Windsor Park Tenants' Ass'n v. New York City Conciliation and Appeals Bd.

• Decision Date: 29 August 1977
• Citation: Windsor Park Tenants' Ass'n v. New York City Conciliation and Appeals Bd., 397 N.Y.S.2d 828, 59 A.D.2d 121 (N.Y. App. Div. 1977)
• Parties: In the Matter of WINDSOR PARK TENANTS' ASSOCIATION et al., Respondents, v. The NEW YORK CITY CONCILIATION AND APPEALS BOARD et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 828

397 N.Y.S.2d 828

59 A.D.2d 121

In the Matter of WINDSOR PARK TENANTS' ASSOCIATION et al., Respondents, v. The NEW YORK CITY CONCILIATION AND APPEALS BOARD et al., Appellants.

Supreme Court, Appellate Division, Second Department.

Aug. 29, 1977.

Ellis S. Franke, New York City (William E. Rosen, New York City, of counsel), for appellant New York City Conciliation and Appeals Board.

McLaughlin & Fougner, New York City (Robert S. Fougner, New York City, of counsel), for appellant Windsor Park Associates.

Cammer & Karlsson, Brooklyn (Kent Karlsson, Brooklyn, of counsel), for respondents.

Before HOPKINS, Justice Presiding, and SHAPIRO, HAWKINS and SUOZZI, JJ.

SHAPIRO, Justice.

The New York City Conciliation and Appeals Board (CAB), granted the respondent landlord, Windsor Park Associates, a 6.31% building-wide comparative hardship rent increase under the New York City Rent Stabilization Law. In an article 78 proceeding instituted by the petitioners (the tenants and their association) Special Term granted the petition to the extent of remanding the proceeding to the CAB "for the purpose of conducting a further hearing after an opportunity is afforded to the tenants to examine the books and records of the landlord upon which this application is based, said examination to be at the tenants' cost and expense." The landlord and CAB separately appeal from that determination. We affirm.

THE QUESTION AT ISSUE

The CAB is a landlord-funded, mayoral-appointed body and we are here called upon to examine the procedures followed by it in reviewing applications by landlords for comparative hardship rent increases. Specifically, the question is whether the CAB, rather than relying primarily upon the landlord's financial statements certified only by landlord-retained certified public accountants, is required to make an independent audit of the books and records upon which the application is based or, in lieu thereof, must permit a tenant audit. The landlord-appellant also asks us to determine that the CAB is a City Housing Rent Agency and therefore has the automatic appeal and stay rights conferred by statute upon governmental agencies.

I. THE GENESIS OF THE RENT STABILIZATION LAW

In 1962, pursuant to a State enabling act (L.1962, ch. 21, eff. Feb. 17, 1962), the City of New York enacted legislation placing its residential housing accommodations under city rent control (Administrative Code of City of New York, ch. 51, tit. Y). However, the city's 1962 Title Y residential rent control legislation expressly excluded from its rent control certain classes of housing accommodations. Among exempt classes were (generally) housing accommodations which were completed on or after February 1, 1947. Embraced in this major exclusion is the subject 20-building complex consisting of 1,828 units.

The 1962 enabling act provided that the regulation and control of residential rents and evictions within cities adopting local rent control legislation pursuant to the act shall be in a "city housing rent agency", which was to succeed to State rent control functions within the city (L.1962, ch. 21, § 1, subds. 4, 5, 6).

In 1969 the city enacted the Rent Stabilization Law (RSL) (Administrative Code, ch. 51, tit. YY). In 1970 the Court of Appeals, in 8200 Realty Corp. v. Lindsay, 27 N.Y.2d 124, 313 N.Y.S.2d 733, 261 N.E.2d 647, app. dsmd. 400 U.S. 962, 91 S.Ct. 367, 27 L.Ed.2d 381, upheld the constitutionality of the RSL. In comparing the differences in nature and administration between the city's 1962 title Y rent control statute and its 1969 title YY Rent Stabilization Law, as originally enacted, ¹ the Court of Appeals noted (pp. 129-134, 313 N.Y.S.2d pp. 736-740, 261 N.E.2d pp. 649-652):

"Rent control of housing accommodations completed before February, 1947 is in pursuance of title Y of chapter 51 of the Administrative Code, enacted by the city in 1962. This local law as amended vests in the Housing and Development Administration, a city agency, authority to administer rent control under title Y. It expressly limits rentals that may be charged, in the accommodations to which it applies, to 6% net annual return plus 2% annual depreciation.

