OFFICE OF RENT ADMINISTRATION
                                    GERTZ PLAZA
                              92-31 UNION HALL STREET
                              JAMAICA, NEW YORK 11433

     ------------------------------------X  S.J.R. 5184
     APPEAL OF                              DOCKET NO.: DG 130213-RO
                                            DRO DOCKET NO.: OI 011001-OI
                           PETITIONER    : 


     On July 24, 1989 the above-named petitioner-owner filed an  Administrative
     Appeal against an order issued on June  20,  1989  by  the  District  Rent
     Administrator, 92-31 Union Hall Street, Jamaica, New York  concerning  the
     housing accommodations known  as  Fairview  Terrace,  Bayside,  New  York,
     Various Apartments more fully described on the attached Appendix.

     Subsequent thereto, the petitioner filed a petition in the  Supreme  Court
     pursuant to Article 78 of the Civil Practice Law and Rules requesting that 
     the "deemed denial" of his administrative appeal be annulled.

     On February 15, 1990, an order was signed  by  Justice  Cosmo  J.  DiTucci
     remitting the proceeding to the Division for an expeditious  determination
     of the owner's administrative appeal.

     On June 12, 1990, the Commissioner issued an order and opinion denying the 
     owner's administrative appeal.

     Subsequent thereto, the owner  filed  a  petition  in  the  Supreme  Court
     pursuant to Article 78 of the Civil Practice Law and Rules requesting that 
     the order of the Commissioner be annulled.

     On May 16, 1991, a judgment was signed by  Justice  Dunkin  remitting  the
     proceeding to the Division for further consideration.  

     The Administrative Appeal is being determined pursuant to  the  provisions
     of 9 NYCRR 2524.2(c)(3), 2524.5(a)(2), 2524.5(b), 2524.5(c) and 2524.5(d).

     The issue herein is  whether  the  District  Rent  Administrator  properly
     determined  the  owner's  application  to  recover  the  subject   housing
     accommodations for the purpose of demolition.

     The District Rent Administrator's  order,  appealed  herein,  granted  the
     owner's  application  for  permission  to  recover  the  subject   housing
     accommodations for the purpose of  demolition  in  order  to  convert  the
     existing housing complex from twenty-six units  into  thirteen  one-family
     dwellings.  Said order was conditioned upon the  owner's  compliance  with
     the relocation and stipend provisions set forth  in  Operational  Bulletin
     89-1, dated June 15, 1989, and incorporated into the order.

          DOCKET NUMBER: DG 130213-RO
     On appeal, the petitioner-owner alleged, in substance,  that  it  was  not
     appropriate to apply the  newly  developed  formula  for  calculating  the
     stipends payable in  connection  with  the  tenants'  relocation  in  this
     proceeding; that the new guidelines were adopted by the Division in  June,
     1989, approximately five and one-half years after  the  owner  applied  to
     withdraw the subject apartments from the rental  market;  that  the  prior
     stipend requirements constituted a far less  onerous  burden  on  property
     owners; that the expense and stipend calculations approved by the Court in 
     Villas of  Forest  Hills  should  control  with  respect  to  the  instant
     application; that the hearing in this matter was concluded  in  May,  1986
     and the further conditions to approval recommended by  the  Administrative
     Law Judge were met  by  January,  1987;  that  the  owner  was  forced  to
     institute mandamus proceedings in May, 1988 to obtain an order  compelling
     the Division to render a decision on his application; that in an order and 
     judgment dated November 14, 1988, the Court ordered the Division to  issue
     a determination on or before March 5, 1989; that the  Division  failed  to
     comply with the Court's order and delayed granting the owner's application 
     until June 20, 1989, after the new stipend guidelines  had  been  adopted;
     that the Division's failure to comply with the Court's order is  the  only
     reason that the new standards were applicable in this proceeding; that the 
     new stipend  schedule  requires  uniform  payments  from  property  owners
     seeking to withdraw units from the rental  market  in  all  five  boroughs
     without regard to whether the relocation occurs in a high rent or low rent 
     area; that this creates a windfall for the subject tenants at the  owner's
     expense; that by making the granting of the owner's application contingent 
     upon the payment of excessive stipends, the order mandates a taking of the 
     owner's property in violation of the owner's constitutional  rights;  that
     the issue herein is analogous  to  the  application  of  the  Single  Room
     Occupancy moratorium law as analyzed by the Court of  Appeals  in  Seawall
     Associates; that the  stipend  payments  required  in  the  District  Rent
     Administrator's order effect an uncompensated transfer  of  property  from
     the owner to his tenants; and that by failing to  take  into  account  the
     differentials between housing costs in various parts of the City so as  to
     prevent an unjustifiable bonus to the tenants, the stipend scheme proposed 
     by the District Rent Administrator's order is constitutionally flawed.

