Ansonia Residents Assoc. v. NYS Div. Hous. Comm. Ren.
Posted: Fri Jun 30, 2006 8:02 am
In the Matter of Ansonia Residents Association et al., Appellants-Respondents, v. New York State Division of Housing and Community Renewal, Respondent. Ansonia Associates, Intervenor-Respondent. Thomas Soja, Individually and as President of the Ansonia Tenants Coalition, Inc., Intervenors-Respondents-Appellants
[NO NUMBER IN ORIGINAL]
Court of Appeals of New York
75 N.Y.2d 206; 551 N.E.2d 72; 551 N.Y.S.2d 871; 1989 N.Y. LEXIS 3223
October 19, 1989, Argued November 21, 1989, Decided
PRIOR HISTORY:
Cross Appeals, by permission of the Court of Appeals, from an order of the Appellate Division of the Supreme Court in the First Judicial Department, entered November 17, 1988, which affirmed a judgment of the Supreme Court (Carmen B. Ciparick, J.), entered in New York County in a proceeding pursuant to CPLR article 78, denying the application and dismissing the petition to review a determination of the respondent Division of Housing and Community Renewal which granted intervenor-respondent Ansonia Associates a permanent rent increase for completing a major capital improvement to its rent-stabilized building.
Matter of Ansonia Residents Assn. v New York State Div. of Hous. & Community Renewal, 144 AD2d 1040, affirmed.
DISPOSITION: Order affirmed, with costs.
HEADNOTES:
Landlord and Tenant -- Rent Regulation -- Permanent Rent Increase for Major Capital Improvement
1. Rent Stabilization Law § 26-511 (c) (Administrative Code of City of New York) authorizes the Division of Housing and Community Renewal (DHCR) to award a permanent rent increase to an owner who completes a major capital improvement of a rent-stabilized building. The requirement of section 26-511 (c) that the costs of major capital improvements be "amortized" refers only to the method of calculating the amount of the corresponding rent increase -- an amount which section 26-511 (c) also provides may not exceed 6% annually and which is to be added to the permanent stabilized rent. Once the amount of the increase is calculated, the statute does not limit the time during which the increase can be imposed. Accordingly, in a CPLR article 78 proceeding challenging a determination of DHCR granting respondent owner a permanent rent increase for a major capital improvement of the subject rent-stabilized building based upon the owner's installation of storm windows, the agency did not err in construing the statutory requirement that the costs of such improvements be "amortized" as describing the method by which the corresponding rent increase is to be calculated rather than mandating that any such increase be terminated when the owner recoups the cost of a major capital improvement (see, Administrative Code § 26-511 [c] [6] [b]).
Landlord and Tenant -- Rent Regulation -- What Constitutes Major Capital Improvement -- Installation of Storm Windows
2. A determination of the Division of Housing and Community Renewal (DHCR) that an alteration constitutes a major capital improvement within the meaning of Rent Stabilization Law § 26-511 (c) (6) (b) necessarily entails the agency's expertise in evaluating factual data and is entitled to deference if not irrational or unreasonable. Thus, in a CPLR article 78 proceeding challenging a determination of DHCR granting respondent owner a permanent rent increase for a major capital improvement of the subject rent-stabilized building, the tenants' contention that DHCR erred in concluding that the installation of storm windows at the subject building is a major capital improvement, is rejected. The agency has rationally interpreted the requirement of section 26-511 (c) (6) (b) that such improvements be "building-wide" to be satisfied by the installation of storm windows in virtually all the building's living areas notwithstanding that none were installed in hallways or other common areas (see also, Rent Stabilization Code [9 NYCRR] § 2522.4 [a] [2] [i]).
