MATTER OF DEJESUS v. Roberts

• Decision Date: 02 July 2002
• Citation: 746 N.Y.S.2d 1,296 A.D.2d 307
• Court: New York Supreme Court — Appellate Division
• Parties: In the Matter of DIANE DEJESUS et al., Respondents,<BR>v.<BR>RICHARD ROBERTS, as Commissioner of the Department of Housing Preservation and Development of the City of New York, et al., Appellants.

296 A.D.2d 307

746 N.Y.S.2d 1

In the Matter of DIANE DEJESUS et al., Respondents,

v.RICHARD ROBERTS, as Commissioner of the Department of Housing Preservation and Development of the City of New York, et al., Appellants.

Decided July 2, 2002.

Concur — Buckley, J.P., Sullivan, Lerner and Friedman, JJ.

Petitioners are tenants in a City-owned building, acquired in 1987 tax foreclosure proceedings, located at 230 East 95th Street in Manhattan. They bring this proceeding to prevent HPD from selling the building "as is" in its Asset Sales program, and, instead, to direct HPD to rehabilitate the building with public funds and convey it to the tenants as part of the agency's TIL program. Under the TIL program, HPD would lease the building to a tenants' association, which would collect the rents and manage the building, while HPD would pay the cost to "replace or upgrade major systems" and, eventually, at a price of $250 per apartment, convey the building to the tenants as a cooperative. The Asset Sales program, on the other hand, is designed to return City-owned buildings to private ownership. The buildings so selected are "located within strong marketable areas." The purchaser assumes all responsibility for financing and rehabilitation; no City funds are used. The purchaser must offer the tenants two-year leases at existing HPD rents, which are thereafter adjusted pursuant to applicable rent regulation laws. As HPD's brochure explains, HPD provides a window period where only the tenants may purchase; thereafter, HPD solicits bids from all potential purchasers, including the tenants.

According to HPD's answer, a building's assignment to a particular program is a discretionary decision, made after "evaluat[ing] a number of factors." If a building is marketable in its "as is" condition, it is sold in the Asset Sales program, thereby conserving scarce City financial resources for the substantial number of City-owned buildings in need of major rehabilitation. TIL, on the other hand, is used for "buildings which are otherwise unmarketable * * *, often located in economically depressed areas."

On February 25, 1998, HPD gave petitioners written notice that the building was to be sold in the Asset Sales program. They were given an exclusive right to purchase at an "asking price" of $255,000 and advised that they had until June 30, 1998 to make an acceptable offer. After that date, the tenants were advised, they could make an offer but it would be "considered competitively with all other submitted offers." At a March 12, 1998 meeting called by HPD, its representative informed the tenants that the building was ineligible for TIL because it was in a "prominent neighborhood with great opportunities." As petitioners acknowledge, they left the meeting with the understanding that "[w]e must buy or be bought." Despite their preference that the building be placed in the TIL program, petitioners made several failed attempts to purchase it, submitting offers of $92,970 and, later, meeting the $255,000 demand price. In that regard, HPD attempted to assist petitioners, removing the building from a pending solicitation for purchase offers so as to give the tenants another opportunity to purchase it and twice extending the deadline for the tenants to arrange financing.

When the tenants could not obtain the necessary financing, HPD put the building up for sale in November 1999. In January 2000, the tenants wrote to their community board, with a copy to HPD, and "renewed their request to be placed in the TIL program," acknowledging that in February 1998 they were told they were no longer eligible. HPD wrote to the tenants on February 15, 2000, observing that they had received written notice in February 1998 that the building would be sold in the Asset Sales program. The letter summarized the tenants' failed attempts to purchase the building and concluded by reiterating that HPD had "programmed" the building for Asset Sales.

This article 78 proceeding, commenced in March 2000, over two years after HPD advised the tenants that the building would be sold in the Asset Sales program, alleged that HPD's February 2000 determination to reject their TIL application was "arbitrary and capricious, violative of [petitioners'] due process rights and against public policy." Included in their prayer for relief was a request for a declaration to that effect and an order directing HPD to transfer the building to the TIL program. HPD cross-moved to dismiss the petition as barred by the four-month statute of limitations provided in CPLR 217 (1).

The IAS court denied the motion and, after HPD answered, granted the petition to the extent of vacating the February 15, 2000 "administrative determination" and remanding the matter to HPD for "further consideration of the merits of [p]etitioners' TIL application." In rejecting HPD's argument that the limitations period began on February 25, 1998, when petitioners received notice of HPD's decision to dispose of the building through the Asset Sales program, the court found that HPD's February 15, 2000 letter was the first notice that...