     In answer to the owner's administrative appeal,  the  tenants  stated,  in
     substance, that the owner has not offered on-site or local  relocation  as
     was the case in Villas of Forest Hills;  that  the  owner  was  given  two
     options regarding relocation  allowances  to  the  tenants  but  has  only
     considered one; and that the owner  has  not  shown  good  faith,  is  not
     maintaining services, and is permitting harassment of the tenants.

     After a careful  consideration  of  the  entire  evidence  of  record  the
     Commissioner was of the opinion that the administrative appeal  should  be

     The Commissioner's determination was based upon the following discussion:

     The Commissioner found  that  the  District  Rent  Administrator  properly
     determined  the  owner's  application  by  applying  the  regulations  and
     procedures  in  effect  at  the  time  of  issuance  of  the  order.   The
     Commissioner rejected the owner's allegation  that  the  issuance  of  the
     District Rent Administrator's was inordinately delayed in this proceeding. 
     An owner's  application  to  recover  subject  apartments  for  demolition
     purposes requests extraordinary relief, and appropriate relocation and 

          DOCKET NUMBER: DG 130213-RO
     stipend provisions for the affected tenants is an  integral  part  of  the
     order.  Contrary to the owner's allegation on remand,  the  processing  in
     this proceeding was not completed as of January, 1987,  but  as  of  June,
     1989 with the formulation of an appropriate relocation and stipend scheme. 
     The Court, in Villas of Forest Hills, held that the rent agency has  broad
     powers to set stipends and relocation conditions.  The Commissioner  noted
     that the relocation requirements included in the Court's order for  Villas
     of Forest Hills were particular to the facts of that proceeding  and  were
     not appropriate for application to the instant case.

     Furthermore, the Commissioner found that the owner's  arguments  regarding
     the constitutionality  of  the  relocation  and  stipend  provisions  were
     without merit.  In Loab Estates v. Druhe, 300 N.Y. 176, the Court  upheld,
     and found constitutional,  a  local  law  which  barred  the  eviction  of
     residential tenants unless provisions had been made for their  relocation.
     In addition, the case of Seawall Associates v. the City of  New  York,  74
     N.Y.2d 92, may be  distinguished  from  the  instant  proceeding  in  many
     respects.  In Seawall, the Court found Local Law No. 9,  which  prohibited
     demolition, alteration, or  conversion  of  Single  Room  Occupancy  (SRO)
     properties  and  obligated  owners  to  restore  all  units  to  habitable
     condition and lease them at controlled rents for an indefinite period,  to
     be facially invalid as both a physical and regulatory taking in  violation
     of the federal and state constitutions.  Unlike in  Seawall,  the  stipend
     and relocation requirements in the instant proceeding do  not  require  an
     owner to engage in  a  particular  business.   Rather,  such  stipend  and
     relocation requiremen s  constitute  appropriate  regulation  of  a   pre-
     existing landlord and tenant relationship.  The  owner  herein  entered  a
     business where demolition has long been  considered  extraordinary  relief
     and various restrictions applied.  In Seawall, demolition  was  proscribed
     entirely by Local Law No. 9, and  this  new  requirement  was  foisted  on
     unsuspecting SRO owners.

     The Commissioner noted that in the instant proceeding, unlike in  Seawall,
     the Division was not forcing the owner  to  bear  a  public  burden,  i.e.
     providing homes for the homeless.  The  benefit  to  the  owner  in  being
     granted permission to demolish the subject premises was  balanced  against
     the tenants' being evicted from their regulated homes and having to search 
     for a new place to live in  a  housing  emergency.   They  were  therefore
     entitled to an appropriate stipend.  The stipends were narrowly  drawn  to
     resolve the conflicting interests of particular parties with  pre-existing
     rights to a subject property.

     The Commissioner further found that the owner was afforded the  option  to
     pay a relocated tenant a stipend which was based on the difference between 
     the prior rent and the rent for the housing  accommodation  to  which  the
     tenant would be relocated within a closely proximate  area.   The  stipend
     scheme thereby took into  account  differences  in  rental  values  within
     various sections of New York City.  Lastly, the Commissioner held that the 
     stipend did not represent a windfall  to  tenants,  but  was  rather  just
     compensation to tenants for  the  various  inconveniences  and  additional
     expenses involved in relocating.

     In his decision memorandum, Justice Dunkin described the three  relocation
     and stipend options available to the owner under Operational Bulletin 89-1 
     as follows:

          DOCKET NUMBER: DG 130213-RO
          "The first option involves either  relocating  the  tenant  to  a
          suitable  apartment  renting  at  the  same  or  lower  rent   or
          providing him an apartment  in  the  new  building  and  suitable
          interim housing until the apartment  is  available.   The  tenant
          would be entitled to a $5,000 stipend,  adjusted  to  offset  his
          tax liability.