Landlord and Tenant -- Rent Regulation -- What Constitutes Major Capital Improvement -- Installation of Storm Windows -- Conformity with Agency Precedent
3. The Division of Housing and Community Renewal (DHCR) did not act arbitrarily or capriciously in determining that respondent owner's installation of storm windows in a rent-stabilized building qualified as a major capital improvement contrary to the agency's Operational Bulletin 84-4, which provides that the installation of storm windows is not a major capital improvement if unaccompanied by the installation of prime windows. Operational Bulletin 84-4 became effective after the determination of the District Rent Administrator in this case that such installation constituted a major capital improvement and DHCR has allowed the owner the benefit of the agency's published exception to that bulletin for parties who had expended sums installing storm windows before its effective date. In so treating the owner's rent increase application, DHCR has acted consistently with its treatment of the rent increase applications of other owners who installed storm windows before the effective date of Operational Bulletin 84-4.
COUNSEL: David Ng, William A. Herbert and Susan A. Saslow for appellants-respondents. I. It was arbitrary and capricious for DHCR to grant a major capital improvement (MCI) increase for installation of storm windows when DHCR Operational Bulletin 84-4 allows a MCI increase for such installations only if they are done in conjunction with installation of prime windows. II. It was error for DHCR to grant a MCI increase when the installation was not "building-wide", as required by statute and regulation. ( Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Matter of Manhattan Pizza Hut v New York State Human Rights Appeals Bd., 51 NY2d 506; Pearce, Mayer & Greer v Joy, 63 AD2d 928, 48 NY2d 680.) III. It was error for DHCR to grant a MCI increase for work done to correct violations. ( Matter of Rosen v Weaver, 7 Misc 2d 576.) IV. It was error for DHCR to allow a MCI surcharge to become a permanent part of the rent. ( Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; Matter of Manhattan Pizza Hut v New York State Human Rights Appeals Bd., 51 NY2d 506; Coalition Against Rent Increase Passalongs v Rent Guidelines Bd., 104 Misc 2d 101; 8200 Realty Corp. v Lindsay, 27 NY2d 124; Sullivan v Brevard Assocs., 66 NY2d 489; Two Assocs. v Brown, 127 AD2d 173; Matter of Walter & Samuels v New York City Conciliation & Appeals Bd., 63 AD2d 626.)
Donald Eng and David Rozenholc for intervenors-respondents-appellants. I. DHCR failed to comply with Justice Glen's February 27, 1986 order. II. There can be no major capital improvement rent increase because the replacement of storm windows was not building-wide. III. DHCR erred in making the MCI rent increase permanent. ( Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; Matter of Manhattan Pizza Hut v New York State Human Rights Appeals Bd., 51 NY2d 506.)
Mary Ellen Cronly and Dennis B. Hasher for respondent. I. The Division's application of the Rent Stabilization Law to authorize permanent base rent increases for major capital improvements is in full accord with law and supported by a rational basis. (8200 Realty Corp. v Lindsay, 27 NY2d 124, 400 U.S. 962; French Investing Co. v City of New York, 39 NY2d 587, 429 U.S. 990; Matter of Ansonia Residents' Assn. v New York State Div. of Hous. & Community Renewal, 141 Misc 2d 224; Matter of Mounting & Finishing Co. v McGoldrick, 294 NY 104; White v Winchester Club, 315 U.S. 32; United States v Hammers, 221 U.S. 220; Bowles v Seminole Rock Co., 325 U.S. 410; Matter of Plaza Mgt. Co. v City Rent Agency, 48 AD2d 129, 37 NY2d 837; Minton v Domb, 63 AD2d 36; Matter of Cale Dev. Co. v Conciliation & Appeals Bd., 94 AD2d 229, 61 NY2d 976.) II. A rational basis supports the determination that the installation of new storm windows in apartments is a building-wide major capital improvement. ( Matter of Fanelli v New York City Conciliation & Appeals Bd., 90 AD2d 756, 58 NY2d 952; Matter of Oriental Blvd. Co. v New York City Conciliation & Appeals Bd., 92 AD2d 470, 60 NY2d 633; Matter of Levine v New York State Liq. Auth., 23 NY2d 863.) III. The record amply supports the Division's determination that the installation of storm windows was a MCI and not merely deferred maintenance where storm windows were a new feature in the building, and where the owner made substantial efforts to remove all violations pertaining to the windows. IV. The Commissioner acted rationally in applying its exception to Operational Bulletin 84-4 when he granted increases for MCI's installed in reliance on the prior board policy which authorized MCI increases for storm windows. ( Longines-Wittnauer Watch Co. v Barnes & Reinecke, 15 NY2d 443, cert denied sub nom. Estwing Mfg. Co. v Singer, 382 U.S. 905; Matter of St. Vincent's Hosp. & Med. Center v New York State Div. of Hous. & Community Renewal, 109 AD2d 711, 66 NY2d 959; Matter of Ess Pee Bee Realty Corp. v Gabel, 52 Misc 2d 1033, 28 AD2d 822; Securities Commn. v Chenery Corp., 322 U.S. 194.)
