NYCHA Claims Progress in Section 8 Cleanup - … · NYCHA Claims Progress in Section 8 Cleanup 1. ... The New York City Housing Authority (NYCHA) maintained that it had made substantial

CONTENTS:

REPORTERVol. 30 Issue 10 December 2011

“Fighting to preserve free enterprise in NYC’s housing market”

1 NYCHA Claims Progress in Section 8 Cleanup2 President’s MessageCITY & STATE ROUNDUP

4 Q&A: Wheelchair Ramp Installation5 Beware the Imposition of Retroactive Real Estate Taxes6 Local Law 84 – Benchmarking – Deadline Extended6 SCRIE Information for Owners Now Available On-Line

IN THE COURTS 7 J-51, the Roberts Case and Other Related Cases 9 Tenant Thwarted in Suit to Stop Sales of Housing Court Data 10 Ask the AdministratorRSA SERVICE PROFILE 10 2012 Annual Safety Notice Service12 Calendar of Events

NYCHA Claims Progress in Section 8 Cleanup

1. If the apartment or public space area fails inspection, please make repairs immediately and fax your certification with BOTH landlord and tenant signatures (where required) before 30 days to avoid suspension.

2. Landlord leases should be sent to: NYCHA, P.O. Box 19197, Long Island City, New York 11101-9197.

3. Fax NE-1 certification letters with bar codes ONLY to the dedicated eFAX number listed on the certification, 718-824-0546. Please do not send other correspondence to this fax number, it clogs up the NE-1 fax and keeps (Continued on page 3…)

The New York City Housing Authority (NYCHA) maintained that it had made substantial progress in cleaning up backlogs and getting its new Section 8 computer management system operational at the latest meeting with RSA staff and property managers. The RSA has been meeting regularly with NYCHA (see RSA Reporter, October, 2011) to clarify communications breakdowns and identify processing backlogs which have left many lease renewals pending since at least January.

NYCHA now says that it has scanned all pending documents into its computer system and that lease renewals have returned to normal backlog. They also indicated that no Section 8 terminations have been issued since January as a result of the processing problems.

NYCHA officials pointed out numerous changes in Section 8 processing of which owners need to be aware of. Some highlights are posted on the NYCHA website and

are reprinted in this RSA Reporter. For example, owners should know that Housing Quality Standards Inspections (HQS) can now include problems in public areas, NYCHA forms are now bar-coded and must be submitted as originals, there are new addresses for the submission of leases, fees have been eliminated for the direct deposit of NYCHA payments, property managers are encouraged to sign on to NYCHA’s extranet to view Section 8 status and receive Email alerts and owners can now reach NYCHA through a special telephone number instead of 311.

NYCHA expressed its commitment to cure outstanding problems and the RSA will continue to work with the agency to do so. If you are having difficulty communicating with NYCHA, obtaining lease renewals or have other issues with the Section 8 program, we would like to know. Please contact RSA’s Deputy Counsel, Robin Bernstein at (212)214-9246 with specifics about your situation.

staff from getting to your certifications by having to sort through other correspondence. NYCHA will not respond to other correspondence sent to this dedicated fax, other correspondence must be sent to our correspondence unit at: NYCHA, P.O. Box 19201-9201, Long Island City, New York 11101-9201

4. DO NOT replicate or copy any NYCHA forms! Our forms have 2 distinct barcodes, one that identifies the form and one that is unique to the voucher holder. If you copy or try

10 Facts for Property Owners About Section 8

http://www.nyc.gov/html/nycha/html/home/homeshtml

2 REPORTER| December 2011

PRESIDENT’S MESSAGE

Disclaimer: Every effort is made to provide accurate and up-to-date information in RSA publications and bulletins. However, information or advice provided in these publications should not be taken as legal opinions. Always consult your attorney when in doubt. The RSA Reporter is intended for the exclusive use of RSA members. This publication may not be reproduced, in whole or in part, without the written permission of the RSA. The RSA welcomes comments, suggestions and questions from its members. Editor: Jack Freund Assistant Editor: Jacqueline Monterosso Production: Christine Chu. Copyright 2011, Rent Stabilization Association of N.Y.C., Inc., 123 William Street, NY, NY 10038.

Chairman of the Board Arnold GoldsteinVice Chairmen N. Richard Kalikow, Leonard LitwinChairman of the Executive Committee Arnold GoldsteinPresident Joseph StrasburgExecutive Vice President Jack FreundVice Presidents Mark Engel, John J. Gilbert III, Gary Jacob, Jeffrey Manocherian, Roger Melzer, Howard Milstein, Jimmy SilberTreasurer Lennard KatzSecretary Michael Laub

Directors Frank Anelante, Christopher Athineos, Roberta Bernstein, Dennis Brady, Donald Capoccia, Helen Daniels, Douglas Durst, Matthew Engel, Gary Flamenbaum, Denis Gittens, Laurence Gluck, George Hatzmann, Andrew Hoffman, Michael Kerr, Jack Levy, Robert Nelson, Adam Parkoff, Oscar Perez, Jordan Platt, Neil Rubler, Matthew Schmelzer, Michael Schmelzer, William Schur, Aaron Sirulnick, Joseph Zitolo, Laurie ZuckerHonorary Directors Martin Goodstein, Richard Lefrak, Kenneth Patton, Sanford Sirulnick, Donald Trump, Charles J. Urstadt

The RSA Reporter (ISSN #1089-9375) is published monthly (except August) by the Rent Stabilization Association of N.Y.C., Inc., 123 William Street, New York, NY 10038-3804. Periodicals postage paid at New York, NY.

