Supreme Court Ruling Affects Mitchell Lama tenants in a

[alinnyc]

The Supreme Court last week upheld DHCR's decision to deny an adjustment to initial regulated rents to the landlord of a former Mitchell Lama building.

RSL 26-513a allows a landlord or tenant to request an adjustment in rent upon leaving Mitchell/Lama and entering Rent Stabilization. The building was occupied in 1968, and therefore, DHCR found that this section of the law was not applicable to the premises owing to the occupancy date. (The statute could be used for buildings occupied after 1969 and before 1974).

DHCR denied the application and denied the subsequent PAR. Finally, the Supreme Court dismissed the landlord's Article 78. The decision sets a precedent for all Mitchell Lama buildings occupied before 1969 that are facing buyouts.

KSLM-Columbus Apartments was the Plaintiff. The Attorney General's office represented DHCR as Respondent and the Westgate Tenants Association was the Intervenor Respondent in the action.

The case was filed in the Supreme Court under Index Number 105742/2001.

<small>[ June 17, 2002, 02:28 PM: Message edited by: Al ]</small>

[consigliere]

It looks like a final decision was rendered on June 10, 2002, but I couldn't find the substance of that decision on the court website.

Below is the May 10, 2002 interim decision, which discusses the merits of the case:

SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY

PRESENT: Hon. SHEILA ABDUS-SALAAM Justice PART 13


In the Matter of KSLM-Columbus Apartments, Inc.

v.

New York State Division of Housing and Community Renewal

INTERIM DECISION

Upon the foregoing papers, it is ordered that this petition is held in abeyance pending submission of an answer by respondent and the cross-motion by respondent for an order pursuant to CPLR 3211(a)(7) is denied.

Petitioner KSLM-Columbus Apartments, Inc. "KSLM" owns three residential
apartment buildings located at 120 West 97th Street, 160 West 97th Street and 135 West 96th Street. Those buildings, which were first occupied in 1968, were constructed and financed as "Mitchell-Lama" housing through Article 2 of the Private Housing Finance Law ("PHFL"). In March 1998, petitioner voluntarily dissolved the PHFL company and the buildings ceased being governed by the PHFL and were no longer exempted from the rent stabilization law. In May 1998, KLSM filed applications with DHCR requesting an adjustment of the initial rent stabilized rents for the buildings pursuant to Rent Stabilization Law §26-513 which entitles owners and tenants of rent stabilized apartments to obtain a DHCR order adjusting the initial rent stabilized base rents where "unique and peculiar circumstances" resulted in the base rent being substantially different from the rents generally prevailing in the same area for substantially similar accommodations. KSLM's applications asserted that, based on the fact that the buildings had been governed by the PHFL for 29 years, the rent for all of the apartments were "substantially different from the rents generally prevailing in the same area for-substantially similar
housing accommodations." They also asserted that the buildings were not economically viable absent a RSL §26-513a adjustment of the initial rents.

Respondent denied the applications on the ground that the buildings are not subject to RSL §26-513 because that law specifically only apples to buildings that became subject to the Rent Stabilization Law by the Emergency Tenant Protection Act of 1974 ("ETPA"). Respondent determined that when the buildings' Mitchell-Lama status expired, the apartments automatically became subject to the Rent Stabilization Law of 1969, which does not include a provision enabling an owner to obtain an adjustment of the base rent based upon "unique and peculiar" circumstances. Because DHCR found that the buildings were not subject to RSL §26-513, it did not consider the merits of the applications and did not process the applications beyond reaching the initial determination that the applications were not properly made.
This Article 78 proceeding challenges DHCR's determination that these former Mitchell-Lama buildings cannot be subject to the ETPA of 1974 and that they are only subject to the Rent Stabilization Law of 1969. Petitioner maintains that respondent's determination that the buildings are not subject to the EPTA is arbitrary, capricious and contrary to law. Respondent cross-moves to dismiss the petition, asserting inter alia, that the petition fails to state a cause of action because it "seeks application of a statutory provision which by its terms is not applicable." (Timon affirmation dated 10/19/01, 1 26). However, respondent's determination that the ETPA does not apply to these buildings is properly challenged in this proceeding.

Accordingly, the cross-motion is denied and respondent is directed to serve an answer' within 10 days of service of a copy of this order with notice of entry.

This court has entertained oral argument as to the substantive issues raised in the petition and all parties were given an opportunity to make additional submissions, which submissions were made. Thus, the merits of the petition have been addressed by all parties. However, upon denying the cross-motion to dismiss, respondent must be given an opportunity to answer the petition. Respondent is to submit only an answer, not any additional memoranda.
 

[alinnyc]

Consigliere:

I have a hard copy of the decision. It's 16 pgs. long. If you have a fax, I could send it to you.

You mention the court's web site on your post. What is their web address, and how does one access the substance of filings?

Thanks,

Al

[consigliere]

Go to http://e.courts.state.ny.us and click on Trial Courts under On-Line Decisions. Then enter the index number, including the year.
 
For this KSLM-Columbus Apartments case, I found three listings. Only the May 10, 2002 decision had any substance. The other two decisions, including the June 10, 2002 final decision, were short and meaningless. This may be the result of bad scanning.
 
You can be sure that the landlord will appeal the decision to the Appellate Division, First Department, so the landlord and the tenants will have to await a final decision in this case. It might even go to the Court of Appeals.
 

[alinnyc]

Landlord filed a notice of appeal in July. More to follow.