Uptown Realty Unlimited L.L.C. v. N.Y. State Div. of Hous. & Cmty. Renewal, Index Number 113960/04
| Decision Date | 05 December 2005 |
| Docket Number | Index Number 113960/04 |
| Citation | 2005 NY Slip Op 30631 (U) |
| Parties | In the Matter of the Application of UPTOWN REALTY UNLIMITED L.L.C., Petitioner, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules v. NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, Respondent. RE: Dkt. SJR-10,614 (EF-530015-OM) |
| Court | New York Supreme Court |
Decision, Order & Judgment
This is a proceeding brought, pursuant to Civil Practice Law and Rules("CPLR") section 7803(3), by petitioner Uptown Realty Unlimited L.L.C., as owner of the premises known as and located at 128 Fort Washington Avenue, New York, New York, Apartment 5 ("Premises"), challenging an Order issued by the New York State Division of Housing and Community Renewal's ("DHCR") Deputy Commissioner Paul Roldan on August 4, 2004 under Docket Number SJR 10,614. The August 4, 2004 Order affirmed the Deputy Commissioner's Order dated May 17, 2002, which reinstated the District Rent Administrator's ("DRA") grant of petitioner's Major Capital Improvement ("MCI") Application pursuant to Order EF-530015-OM dated July 14, 1992. According to petitioner, the challenged Order should be modified to the extent of reinstating the original effective date for the MCI increases to October 1, 1990.
On June 1, 1990, the prior owner, 128 Ft. Washington Partners, filed an MCI application with the DHCR. The application was for $189,458.70 worth of improvements. The improvements included work on the apartment windows, a new roof, a water tank and insulation of pipes. On May 25, 1990, Ira Kellman, a partner in the former owner 128 Fort Washington Partners, signed on behalf of the former owners, the following statement in the application:
In August and September of 1990, various tenants raised issues with repairs in their Answers to the MCI Application. The tenant Answers were not served on the former owner until March 19, 1992. On April 10, 1992, the former owner responded to the tenant complaints and notified DHCR of its follow-up.
On May 20, 1992, the DHCR forwarded a Request for AdditionalInformation/Evidence to the former owner. On June 8, 1992, the former owner responded to the DHCR's request.
On June 16 and 19, 1992, the DHCR conducted its own inspection. The "[i]nspections conducted on 6/16/92 and 6/19/92 revealed that the tenants' complaints were not valid."
On July 14, 1992, the DHCR granted the owner's MCI application. In July and August of 1992, several tenants filed Petitions for Administrative Review.
On December 30, 1992, petitioner purchased the building from a receiver. On December 24, 1993, Lloyd Temes, P.E., a licensed engineer signed a notarized "affidavit of violation clearance for architects and engineers" regarding petitioner's J-51 tax abatement application, Docket Number 1054/92, certifying that the "C" violations were cured. On December 27, 1993, Florence Edelstein, who is one of petitioner's officers, also signed an sworn affidavit that the "C" violations had been cured. On February 7, 1994, petitioner signed a consent order in DHPD v. Uptown Realty Unlimited, Co., Index Number HP 1471/93. On October 24, 1994, the DHPD issued a Certificate of Eligibility granting the petitioner a J-51 tax abatement.
Five years later, on September 20, 1999, DHCR Deputy Commissioner Paul Roldan issued Order GG-510289-RT, revoking the MCI's granted seven years ago, retroactive for nine years. Deputy Commissioner Roldan based his revocation of the MCI Orderon a review of HPD records which revealed that at the time of the owner's MCI application was filed, there were 107 Class "C" immediately hazardous violations and that the Rent Administrator ("RA") erred in not addressing the existence of these hazardous violations during the processing of the MCI application. He also noted that Policy Statement 90-8 requires the owner to correct the violations within a reasonable time before DHCR considers the MCI application.
In Uptown Realty Unlimited, L.L.C. v. NYS DHCR, Index Number 123428/99, petitioner challenged on numerous grounds, including due process, the Commissioner's Order under Docket Number GG-510289-RT in Supreme Court, New York County. On March 28, 2000, the DHCR cross-moved to remit the proceeding for further processing. On May 19, 2000, the Court issued its decision, granting the cross-motion to remit the matter to DHCR for further proceedings relating to the "C" violations in question. Pursuant to the order of the Supreme Court, on July 25, 2001, the "Notice of Opportunity to Present Further Information" was issued by DHCR under the remand Docket Number OJ-430015-RP. The Petitioner submitted numerous responses. On May 17, 2002, the Challenged Order was issued, re-instating the MCI increases but changing the effective date of the increase by almost 3 ½ years of increases, an approximate loss of $110,283.03. The Deputy Commissioner, in his May 17, 2002 Order found "under these unique circumstanceswherein a possible due process failure existed, that the immediately hazardous violations were cured within a reasonable time, and therefore, based upon the equities, the subject MCI application may be granted." However, the effective date of the MCI increase was changed to March 1, 1994, the first rent payment date after the date of the February 7, 1994 Civil Court Consent Order, which conclusively established that the immediately hazardous violations had been rectified.