Rent Stabilization Association ♦ 123 William Street New York, NY 10038-3804 ♦ http://www.rsanyc.org ♦ (212) 214-9200

POSTMASTER: Send address changes to The RSA Reporter, 123 William Street, 14th Floor, New York, NY 10038-3804.

by Joseph Strasburg

Looking Back at 2011All in all, considering the potential

for disaster, 2011 turned out to be a pretty good year for the rental housing industry in New York City.

On a macro level, rental housing, both nationally and in New York, became an economic highlight in an otherwise stagnant or declining economy. The rental housing sector did not suffer as much as many other parts of the economy in the depths of the recession and appears to be reviving more quickly than other sectors. Rental housing is likely to continue to benefit from the continued weakness in the home ownership sector.

In Albany, the RSA, despite the lack of a united industry, was able to hold on to the major gains achieved for the regulated housing industry over the past two decades. We did lose some ground in terms of higher thresholds for deregulation and reduced pay backs for individual apartment improvement in larger buildings.

Some viewed the changes in Albany as a major setback or defeat for the industry. But in politics, success is not measured by the amount of damage inflicted but by the amount of damage that could have been inflicted and was avoided.

By this measure, we certainly had a successful year in Albany, avoiding many very harmful bills that passed the Democratic Assembly, that could have been supported by a self-proclaimed “tenant advocate” Governor and were only held at bay by a tenuous one vote Republican majority in the Senate.

At the City level, we managed to get the highest rent guideline increases in three years. True, we were unable to get a low rent adjustment this year, but we will stand a better chance of doing so next year.

Also at the City level, the RSA was able to moderate what may be described as an overzealous effort to reduce the City’s carbon footprint at the expense of property owners through such administrative initiatives as energy benchmarking and the phase-out of #6 heating oil.

Safety Notices and CO AlarmsThe end of the year is also the time for window guard, lead

paint and fire safety notices, which the RSA delivers for you in one convenient package mailed directly to your tenants. With our Enhanced Safety Notice service, you will automatically get a second mailing if there is no tenant response and you will be able to track tenant responses, generate follow-up work notices and inspection requests, among other features. If you are not enrolled in this important program, call an RSA Counselor at 212-214-9200 today.

Many of you have gotten complaints from tenants about beeping carbon monoxide detectors, which indicates that their useful life has expired. Legislation is expected to be introduced in the City Council that will allow owners to replace these failed detectors and be reimbursed for the cost by the tenant. RSA will shortly have a group purchasing program in place for CO alarms with the Kidde Company, one of the nation’s largest and most reputable manufacturers. Check with the RSA before replacing your carbon monoxide detectors.

I wish you all a happy holiday season and best wishes for the New Year.

3December 2011 |REPORTER

CITY & STATE ROUNDUP

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to replicate the form and/or the barcodes, the form will not be read by our scanners and the form will not attach to the voucher holders case and therefore it will not appear and will be tantamount to never sending it in.

5. We are aware that some landlords assist their tenants in filling out the annual recertification package. This is fine as long as you remember once again, DO NOT replicate or copy the annual review forms. A copy of the form will not allow the 2D barcode to be scanned properly. Whether you or your tenant is filling out the form, please remember to not cross out on the form, do not use white out, or write NA or strike a line across the form. Please do: write clearly, fill out only the areas that pertain to the tenant (do not put NA, just leave blank). And most importantly, make certain that the tenant and all adult family members sign the Affidavit of Income (AOI) and related forms in the package. These are required forms by HUD and failure to sign them creates serious delay in processing. Also, encourage tenants to send in all required documentation at the time they submit their AOI package. If they are employed, send in paystubs, if they receive Social Security benefits; please send the current year’s award letter, etc. This method also applies to any tenant interim changes in income or family composition. Sending in as much documentation as possible with the request for a change allows for more expeditious processing.

6. Your building may lose subsidy due to a public space violation. NYCHA is required by HUD regulations to inspect the public space areas for the safety and well- being of the tenants. Examples of public space violations that will result in a building wide suspension if not repaired in 30 days are: Broken hallway locks, Missing/Rotten Stairs, Infestation, Loose bricks, Debris on or near door, Elevator out of order, Elevator over the ground floor, Elevator not level with floor-severe, Elevator out of order- over the 5th FL.

7. Lease Renewals must be submitted to the new P.O. Box 19197, Long Island City, NY 11101-9197. Lease Renewals

must be submitted 60 days prior to the lease effective date. You may request a cover sheet for submission of your lease renewal by calling the Customer Contact Center at 718-707-7771.

8. NYCHA strongly encourages Landlords to register on our Landlord extranet by logging on to www.nyc.gov/nycha “click on Section 8 assistance”. You may review NE-1 failed unit and public space violations and register for direct deposit. If you experience technical difficulties, please contact Ms. Kantor at 212-306-4122.

9. Communication begins with the Customer Contact Center (CCC), if you have questions. If you feel that you are not getting the responses you need, please note the day and time of your call and the person you spoke with. The NYCHA call center has a sophisticated quality assurance program and we are able to review all calls. This will assist us greatly in determining where we can improve customer service.

10.You must contact the Leased Housing Eviction Review Unit if you wish to commence legal action against your Section 8 tenant. The Eviction Hotline is 212-306-8500.

