housing maintenance code for a dwelling unit in a multiple dwelling where (i) title to such multiple dwelling is held by a cooperative housing corporation or such dwelling unit is owned as a condominium unit, and (ii) such dwelling unit is occupied by the shareholder of record on the proprietary lease for such dwelling unit or the owner of record of such condominium unit, as is applicable, or the shareholder’s or record owner’s family, the cooperative housing corporation or the condominium board of managers may apply to the department to have such violation reissued. Such application shall include a sworn affidavit from a representative of the cooperative housing corporation or condominium board of managers attesting to the status of such multiple dwelling as either a cooperative or condominium, and a sworn affidavit from the shareholder of record on the proprietary lease of the unit or the owner of record of the condominium unit for which the violation was issued, attesting to his or her occupancy of the unit.

Chapter 12: Smoke Detecting and Carbon Monoxide Detecting Devices and Systems In Multiple Dwellings

§ 12-01 Owner Responsibilities for Smoke Detecting Devices for Class A Multiple Dwellings.

Pursuant to § 27-2045 of the Administrative Code of the City of New York, the owner of a Class A multiple dwelling which is required to be equipped with smoke detecting devices pursuant to section 907.2 of the New York City building code or sections 27-978, 27-979, 27-980 and 27-981 of the 1968 building code shall:

  1. Provide and install one or more approved and operational smoke detecting devices in each dwelling unit and replace such devices in accordance with article 312 of chapter 3 of title 28 of the administrative code of the city of New York in locations specified in reference standard 17-12 of the 1968 building code or section 907.2.10 of the New York city building code, as applicable.
  2. Post a notice in a form approved by the Commissioner of the Department of Housing Preservation and Development (“HPD” or “the Department”) in a common area of the building, readily visible and preferably in the area of the inspection certificate, informing the occupants of such building that the owner is required by law to install one or more approved and operational smoke detecting devices in each dwelling unit in the building and to periodically replace such devices upon the expiration of their useful life in accordance with article 312 of chapter 3 of title 28 of the administrative code of the city of New York, and that each occupant is responsible for the maintenance and repair of such devices and for replacing any or all such devices which are stolen, removed, missing or rendered inoperable during the occupancy of such dwelling unit with a device meeting the requirements of article 312 of chapter 3 of title 28 of the administrative code of the city of New York. In addition, the notice should state that the occupant of a dwelling unit in which a battery-operated smoke detecting device is provided and installed shall reimburse the owner a maximum of twenty-five dollars or a maximum of fifty dollars where a combined smoke and carbon monoxide detecting device is installed, for the cost of providing and installing each such device. The occupant shall have one year from the date of installation to make such reimbursement. A sample of an approved notice is made part of these regulations in 28 RCNY § 12-04 and may also be found on HPD’s website at www.nyc.gov/HPD.
  3. The notice in 28 RCNY § 12-01(b) above:

   (1) shall have letters not less than three-sixteenths of an inch in height;

   (2) the lettering of the notice shall be of bold type and shall be properly spaced to provide good legibility and the background shall be of contrasting colors;

   (3) the notice shall be durable and shall be substantially secured to the common area where posted;

   (4) the notice shall be of metal, plastic, or decal;

   (5) lighting shall be sufficient to make the notice easily legible.

  1. For the notice required by subdivisions (b) and (c) of this section, an owner may in lieu of such otherwise required notice instead choose to post a single notice that incorporates and complies with subdivisions (b) and (c) of this section as well as the provisions of 28 RCNY § 12-06(b) and 28 RCNY § 12-11(b). A sample of an approved single notice, the language of which may be used for compliance with this subdivision, is made part of these regulations in 28 RCNY § 12-12.1 and may also be found on HPD’s website at www.nyc.gov/HPD.
  2. Replace any smoke detecting device which has been stolen, removed, missing or rendered inoperable during a prior occupancy of the dwelling unit and which has not been replaced by the prior occupant prior to the commencement of a new occupancy of a dwelling unit with a device meeting the requirements of article 312 of chapter 3 of title 28 of the administrative code of the city of New York.
  3. Replace within thirty calendar days after the receipt of written notice any such device which becomes inoperable within one year of the installation of such device and through no fault of the occupant of the dwelling unit.
  4. Keep the following records, on the premises or in the business office of the managing agent or owner, relating to the installation and maintenance of smoke detecting devices in the building:

   (1) date notice posted pursuant to 28 RCNY § 12-01(b);

   (2) date of installation of each smoke detecting device and other records showing that the device installed meets the requirements of Article 312 of Chapter 3 of Title 28 of the administrative code of the City of New York, including the manufacturer’s suggested useful life of each device;

   (3) whether the smoke detecting device receives its primary power from the building wiring or whether it is a battery-operated device;

   (4) apartment number and location within apartment where device installed;

   (5) records showing that maintenance work performed on each device has met the requirements of Article 312 of Chapter 3 of Title 28 of the administrative code of the City of New York;

   (6) date tenant requested replacement/repair.

   (7) These records must be made available to the Commissioner of the Department of Housing Preservation and Development upon request.

§ 12-02 Occupant Responsibilities for Smoke Detecting Devices for Class A Multiple Dwellings.

Pursuant to § 27-2045(b) of the Administrative Code of the City of New York it shall be the sole duty of the occupant of each unit in a Class A multiple dwelling in which a smoke detecting device has been provided and installed by the owner pursuant to section 907.2 of the New York city building code or sections 27-978, 27-979, 27-980 and 27-981 of the 1968 building code to:

  1. keep and maintain such device in good repair; and
  2. replace any and all devices which are either stolen, removed, missing or rendered inoperable during the occupancy of such dwelling unit with a device meeting the requirements of article 312 of chapter 3 of title 28 of the administrative code of the city of New York. Note: Except as provided in 28 RCNY § 12-01(d) and (e) above and article 312 of chapter 3 of title 28 of the administrative code of the city of New York, an owner of a Class A multiple dwelling who has provided and installed a smoke detecting device in a dwelling unit shall not be required to keep and maintain such device in good repair or to replace any such device which is stolen, removed, missing or rendered inoperable during the occupancy of such dwelling unit. In addition, the occupant of a dwelling unit in which a battery-operated smoke detecting device is provided and installed shall reimburse the owner a maximum of twenty-five dollars or a maximum of fifty dollars where a combined smoke and carbon monoxide detecting devices is installed, for the cost of providing and installing each such device. The occupant shall have one year from the date of installation to make such reimbursement.

§ 12-03 Owner Responsibilities for Smoke Detecting Devices for Class B Multiple Dwellings.

Pursuant to § 27-2046 of the Administrative Code of the City of New York the owner of a Class B multiple dwelling which is required to be equipped with smoke detecting devices pursuant to section 907.2 of the New York city building code or sections 27-978, 27-979, 27-980, and 27-981 of the 1968 building code shall:

  1. Provide and install one or more approved and operational smoke detecting devices in each dwelling unit or, in the alternative, provide and install a line-operated zoned smoke detecting system with central office tie-in for all public corridors and public spaces pursuant to rules and regulations promulgated by the Commissioner of the Department of Buildings.
  2. Keep and maintain smoke detecting devices in good repair and replace such devices in accordance with article 312 of chapter 3 of title 28 of the administrative code of the city of New York.
  3. Replace any smoke detecting device which has been stolen, removed, missing or rendered inoperable prior to the commencement of a new occupancy of a dwelling unit in accordance with article 312 of chapter 3 of title 28 of the administrative code of the city of New York.
  4. Keep the following records, on the premises or in the business office of the managing agent or owner, relating to the installation and maintenance of smoke detecting devices in the buildings:

   (1) date of installation of each smoke detecting device and other records showing that the device installed meets the requirements of Article 312 of Chapter 3 of Title 28 of the administrative code of the City of New York, including the manufacturer’s suggested useful life of each device;

   (2) whether the smoke detecting device receives its primary power from the building wiring or whether it is a battery operated device or in the alternative whether it is a line operated zoned smoke detecting system with central annunciation and central tie-in for all public corridors and public spaces;

   (3) room number and location within room where each smoke detecting device is installed;

   (4) records showing that maintenance performed on each device has met the requirements of Article 312 of Chapter 3 of Title 28 of the administrative code of the City of New York.

These records must be made available to the Commissioner of the Department of Housing Preservation and Development upon request.

§ 12-04 Form for Records or Smoke Detecting Devices.

A sample notice as required by 28 RCNY § 12-01(b) follows:

~

§ 12-05 Definitions.

For the purposes of this chapter

  1. CO means carbon monoxide; and
  2. CO alarm means a “carbon monoxide alarm” as defined in 1 RCNY Chapter 28 and shall also mean a “carbon monoxide detecting device” as such term is used in subchapter 7 of chapter 1 and subchapter 2 of chapter 2 of title 27 of the administrative code of the city of New York, and section 902.1 of the building code.*

§ 12-06 Owner Responsibilities for CO Alarms for Class A Multiple Dwellings.

Pursuant to § 27-2046.1 of the administrative code of the city of New York, the owner of a Class A multiple dwelling that is required to be equipped with carbon monoxide detecting devices pursuant to section 908.7 of the New York city building code or sections 27-981.1, 27-981.2 and 27-981.3 of the 1968 building code, and as prescribed by the Department of Buildings (“DOB”) pursuant to 1 RCNY Chapter 28 shall comply with the following requirements:

  1. Provide and install one or more approved and operational CO alarms in each dwelling unit, provided that there shall be installed at least one approved and operational CO alarm within 15 feet of the primary entrance to each room lawfully used for sleeping purposes, and replace such devices as necessary in accordance with article 12 of chapter 3 of title 28 of the administrative code;
  2. Post a notice in a form approved by the Commissioner of the Department of Housing Preservation and Development (“HPD” or “the Department”) in a common area of a Class A multiple dwelling, readily visible and preferably in the area of the inspection certificate informing the occupants of such building that:

   (1) the owner is required by law to install one or more approved and operational CO alarm in each dwelling unit in the building within 15 feet of the primary entrance to each room lawfully used for sleeping purposes and to periodically replace such devices as necessary in accordance with Article 12 of Chapter 3 of Title 28 of the administrative code;

   (2) each occupant is responsible for the maintenance and repair of such alarms and for replacing any or all such alarms that are stolen, removed, missing, or rendered inoperable during the occupancy of such dwelling unit; and

   (3) the occupant of a dwelling unit in which a CO alarm is newly installed or in which a CO alarm is installed by the owner as a result of such occupant’s failure to maintain such alarm or where such alarm has been lost or damaged by such occupant, or where such alarm is replaced upon the expiration of its useful life pursuant to Article 12 of Chapter 3 of Title 28 of the New York City administrative code, shall reimburse the owner in the amount of $25.00 per device for the cost of such work, or a maximum of $50.00 per device where a combined smoke and carbon monoxide detecting device is installed, and such occupant shall have one year from the date of installation to make such reimbursement.

   (4) A sample of an approved notice that may be used for CO alarms is made part of these regulations in 28 RCNY § 12-10 and may also be found on HPD’s website at www.nyc.gov/HPD.

   (5) For the notice otherwise required by this provision, an owner may in lieu of such notice, instead choose to post a single notice that incorporates and complies with this provision as well as the provisions of 28 RCNY § 12-01(b) and (c) and 28 RCNY § 12-11(b). A sample of an approved single notice, the language of which may be used for compliance with this subdivision, is made part of these regulations in 28 RCNY § 12-12.1 and may also be found on HPD’s website at www.nyc.gov/HPD.

