[NYtenants-Online] NY Tenants Online 4/13/00

[tenant]

NYtenants Online                                          4/13/00
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In this issue...

1. Housing Court Training Forum
2. Tenants stop 32.4% MBR Rent Increase
3. NYC Rent Law Not Trumped by NYS Law (Law Journal)
    Text of the Decision will follow in a separate email.
4. Board Reports Record Income From Rent-Regulated Housing (Times)

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HOUSING COURT TRAINING FORUM

City-Wide Task Force on Housing Court, Inc.
“TRAINING for ADVOCATES SERIES 2000”
Co-sponsored by Community Service Society

Housing Court: A General Overview
Date: Wednesday, April 19, 2000
Time: 2:30-5:OOpm
The Legal Aid Society
90 Church Street
15th Fl. Conference Room
(Vesey and Murray Streets)

Training conducted by:
Lis Fiekowskjv- Attorney, South Brooklyn Legal Services, Corp. B
Barbara Schliff- Director, Housing Resources Unit, Los Sures

Contact person: Stephanie Townsend-Bakare, Assistant Director
(212) 982-5512 xl1

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TENANTS STOP 32.4% MBR RENT INCREASE

In a smashing victory for rent controlled tenants, a Supreme Court judge in 
Manhattan has upheld Local Law 73 of 1997 in which the City Council revised 
the formula for calculating Maximum Base Rent increases.

As a result of the April 6 decision by Justice Leland DeGrasse rent 
increases going back to January 1, 1996 for rent controlled tenants will 
remain at the rates that have been temporarily utilized by the Division of 
Housing & Community Renewal. The owners had sought a 32.4 % increase in the 
MBR retroactive to the 1996 cycle. Had the owners succeeded rent controlled 
tenants would have been virtually guaranteed increases of seven and one 
half percent (7˝%) every year for many years to come.

The decision protects the relatively modest bi-yearly MBR increases of 3.8% 
and approximately 4% for the most recent cycles.

The owners had based their challenge to the City law on the infamous 
Urstadt Law, enacted in 1970, which restricts the City Council from enacted 
a “more stringent or restrictive” rent regulation than was in effect at 
that time.

In rejecting the owners’ claim, Justice DeGrasse noted that Local Law 73 
“does not impose new regulations, or shuffle existing regulations to thwart 
rent control provisions designed to help owners. Instead it mandates that 
an existing element shall be determined in a more accurate way.” He also 
rejected the idea that “any change to existing rent control laws is invalid 
if it results in a diminution of rent increases for rent controlled units.”

The Tenants Associations who participated in the suit were represented by 
Collins, Dobkin & Miller, LLP, and by Himmelstein, McConnell, Gribben and 
Donoghue.

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NYC RENT LAW NOT TRUMPED BY NYS LAW
New York Law Journal, April 11, 2000
BY Cerisse Anderson

[TenantNet note: the New York Law Journal incorrectly omitted the law firm 
of Collins Dobkin and Miller as representing tenant-intervenors in thiis case]

A 1997 local law affecting New York City landlords' computation of rents 
for some 71,000 rent-controlled apartments does not conflict with a State 
statute prohibiting more stringent regulations on housing than already 
exist, a Manhattan Supreme Court justice ruled last week.

Justice Leland DeGrasse in City of New York v. New York State Division of 
Housing and Community Renewal, 404031/97, filed in Supreme Court, New York 
County, IA Part 25, granted the motion for summary judgment sought by New 
York City and eight tenant association intervenors. The City sought a court 
order declaring that the City Council's Local Law 73 was lawful.

It also sought to require the Division of Housing and Community Renewal 
(DHCR) to use the methodology prescribed by the law to compute the 1996-97 
maximum base rent and all future calculations of the maximum base rents for 
rent-controlled apartments.

Rent control applies to buildings constructed before Feb. 1, 1947; 
rent-stabilization regulations affect buildings constructed between Feb. 1, 
1947, and March 11, 1969.

The Rent Stabilization Association of New York City and seven other 
landlord organizations also intervened in the proceeding and were denied 
summary judgment by Justice DeGrasse, who rejected their arguments that the 
City Council's act was barred by the 1971 enactment of the "Urstadt Law," 
named for the then-DHCR Commissioner Charles Urstadt.

The year before that law was passed, the City Council set a formula for 
establishing maximum base rents for rent-controlled apartments. Basically, 
it divided the maximum gross rentals for a sample of buildings in the City 
by the number of units in the buildings. The maximum gross rent includes 
real estate taxes, water and sewer charges, operation and maintenance 
expenses, vacancy and collection loss allowances and the disputed item — an 
8 1/2 percent return on capital value. The formula produces a rental 
increase, called the "standard adjustment factor" that is used citywide. 
However, each annual increase is limited by a statutory 7.5 percent cap.

