[NYtenants-online] Museum Would Evict 15 Tenants

[Tenant]

NYtenants Online/TenantNet                               1/6/02
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IN THIS ISSUE ...

1. State seeks building to expand Tenement Museum (Villager)
2. Museum in Bizarre Bid to Wreck Building (Post)
3. Court Foils Rent-Rise Formula (Times)
4. NYT Q&A: Loss of Storage Space/Elevators aren't for Mattresses

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STATE SEEKS BUILDING TO EXPAND TENEMENT MUSEUM
The Villager, January 03, 2002
by Jennifer Jensen	

The Lower East Side Tenement Museum is good for New York. That is at least 
according to the Empire State Economic Development Corporation, which is 
trying to force the sale of an adjacent building so that the Tenement 
Museum next door can expand.

Empire State is jockeying to take over 99 Orchard St., a 
turn-of-the-century, mixed-use building, through emminent domain, a process 
by which a property owner must sell because the government has decided it 
is in the public's best interest for them to do so. Expanding the 
already-cramped museum will allow the state to move ahead with 
three-year-old plans to affiliate the Tenement Museum with two other 
important symbols of the city's immigrant history: Ellis Island and the 
Statue of Liberty. The Tenement Museum, located at 79 Orchard St., is 
dedicated to telling the story of the living conditions of immigrant 
families living on the Lower East Side.

"This project is in the public's interest because it will allow for the 
expansion of an important cultural museum. It will also allow for a 
partnership with Ellis Island and the Statue of Liberty," said Michael Mar, 
a spokesperson for the Empire State Economic Development Corporation.

In 1998, the Tenement Museum was officially linked with Ellis Island and 
"Lady Liberty," but the benefits of such an association - namely joint 
marketing and financial support from the National Parks Service - were put 
off because the museum is currently too small to accommodate the influx of 
tourists from those sites.

"We cannot accommodate any portion of the 5 million visitors who go to 
Ellis Island and the Statue of Liberty every year," said Ruth Abram, 
president of the Lower East Side Tenement Museum. "We're already turning 
people away." With 99 Orchard St., the museum would be able to accommodate 
an additional 200,000 guests a year, Abram said.

In addition to the benefit of bringing in tourist dollars to the Lower East 
Side that would be helped by acquiring the building, Abram said 
construction at 99 Orchard had undermined the museum's foundation in the 
past, and that on four different occasions the Department of Buildings 
enforced a stop-work order on the project. According to a Department of 
Buildings spokesperson, two stop-work orders were enforced at the site in 
2001, but she said there could have been more. She said the owner, 98 Allen 
Realty, currently has several permits for an ongoing rehabilitation of the 
five-story building. Congee Village Resturant is located in the building. 
Abram also said that alterations to the building date back to 1905 and that 
the structure is probably even older than that. Building plans call for a 
restaurant on the first floor and 15 apartments on the top four floors.

Owners of 99 Orchard St. were surprised to hear about the news, and say 
they don't want to sell. "I don't know why they're doing that," said Jenny 
Ngo, a spokesperson for Peter Liang, owner of 98 Allen Realty, the company 
that owns the building. "They thought the building was empty. It's not. It 
has a restaurant and 15 apartments. We don't want to sell the building."

E.S.D.C. has scheduled a public meeting on the project for Jan. 9, 
according to Ngo. For time and location, call 803-3100. Abram said the 
project is out of the Tenement Museum's control until the state acquires 
the building. "This is a state decision," said Abram. "If that should 
happen, they [the state] will sell that building to us."

If they do end up getting the building, Abrams said the museum would 
probably re-create tenement apartments inhabited by immigrants on the Lower 
East Side during the 19th century. In their current space, all of the 
permanent exhibits are based on actual families who lived in the building 
at 97 Orchard St., which operated as a tenement from 1863 to 1935. Of the 
7,000 families that lived in the building during that time, museum staff 
and volunteers have documented the lives of about 1,200. Since 99 Orchard 
St. has been nearly completely gutted and little of the original interior 
remains, Abrams said any new exhibit would be interpretations based on the 
history of immigrant communities in the entire neighborhood.

"We would be free to interpret families who lived in the neighborhood but 
not necessarily in that building," she said.

