Opinion
1250/2006.
Decided October 16, 2006.
JPMorgan Chase Legal Department, Beldock Levine Hoffman LLP, Borah, Goldstein, Altschuler, Schwartz Nahins, P.C.
The petitioners, New York State Tenants Neighbors Coalition, and Stephen Robinson, (hereinafter referred to as "NYS T"), move pursuant to Article 78 of the Civil Practice Law Rules for an order pursuant to CPLR §§ 7803(1) and (3) invalidating Guideline 40 adopted by the respondent, Nassau County Rent Guidelines Board, (hereinafter referred to as the "Board"), on September 21, 2005. The Proposed Respondent, Apartment House Council of Nassau County, submits an Answer to the Petition herein. The Board submits a Verified Answer and Memorandum of Law in Support of Verified Answer. The petitioners submit a Verified Reply and Reply Memorandum in Support of the Article 78 Petition.
A conference regarding the above matter was held before this Part on August 17, 2006.
The petitioner, NYS T, a not-for-profit corporation and a statewide membership organization, advocates and lobbies for tenants' rights and affordable housing programs, and has 350 individual members in Nassau County. The petitioner, Stephen Robinson, is a tenant at 590 Fulton Avenue, Apartment B, Hempstead New York, (hereinafter referred to as the "building"). The building is covered by the Emergency Tenant Protection Act, (hereinafter referred to as "ETPA"). The respondent, the Board, was created to perform the quasi-legislative function of establishing annual rent guidelines for rent adjustments for rent-stabilized apartments.
The Board passed Guideline 40 on September 21, 2005 for the 2005-2006 year, and certified Guideline 40 as the maximum rent adjustments for the year on October 5, 2005. Guideline 40 provides lease renewal guidelines and conditions. Guideline 40 sets different levels of rent adjustments for tenants who earn less than $24,000.00 per year, than those who earn more than that amount. In essence, Guideline 40 provides that tenants who can demonstrate that they earn less than $24,000.00 per year will not be subject to a rent adjustment.
The petitioner, NYS T, submits that Guideline 40 is unlawful, affected by an error of law, was adopted following a violation of New York Open Meetings Law, and is illegal because the respondent failed to properly file its findings. The Board submits that it held four public meetings prior to finalizing Guideline 40, and that the Board, in such proceedings, acted reasonably, in good faith and in accordance with all applicable laws, rules and regulations.
The respondent also argues that regarding Guideline 40, the petitioners lack standing to challenge the lease renewal guideline pertaining to tenants whose gross income is below $24,000.00 a year, lack standing to challenge the provision which requires that a dispute between a tenant and landlord concerning the applicability of the "low income" guideline be determined by the Board in writing before submission to the Division of Housing and Community Renewal, (hereinafter referred to as "DHCR"), and lack standing to challenge the September 21, 2005 meeting between the Board and its counsel under the New York Open Meetings Law.
GUIDELINE 40
ETPA § 4(b) provides that the Board may only vary the maximum rent increase adjustments in three ways, based upon (1) classes of accommodation, (2)zones, or (3)jurisdictions. Guideline 40 establishes the maximum adjustments of legal regulated rates under leases commencing between October 1, 2005 and September 30, 2006, as follows: for apartments occupied by a tenant with gross aggregate income below $24,000.00 per year, the maximum rent increase is 1% for a one-year lease, or 2% for a two-year lease, for apartments occupied by a tenant with gross aggregate income above $24,000.00 per year, the maximum rent increase is 5.25% for a one year lease, or 7.25% for a two-year lease.
"It is a fundamental principle of administrative law that an agency cannot promulgate rules or regulations that contravene the will of the Legislature." (Weiss v. City of New York, 95 NY2d 1). "A court, in interpreting a statute, should attempt to effectuate the intent of the Legislature, but where the statutory language is clear and unambiguous, the court should construe it so as to give effect to the plain meaning of the words used." ( In the Matter of Raritan Development Corp. v. Silva, 91 NY2d 98). "Although [an] agency's rational construction of a statute is normally entitled to deference, determination of an agency that runs counter to [the] clear wording of statutory provision is given little weight." ( Excellus Health Plan v. Serio, 2 NY3d 166).