Dean G. Yuzek, Arthur C. Fahlbusch, Jr., Richard L. Gabriel and Jeffrey R. Metz for intervenor-respondent. I. The determination of the DHCR and the courts below that MCI rent increases are permanently added to the rent base is in complete accord with the intent of the Legislature and settled precedent. ( Matter of Howard v Wyman, 28 NY2d 434; Matter of Meko Holding v Joy, 107 AD2d 278; Matter of Litman v Weaver, 20 Misc 2d 1032, 10 AD2d 865; Matter of Gilmore v Preferred Acc. Ins. Co., 283 NY 92; Matter of Abraham & Straus v Tully, 47 NY2d 207; Feder v Caliguira, 8 NY2d 400; Matter of Charles v Regan, 126 Misc 2d 333.) II. The court below and the trial court correctly affirmed the DHCR's determinations that the installation of storm windows was building-wide and that a MCI rent increase was warranted. ( Matter of Oriental Blvd. Co. v New York City Conciliation & Appeals Bd., 92 AD2d 470, 60 NY2d 633; Matter of Korein v Conciliation & Appeals Bd., 84 AD2d 724, 57 NY2d 938; Fresh Meadows Assocs. v New York City Conciliation & Appeals Bd., 88 Misc 2d 1003, 55 AD2d 559, 42 NY2d 925; Matter of Bambeck v State Div. of Hous. & Community Renewal, 129 AD2d 51, 70 NY2d 615; Matter of Carol Mgt. Corp. v Commissioner of State of N. Y. Div. of Hous. & Community Renewal, 140 Misc 2d 673.) III. The court below and the trial court correctly affirmed the DHCR's finding that the installation of storm windows where none existed before was a major capital improvement, and not deferred maintenance or ordinary repairs. ( Matter of Rosen v Weaver, 7 Misc 2d 576.) IV. The court below and the trial court correctly affirmed the DHCR's determination that Operational Bulletin 84-4 is inapplicable where, as here, applying that order would have been grossly inequitable.
Joseph L. Forstadt, Anthony I. Pye and Martin J. Heistein for Rent Stabilization Association of New York City, Inc., amicus curiae. I. The policy of granting permanent rent increases for major capital improvements is supported by the doctrine of stare decisis. ( Cenven, Inc. v Bethlehem Steel Corp., 41 NY2d 842; Baker v Lorillard, 4 NY 257; Donawitz v Danek, 42 NY2d 138; Matter of Higby v Mahoney, 48 NY2d 15; Matter of Eckart, 39 NY2d 493; Matter of Litman v Weaver, 20 Misc 2d 1032, 10 AD2d 865; Town of Amherst v County of Erie, 236 App Div 58, 260 NY 361; Matter of Johnson v Joy, 48 NY2d 689; Matter of Harder's Express v New York State Tax Commn., 70 AD2d 1010, 50 NY2d 1050; Matter of Charles v Regan, 126 Misc 2d 333.) II. The Legislature has expressly approved the Rent Stabilization Code providing permanent increases for MCIs. ( Matter of Richardson v Starr, 85 Misc 2d 476; People v Gray, 41 AD2d 125, 34 NY2d 903, 419 U.S. 1055.) III. Permanent rent increases for MCIs further the public policy embodied in the Rent Stabilization L
JUDGES: Judges Alexander, Simons, Kaye, Titone, Hancock, Jr., and Bellacosa concur; Chief Judge Wachtler taking no part.