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MUSEUM IN BIZARRE BID TO WRECK BUILDING
New York Post, January 4, 2002
by John Lehmann

A New York museum is trying to kick out the owner and tenants of newly 
restored apartments on the Lower East Side - so it can spend $2 million in 
taxpayer money to convert the building into "historic" tenements.

The Lower East Side Tenement Museum on Orchard Street has struck a 
preliminary agreement with the state to condemn the neighboring five-story 
brick building - even though the owners have just completed a 
multimillion-dollar refurbishment.

The building, at 99 Orchard St., houses 15 apartments, which are fetching 
$1,650 a month in rent, and an acclaimed Chinese restaurant, Congee Village 
Restaurant.

But under the museum's plan - which is being supported by the Empire State 
Development Corp. - the museum would acquire the building by eminent domain 
and use it to expand its facilities and tours showcasing immigrant life in 
the 1800s.

One of the building's owners and residents, Lou Holtzman, 52, whose family 
has owned the building since 1910, said yesterday he was outraged the state 
would close down a flourishing business and drive out tenants.

"I can't understand how this is for the public good," he said. "You would 
think the museum would have some appreciation of how immigrants to this 
country established businesses over decades and added to their communities. 
"My mother ran a shop in this building from the 1940s to the 1980s - in the 
days when the Lower East Side wasn't the most popular neighborhood."

Holtzman, a recording engineer, co-owns the building with property investor 
Peter Liang. Holtzman's wife, Mimi Holtzman, said the museum's plan to 
install four tenement apartments in the building was like a "Disney World 
creation." "How can you build tenement-style apartments and then say they 
have historic worth?" she said.

In planning documents obtained by The Post, the museum - which often works 
on immigrant projects with Ellis Island and Statue of Liberty Park - said 
the apartment building was built as a pair to the building which now houses 
the museum. The museum planned to spend $1.35 million to acquire the 
building from its owners and reimburse tenants and another $2.338 million 
to renovate it, the documents said.

The owners believe the building alone is worth more than $3 million. The 
document said "historic" tenements would be installed as part of the 
renovation, along with a theater, classrooms and a storage facility. The 
plan said $2 million was "committed" to the project in a grant from the 
City Department of Cultural Affairs.

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COURT FOILS RENT-RISE FORMULA
New York Times, January 6, 2002
by Jay Romano

Tens of thousands of tenants in rent- controlled apartments in New York 
City received good news last month when the state's highest court ruled 
that landlords may not calculate rent increases in a way that could have 
amounted, retroactively and going forward, to thousands of dollars per 
apartment.

On Dec. 20, in a case that had been in court since 1997, the state Court of 
Appeals ruled 5 to 1 that a change in the way rent increases for New York 
City rent-controlled tenants are calculated — which resulted in lower 
increases — did not violate a law prohibiting the city from imposing more 
restrictive rent laws on landlords.

"It's hard to calculate exactly how much money was involved here," said 
Stanley Panesoff, an urban housing specialist at the Community Training 
Resource Center, a tenant advocacy group in Manhattan. "But it is clear 
that rent-controlled tenants were facing huge retroactive rent increases 
and would be paying large rent increases for years into the future."

Mr. Panesoff said that if the court had ruled in favor of the property 
owners, more than 30,000 rent-controlled tenants would have faced 
retroactive rent increases amounting to thousands of dollars each. In 
addition, he said, the city itself would have faced retroactive increases 
for apartments occupied by about 17,000 elderly rent-controlled tenants 
whose rents are subsidized by the Senior Citizen Rent Increase Exemption 
Program.

"Hundreds of millions of dollars were at stake," Mr. Panesoff said. The 
decision affects only rent-controlled tenants in New York City. Such 
households, now numbering about 50,000, are in general those who live in 
housing built before February 1947 and who have occupied their apartments 
since before July 1, 1971.

Rent-stabilized households, now numbering a little more than one 
million,are not affected by the ruling. These include tenants who live in 
buildings of six units or more built between Feb. 1, 1947, and Jan. 1, 
1974, as well as tenants who moved into pre-1947 buildings after June 30, 
1971, and tenants in buildings with three or more apartments constructed or 
extensively renovated since 1974 whose owners received special tax benefits.

To appreciate the recent decision, Mr. Panesoff said, it is necessary to 
understand how rent increases are calculated for rent- controlled tenants.

