Opinion
L & T 73572/14
04-02-2015
375 New York HDFC, Petitioners-Landlord v. Viola Jones 375 Manhattan Avenue, APT 7N New York, New York 10026, Respondent-Tenant Isabel Guzman Respondent-Occupant
EDWARD JOSEPH FILEMYR IV, ESQ. Attorney for Petitioner 11 Park Place, Suite 1212 New York, NY 10007 212.233.4069 VERNON & GINSBERG, LLP Attorneys for Respondents By: Yoram Silagy, Esq. 261 Madison Avenue, 26th Floor New York, NY 10016 212.949.7300
EDWARD JOSEPH FILEMYR IV, ESQ.
Attorney for Petitioner
11 Park Place, Suite 1212
New York, NY 10007
212.233.4069
VERNON & GINSBERG, LLP
Attorneys for Respondents
By: Yoram Silagy, Esq.
261 Madison Avenue, 26th Floor
New York, NY 10016
212.949.7300
Sabrina B. Kraus, J.
BACKGROUND
This holdover proceeding was commenced by 375 NEW YORK HDFC (Petitioner) and seeks to recover possession of APARTMENT 7N at 375 MANHATTAN AVENUE, NEW YORK, NEW YORK, 10026(Subject Premises) based on the allegation that VIOLA JONES(Respondent), is a month to month tenant, with no ongoing right to possession, and that Petitioner has good cause to seek Respondent's eviction based on her refusal to execute a lease renewal. The primary dispute between the parties is whether the premises are governed by rent stabilization.
PROCEDURAL HISTORY
Petitioner issued a Thirty Day Notice of Termination dated June 16, 2014, terminating Respondent's tenancy effective July 31, 2014. The Petition is dated August 4, 2014, and the proceeding was initially returnable August 20, 2014.
Respondent filed an answer on September 19, 2014, asserting the Subject Premises is subject to rent stabilization, as Respondent was in occupancy prior to the cooperative conversion, pursuant to a non-eviction plan.
The proceeding was assigned to Part L for trial on December 8, 2014, and was adjourned in contemplation of settlement. The parties were unable to reach a settlement, and a trial was scheduled for March 2, 2015, in Part R, as this Court had been reassigned and retained jurisdiction over the proceeding.
On March 2, 2015, the parties, appearing by counsel, stipulated to facts and the submission of documents, and agreed the primary issue for the Court to determine is whether the Subject Premises is subject to rent stabilization. The proceeding was adjourned for submission of legal memorandum, and on March 19, 2015, the court reserved decision.
FACTS
Petitioner is the owner and landlord of the building located at 375 Manhattan Avenue, New York, NY 10026, pursuant to a deed dated February 23, 2010, from UHAB HDFC to Petitioner (Ex 1). Petitioner is a cooperative corporation formed pursuant to pursuant to Article XI of the Private Housing Finance Law and Section 402 of the Business Corporation Law. Petitioner's certificate of incorporation (Ex 3) provides that the HDFC is organized exclusively for the purpose of developing and preserving a housing project for persons of low income.
There is a valid MDR on file for the building through 8/1/15 (Ex 2).
Respondent has lived in the Subject Premises for close to three decades, and well before the cooperative conversion (Ex A-1). Respondent received an offer to purchase prior to the conversion, and elected not to purchase.
Respondent executed a lease for the Subject Premises with HPD, for a term commencing May 16, 1985, at a rent of $244, for an ongoing monthly term (Ex C-1). Respondent also executed a lease for the Subject Premises with Neighborhood Restore, dated December 1, 2002, for a one year term through November 30, 2003, at a monthly rent of $446.00 (Ex C- 2). Neighborhood Restore HDFC was the owner of the premises until June 29, 2004, when the premises was transferred by Deed to UHAB HDFC, Petitioner's predecessor in interest (Ex A-1).
The last lease renewal Respondent executed for the Subject Premises was dated August 30, 2010, is a rent-stabilized renewal form for a period through and including November 30, 2010 at a monthly rent of $1204.18 (Ex 4).
Petitioner sent Respondent a renewal offer dated January 21, 2013, which was not a rent stabilized renewal and sought to give Respondent a one or two year extension, at a monthly rate of $1283.54 or $1308.70 respectively(Ex 5). Respondent never executed said renewal. Respondent remains in possession of the Subject Premises.
Petitioner registered the Subject Premises with Department of Housing and Community Renewal (DHCR) for the years 2003 through 2010 (Ex B) . The registration lists Respondent as the rent stabilized tenant of record for each of those years. The legal registered rent is listed as: $446 for 2003 through 2006; $499.86 in 2007; and $1204.18 for 2008 through 2010.
The Subject Premises was not registered with DHCR between 1984 and 2002, nor was it registered after 2010.