[NO NUMBER IN ORIGINAL]
Court of Appeals of New York
75 N.Y.2d 206; 551 N.E.2d 72; 551 N.Y.S.2d 871; 1989 N.Y. LEXIS 3223
October 19, 1989, Argued November 21, 1989, Decided
PRIOR HISTORY:
Cross Appeals, by permission of the Court of Appeals, from an order of the Appellate Division of the Supreme Court in the First Judicial Department, entered November 17, 1988, which affirmed a judgment of the Supreme Court (Carmen B. Ciparick, J.), entered in New York County in a proceeding pursuant to CPLR article 78, denying the application and dismissing the petition to review a determination of the respondent Division of Housing and Community Renewal which granted intervenor-respondent Ansonia Associates a permanent rent increase for completing a major capital improvement to its rent-stabilized building.
Matter of Ansonia Residents Assn. v New York State Div. of Hous. & Community Renewal, 144 AD2d 1040, affirmed.
DISPOSITION: Order affirmed, with costs.
HEADNOTES:
Landlord and Tenant -- Rent Regulation -- Permanent Rent Increase for Major Capital Improvement
1. Rent Stabilization Law § 26-511 (c) (Administrative Code of City of New York) authorizes the Division of Housing and Community Renewal (DHCR) to award a permanent rent increase to an owner who completes a major capital improvement of a rent-stabilized building. The requirement of section 26-511 (c) that the costs of major capital improvements be "amortized" refers only to the method of calculating the amount of the corresponding rent increase -- an amount which section 26-511 (c) also provides may not exceed 6% annually and which is to be added to the permanent stabilized rent. Once the amount of the increase is calculated, the statute does not limit the time during which the increase can be imposed. Accordingly, in a CPLR article 78 proceeding challenging a determination of DHCR granting respondent owner a permanent rent increase for a major capital improvement of the subject rent-stabilized building based upon the owner's installation of storm windows, the agency did not err in construing the statutory requirement that the costs of such improvements be "amortized" as describing the method by which the corresponding rent increase is to be calculated rather than mandating that any such increase be terminated when the owner recoups the cost of a major capital improvement (see, Administrative Code § 26-511 [c] [6] [b]).
Landlord and Tenant -- Rent Regulation -- What Constitutes Major Capital Improvement -- Installation of Storm Windows
2. A determination of the Division of Housing and Community Renewal (DHCR) that an alteration constitutes a major capital improvement within the meaning of Rent Stabilization Law § 26-511 (c) (6) (b) necessarily entails the agency's expertise in evaluating factual data and is entitled to deference if not irrational or unreasonable. Thus, in a CPLR article 78 proceeding challenging a determination of DHCR granting respondent owner a permanent rent increase for a major capital improvement of the subject rent-stabilized building, the tenants' contention that DHCR erred in concluding that the installation of storm windows at the subject building is a major capital improvement, is rejected. The agency has rationally interpreted the requirement of section 26-511 (c) (6) (b) that such improvements be "building-wide" to be satisfied by the installation of storm windows in virtually all the building's living areas notwithstanding that none were installed in hallways or other common areas (see also, Rent Stabilization Code [9 NYCRR] § 2522.4 [a] [2] [i]).
Landlord and Tenant -- Rent Regulation -- What Constitutes Major Capital Improvement -- Installation of Storm Windows -- Conformity with Agency Precedent
3. The Division of Housing and Community Renewal (DHCR) did not act arbitrarily or capriciously in determining that respondent owner's installation of storm windows in a rent-stabilized building qualified as a major capital improvement contrary to the agency's Operational Bulletin 84-4, which provides that the installation of storm windows is not a major capital improvement if unaccompanied by the installation of prime windows. Operational Bulletin 84-4 became effective after the determination of the District Rent Administrator in this case that such installation constituted a major capital improvement and DHCR has allowed the owner the benefit of the agency's published exception to that bulletin for parties who had expended sums installing storm windows before its effective date. In so treating the owner's rent increase application, DHCR has acted consistently with its treatment of the rent increase applications of other owners who installed storm windows before the effective date of Operational Bulletin 84-4.