"It is administered, as it has been noted, by a public agency of the city. The validity of this statute and its method of control have been sustained (Plaza Mgt. Co. v. City Rent Agency, 25 N.Y.2d 630, 306 N.Y.S.2d 11, 254 N.E.2d 227; Matter of Hartley Holding Corp. v. Gabel, 13 N.Y.2d 306, 247 N.Y.S.2d 97, 196 N.E.2d 537).

"The 1969 local law, here involved, known as the Rent Stabilization Law, added title YY to chapter 51 of the Administrative Code and undertook to provide rent control for housing accommodations completed between February 1, 1947 and March 10, 1969. Until the enactment of the 1969 statute, rental of housing accommodations becoming available during this 22-year period was uncontrolled.

"The main difference between the Rent Stabilization Law of 1969 and its predecessor is that while the 1962 statute is administered entirely by a city agency, the 1969 law is administered in part by an association made up of apartment owners, but under close and detailed supervision and control of official city agencies.

"A somewhat larger permissible return on investment is possible under the 1969 act. Consistently with guidelines required to be prescribed, increases over the May 31, 1968 rent may be allowed on renewed leases or new leases not exceeding 10% for a two-year lease or 15% for a three-year lease (Administrative Code, § YY 51-5.0, subd. d). Certain other kinds of vacancies result in smaller percentage increases (subd. e). These limitations continue until July 1, 1970. In vacancies occurring after that date, increases may be fixed by administrative action at levels other than those prescribed in the statute.

"The association which is authorized by the act to play a part in rent control is precisely prescribed ( § YY 51-6.0) as a 'Real Estate Industry Stabilization Association'. This group may be either a corporation or an association and shall have as members the owners of not less than 40% of the dwelling units affected by the 1969 statute. It shall be registered with the Housing and Development Administration, a city agency which was in existence before the enactment of the 1969 act.

"But this city agency may accept an industry association for registration only if it is satisfied that certain preconditions have been met: (a) that membership in the association is open to any owner of a multiple dwelling covered by the act; (b) that the association has adopted a code covering related terms and conditions of occupancy which has been approved by the Housing and Development Administration; (c) that the association has established a Conciliation and Appeals Board, the members of which, however, are all to be appointed by the Mayor with the approval of the City Council; (d) that each member has agreed in writing to abide by the orders of the Conciliation and Appeals Board and by the code; and (e) that the association is of such a character that it can carry out the purposes of the statute.

"The statute also establishes a Rent Guidelines Board of nine members, all appointed by the Mayor and paid by the city, no member of which may be a person who owns real estate covered by the statute or is an officer of a tenants' organization ( § YY 51-5.0). Its function is to prescribe guidelines for rent increases within the prescribed limits before July 1, 1970, and to review the problem of rent increases once annually and to establish different levels thereafter (subd. d).

"Membership by owners of multiple dwellings in the Real Estate Industry Association is voluntary, but if an owner does not join an association the dwelling becomes subject to normal rent control under title Y of chapter 51, in which case the City Rent Agency shall establish the maximum rent on the basis of the rent charged May 31, 1968 ( § YY 51-4.0, subds. a, b).

"It is thus to be seen that members of the industry play a part closely interrelated with official agencies in rent control by mechanisms designed to protect both owners and tenants during the emergency. The over-all supervision of the regulatory process is vested in the Housing and Development Administration which is expressly authorized to enact rules and regulations for the implementation of the statute ( § YY 51-4.0, subd. c); to approve the code of an association ( § YY 51-6.0, subd. b, par. (2)), and to discipline an association (subd. d).

"The members of an association must also adhere to the limitations on rent increases fixed, as it has been noted, by the Rent Guidelines Board, and the Conciliation and Appeals Board has the power to hear complaints by tenants against landlords and requests by landlords for hardship increases above fixed rentals. Although the association establishes this board as part of the condition of approval and provides the funds for its operation, the Mayor appoints the members of the board.

"The word 'establish', as used in this context, can only mean that by getting its organization under way, the association has taken the preliminary step by which the board will be called to function and thus may be appointed by the Mayor. It is true that the funds to pay the salaries of the board and the expenses of its office are provided by the association."

It should be noted that section 6 of chapter 576 of the Laws of 1974 amplified and augmented the authority of the CAB. Among the provisions of section 6 were the following:

" § 6. a. The New York City conciliation and appeals board established pursuant to the provisions of section YY 51-6.0 of the administrative code of the city of New York is hereby continued as a nine member board to be appointed by the mayor with the approval of the city council. Four members shall be representative of owners, and one member shall be designated by the mayor to serve as the impartial chairman and shall hold no...