The New York State Homes and Community Renewal (HCR) is moving their Bronx Borough Rent Office. Starting November 30, 2012 HCR will be located at:

2400 Halsey StreetBronx, NY 10461

Phone: (718) 430-0880 Fax: (718)430-0670

If you prefer to speak with a NYCHA representative in person, you can visit one of the following walk in centers:

BRONX/MANHATTAN LEASED HOUSING OFFICE478 East Fordham Road (1 Fordham Plaza), 2nd FloorBronx, NY 10458

BROOKLYN/STATEN ISLAND LEASED HOUSING OFFICE 787 Atlantic Avenue, 2nd FloorBrooklyn, NY 11238

QUEENS LEASED HOUSING OFFICE90-27 Sutphin Boulevard, 4th FloorQueens, NY 11435



Q: Will the installation of a wheelchair ramp qualify for a Major Capital Improvement Rent Increase and a J-51 Tax Abatement?

A: Pursuant to Section 2522.4 of the Rent Stabilization Code, an owner may apply for a major capital improvement rent increase (MCI) when there has been an

increase in services or an improvement to the building (other than for ordinary repairs). The improvement must be building-wide, depreciable under the Internal Revenue Code, required for the operation, preservation and maintenance of the structure and replace an item whose useful life has expired.

Recent decisions by the DHCR have granted owners’ applications for an MCI based on the installation of a wheelchai r ramp. In 64-20 Saunders S tree t , Docket#WJ110017RT, (decided on July 22, 2011), DHCR allowed the owner to receive an MCI for a wheelchair ramp and lobby door installations. DHCR ruled that “the work performed meets the definitional requirements of a major capital improvement for which a rent increase may be warranted.” In 33-52 85th Street, Docket #TE110078RO (decided on February 6, 2008), DHCR again approved an owner’s application for an MCI based on the installation of a wheelchair ramp. In addition to the owner submitting all the required evidence to comply with the MCI application, the Commissioner noted that “a new handicap ramp was built, and the record shows that the building houses a disabled tenant and the owner constructed the ramp in compliance with the Human Rights Law by giving reasonable accommodation to its tenant with a disability. Therefore, the Commissioner finds the handicap ramp eligible for an MCI rent increase.”

Fur thermore , in 35-65 Bruckner Boulevard , Docket#PH630076RO (decided on January 15, 2004), DHCR decided that “where there has been an increase in services or improvement, other than repairs, on a building-wide basis, which the owner can demonstrate is necessary in order to comply with a specific requirement of law, an MCI rent increase may be warranted.” Here, the record shows that the building housed a disabled tenant and that the owner constructed the ramp complying with the intent of the Local

Law 58 of 1987 and, as a result, the MCI application for the ramp was approved.

DHCR has not issued a formal policy but these decisions indicate that for a ramp to be considered eligible for treatment as an MCI, the owner should have received a complaint from a tenant who has mobility problems and/or the owner has been contacted by a governmental agency dealing with accommodations, such as the Commission on Human Rights. In such cases, the ramp should comply with local construction requirements. DHCR recommends that owners who are unsure of their situation should ask for a Prior Opinion.

With respect to J-51 benefits, in the rare case of a building (1) which performs a J-51 moderate rehabilitation or (2) obtains a new certificate of occupancy, it is possible (but not definite) that J-51 benefits might be granted under the category of concrete flatwork. J-51 benefits are given only for items listed in the itemized cost breakdown schedule. Since a handicap ramp is not a listed item, it would not normally be eligible. However, eligibility for certain items is often left to the discretion of the J-51 engineering unit and owners may be granted J-51 benefits if the J-51 engineer feels it is “equivalent” to a listed item in the J-51 itemized cost breakdown schedule. There is some indication in the 1993 edition of the J-51 engineer’s “Field Inspection Guide” that a ramp might be deemed eligible for J-51 benefits as concrete flatwork. Unfortunately, the J-51 allowance for this item is set at only $4.00 per square foot and, after deducting J-51 filing fees and processing costs, unless this is an exceptionally long ramp, it will not result in an appreciable costs savings. Furthermore, the law requires that 50% of the annual real estate tax savings will be deducted from any major capital improvement rent increase which is granted for the same work.

Paul Korngold is a partner in the NYC law firm of Tuchman, Korngold, Weiss, Lippman & Gelles. Grace Betancourt is a legal intern with that law firm and a law student at New York Law School.

By Paul J. Korngold and Grace Betancourt

In the November Reporter, owners were advised about a State Supreme Court decision, Riverbay Corp. v. City Commission on Human Rights, which upheld a City Human Rights Commission ruling that it was not “unduly burdensome” to require the property owner to install a wheelchair access ramp, which the owner estimated to cost almost $20,000, as a “reasonable accommodation” under the City’s Human Rights Law. As a follow-up, we were asked to explore whether an owner can obtain a rent increase or tax abatement to recoup the cost of the installation of such a ramp.


Beware the Imposition of Retroactive Real Estate Taxes

A recent New York Supreme Court decision affirmed the right of the City of New York to collect retroactively real estate taxes in cases where the City of New York forgot to bill the owners. Although this decision dealt with a retroactive imposition of taxes on a non-residential building, clearly the law applies to residential owners and, particularly, those owners who are receiving tax benefits such as J-51, 421-a, Senior Citizen Rent Increase Exemption (“SCRIE”) and other similar real estate tax abatements and tax exemptions.