COUNSEL: David Ng, William A. Herbert and Susan A. Saslow for appellants-respondents. I. It was arbitrary and capricious for DHCR to grant a major capital improvement (MCI) increase for installation of storm windows when DHCR Operational Bulletin 84-4 allows a MCI increase for such installations only if they are done in conjunction with installation of prime windows. II. It was error for DHCR to grant a MCI increase when the installation was not "building-wide", as required by statute and regulation. ( Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Matter of Manhattan Pizza Hut v New York State Human Rights Appeals Bd., 51 NY2d 506; Pearce, Mayer & Greer v Joy, 63 AD2d 928, 48 NY2d 680.) III. It was error for DHCR to grant a MCI increase for work done to correct violations. ( Matter of Rosen v Weaver, 7 Misc 2d 576.) IV. It was error for DHCR to allow a MCI surcharge to become a permanent part of the rent. ( Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; Matter of Manhattan Pizza Hut v New York State Human Rights Appeals Bd., 51 NY2d 506; Coalition Against Rent Increase Passalongs v Rent Guidelines Bd., 104 Misc 2d 101; 8200 Realty Corp. v Lindsay, 27 NY2d 124; Sullivan v Brevard Assocs., 66 NY2d 489; Two Assocs. v Brown, 127 AD2d 173; Matter of Walter & Samuels v New York City Conciliation & Appeals Bd., 63 AD2d 626.)
Donald Eng and David Rozenholc for intervenors-respondents-appellants. I. DHCR failed to comply with Justice Glen's February 27, 1986 order. II. There can be no major capital improvement rent increase because the replacement of storm windows was not building-wide. III. DHCR erred in making the MCI rent increase permanent. ( Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; Matter of Manhattan Pizza Hut v New York State Human Rights Appeals Bd., 51 NY2d 506.)
Mary Ellen Cronly and Dennis B. Hasher for respondent. I. The Division's application of the Rent Stabilization Law to authorize permanent base rent increases for major capital improvements is in full accord with law and supported by a rational basis. (8200 Realty Corp. v Lindsay, 27 NY2d 124, 400 U.S. 962; French Investing Co. v City of New York, 39 NY2d 587, 429 U.S. 990; Matter of Ansonia Residents' Assn. v New York State Div. of Hous. & Community Renewal, 141 Misc 2d 224; Matter of Mounting & Finishing Co. v McGoldrick, 294 NY 104; White v Winchester Club, 315 U.S. 32; United States v Hammers, 221 U.S. 220; Bowles v Seminole Rock Co., 325 U.S. 410; Matter of Plaza Mgt. Co. v City Rent Agency, 48 AD2d 129, 37 NY2d 837; Minton v Domb, 63 AD2d 36; Matter of Cale Dev. Co. v Conciliation & Appeals Bd., 94 AD2d 229, 61 NY2d 976.) II. A rational basis supports the determination that the installation of new storm windows in apartments is a building-wide major capital improvement. ( Matter of Fanelli v New York City Conciliation & Appeals Bd., 90 AD2d 756, 58 NY2d 952; Matter of Oriental Blvd. Co. v New York City Conciliation & Appeals Bd., 92 AD2d 470, 60 NY2d 633; Matter of Levine v New York State Liq. Auth., 23 NY2d 863.) III. The record amply supports the Division's determination that the installation of storm windows was a MCI and not merely deferred maintenance where storm windows were a new feature in the building, and where the owner made substantial efforts to remove all violations pertaining to the windows. IV. The Commissioner acted rationally in applying its exception to Operational Bulletin 84-4 when he granted increases for MCI's installed in reliance on the prior board policy which authorized MCI increases for storm windows. ( Longines-Wittnauer Watch Co. v Barnes & Reinecke, 15 NY2d 443, cert denied sub nom. Estwing Mfg. Co. v Singer, 382 U.S. 905; Matter of St. Vincent's Hosp. & Med. Center v New York State Div. of Hous. & Community Renewal, 109 AD2d 711, 66 NY2d 959; Matter of Ess Pee Bee Realty Corp. v Gabel, 52 Misc 2d 1033, 28 AD2d 822; Securities Commn. v Chenery Corp., 322 U.S. 194.)