Thereafter, two Article 78 proceedings were commenced; one by the tenants and one by the owner which were both consolidated and remitted on February 5, 2003 pursuant to a "Stipulation to Remit" the matter.
On August 4, 2004, the DHCR issued the Challenged Order Docket Number SJR 10,614 stating:
Additionally, the owner in response to the reopening notice included the contention that the effective date of the MCI increase in the Commissioner's order under Docket No. OJ430015RP is incorrect and should be the original effective date of the MCI order EF530015OM. This issue does not fall within the scope of the reopening notice, however, the Commissioner notes the various documents the owner claims show when the violations were corrected were already presented during the remand proceeding and will not be addressed in this limited reopening...
The instant Article 78 proceeding ensued.
It is well settled that judicial review of DHCR's interpretation of the statutes it administers is limited, and if DHCR's interpretation is not unreasonable or irrational, it is entitled to deference (see Matter of Ansonia Residents Assn. V. New York State Div. Of Housing & Community Renewal, 75 N.Y.2d 206 [1990]; Matter of Salvati v. Eimicke, 72 N.Y.2d 784 [1989]). If there is a rational basis for the determination and it is not arbitrary or capricious, it must be affirmed by the Court. The Court is limited to a review of the record which was before DHCR (see Matter of 36-08 Queens Realty v. New York State Division of Housing and Community Renewal, 222 A.D.2d 440, 441 [2d Dept. 1995]). Here, after reviewing the record before DHCR, the court concludes that DHCR's determination, changing the effective date of the MCI increase from that set by the RA, was neither arbitrary nor capricious, that it has a reasonable basis in law and is supported by the record (see Matter of Pell v. Board of Education, 34 N.Y.2d, at 231-32).
At the outset, this Court notes that it is well within DHCR's scope of authority to determine whether or not to grant a MCI increase and to set the effective date of that increase (see RSL §§ 26-511[c][6][b], 512; Versailles Realty Co. v. DHCR, 76 N.Y.2d 1009 [1990], aff'g 154 A.D.2d 540 [1st Dept. 1989], re-arg. den. 76 N.Y.2d 890 [1990]; Wesley Ave. Associates v. DHCR,206 A.D.2d 378 [2nd Dept. 1994]). Where an owner performs a major capital improvement, the owner is entitled to a permanent, building-wide rent increase (see Matter of Ansonia Residents Assn. V. New York State Div. Of Housing & Community Renewal, 75 N.Y.2d 206). The monthly amount of that rent increase is based upon the cash purchase price of the improvement, amortized over a seven year period (see RSL § 26-511[c][6][b]). To qualify for an MCI rent increase, an owner must have made an installation or performed work which meets the requirements set forth in the Rent Stabilization Code (see Garden Bay Manor Assocs. v. DHCR, 150 A.D.2d 378 [2nd Dept. 1989]). Policy Statement 90-8 and RSC § 2522.4(a)(13), states that no rent increase shall be granted, in whole or in part, if there are current immediately hazardous violations of any municipal, county, state or federal law against the premises at the time the MCI application is pending.
The burden of proof is on the owner seeking an MCI rent increase to establish its entitlement by sufficient documentary evidence in support of its application (see Henschke v. DHCR, 249 A.D.2d 204 [1st Dept. 1998]; Weinreb Mgt. v. DHCR, 204 A.D.2d 127 [1st Dept. 1994]). Based on the applicable law, DHCR has the discretion, and the right, to refuse to grant an owner a rent increase for major capital improvements where the owner was not maintaining all required services or where there are outstanding hazardous violations (see RSL § 2522.4[a][13]; 9 NYCRR §2522.4(a)(13); DHCR's Policy Statement 90-8 [March 23, 1990]; 251 West 98th Street Owners, LLC v. DHCR, 276 A.D.2d 265 [1st Dept. 2000]; ...
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