In Milea Associates v. New York City Dept. of Finance, Index 5615/11, NYLJ 1202522237141, at *1 (Sup. Ct. Kings County decided Oct. 12, 2011) at issue was a property tax exemption given in 1981 to Milea Associates, a Brooklyn company, through the City’s Industrial Development Agency (“IDA”). The company agreed to make payments in lieu of taxes (“PILOT”) to the IDA that were lower than the normal property taxes the company would have paid on their property if there had been no PILOT in place. The PILOT was scheduled to end when Milea Associates agreed to buy the property from the agency on February 3, 2000. A Tax Directive Letter, dated February 3, 2000, was sent to the Department of Finance to advise them that Milea Agency’s PILOT benefits should cease; however, through inadvertent error, the letter was not processed and Milea Associates did not receive tax bills for the period of February 3, 2000 to January 2, 2011. Upon finding the error, the Department of Finance revoked the incorrect exemption and generated a real property tax bill for the period of July 1, 1999 to January 1, 2011 in the amount of $480,299.03. Milea Associates paid the bill and brought an Article 78 proceeding against the Department of Finance alleging among other things that this imposition of taxes was arbitrary, capricious, unreasonable, unsupported by the facts and contrary to law.

Justice Michael L. Pesce ruled in favor of the Department of Finance, finding that “it is the burden of the taxpayer to make sure that its taxes have been paid” and that the “Department of Finance acted appropriately when it billed petitioner for the taxes that had not been paid since the property’s tax exempt status had expired.” Justice Pesce also wrote that “the fact that the petitioner therein was not sent tax bills for the subject years, or that the tax rolls were in error so that the petitioner was not taxed in prior years, did not bar the City from levying these taxes for the full period that the property was taxable.”

Although the imposition of taxes was scheduled to occur in this case as a result of a sale, owners should not believe that title insurance will cover them against retroactive impositions of real estate taxes. A retroactive real estate tax lien can be imposed after a closing and title insurance will not protect the purchaser unless it was of record on the date of closing. The title company is liable only where the tax lien could have

been discovered by the title company and the title company failed to do so.

A recent audit by City Comptroller John Liu discovered that the city had paid out $11.8 million through SCRIE benefits to about 4,000 dead beneficiaries. The audit discovered that owners of 3,801 tenants who were dead, some for as long as a decade, continued to receive the benefits because the deceased tenants’ households did not inform the owners or the City. City officials say that they have recovered $3.3 million of the posthumous profits, but say they will continue to collect the rest and implement safeguards to avoid this problem.

Existing owners of multi-family properties, as well as purchasers of multi-family properties, may wish to take the following steps to avoid the retroactive imposition of these charges under each of these programs:

SCRIE1. Is the named tenant actually 62 years of age or older

and still living in the apartment?2. Is the apartment still subject to rent control or rent

stabilization?3. Does the beneficiary have an annual household income

of $29,000 or less?4. Does the beneficiary pay more than one-third of the

household’s aggregate disposable income for rent?J-51

1. Is the property still receiving abatements or exemptions even though the benefits were scheduled to expire?

2. Is the amount of the abatement or exemption accurate?

421-a1. Is the amount of the exemption accurate?2. Does the scheduled expiration date correspond with the

certificate of eligibility and certificate of occupancy?

For both J-51 and 421-a, owners are urged to be sure their rent registrations with the DHCR are timely filed. Our office is presently involved in an Article 78 proceeding where the Department of Finance retroactively imposed a $750,000 tax lien on a five-family building receiving 421-a benefits for failing to properly register the units with the DHCR.

Owners and prospective purchasers are urged to take similar precautionary steps on properties with DRIE or coop/condo abatements. By properly checking the records of the city agencies as well as the owner’s own internal records, the imposition of retroactive real estate taxes can be avoided.

Paul Korngold is a partner in the NYC law firm of Tuchman, Korngold, Weiss, Lippman & Gelles. Grace Betancourt is a legal intern with that law firm and a law student at New York Law School.


By Paul J. Korngold and Grace Betancourt


CITY & STATE ROUNDUPLocal Law 84 - Benchmarking - Deadline Extended

1. Date for Penalties: While compliance with Local Law 84, Benchmarking, was due on May 1, 2011, the City will accept the 2010 Benchmarking Compliance Report up to December 31, 2011 without the issuance of a penalty.

2. Warning Letter: A warning letter was sent to all buildings that did not comply by August 1, 2011. If you received this letter and believe you have benchmarked it could be for the following reasons: a. You benchmarked after August 1. If you correctly

entered your borough, block and lot number (BBL) in Portfolio Manager’s Notes field, and you have a confirmation email from the EPA, then you are in compliance and there is nothing further to do.

b. The BBL was entered inaccurately or not entered at all. If you benchmarked before August 1, please check the confirmation email you received to ensure the BBL entered is correct. If the BBL is inaccurate, then simply enter the BBL correctly and resubmit the report, as you did initially, by 12/31/11. (See instructions on how to enter the BBL)

3. Benchmarking Help Center: A hotline is available to answer general benchmarking questions and assist with the use of Portfolio Manager. It can be accessed Tuesdays and Thursdays from 10am-5pm and Fridays from 10am-2pm, by dialing 311 or 212-442-7901. If the Help Center is not open, leave a message and they will return your call. This resource has been made available through a partnership between The

SCRIE Information for Owners Now Available On-LineThe City’s Department of Finance (DOF) has had numerous

problems with the administration of SCRIE since they took over responsibility for the program from the Department of the Aging in 2009. The problems include delays in the processing of new and renewal applications, the failure to provide any reports on an owner’s SCRIE tax abatement (called a “TAC Report”) unless requested by the owner, and the failure to provide a phone number for owners to call. The only way owners could communicate with DOF was by calling 311.