   (6) The notice required by this subdivision shall conform with the following requirements:

      (i) the notice shall have letters not less than three-sixteenths of an inch in height;

      (ii) the lettering of the notice shall be of bold type and shall be properly spaced to provide good legibility and the background shall be of contrasting colors;

      (iii) the notice shall be durable and shall be substantially secured to the common area where posted;

      (iv) the notice shall be of metal, plastic, or decal;

      (v) lighting shall be sufficient to make the notice easily legible; and

  1. Replace any CO alarm that has been stolen, removed, found missing, or rendered inoperable during a prior occupancy of the dwelling unit and which has not been replaced by the prior occupant before the commencement of a new occupancy of the dwelling unit and replace such alarm upon the expiration of its useful life pursuant to article 12 of chapter 3 of title 28 of the New York city administrative code;
  2. Replace within 30 calendar days after receipt of written notice any such alarm that becomes inoperable within one year of the installation of such alarm due to a defect in the manufacture of such alarm through no fault of the occupant of the dwelling unit;
  3. Provide written information regarding the testing and maintenance of CO alarms to at least one adult occupant of each dwelling unit, including, but not limited to, general information concerning carbon monoxide poisoning and what to do if a CO alarm goes off, that CO alarms have a useful life limitation and that the owner has a duty to replace such alarms upon the expiration of such useful life. Such information may include material that is distributed by the manufacturer or any material prepared or approved by DOB and shall be provided at the time of installation;
  4. Keep the following records, on the premises or in the business office of the owner or managing agent, relating to the installation and maintenance of CO alarms in the building:

   (1) date notice posted pursuant to 28 RCNY § 12-06(b);

   (2) date of installation of each CO alarm and the expiration date of the manufacturer’s suggested useful life of each such alarm;

   (3) whether each CO alarm receives its primary power from the building wiring with secondary battery back-up, is a battery-operated alarm, or is a plug-in type CO alarm with a back-up battery;

   (4) apartment number and location within apartment where each alarm was installed;

   (5) maintenance work performed on each alarm; and

   (7) date occupant requested replacement/repair. These records must be made available to the Commissioner of the Department of Housing Preservation and Development, DOB, the Fire Department, or the Department of Health and Mental Hygiene (“DOHMH”) upon request.

§ 12-07 Owner Responsibilities for CO Alarms for Private Dwellings.

Pursuant to § 27-2046.1 of the administrative code of the city of New York, the owner of a private dwelling that is required to be equipped with CO alarms pursuant to section 908.7 of the New York city building code or sections 27-981.1, 27-981.2 and 27-981.3 of the 1968 building code and as prescribed by DOB pursuant to chapter 28 of title 1 of the rules of the city of New York shall comply with the following requirements:

  1. Provide and install one or more approved and operational CO alarm in each dwelling unit, provided that there shall be installed at least one approved and operational CO alarm within 15 feet of the primary entrance to each room lawfully used for sleeping as prescribed in the DOB rules and regulations relating to CO alarms, and replace such devices as necessary in accordance with article 12 of chapter 3 of title 28 of the administrative code;
  2. For purposes of (c) through (g) of this section, “private dwelling” shall mean a dwelling unit in a one-family or two-family home that is occupied by a person or persons other than the owner of such unit or the owner’s family
  3. Provide notice in a form approved by the Department to the occupants of such dwelling that:

   (1) the owner is required by law to install an approved and operational CO alarm in each dwelling or dwelling unit in the building, within 15 feet of the primary entrance to each room lawfully used for sleeping and to periodically replace such devices as necessary in accordance with article 12 of chapter 3 of title 28 of the administrative code;

   (2) each occupant is responsible for the maintenance and repair of such alarms and for replacing any or all such alarms that are stolen, removed, missing, or rendered inope