N.Y. Private Housing Finance Law § 85: Control of rentals

§ 85. Control of rentals. 1. The commissioner shall fix the maximum

rental per room to be charged the tenants of the dwellings furnished by

a housing company, the average of such rentals for the dwellings in any

project not to exceed the maximum average rental prescribed by law,

except as provided in section eighty-seven. Such maximum average rental

rate shall be determined upon the basis of the actual final cost of the

project containing such rooms so as to secure, together with all other

income of the housing company, a sufficient income to meet all necessary

payments to be made by said housing company, as hereinafter prescribed,

and such room rental rates shall be subject to revision by the

commissioner from time to time. The payments to be made by a housing

company shall be

(a) All fixed charges, and all operating and maintenance charges and

expenses which shall include a charge to be fixed by the commissioner to

reimburse him in whole or in part for the expenses of inspection,

supervision and auditing, taxes, assessments, insurance, amortization

charges in amounts approved by the commissioner to amortize the mortgage

indebtedness in whole or in part, improvements and additions to the

projects to the extent and in the amount approved by the commissioner;

depreciation charges if, when and to the extent deemed necessary by the

commissioner; reserves, sinking funds and expenses essential to

operation and management of the project in amounts approved by the

commissioner.

(b) A distribution not exceeding the maximum fixed by this article

upon the capital of the housing company allotted to the project by the

commissioner, and interest on income debentures.

(c) Where feasible in the discretion of the commissioner a sinking

fund in an amount to be fixed by the commissioner for the gradual

retirement of the capital, and income debentures of the housing company

to the extent permitted by this article. When tenants own shares or

income debentures in a housing company, a sinking fund may with the

approval and subject to the regulations of the commissioner be set up

and maintained out of the net profits applicable to surplus and used

subject to the regulations of the commissioner for the purchase at not

to exceed par and accrued interest of the shares and income debentures

held by tenants ceasing to be occupants of the buildings; shares so

purchased may be resold by the housing companies. The moneys payable by

the project to reimburse the commissioner for the expenses of

inspection, supervision and auditing as herein provided shall be paid to

the executive department. Letting, subletting or assignment of leases of

apartments in such buildings or structures at greater rentals than

prescribed by the order of the commissioner are prohibited and all such

leases shall be void for all purposes.

2. For the purpose of calculating rentals in such dwellings, alcoves,

dining bays, and similar accommodations where their existence is legally

permissible, and bathrooms in the case of apartments of three rooms or

less, may, in the discretion of the commissioner, be counted as half

rooms; bathrooms in apartments of four rooms or more shall not be

counted as rooms or half rooms.

3. In projects where the land is leased from a municipality the value

of the land shall be taken at a sum fixed by the board, body or officer

designated by the local legislative body and approved by the

commissioner. For all the purposes of this article (including the

provisions of section eighty-one) the determination of the actual or

estimated cost of projects involving leased lands shall be made on the

basis provided in section eighty-three and other sections of this

article in the case of projects involving land purchased in fee by a

housing company, except that in projects involving leased land the value

of the land leased, ascertained in the manner described above, shall be

used instead of the cost of the land in determining the total cost of

the land and improvements comprising the project. In projects involving

leased land, the rental, if any, during the period of construction may

be included as part of the cost of the project. The sections of this

article requiring the investment of at least one-fifth of the cost of

the projects capital and income debentures shall not apply to projects

involving leased land but in such projects the value of the land,

ascertained in the manner described above, plus the amount obtained by

the investment in the capital and income debentures of the housing

company shall be at least one-fifth of the cost of the project, and the

amounts, if any, to be raised by mortgage indebtedness shall not exceed

four-fifths of such cost.