          "The  second  option  involves  relocating  the   tenant   to   a
          comparable  apartment  renting  for   more   than   his   present
          apartment.  Where the tenant has  been  in  occupancy  for  seven
          years or less, he would be entitled to a  stipend  equal  to  the
          difference in monthly rent between the old  and  new  apartments,
          multiplied by 84 months (7 years).  Where the tenant has been  in
          occupancy for more than seven years, the  84-month  period  would
          be increased by one year for each additional year  of  occupancy,
          up to a maximum of fifteen years.  The stipend would be  adjusted
          to offset the tenant's tax liability.

          "The third option involves paying the tenant a stipend  equal  to
          the difference in  monthly  rent  between  the  tenant's  present
          apartment and an amount calculated as  follows:   $314  per  room
          per month multiplied by the  number  of  rooms  in  the  tenant's
          present apartment, but not less than  three.   Where  the  tenant
          has been in occupancy for seven years or less, the difference  is
          multiplied by 84 months.  Where the tenant is  in  occupancy  for
          more than seven years, the 84-month period would be increased  by
          one year for each additional year of occupancy, up to  a  maximum
          of fifteen years, but the number of rooms  would  be  limited  to
          three for the purpose of calculating the maximum  rent  for  each
          year above seven years.  The stipend would be adjusted to  offset
          the tenant's tax liability."

     The Court found that the formulae contained in Operational  Bulletin  89-1
     for calculating a tenant's stipend is invalid as it applies  to  a  tenant
     who has occupied his or her present apartment for more than  seven  years.
     The Court held that there  was  no  rational  basis  for  increasing  such
     tenant's stipend according to the length of his or her present  occupancy.
     The District Rent Administrator's order of June 20, 1989  was  vacated  by
     the Court the extent that  said  order  imposed  such  invalid  conditions
     prescribed by Operational Bulletin 89-1.

     9 NYCRR 2524.5(c) provides that, upon an  order  permitting  an  owner  to
     demolish a subject housing accommodation, the Division  shall  require  an
     owner to pay all reasonable moving expenses and  shall  further  condition
     the order upon the payment of a reasonable stipend and/or  the  relocation
     of the tenant by the owner to a suitable housing accommodation at the same 
     or lower regulated rent in a closely proximate area.  If no  such  housing
     accommodation is available at the same or lower regulated rent, the  owner
     may be required to pay the difference in rent between the subject  housing
     accommodation and the new housing accommodation to  which  the  tenant  is
     relocated of or such period as the Division  determines,  commencing  with
     the occupancy of the new housing accommodation by the tenant.

     The Court held that although said  regulation  empowers  the  Division  to
     determine the length of time  for  which  the  tenant  shall  receive  the
     difference in monthly rent between the old and new apartments, it clearly

          DOCKET NUMBER: DG 130213-RO
     contemplates that the  length  of  time  must  be  commensurate  with  the
     tenant's anticipated  future  tenancy;  that  the  formulae  contained  in
     Operational Bulletin 89-1 for calculating the stipend for a tenant who has 
     occupied the apartment for seven years or  less  properly  implements  the
     goals implicit in 9 NYCRR 2524.5(c), citing a footnote to said Operational 
     Bulletin which  reads  that  the  stipend  compensates  for  a  reasonably
     expected alternative rent multiplied by the typical length of  tenure  (84
     months); that neither technical  analysis  nor  social  or  economic  data
     justifies increasing the stipend for a tenant who has occupied his or  her
     apartment for more than seven years according to the length of his or  her
     present occupancy; and that as Operational Bulletin 89-1 presently stands, 
     so increasing the stipend represents a policy decision having no  rational

     The Court remitted the proceeding to the Division for  a  modification  of
     its prior determination in accordance with the decision of the Court.

     In view of the foregoing, and in  accordance  with  the  decision  of  the
     Court,  the  Commissioner   hereby   modifies   the   prior   orders   and
     determinations of June 20, 1989 and June 12, 1990 to  provide  that  there
     are no additional stipend payments for any of the subject tenants who have 
     occupied their apartments for more than seven years.

     THEREFORE, in accordance with the provisions of the Rent Stabilization Law 
     and Code, it is

     ORDERED, that the Commissioner's prior order and opinion of June 12, 1990, 
     and the District Rent Administrator's prior  order  and  determination  of
     June 20,  1989  be,  and  the  same  hereby  are,  modified,  as  provided
     hereinabove.  Said orders are hereby affirmed in all other respects.


                                             ELLIOT SANDER
                                           Deputy Commissioner


TenantNet Home | TenantNet Forum | New York Tenant Information
DHCR Information | DHCR Decisions | Housing Court Decisions | New York Rent Laws
Disclaimer | Privacy Policy | Contact Us

Subscribe to our Mailing List!
Your Email      Full Name