When the city in 1970 passed Local Law 30, which governs rent increases for 
rent- controlled tenants, it devised a formula that would protect tenants 
from precipitous rent increases while recognizing the property owner's 
right to earn a return on his investment.

"When Local Law 30 was enacted, about 74,000 buildings were audited and a 
Maximum Base Rent was established for every rent-controlled apartment," Mr. 
Panesoff said.

The M.B.R., as it is called, was based on factors that included the gross 
rental income of the building, operating expenses and the owner's return on 
his investment — an amount established at 8.5 percent of the market value 
of the property.

Because the initial Maximum Base Rent for most apartments was considerably 
higher than the rent being charged, Mr. Panesoff said, Local Law 30 capped 
the amount a tenant's rent could be raised to 7.5 percent a year. The 
resulting figure — that is, the rent being paid plus any allowable increase 
— is known as the Maximum Collectible Rent, or M.C.R.

Over the years, Mr. Panesoff said, the Maximum Collectible Rent figures 
eventually caught up with the Maximum Base Rent figures, which are 
themselves adjusted annually. As a result, the increase that a landlord may 
charge a rent-controlled tenant is usually the lesser of either 7.5 percent 
— the cap set by Local Law 30 — or the difference between the current rent 
and the new Maximum Base Rent allowed after the owner's allowable rate of 
return on investment is taken into consideration.

And because the return on investment is based on the market value of the 
property, Mr. Panesoff said, that value can significantly affect the 
Maximum Base Rent.

That set the stage for the case just decided by the Court of Appeals.

Stephen Dobkin, a Manhattan lawyer who represented the tenants, explained 
that in 1981, the Legislature changed the way that the market value of a 
property relates to its assessed value. Generally speaking, Mr. Dobkin 
said, the assessed value of a property is less than the market value.

The amount by which the assessed value must be multiplied to obtain the 
market value is known as the equalization ratio. So, if a property with an 
assessed value of $100,000 has a market value of $200,000, the equalization 
ratio is 2.

Before 1981, Mr. Dobkin said, a single averaged ratio was used for all 
properties in the city. In 1981, however, the State Legislature passed a 
law that divided New York City properties into four classes for assessing 
property taxes, with each class having its own equalization ratio. But 
officials continued to use the single- class ratio when calculating Maximum 
Base Rent.

It became apparent, Mr. Dobkin said, that the single-class ratio was 
producing erroneous market values. The Court of Appeals decision, for 
example, pointed out that in 2000, Class 1 properties — which include one-, 
two- and three-family homes — were assessed at about 8 percent of market 
value. The majority of buildings subject to rent control, on the other 
hand, were assessed at 45 percent of market value. In other words, Mr. 
Dobkin said, when an averaged equalization ratio was used to calculate a 
single-family house's market value from its assessed value, it would likely 
produce a calculated market value that was lower than the actual value. 
Conversely, when the single ratio was applied to a large apartment 
building, it would often produce a calculated market value that was higher 
than the actual value.

In 1986, the Division of Housing and Community Renewal, the state agency 
that administers the rent laws, adopted the four-class ratio formula. The 
ultimate result, Mr. Dobkin said, was that the market values of large 
rental properties often ended up being lower — but more accurate — than 
they would have been using the single ratio formula. This resulted in a 
lower figure for the landlord's return on investment which, in turn, 
resulted in a lower Maximum Base Rent.

At the time, however, the change had little practical effect because most 
Maximum Collectible Rents had not yet caught up with the Maximum Base Rents 
and most landlords continued to receive the 7.5 percent increase allowed by 
law. By 1997, however, the change started to have an impact and, as a 
result, the landlords successfully challenged the D.H.C.R.'s decision in 
court by contending that Local Law 30 required the single-class formula to 
be used to determine market value.

Immediately thereafter, the city enacted Local Law 73 to amend the rent 
laws to require the use of the four-class system. And that, Mr. Dobkin 
said, had an enormous effect on the rent increases to which the landlords 
would be entitled.

Under the single-class system the landlords wanted to use, for example, the 
Maximum Base Rents for the 1996-1997 cycle would have increased by about 32 
percent. In other words, the landlords would have been able to increase 
rents by the maximum 7.5 percent every year for at least four years and 
probably more. But using the four-class system, the Maximum Base Rents, 
which are adjusted every two years, increased by only 3 percent for 
1996-1997, 3.8 percent for 1998-1999, and 4.3 percent for 2000-2001.