One of the most egregious problems was a “computer glitch” earlier this year, which resulted in thousands of own-ers not receiving proper credits on their tax bills because the SCRIE credits to which they were not entitled were not properly calculated by DOF.

In September, due to pressure from RSA, as well as tenant advocacy groups, the City Council held a hearing on prob-lems with DOF’s administration of the SCRIE program. A further hearing on this subject was also recently held by the State Assembly’s Housing Committee. Both before and since these hearings, RSA has been working together with DOF to improve the flow of SCRIE information to owners.

As a result, DOF has generated two new SCRIE reports

which were posted on DOF’s web site on December 1. The first is a new TAC report. The TAC report shows tax credit and debits posted during a given period. The second is a called a “tenant report.” The tenant report shows status and benefit information for current and recent SCRIE tenants. According to DOF, the TAC reports will be updated on a monthly basis and the tenant reports will be updated on a weekly basis.

Links to the SCRIE reports are available on RSA’s website. Buildings are identified by borough, block and lot information (BBL) and SCRIE docket numbers are used to identify the SCRIE tenants. Owners who have tenants on SCRIE were notified of the docket number in the initial approval letter. For privacy reasons, tenant names and apartment numbers are not posted on-line. Owners can use the two reports along with their own tenant files to reconcile their tenant accounts.

DOF has also included an e-mail address for owners to contact the agency if they have questions or problems with their reports: [email protected]

A link to the SCRIE reports is on RSA’s website: http://www.nyc.gov/html/dof/html/property/property_tax_re-duc_drie_sc_ll.shtml

Beyond Benchmarking:Improve Energy Performance

and Your Bottom LineFree Workshop for MultiFamily Building Owners and Operators

Monday, December 12, 3:00 – 5:00 PMReal Estate Board of New York Headquarters570 Lexington Avenue • Mendik Education Center, Lower Level,New York, NY 10022

To RSVP, please e-mail your name and organization to the following address with the subject line

“NYC Workshop: Multi-Family” to: [email protected]

City University of New York (CUNY), New York State En-ergy Research and Development Authority (NYSERDA), and the City of New York. 4. Benchmarking Training: The Association for Energy Affordability is offering in person training on the Portfolio Manager tool. The training also covers how to comply with Lo-cal Law 84. For class dates and to register visit their website. 5. Updates on the City’s Website: Please regularly visit the Greener, Greater Buildings Plan website for more informa-tion and continual updates on Local Law 84: http://www.nyc.gov/GGBP


IN THE COURTS

J-51, the Roberts Case and Other Related CasesEver since the Court of Appeals ruled in October, 2009, in

Roberts v. Tishman Speyer, that property owners could not deregulate units in rental buildings that received J-51 benefits, there has been a significant amount of concern regarding how the issues arising from the Court’s decision would be resolved. There was also much concern regarding whether interpretations of Roberts could expand its application into other scenarios. Two years later, that concern and those issues remain a constant for property owners.

Roberts The Court of Appeals did not resolve whether Roberts was

to be applied retroactively to previously deregulated units or only prospectively, so that only future deregulations would be prohibited in J-51 buildings. In addition, if Roberts was to be applied retroactively, the Court did not determine how the four-year period was to be measured for the purpose of calculating overcharges. The extent of an affected owner’s potential overcharge liability is related directly to how these issues are, ultimately, resolved.

While the manner in which four-year period is to be measured remains an open question, the courts are slowly resolving the question of retroactivity. In a recent decision by the Appellate Division, First Department, dated November 3, 2011, involving an appeal by MetLife (the prior owners of the Stuyvesant Town/Peter Cooper Village complex) from a lower court ruling which gave retroactive effect to the Roberts decision, the Court affirmed that ruling and rejected MetLife’s argument that Roberts should only be applied prospectively. We will be watching all further developments in this very important case.

A lower court decision favorable to owners was recently issued regarding the calculation of the four-year overcharge period. In Morgan v. Mayflower Development, State Supreme Court Justice Eileen A. Rakower considered the situation where, in 2005, an unregulated tenant commenced occupancy in a J-51 building at a rent of $4,250 and then filed the overcharge claim five years later, in 2010. Justice Rakower held that the base date for measuring the four-year overcharge was the rent charged in 2005 and not, as the tenant argued, the last regulated rent more than four years prior to filing the claim. Justice Rakower also rejected the tenant’s claim for treble damages, finding that in this uncertain area of the law there was no demonstrated claim of fraud or willfulness. The owner was represented by Niles Welikson, Esq., from Horing, Welikson & Rosen.

GerstenWhile owners of J-51 buildings who had previously

deregulated units under the high-rent vacancy provisions of the rent laws are bound by Roberts, the status of units in J-51 buildings that had been previously deregulated under the high-income, high-rent procedures has been an open question. In Gersten v. 56 7th Avenue, LLC, the Appellate Division, held that tenants who were deregulated previously as a result of the high-income, high-rent deregulation process were NOT protected by Roberts.