Dean G. Yuzek, Arthur C. Fahlbusch, Jr., Richard L. Gabriel and Jeffrey R. Metz for intervenor-respondent. I. The determination of the DHCR and the courts below that MCI rent increases are permanently added to the rent base is in complete accord with the intent of the Legislature and settled precedent. ( Matter of Howard v Wyman, 28 NY2d 434; Matter of Meko Holding v Joy, 107 AD2d 278; Matter of Litman v Weaver, 20 Misc 2d 1032, 10 AD2d 865; Matter of Gilmore v Preferred Acc. Ins. Co., 283 NY 92; Matter of Abraham & Straus v Tully, 47 NY2d 207; Feder v Caliguira, 8 NY2d 400; Matter of Charles v Regan, 126 Misc 2d 333.) II. The court below and the trial court correctly affirmed the DHCR's determinations that the installation of storm windows was building-wide and that a MCI rent increase was warranted. ( Matter of Oriental Blvd. Co. v New York City Conciliation & Appeals Bd., 92 AD2d 470, 60 NY2d 633; Matter of Korein v Conciliation & Appeals Bd., 84 AD2d 724, 57 NY2d 938; Fresh Meadows Assocs. v New York City Conciliation & Appeals Bd., 88 Misc 2d 1003, 55 AD2d 559, 42 NY2d 925; Matter of Bambeck v State Div. of Hous. & Community Renewal, 129 AD2d 51, 70 NY2d 615; Matter of Carol Mgt. Corp. v Commissioner of State of N. Y. Div. of Hous. & Community Renewal, 140 Misc 2d 673.) III. The court below and the trial court correctly affirmed the DHCR's finding that the installation of storm windows where none existed before was a major capital improvement, and not deferred maintenance or ordinary repairs. ( Matter of Rosen v Weaver, 7 Misc 2d 576.) IV. The court below and the trial court correctly affirmed the DHCR's determination that Operational Bulletin 84-4 is inapplicable where, as here, applying that order would have been grossly inequitable.
Joseph L. Forstadt, Anthony I. Pye and Martin J. Heistein for Rent Stabilization Association of New York City, Inc., amicus curiae. I. The policy of granting permanent rent increases for major capital improvements is supported by the doctrine of stare decisis. ( Cenven, Inc. v Bethlehem Steel Corp., 41 NY2d 842; Baker v Lorillard, 4 NY 257; Donawitz v Danek, 42 NY2d 138; Matter of Higby v Mahoney, 48 NY2d 15; Matter of Eckart, 39 NY2d 493; Matter of Litman v Weaver, 20 Misc 2d 1032, 10 AD2d 865; Town of Amherst v County of Erie, 236 App Div 58, 260 NY 361; Matter of Johnson v Joy, 48 NY2d 689; Matter of Harder's Express v New York State Tax Commn., 70 AD2d 1010, 50 NY2d 1050; Matter of Charles v Regan, 126 Misc 2d 333.) II. The Legislature has expressly approved the Rent Stabilization Code providing permanent increases for MCIs. ( Matter of Richardson v Starr, 85 Misc 2d 476; People v Gray, 41 AD2d 125, 34 NY2d 903, 419 U.S. 1055.) III. Permanent rent increases for MCIs further the public policy embodied in the Rent Stabilization L
JUDGES: Judges Alexander, Simons, Kaye, Titone, Hancock, Jr., and Bellacosa concur; Chief Judge Wachtler taking no part.