Local Law 73 changed how capital value was calculated based on an equalized 
assessment of the value of taxable real property in the City. Under the old 
method — based on Article 12A of New York's Real Property Tax Law — the 
equalization ratios were based on an aggregation of all properties in the 
City. Local Law 73 directed that capital value be determined by an 
equalized assessed valuation based on a tax class ratio established by 
Article 12 of the Real Property Law, that is, based on the assessed values 
of only Class 2 properties, which are those with four or more residential 
units.

Using the Article 12 method, the DHCR calculated a maximum base rental 
increase of about 3 percent in 1996/97, less than in previous years. When a 
ruling by the Appellate Division, Third Department, directed that Article 
12A should be used, the recalculated increase would have been 32.4 percent, 
but for the 7.5 percent annual cap.

The City Council passed Local Law 73 in response to the Third Departments 
ruling in Community Housing Improvement Program Inc. v. NYS Division of 
Housing and Community Renewal, 230 AD2d 66.

Justice DeGrasse found that the Urstadt Law was not violated by the City 
Council's action.

"[L]ocal Law 73 seeks to amend how an existing input in the MBR formula, 
capital value, is determined. Local Law 73 does not impose new regulations, 
or shuffle existing regulations to thwart rent control provisions designed 
to help owners. It does not insert any new element into the MBR formula. 
Instead, it mandates that an existing element shall be determined in a more 
accurate way. The City and tenants have brought forth evidence that Article 
12 yields a more accurate measure of the capital value of rent-controlled 
housing," the judge wrote.

"The Urstadt Law invalidates more 'stringent' or 'restrictive' regulation. 
It does not invalidate, though it could have, any new regulations that have 
the effect of generating an MBR increase that does not reach the statutory 
annual rent cap of 7.5 percent," he added.

Assistant Corporation Counsels Deborah Rand and Spencer Fisher appeared for 
the City. Counsel for the tenant intervenors were led by William Gribben, 
of Himmelstein McConnell Gribben & Donohue. The Rent Stabilization 
Association and other landlord intervenors were represented by Jeffrey 
Metz, of Borah Goldstein Altshuler & Schwartz.

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BOARD REPORTS RECORD INCOME FROM RENT-REGULATED HOUSING
New York Times, April 12, 2000
By BRUCE LAMBERT

The landlords of the one million rent-stabilized apartments in New York 
City enjoyed record-high income coupled with the smallest increase in 
expenses in nearly a decade in 1998, according to the latest annual report 
issued yesterday at a meeting of the city's Rent Guidelines Board.

Tenant groups said that the figures showed little if any need to raise 
rents, while landlords said they were only rebounding from the recession 
and pointed to recent increases in fuel costs for heat and hot water.

The rent board's staff conducted the study in preparation for the annual 
decision in June on whatever rent increase it might authorize for the 
coming year. Besides that study, the board gives major consideration to its 
annual index of operating prices, a report due for release on April 25.

The income-and-expenses study covered 1998, the most recent year for which 
figures were available, and was based on a survey of more than 10,000 
buildings by the city's tax assessors.

Net operating income -- the difference between income and operating 
expenses -- jumped 11.8 percent, slightly more than the previous record of 
11.4 from 1997. Net operating income is used for mortgage payments, 
building improvements and profit.

The report called the findings "the highest rate of net operating income 
growth found in the nine years" that the agency has tracked the statistics. 
It added, "These figures suggest that New York's stabilized housing market 
has emerged from the deep recession of the early 1990's."

One tenant advocate in the audience, Kenneth D. Schaeffer of the Legal Aid 
Society, said: "I'm struck by the huge increase in net income, double 
digits two years running. Last year they did better than ever, and now 
they're doing 11 percent better than that." He said that past rent 
increases adopted by the board had "overcompensated" landlords.

But one landlord representative on the board, Harold A. Lubell, spoke in 
biblical terms, likening the turnaround to a belated feast "following seven 
years of famine." Another board member noted that despite the upturn, 7 
percent of the buildings were still running deficits.

Citywide, the average monthly rent collected on rent-stabilized apartments 
in 1998 was $681, an increase of 5.5 percent over 1997. The study 
attributed the higher collections to fewer vacancies, fewer tenants in 
arrears, rent deregulation, general rent increases and increases for 
improvements. Among the boroughs, Manhattan had the highest average monthly 
rent collection, $892; followed by Queens, $609; Brooklyn, $536; and the 
Bronx, $508. A figure was not given for Staten Island because of the small 
number of stabilized apartments there.

Expenses on rent-stabilized apartments averaged $459 a month per apartment 
citywide, an increase of 1.5 percent, which the report said was the 
smallest in the nine years that it has recorded the figures. The trend was 
ascribed to a dip in insurance, utility and fuel bills in 1998. Manhattan 
had the highest costs, $586; followed by Queens, $406; the Bronx, $365; and 
Brooklyn, $364.