Respondent submits four sets of certified documents [Exs A(1)-(4)] from the Attorney General's office in regards to conversion for the Subject Premises.
These documents are the equivalent of the initial offering plan and amendments for Petitioner, submitted to the Attorney General's office in support of the request for a No-Action Letter . As part of said submissions, Petitioner represented to the Attorney General that:
Pursuant to 13 NYCRR §18.9 a no action letter may be issued where the Attorney General determines that the relationship between the offeror and offerees is of such a nature that the offerees do not require the protection of an offering plan. Thus, the documents admitted as Exs A(1)-(4) are not plans and amendments, but are called instead a Cooperative Information Package, as they are used in the same manner as a plan the court has referred to them as the plans for the purposes of this decision.
Residents who have elected not to purchase shares will not be required to vacate their apartment and will remain as rent-stabilized residents with all applicable rights and protections under the Rent Stabilization Law of 1969.
Also part of said submissions by Petitioner to the Attorney General is a document labeled "Cooperative Conversion Materials For Third Party Transfer". This document provides on pages 4-5 under the heading "Status of Non-purchasing Existing Residents"
All Cooperative conversion plans under the TPT program shall be treated as non-eviction plans. Under a non-eviction plan, all non-purchasing residents, including senior citizens and persons with disabilities, are protected from being evicted as a result of deciding to forgo purchasing the shares allocated to their apartment. All non-purchasing residents will remain rent-stabilized tenants and will be subject to permissible rent increases as determined from time to time by the Rent Guidelines Board. ... Rents for non-purchasing tenants may be higher than the monthly charges for residents who purchase, as they will remain rent-stabilized tenants, and therefore the permissible increases for rent-stabilized (sic) may be more than the 2% per year increase for maintenance fees [Exs A(1)-(3)].
The initial submission to the AG's office represents that there are 20 residential units in the building, 19 of which were being offered for sale and one which would be a Superintendent's unit. Respondent is identified as the tenant of record for the Subject Premises and listed as a proposed offeree. Of the 19 intended offerees the submission represented that only nine had affirmed their interest to purchase.
Each offerree was sent repeated written representations that if they elected not to purchase they would not be subject to eviction and would be rent stabilized tenants.
DISCUSSION
Paragraph 8 of the Petition asserts that the Subject Premises are exempt from rent regulation because it is located within a building that is owned by a cooperative corporation and operated on a not for profit basis for charitable purposes. Petitioner asserts the charitable purpose is to provide affordable housing for low income individuals. It is Petitioner's burden to establish an exemption from rent stabilization [ Rapone v Katz 30 Misc 3d 132(A)].
Respondent argues the Subject Premises is subject to rent stabilization because the conversion was pursuant to a non-eviction plan, that specifically provided for continued protection of non-purchasing rent-stabilized tenants.
§ 26-504(a) of the Rent Stabilization Law of 1969 provides that the law is applicable to Class A multiple dwellings, not owned as a cooperative or condominium, except as provided in §352-eee of the General Business Law.
§ 2520.11(l) of the Rent Stabilization Code provides an exemption from rent stabilization for housing accommodations as provided in § 352-eeee of the General Business Law in accordance with §2522.5 (h) of the Rent Stabilization Code.
§2522.5 (h) of the Rent Stabilization Code specified instances where a cooperative, for which the Attorney General has accepted an eviction plan for filing, may evict a previously rent stabilized tenant. This provision is inapplicable to the case at bar, where the conversion was pursuant to a non-eviction plan.
§ 352-eee (2)(c) (iii) provides that the attorney general will not approve a non-eviction plan unless "(n)on-purchasing tenants who reside in dwelling units subject to government regulation as to rentals and continued occupancy prior to the conversion ... shall continue to be subject thereto."
Based on the foregoing, an apartment that was subject to rent stabilization prior to the conversion under a non-eviction plan, remains subject to rent stabilization, if occupied by a non-purchasing tenant in occupancy prior to the conversion. Generally, tenants in possession prior to a cooperative conversion under a non-eviction plan remain subject to rent stabilization (160 Bleecker Street Owners Inc. v DHCR, 27 AD3d 369).
In this case, Petitioner's claimed exemption from rent stabilization is based on §2520.11(j) of the Rent Stabilization Code, which provides an exemption from rent regulation for housing accommodations in buildings operated exclusively for charitable purposes on a nonprofit basis.
However, the exemption under §2520.11(j) has been held inapplicable where the charitable institution receives government funding. §2520.11(f) of the Rent Stabilization Code provides that housing accommodations owned operated or leased or rented pursuant to governmental funding by any institution operated exclusively for charitable purposes on a nonprofit basis and occupied by a nonaffiliated tenant shall be subject to rent stabilization.
