Gearing Up for the New Era of Tenant Protection Laws

Certificate of No Harassment (CONH) Program

As of December 1, 2017, the NY City Council expanded the Certificate of No Harassment (CONH) Program to safeguard NYC Tenants.

The enlarged program requires certain property owners to prove to the City that they have not harassed tenants for the previous 5 years before they can obtain permits to renovate or demolish buildings. The several new additions to the laws expand both the classes of buildings to which CONH applies and what counts as prohibited harassment in these and many other multi-family buildings.

Highlights of the Legislative Changes

City-wide

  • Any building where there has, within the last 5 years, been a Court finding or NYS Homes and Community Renewal (DHCR) finding of harassment will automatically be denied a CONH if/when they apply for a DOB permit.

Pilot Geographies

  • In 11 community districts that have been identified as at particular risk for harassment, a wider set of buildings will be required to obtain a CONH.
    • New areas: Bed Stuy, East Harlem, Morningside Heights, and others.
  • Neighborhoods will be added to the CONH program automatically when they are part of a City-sponsored neighborhood-wide rezoning.
  • HPD will be developing a "Building Distress Index" that will flag buildings with a combination of factors including recent ownership changes and poor building conditions.

Process Changes

  • A building owner subject to the program and seeking a permit from DOB for a demolition or significant renovation will apply for the CONH to HPD in nearly the same manner as previously used for SRO buildings.
  • While the law makes no mention of it, it is likely that the process can be simplified as with SRO buildings by using professionals to gather affidavits from present and former tenants attesting to a lack of harassment in the building.

NYC Housing Preservation and Development

  • If HPD determines that there is evidence of harassment within the past five years, a hearing will be held at the Office of Administration Trials and Hearings (OATH). As of this writing, it appears unlikely that many owners will prevail at any such hearing. Thus, strategies should focus on preventing the necessity of having such a hearing in the first place.

Penalties

  • When a CONH is denied, the owner will be denied DOB permits for demolition and significant renovations for a period of 60 months unless the owner enters into a cure agreement with the HPD.
  • If the CONH is denied, the owner must provide so-called affordable housing with no public subsidy or they would not be able to pull those permits for five years.

With increasing penalties and greater downside for violations, it's in the landlords' best interests to find experienced guidance in navigating these regulations to maximize value.

Transforming A Challenge Into An Opportunity

Situation

  • The new additions to the CONH laws as outlined above create further strategic uncertainty for landlords and investors with significant business plans in these zones.
  • While following the history and rationale of the legislation and other upcoming changes regarding the CONH Zones, STRATCO foresaw the many logistical issues that could arise with the passage of these new laws.
  • Fear and uncertainty is now common-place among these additional targeted areas.

The STRATCO Advantage

  • STRATCO has created a portal for executing sophisticated business strategies in the outlined areas.
  • The portal now streamlines the strategy among the property owner, management company, attorney, and STRATCO.

Result

  • A complete package of the needed items for an HPD non-harassment application will be prepared in advance of regulatory enforcement.
  • Client can realize the benefits of additional air rights in the new re-zoned area.
  • The risks with filing for a non-harassment application can be mitigated by providing an overabundance of meaningful documents in a thoughtful manner.
  • Operators engaging STRATCO's portal and methodology are able to create a competitive advantage over industry competitors by capitalizing on the recent regulatory changes.

Disclosure of Services

STRATCO does not serve as an attorney and does not provide legal advice. STRATCO functions as a management consultant on executing highly complex business strategies. STRATCO functions as an intermediary with client's legal counsel in order to effectuate risk mitigation and regulatory compliance.

Contact Information

info@stratcoproperty.com

646-760-9723

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