As already provided, ETPA gives the Board authority to vary its rent increases (1) by the "classes of accommodations" as set by the local legislatures, (2) by zones, or (3) by jurisdiction. Webster's dictionary defines "accommodation" as "[s]omething that is supplied for convenience or to satisfy a need: lodging . . . in its natural and most obvious sense" The word "accommodation" contained in ETPA § 4(b) is a clear reference to the "housing" in which the tenant lives or wishes to live, referring to the physical premise which is the subject of the lease, and not the tenant. The respondent does not dispute that the clear meaning of "accommodations" contained in the ETPA refers to the physical premise which is the subject of the lease. Guideline 40 divides the classes of tenants on the basis of income, and varies rent increases accordingly. In doing so, the Board has contravened the will of the legislature and exceeded its authority.
The respondent's reliance on the majority of cases cited in its Memorandum of Law are misplaced in that they involve statutory schemes that differ from the ETPA. For instance, in Gauthier v. Gabel, 44 Misc 2d 887 the statutory scheme contained thereto gave regulatory bodies different powers than the ETPA gave to the Board. The Local Emergency Housing Rent Control Act, 1962, NY Laws ch. 21, in Gauthier, allowed the NYC Council to exempt from local rent control laws accommodations which rented for $250.00 per month or more. Unlike the statute in Gauthier, the ETPA does not grant the Board the authority to classify types of housing accommodations. Likewise, In the Matter of Muriel Towers Company, et al. v. City of New York Rent Guidelines Board, 117 Misc 2d 837, section YY51-5.0(subd b, par[3]) of the Administrative Code authorized the Board to consider a tenant's ability to pay, and no such provision exists in the ETPA. In any event, In the Matter of Muriel Towers Company, the tenant's ability to pay was a "factor" considered by the Board, and was not the sole basis of the Board's consideration in determining its rent guidelines.
Additionally, Guideline 40 provides, in essence, that should a dispute arise pertaining to the applicability of the provisions of the "low-income guideline," then such dispute shall be determined by the Board. It is only after the Board has reviewed the dispute, and has provided a written decision, that the tenant is permitted to seek review from the DHCR. However, The ETPA only authorizes the DHCR, and not the Board, to consider rent overcharge complaints. Therefore, the Board exceeded its authority in requiring tenants submit to a review by the Board of any complaints of overcharge under the low-income guideline.
BOARD'S FAILURE TO FILE ITS FINDINGS
County Rent Guideline Boards are local entities of a quasi-legislative body, created to respond to a locally declared and locally limited emergency situation. ( Incorporated Village of Great Neck Plaza v. Nassau County Rent Guidelines Boad, 69 AD2d 528). ETPA § 4(b) requires the Board to establish annual guidelines for rent adjustments. In determining whether any adjustments for the following year are warranted, the statute requires that the County Rent Guideline Board shall consider, among the following things, (1) the economic condition of the residential real estate industry in the affected area, (i) real estate taxes and sewer and water rates, (ii) gross operating maintenance costs, (iii) costs and availability of financing, (iv) over-all supply of housing accommodations and over-all vacancy rates, (2) relevant date from the current and projected cost of living, and (3) such other data as may be made available to it. The statutory factors that the Board must consider in making a rent adjustment determination are spelled out in ETPA § 4(b), and the failure to consider any of those factors is fatal. ( In the Matter of New York State Tenants Neighbors Coalition, Inc. v. New York State Division of Housing and Community Renewal , 18 AD3d 875 ).
ETPA § 4(b) also requires the Board to file its findings on all of the requisite factors to accompany the guidelines. In the case at bar, the Board has failed to file and/or render findings regarding the prevailing and projected (1)sewer rates, (2) water rates, (3) cost of financing, (4) availability of financing, and (5) supply of housing accommodations. ETPA requires the Board to file findings on these factors "[a]s soon as reasonably practicable after its creation and thereafter not later than July first of each year." The statutory factors that the Board must consider in making a rent adjustment determination are spelled out in the ETPA § 4(b), and include the economic condition of the residential real estate market and relevant cost-of-living data. The failure to consider any of those factors is fatal. ( In the Matter of New York Sate Tenants Neighbors Coalition, Inc. v. New York State Division of Housing and Community Renewal, 18 AD3d 875, emphasis added).
The Board concedes that it did not file findings on each of the items listed in § 4(b), and submits that the statute does not require the Board to file findings for each of the items it must consider. However, the plain reading of the statute, ETPA § 4(b), lists the particular items which must be considered and then states that the Board must file "findings for the preceding year." The legislative requirement that findings on all items be filed enables a reviewing court to determine whether the Board considered all the necessary factors, and whether the Board's determination was not arbitrary or capricious. The Board's failure to file its findings hampers this Court's ability to ascertain if the Board even considered the requisite findings. The Board's failure to consider the requisite factors is fatal, and therefore, Guideline 40 is invalid.