In this case, the tenants, who lived in an apartment that was combined over the years from three apartments, were high-income deregulated in 1999. In December, 2009, after the Court of Appeals issued its decision in Roberts, the tenants brought a lawsuit claiming that their deregulation in 1999 was invalid because the building in 1999 received J-51 benefits. In July, 2010, the lower court ruled in the owner’s favor, upholding the deregulation, and in August, 2011, the Appellate Division affirmed the lower court’s decision, holding that the tenants “had a full and fair opportunity to litigate before DHCR [in 1999] whether their apartment was subject to luxury deregulation.” Because the tenants had the opportunity to raise this issue at that time, the Court held that the tenants “are now estopped from relitigating the issue 11 years later” and the owner was “entitled to have the determination treated as final.” While the number of units that have been high-income deregulated over the years is relatively small when compared with the number of high-rent deregulated apartments, Gersten is significant because, at least as of now, owners with these units do not have to be concerned with the threat of overcharge liability that would ensue if the courts ruled that these units were deregulated unlawfully. This issue is still not resolved definitively, as Gersten is being appealed by the tenants to the Court of Appeals. The owner is represented by Magda Cruz, Esq., from Belkin, Burden, Wenig & Goldman.

Administrative DecisionsZucker: The role of DHCR’s Office of Rent Administration in the implementation of Roberts-related cases is extremely important for property owners and their decisions need to be followed closely by property owners. Two recent decisions by DHCR have the potential to have an adverse impact on property owners.

In one decision, known as Zucker, (Docket No. XC410013RK), the tenants resided in a building which received 421-a benefits when it was built in 1974; those benefits expired in 1985. In 1982, the building converted to a cooperative and obtained J-51 benefits in 2005. The tenants were high-income, high-rent deregulated in 2006 and

(Continued on next page)


IN THE COURTS

their initial PAR was denied by DHCR in March, 2009. After Roberts was decided in October, 2009, the tenants moved for reconsideration; the owner responded, arguing that Roberts was not applicable to buildings owned as cooperatives.

In its second PAR decision, issued on July 19, 2011, DHCR ruled that the owner’s position “is without merit” and held that the tenant’s apartment should not have been deregulated, stating:

Since the subject apartment was already and continued to be subject to rent stabilization as the result of its prior receipt of 421-a tax benefits, the exception out of the rent stabilization regulatory framework referred to by the owner concerning cooperatives and condominiums receiving J-51 benefits is not applicable and therefore luxury decontrol is not available for the subject apartment while the J-51 benefits are being received.

We will be following Zucker closely to see whether the application of Roberts by DHCR to cooperatives and condominiums is upheld by the courts and whether the prior receipt of 421-a benefits limits the impact of this case. The owner is represented by Blaine Schwadel, Esq., of Rosenberg & Estis. Berk: In Berk, DHCR addressed whether a rent-controlled tenant could be high-income deregulated after the expiration of the building’s J-51 benefits. The owner commenced the high-income deregulation process against the tenant, who was rent-controlled both before and after the expiration of benefits.

The tenant was deregulated by DHCR, in March, 2009, based upon her high-income/high-rent status. However, at the PAR level, DHCR reversed the Administrator’s decision and ruled that the deregulation order should be revoked, even though the J-51 benefits had expired (Docket No. YL420051RT). According to the PAR decision, “there is nothing in the Rent Control Law which provides for the resumption of the availability of high income deregulation after J-51 benefits have expired” and, therefore, “high income rent deregulation is not available to rent controlled apartments for which J-51 tax benefits have been received, such as the subject apartment, even after those J-51 benefits have expired.

This case raises many questions for property owners, including whether DHCR will apply its holding in Berk also to rent-stabilized high-income tenants and, of even more concern, whether DHCR will apply its holding in Berk to high-rent vacancy deregulation cases as well. Unfortunately, there is no explicit language in DHCR’s decision which limits its applicability only to rent-controlled high-income tenants. While the decision by DHCR in this case would not be a significant industry-wide issue if it is limited in its application only to high-income rent controlled tenants, it would be far more damaging if it was expanded to apply to the larger universe of stabilized apartments in buildings where J-51 benefits have expired. The owner is represented by David Cabrera, Esq., of Borah, Goldstein, Altschuler, Nahins & Goidel.

J-51, the Roberts Case and Other Related Cases (Continued from page 7)

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IN THE COURTS

Tenant Thwarted in Suit to Stop Sales of Housing Court DataWhen a prospective tenant applies for an apartment, there

are two invaluable sources of information regarding that person’s suitability to live in your building—their credit his-tory and their litigation history. Over the past several years, there have been attempts, sometimes successful, to make it increasingly difficult to obtain that information.

Information about whether an applicant for an apartment has been the subject of prior non-payment or holdover pro-ceedings is critical to a building owner’s decision-making process. That information, which is a public record, has long been made available by the Office of Court Administration to companies who pay the State for that information and who, in turn, provide that information to owners for a fee. Tenant advocates have objected to that practice and various Democratic State legislators have, at least since 2006, been working to undermine this valuable resource for property owners. In 2008, in response to those efforts, the Office of Court Administration agreed to cease providing information about cases that are commenced by owners but which are never actually calendared. According to OCA, about 40% of

all Housing Court cases fall into that category. In addition, OCA stopped providing the addresses of tenants, making it more difficult for owners to match the information they are given when there are multiple persons with the same name. However, although OCA did take those steps, it does continue to provide Housing Court litigation information to the tenant screening companies.