In 1997, property owners filed another lawsuit contending that by passing 
Local Law 73, the city violated a state statute known as the Urstadt Law, 
named after Charles J. Urstadt, a former commissioner of the D.H.C.R., 
which prohibits the adoption of any local law that makes the rent laws more 
stringent or restrictive. That is the argument rejected by the Court of 
Appeals.

Jeffrey Metz, a Manhattan lawyer who represented the landlords, said: "Our 
position was that by adopting Local Law 73, and changing the equalization 
ratio that has to be used to calculate the Maximum Base Rent, the city made 
the rent laws more stringent. At the end of the day, the Court of Appeals 
decided that that was not the case."

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Q&A
New York Times, January 6, 2002

Loss of Storage Space

[Q] I am a rent-controlled tenant in a building with 48 apartments. Ever 
since I first occupied my apartment more than 30 years ago, I and other 
tenants have had the use of storage space in the basement. The landlord has 
now notified us that we must vacate the storage space. This represents the 
elimination of a service I have enjoyed since moving into the building. Can 
the landlord do this without giving a rent reduction or other compensation? 
. . . G.F., Manhattan.

[A] Colleen F. McGuire, a Manhattan lawyer who represents tenants, said 
that on Dec. 20, 2000, the Division of Housing and Community Renewal, the 
state agency charged with administering the rent laws, adopted amendments 
to the regulations governing rent-controlled and rent-stabilized tenants. 
One of the amendments, Ms. McGuire said, included a roster of conditions 
the agency considers "de minimis."

"The removal or reduction of storage space is now considered to be a de 
minimis condition unless the storage space service was provided for in a 
rider to a lease," she said, adding that the loss of a de minimis service 
would not result in the landlord being required to reduce the rent or 
provide other compensation.

Ms. McGuire added, however, that the agency's characterization of the loss 
of storage space as de minimis is not necessarily set in stone but could be 
subject to interpretation or modification by the agency itself or the courts.

"There may be circumstances where a condition, although included in the 
D.H.C.R.'s roster, will nevertheless be found to constitute a decrease in a 
required service," she said. "So I would advise these tenants to file a 
decrease-in-services complaint with the D.H.C.R. and vigorously protest the 
elimination of the storage."

The tenants should emphasize that the service has been provided for at 
least three decades, that it is important to the tenants who use it, that 
it will be quite expensive for the tenants to find replacement storage 
space outside the building and that, as a result, the termination of the 
use of the space will constitute a real and severe hardship for the tenants.

"In other words," she said, "the tenants should file a complaint that 
demonstrates that the service is not de minimis, but is important and 
integral to the tenancy."

Taking a Mattress Up in the Elevator

[Q] I own and live in an apartment in Rego Park, Queens. A few days ago, 
late in the evening, I took in a twin- size mattress to accommodate an 
unexpected overnight guest. Two days later I was shocked when I got a 
letter from the management company saying that I had violated the "moving 
rule" and was being fined $500.

I know that the rule is that moving must be done between 9 a.m. and 5 p.m., 
Monday through Friday, but that is for tenants who are moving in or out of 
their apartments. I have been living here and just took an item in. Is this 
a violation? . . . Hardy Zhang, Rego Park, N.Y. A Marc Luxemburg, a 
Manhattan co-op lawyer, said that without knowing the details of the moving 
rule, it is impossible to determine whether the letter writer violated it.

However, he said, co-op and condominium boards generally have the power to 
establish rules and regulations pertaining to the use of common areas and 
common elements — like elevators — in the building.

"Rules governing moving usually apply to any use of the common areas for 
moving bulky items, not just to moving the entire contents of an 
apartment," Mr. Luxemburg said.

At the same time, he said, fines imposed for violating the rules should 
bear some relationship to the amount of damage the move might cause.

"A fine of $500 for moving a mattress may be out of proportion to the 
potential damage the building might suffer," he said, adding that the 
letter writer might want to contest the amount of the fine by writing a 
letter to the managing agent or the board explaining the circumstances. If 
the board insists on the $500 fine, Mr. Luxemburg said, the letter writer 
would then have no recourse but to resolve the matter in the courts.
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