GRAMERCY SPIRE TENANTS'ASS'N v. Harris
Citation | 446 F. Supp. 814 |
Decision Date | 16 September 1977 |
Docket Number | No. 76 Civ. 4028 (WCC).,76 Civ. 4028 (WCC). |
Parties | GRAMERCY SPIRE TENANTS' ASSOCIATION, Plaintiff, v. Patricia Roberts HARRIS, as Secretary of the Department of Housing and Urban Development, the Department of Housing & Urban Development, and Morris Sosnow, Jerrold A. Lieberman, Leonard Schwartz, Individually and as co-partners in 16th Street Associates, Defendants, and Patricia Grant, James N. Palik, Rosalyn Rusalem, the Conciliation and Appeals Board and the Housing and Development Administration of the City of New York, Additional Defendants on Counterclaim. |
Court | U.S. District Court — Southern District of New York |
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Maurice A. Reichman, New York City, for plaintiff, and James N. Palik and Rosalyn Rusalem, additional defendants on counterclaim.
Robert B. Fiske, Jr., U. S. Atty. for the Southern District of New York, New York City, for defendant Patricia R. Harris; Patrick H. Barth, Asst. U. S. Atty., Barrie L. Goldstein, Atty., Dept. of Justice, New York City, of counsel.
Squadron, Ellenoff, Plesent & Lehrer, New York City, for defendants, Morris Sosnow, Jerrold A. Lieberman and Leonard Schwartz, co-partners doing business as 16th Street Associates; Neal M. Goldman, New York City, of counsel.
Julia P. Heit, New York City, for Patricia Grant, additional defendant on counterclaim.
W. Bernard Richland, Corp. Counsel, New York City, for Housing and Development Administration of the City of New York; Neil S. Lovit, New York City, of counsel.
Plaintiff Gramercy Spire Tenants' Association has brought suit to challenge the federal government's preemption of New York City's rent control laws as they apply to the Gramercy Spire Apartments located at 160 Third Avenue in New York City. The complaint names as defendants the Department of Housing and Urban Development and its Secretary, Patricia Roberts Harris1 ("HUD") and the individual copartners of "16th Street Associates" ("Associates"), the owner of Gramercy Spire Apartments. In its answer, Associates has counter-claimed for a declaration of the validity of the preemption and for injunctive relief.2 Before us now is its motion for summary judgment on the counterclaim.
Associates' position, in brief, is that the HUD regulation, 24 C.F.R. §§ 403.1-403.6,3 which authorized the preemption was validly promulgated, and that HUD's determination, pursuant thereto, that its economic interest was jeopardized in respect to the Gramercy Spire project — necessitating preemption—is unreviewable agency action. Plaintiff contends, to the contrary, that the regulation is invalid; that the basis for HUD's determination of economic jeopardy is reviewable in this Court; that there are genuine issues of fact pertaining to the latter issue; and that, in any event, in being denied an opportunity to be heard prior to HUD's preemption decision, the tenants of Gramercy Spire were deprived of their right to procedural due process guaranteed by the Fifth Amendment. On the latter claim plaintiff, together with the Housing and Development Administration, joined as a defendant on Associates' counterclaim, has cross-moved for summary judgment.
The obligations which the mortgagor assumes in accepting the benefits of § 207 mortgage insurance, and the restrictions to which he becomes subject, are embodied in a "regulatory agreement," as provided for in 24 C.F.R. § 207.18(c) ( ).
In the present case, Associates availed itself of the § 207 program and became a party to a regulatory agreement with the Federal Housing Commissioner4 in August of 1962. At that time, since it was of post-1947 construction, Gramercy Spire Apartments was subject to neither New York State nor New York City rent control laws. See N.Y.C.Admin.Code § Y51-3.0(e)(2)(h);5 8200 Realty Corporation v. Lindsay, 27 N.Y.2d 124, 313 N.Y.S.2d 733, 261 N.E.2d 647 (1970). The building came under the umbrella of local rent regulation only upon the passage by New York City of the Rent Stabilization Law ("RSL") of 1969, N.Y.C.Admin.Code §§ YY51-1.0 to YY51-7.0,6 which undertook to provide rent regulation for housing accommodations completed between February 1, 1947 and March 10, 1969. N.Y.C.Admin.Code § YY51-3.0(a); 8200 Realty Corporation v. Lindsay, supra, 27 N.Y.2d at 129, 313 N.Y.S.2d at 736, 261 N.E.2d at 649. The administration of the 1969 law was confided largely in a Real Estate Industry Stabilization Association ("Stabilization Association"), N.Y.C.Admin. Code § YY51-6.0, of which Associates became a member. Also at this time, Associates added to all Gramercy Spire leases a "pass-through" rider providing, in effect, that if HUD approved rentals greater than those permissible under the RSL, tenants would pay the federally approved rentals immediately (Exhibit B annexed to Associates' motion).
The category of dwelling units afforded protection under the RSL, however, was significantly restricted by the passage of State legislation in 1971. Under the Vacancy Decontrol Law, 1971 Laws of N.Y., Ch. 371, all rent-controlled or rent-stabilized apartments which became vacant on or after July 1, 1971, were to be rented on a free-market basis. See Perth Realty Company v. Dovoll, 358 N.Y.S.2d 619, 622 (Civil Ct.N.Y.Cty.1974). In 1974, however, pursuant to the Emergency Tenant Protection Act ("ETPA") and related legislation, 1974 Laws of New York, Ch. 576, New York State ended vacancy decontrol and considerably broadened the scope of potential local rent regulation. The ETPA was a form of local option legislation, which authorized the City of New York (and other specified localities) to declare the existence of a public emergency requiring the regulation of residential rents. The Act provided that upon the declaration of an emergency, all apartments which had theretofore been destabilized or exempt from rent stabilization—including apartments which had become vacant on or after July 1, 1971 — were to be subject to the RSL. 1974 Laws of New York, Ch. 576 §§ 2, 4. Effective July 1, 1974, the New York City Council implemented the legislation, determining the existence of a public emergency for all classes of housing accommodations in New York City subject to control by the ETPA. N.Y.C. Council Resolution 276. See Axelrod v. Starr, 52 A.D.2d 232, 383 N.Y.S.2d 31, 33 (App.Div. 1st Dept. 1976); Perth Realty Company v. Dovoll, supra. The consequence, for purposes of the present case, is that Gramercy Spire apartments became fully subject to the provisions of the RSL. As Associates acknowledges, until the local rent control laws were preempted by HUD in respect to Gramercy Spire Apartments on April 6, 1976, Associates assumed that it was legally bound to comply with — and did comply with — both the RSL and ETPA ( ).
Under the RSL, a "level of fair rent increase" is established annually by the Rent Guidelines Board "as a guideline for rent increases upon renewal of leases or any new tenancy * * *" N.Y.C.Admin.Code § YY51-5.0. Provision is made, as well, for landlords to apply for "hardship" increases in the level of stabilization rents. N.Y.C. Admin.Code § YY51-6.0(b)(3); § 43 of the Rent Stabilization Code ("RSC").7 Application is made by the landlord to the Conciliation and Appeals Board ("CAB") of the Stabilization Association. Associates filed such an application with respect to the Gramercy Spire Apartments on November 4, 1974 (Exhibit C annexed to Associates' motion). Under the hardship formula as set forth in § 43, Associates requested a 12.27 percent increase in gross monthly rental income (from $47,932.09 to $53,815.09). Upon request, it supplied the CAB with additional financial data on April 11, 1975. Associates was later informed, on November 3, 1975, of CAB's intention to process its hardship application in accordance with State legislation effective July 2, 1975, providing for the...
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