Claiming that the sale of this information amounts to “ten-ant blacklisting,” the validity of this practice is now being challenged in State Supreme Court in the case of Whelan v. Lippman. Specifically, the tenant claims that the sale of the information to the tenant screening agencies “has a constitu-tionally defective chilling effect on the ability of the plaintiff, and other residential tenants similarly situated, to exercise their constitutionally protected right of access to the New York City Housing Court….” On November 16, 2011, State Supreme Court Justice Eileen A. Rakower denied a motion by the tenant to enjoin the ongoing sale of the Housing Court information by OCA while the case is continuing through the courts. The suit was then discontinued by the tenant.

RSA Members should take advantage of our fuel savings program and start saving on this year’s hea ng bills today! Can you really afford not to? There is no charge for joining this program. These are cost saving perks for being an RSA Member.

HEATING SEASON IS HERE! RSA FUEL SAVINGS PROGRAM: Due to the size of our membership, RSA has negotiated discounted pricing with some of the largest fuel suppliers in the city, strictly for RSA members, on #2, #4 and #6 heating oil. Service contracts, will-call, and scheduled deliveries are available.

Every year our members purchase millions of gallons of home heating oil at prices that have saved them thousands of hard earned dollars.

RSA NATURAL GAS SAVINGS PROGRAM: RSA members whose buildings use natural gas can now save money and enjoy greater purchasing flexibility by joining the Natural Gas Savings Program. This program allows natural gas users to purchase gas through an RSA marketer rather than purchasing it directly from local u li es.

In addi on to savings realized, natural gas users will have the op on of purchasing on either a variable or a fixed rate basis. Local u li es offer only monthly variable rates subject to market condi ons.Typical savings for this year are projected between 5% and 12% but because of market vola lity last year’s savings was approximately 20%!

For a quote for your building using the RSA NATURAL GAS SAVINGS PROGRAM:FAX to: (212) 732-0618 your most recent gas bill with the following informa on

clearly printed on the bill: Name, Address, Phone #, RSA Agent # or MAIL to: RSA, ATTN: Gas Program, 123 William St., 14th Floor, New York, NY 10038.

Any ques ons, call Leo Lehrer, RSA’s Director of Marke ng and Sales at (212) 214-9255.


IN THE COURTS

ASK THE ADMINISTRATORQuestion: I have had several inquiries lately from RSA members regarding situations where a tenant is apparently in a nursing home and a family member or a friend has moved into the apartment.

Answer: Several issues arise under those circumstances. First, owners are reminded that they should only accept rent checks from persons whose names appear on the lease. To accept a check having another person’s name (even if a parent, sibling or child) may result in a Housing Court judge ruling that you have accepted that person as a tenant and allow that person, even if they have not met the requirements for succession rights, to succeed the tenant of record.

Generally, succession is granted to an individual only where they fall within the definition of a person entitled to succession under the law and where they have resided in the apartment with the tenant of record for at least two years – one if the person claiming succession is disabled. I say “generally” because the City’s housing court judges seem to regularly expand and redefine the meanings of various applicable laws, almost always to benefit tenants.

One of the keys here is that the person claiming succession (and the cheaper the apartment, the longer the line of concerned friends and family) must have resided with the tenant of record. Just because someone says they have met the requirements doesn’t mean they have done so in reality. Therefore, the issue of succession rights is an important one for owners to be aware of and to protect themselves against. Always consult your lawyer in cases where succession rights are claimed.

Additionally, and by way of a strong warning, it is imperative that no members of your building staff or management team assist the person who now claims to be taking care of the apartment or the tenant of record until you have ironclad proof that the person who claims the right to act on behalf of the tenant actually has that right. That could include a proper Power of Attorney or may require a court order. I have seen cases where one friend or family member disposes of personal effects of the tenant of record and then someone else comes forward and claims they are the proper party to have done so. The lawsuits follow rather quickly as the “wronged” friend or family member claims that important documents and personal items of great value were removed, with the owner’s assistance. So be very careful.

The next issue that arises in these nursing home-type cases is primary residency as it relates to the tenant of record. What if you believe the tenant cannot or will not be returning to the apartment? The law states that where a tenant of record is in a nursing home or some similar facility (e.g., rehabilitation facility) and has the desire to return or the owner cannot show that the tenant has abandoned the apartment, the tenant of record cannot be evicted. This is true

even in cases where people have moved into a rehabilitation facility because of drug or alcohol abuse and resided in a special facility or home for more than a year.

Bear in mind that each claim is case specific. That means there is no formula that an owner can rely upon to know when they will be entitled to evict a tenant residing in a nursing home based on the tenant’s non-residency in the apartment. Each case is decided by a judge based upon the merits of that particular case and the facts and circumstances presented at the time of trial.

It is not unheard of for family members or friends to hide or misrepresent the extent of the tenant of record’s illness or injuries in order to have access to the apartment and to live there. Nor is it unusual for that family member or friend to continue to reside in an apartment after the passing of the tenant of record and never advise the owner that the tenant of record has passed away. Cases abound where people forge the signatures of the deceased on lease renewals and then, when caught, litigate claiming succession rights despite their obvious and intentional forgeries and lies.

In circumstances where a tenant of record is in a facility and the owner seeks to evict the tenant based upon non-primary residency of the tenant, the language that the courts cite regularly in their rulings is that there must be proof that the tenant does not intend to return to the premises.

