Navigating the NYS 2024/2025 Executive Budget and Its Impact on NYC Multifamily Housing (Part 3 of 4)

New York recently adopted the Affordable Neighborhoods for New Yorkers (ANNY) Tax Incentive and the Affordable Housing from Commercial Conversions (AHCC) Tax Incentive programs, as well as a host of other new and modified laws pertaining to multifamily housing density, rent regulations and tenant protections.
In this series, the attorneys in Cole Schotz’s Real Estate Practice explore some of the initiatives and changes included as part of the Fiscal Year 2024/2025 Executive Budget that will impact developers and owner/operators of properties located in New York City.

Good Cause Eviction

Newly adopted Article 6-A of the New York Real Property Law and amendments to the New York Real Property Actions and Proceedings Law now codify “good cause evictions” for residential apartments in New York City, unless exempt, and provides that a landlord cannot evict a tenant (or fail to renew a lease) absent “good cause” as defined in Article 6-A. 

While “good cause” includes a number of customary and reasonable bases, including, but not limited to, (i) a tenant’s breach of landlord’s rules and regulations, (ii) a tenant’s violation of substantial obligations of its tenancy, (iii) a tenant is committing or permitting a nuisance, (iv) the occupancy by the tenant is in violation or causes a violation of law, (v) the landlord seeks in good faith to recover possession for the landlord’s own personal use and occupancy, and (vi) the landlord seeks in good faith to demolish the housing accommodation or to withdraw the housing accommodation from the rental market, the most contentious aspect of the new law is that it creates, in an eviction proceeding for failure to pay rent involving an apartment that is not subject to rent regulation, a rebuttable presumption that a rent increase in any calendar year that exceeds the lesser of: (x) 10% of the then-current rental, or (y) 5% plus the Consumer Price Index is unreasonable.  However, in considering whether a rent increase is actually unreasonable, a court “may consider all relevant facts” and a landlord may present evidence of its costs (including for fuel and other utilities, insurance, maintenance and property taxes).

We note, however, that Article 6-A exempts several different types of housing accommodations from the good cause eviction law, including:

• (i) rent-stabilized and rent-controlled units;
• (ii) affordable and income-restricted units (pursuant to law, restrictive declaration or regulatory agreement),
• (iii) condo and co-op units;
• (iv) housing accommodations that received a temporary or permanent certificate of occupancy on or after January 1, 2009 (but only until the date that is 30 years after the issuance of such certificate of occupancy);
• (v) seasonal housing;
• (vi) hotel rooms and other transient uses;
• (vii) dormitories;
• (viii) senior living facilities (e.g., among others, facilities licensed as “continuing care retirement communities” and “assisted living residences” under the public health law, and facilities licensed as “adult care facilities” under the social services law);
• (ix) housing accommodations for use by a religious facility or institution;
• (x) units in an owner-occupied building with 10 or fewer units; and
• (xi) units for which the monthly rental is greater than 245% of the fair market rent published by the U.S. Department of Housing and Urban Development for the county in which the same is located.