THE ADOPTION OF GUIDELINE 40 FOLLOWING AN EXECUTIVE SESSION
Under the Public Officers Law, the members of the County Rent Guidelines Boards are local officers for the ETPA, applicable to the County of Nassau. ( Incorporated Village of Great Neck Plaza v. Nassau County Rent Guidelines Board, 69 AD2d 528). Section 98 of the Public Officers Law, a section of article 7 of that law, known as the Open Meetings Law, requires that every meeting of a public body, except for an executive session, be open to the general public." ( In the Matter of Orange County Publications v. Counsel of the City of Newburgh, 60 AD2d 409).
The Open Meetings Law expresses its intent through a legislative determination that "It is essential to the maintenance of a democratic society that the public business be performed in an open and public manner and that the citizens of this state be fully aware of and able to observe the performance of public officials and attend and listen to the deliberations that go into the making of public policy. The people must be able to remain informed if they are to retain control over those who are their public servants. It is the only climate under which the commonwealth will prosper and enable the governmental process to operate for the benefit of those who created it." ( Id, citing Public Officers Law § 95). Any action taken in violation of the statute, "upon good cause shown," may be declared void in whole or in part. ( Id). "Vacatur of an action taken in violation of the Open Meetings Law is committed to the court's discretion upon good cause shown." ( In the Matter of Concerned Citizens to Review the Jefferson Valley Mall v. Town Board of the Town of Yorktown, 83 AD2d 612).
However, a public body may go into an executive session for the purpose of discussing proposed, pending or current litigation. This exception "must be narrowly scrutinized, lest the article's clear mandate be thwarted by thinly veiled references to the areas delineated thereunder." ( Weatherwax v. Town of Stony Point, 97 AD2d 840, citing Daily Gazette Co. v. Town Bd., 111 Misc 2d 303). The belief that a decision adverse to petitioner would lead to litigation does not justify conducting public business in an executive session. ( Id.) "Such a view would be contrary to both the letter and the spirit of the exception." ( Id). Whether action taken by a public body in violation of the Open Meetings Law should be declared void is a matter left to the court's discretion to be exercised upon good cause show. ( In the Matter of Caesar Previdi v. Hirsh, 138 Misc 2d 436).
Here, during the September 21, 2005 meeting, the Board went into an executive session. The Board took the position that the Board was discussing legal opinions. When the Board returned, the record provides that a majority of the time was spent discussing the proposal that the Board had the power to base rent increases on tenant income levels. Guideline 40 was then approved at the September 21, 2005 meeting.
Under these circumstances, the executive session does not fall within the exclusive list of exceptions contained in the Public Officer's Law. The discussion of legal opinions was not a discussion regarding pending litigation privately without having to reveal its strategy to its opponent. Furthermore, the issue of a low-income guideline should not have been held behind closed doors, but rather, should have been held at the open meeting.
The petitioners have demonstrated good cause sufficient to overturn the determination. The Board's violation of the Open Meetings Law resulted in prejudice to the public, the tenants, who could be directly affected by the low-income guideline, as the majority of tenants may not qualify as tenants who earn $24,000.00 or less. By dividing the class of tenants on the basis of income, the Board is offering greater rent protection for one group of tenants than for another group for which the emergency was declared. The Board, in this instance, in the executive session, deliberately excluded the public from a significant policy decision. The Board then considered a significant altercation of the methodology in determining rent increases, the low-income guideline.
STANDING
The respondents argue that the petitioners herein lack standing to challenge the Board's actions herein as the petitioners have not demonstrated that they have been injured by the creation of the low-income guideline, and that there have been no allegations that a qualified tenant has been denied the reduced rent guideline.
However, as already provided, the petitioners have demonstrated that the tenants will be directly affected by the low-income guideline as tenants have to demonstrate that they qualify as low-income tenants in order to reap the benefit of not incurring a rent increase.
Additionally, the record herein demonstrates that some tenants received written lease renewal offers of 5.25% for one-year leases and 7.25% for two-year leases with no mention of the low-income guideline. The record also shows that several leases had been sent back to landlords on the grounds that the landlords have improperly raised rents for tenants, who, by virtue of their participation in the Senior Citizen Rent Increase Exemption program, would, arguably, be eligible for the low-income adjustments.
CONCLUSION
In light of the foregoing, the petition herein requesting an order invalidating Guideline 40 adopted by the Board on September 21, 2005 and certified on October 5, 2005 is hereby granted.