Given that each case requires a “fact-sensitive inquiry” and that judges have many factors that they can consider when rendering their decisions, it is imperative that you consult with your attorney as soon as you are aware of a tenant residing in a facility so that your fact inquiries can begin immediately.

Finally, bear in mind that even where your fact inquiry proves that the tenant may have no ability or intent to return to the apartment, you can still lose that case if a judge rules that you waived that right by waiting to act upon the information for too long a period of time before commencing your action.

As I have said countless times before, “no good deed goes unpunished.” Where you think you have been assisting a tenant or their family in times of need, a judge may rule that in doing so you waived your right to evict the tenant and their guest.

Answer provided by Howard Stern, Esq., Administrator of the RSA Legal Plan for small property owners, who is solely responsible for its content.


RSA SERVICE PROFILE

2012 Annual Safety Notice ServiceAre you complying with the law?

Each year, building owners must provide their tenants with three required notices: • Window Guard • Lead Paint and • Fire Safety Plans

RSA has combined these notices into one mailing and gives you TWO options to comply with these annual legal requirements. Protect yourself

and avoid liability by signing up for the Basic or Enhanced Safety Notice Service today! Notices will be mailed between January 1-16, 2012.

► The Basic Safety Notice Service provides you with:Annual Window Guard, Lead Paint and Fire Safety Plans, sent to your tenant.• Return envelopes for your tenant to send the notices back to you.• Proof of mailing maintained by RSA.•

►► The EEnnhhaanncceedd SSaaffeettyy NNoottiiccee SSeerrvviiccee provides you with: A complete digital back office to fulfill your annual safety notice requirements with the ease of a paperless, online system. The Enhanced Safety Notice Service features include:

Window Guard/Lead Paint responses from your tenants will be return mailed to the RSA to • be scanned and coded.If a tenant response is not received in thirty days, a second notice will be mailed • automatically. Use the secure RSA website to generate follow-up work orders for tenants who have not • responded, require window guard installation or repair or require a lead paint inspection. Print the required letter to the NYC Department of Health and Mental Hygiene listing the • apartments which did not respond and could not be inspected.

If you’ve used the Annual Safety Notice Service in the past, you might consider using the improved Enhanced Safety Notice Service. Whether you complete the process on-line or through the mail, you can use the RSA website to verify processing dates and to print a notarized affidavit as proof of mailing, should you need it for legal purposes.

HOW DO I SIGN-UP? ► Basic Safety Notice Service:

Return the Worksheet to RSA.• - or -

Log on to the RSA website• (www.rsanyc.org)

► Enhanced Safety Notice Service: AVAILABLE ONLINE ONLY Log on to the RSA website (www.rsanyc.org).

For information or assistance call the RSA at 212-214-9200.

RENT STABILIZATION ASSOCIATION • 123 William Street • New York, NY 10038 • 212-214-9200

It is extremely important to send your worksheet in or sign-up online ASAP so that your notices can be mailed on time. Notices will be mailed between January 1-16, 2012.

WHAT DOES IT COST? ► Basic Safety Notice Service:

$4.40 per apartment for members ($40 minimum per bldg.) and $6.40 per apartment for non-members ($60 minimum per bldg.)

► Enhanced Safety Notice Service: Includes all the features of the basic service, is available for an additional $1.50 per apartment and is AVAILABLE ONLINE ONLY.


PeriodicalPostage

PaidNY NY

REPORTER

CALEN DAR

DECEMBER · JANUARY

December 7Non-Payment Workshop12:30 PM – 4:00 PMSeating is limited. Call Lisa Richmond at (212) 214-9243 to register. See page 9 for details.

December 15J-51 DeadlineLast day to file with HPD for the quarter ending today.

Annual Elevator Inspection DeadlineQualified inspectors have 45 days to provide you with a completed inspection form (ELV-3). Owners then have 45 days to file this form (an original plus one copy) with the Dept. of Buildings local borough office. Dec. 31 is the last day for filing

December 21Commercial Rent Tax Return and Payment Due for the 2nd quarter ending Nov. 30.

December 25 Christmas Day Building Service Employees’ Union and Sanitation Workers’ holiday. No garbage pick up, no street cleaning. CITY, STATE AND RSA OFFICES CLOSED DECEMBER 26.

January 1New Year’s Day Building Service Employees’ Union and Sanitation Workers’ holiday. No garbage pick up, no street cleaning. RSA OFFICES CLOSED JANUARY 2.

Pay N.Y.C. Property TaxFor properties assessed at more than $80,000, the last semi-annual payment for fiscal 2011-2012 is due to N.Y.C. Dept. of Finance today. For properties assessed at $80,000 or less, the third quarterly payment is due.

Boiler InspectionBetween Jan. 1 and Nov. 15 , low-pressure boilers in buildings containing 6 or more apartments must be inspected by a certified inspector and filed within 45 days of the date of the inspection with the Department of Buildings.

January 16Lead Paint/Window Guard/Fire Safety NoticesLast day to deliver Lead Paint/Window Guard/Fire Safety Notices. Call RSA at (212) 214-9200 today!

SEASON’S GREETINGSFrom the Board of Directors and Staff of RSA

Documents

NYCHA Claims Progress in Section 8 Cleanup - … · NYCHA Claims Progress in Section 8 Cleanup 1. ... The New York City Housing Authority (NYCHA) maintained that it had made substantial