This provision was found applicable to a not for profit corporation organized under the Private Housing Finance Law in Common Ground Community HDFC v Fulgoni (156 Misc 2d 155) where the court the court held because the HDFC had sought and obtained from HPD a loan of over twenty eight million dollars, the premises were subject to rent regulation pursuant to §2520.11(f). In reconciling this provision with §2520.11(j) the court held:
Under standard rules of statutory construction, whenever there is a general provision and a particular provision in the same statute, the general does not overrule the particular but applies only where the particular provision is inapplicable. Section 2520.11(j) is the general provision for housing accommodations operated exclusively for charitable purposes. Section 2520.11(f) is the particular provision for housing accommodations owned, operated and rented or leased with governmental funding exclusively for charitable purposes. As Petitioner obtained funding from HPD, a governmental agency of the City of New York, for the acquisition renovation and operation of the Times Square Hotel, §2520.11(f) of the RSC is applicable. The premises is subject to rent regulation (Common Ground at 158, citations omitted ).
In this case, the proposed contract of sale referenced in the Submission to the AG's office provided that Petitioner was going to purchase the building from UHAB HDFC for $2,087,855.00 (Ex A-1). The funds for the purchase came almost entirely for government funding, including a mortgage from the City of New York. The building was renovated with funding from HPD. An additional grant was provided by the New York State Affordable Housing Corporation of up to $659,000.00 (Ex A-3).
Therefore under the circumstances in the case at bar, Petitioner's status as a not for profit corporation does not lie as a basis to exempt Respondent from rent stabilization.
Petitioner relies 546 West 156th Street HDFC v Smalls (43 AD3d 7) which is distinguishable because it was an eviction plan, and the tenant first occupied the subject apartment in 1994, well after the date of the conversion. This fact was emphasized by the Appellate Division in its ruling wherein the court noted "(i)t is undisputed that respondent has neither purchased nor has been extended an offer to purchase the shares allocated to her present apartment under the proprietary lease." Smalls stands for the proposition that parties cannot stipulate to create status.
The court takes judicial notice, that the New York State Attorney General's Office maintains a Real Estate Finance Database which provides on line information regarding the details of offering plans and indicates that the offering plan for 546 West 156th Street (http://offeringplan.datasearch.ag.ny.gov/REF/planformservlet?id=Y880045), was an eviction plan. The Court may take judicial notice of data maintained on websites by government agencies (see CPLR 4511; Kingsbrook Jewish Medical Center v Allstate Insurance Co 61 AD3d 13; McKinneys State Technology Law §§ 305 & 306).
Petitioner further relies on 512 East 11th Street v. Grimmet (181 AD2d 488), again distinguishable, because the tenant was not in possession prior to the conversion, and the conversion was pursuant to an eviction plan. Grimmet stands primarily for the proposition that there must be just cause to evict a tenant, who came into possession after the conversion, based on the fact that the government is sufficiently entwined with the regulation of an HDFC to trigger constitutional due process protections.
40 Downing St. Housing Development Fund Corp. v Anderson (N.Y.LJ, Apr. 3, 1995, at 28, col 3 [App Term, 1st Dept]) is the appellate authority most on point with the case at bar. The Appellate Term in Anderson noted that while under some circumstances a building converted to an HDFC, under General Business Law §352-eeee and Private Housing Finance Law § 570, is exempt from rent stabilization, there is an exception where the offering plan expressly states non-purchasing tenants would have rent stabilized status. The court held :
The subject building was previously owned by the City of New York, managed by the tenants through the Tenants Interim Lease program and subsequently converted to not-for-profit housing under GBL § 352-eeee and PHFL Section 570 et seq. While this status ordinarily creates a statutory exemption from the Rent Stabilization Law here, the offering plan, pursuant to which the building was converted from City ownership to cooperative ownership, expressly provided that upon sale of the building all non-purchasing tenants, other than those subject to rent control, would return to their rent stabilized status and be offered rent-stabilized leases.
The conversion plan in this proceeding, as noted above, in paragraph 8, (Ex A-1) expressly states: "Residents who have elected not to purchase shares will not be required to vacate their apartment and will remain as rent-stabilized residents with all applicable rights and protections under the Rent Stabilization Law of 1969."
CONCLUSION
Based on the forgoing, the Court finds that Petitioner failed to meet its burden in establishing that the Subject Premises is exempt from rent stabilization and the petition is dismissed.
This constitutes the decision and order of this Court.
Parties may pick up trial exhibits from Window 9 in the clerk's office on the second floor within thirty days. After said period the exhibits may be destroyed in accordance with administrative direction.
Dated:April 2, 2015
New York, New York
____________________
Sabrina B. Kraus, JHC