[NYtenants-online] Museum Would Evict 15 Tenants
Sun, 06 Jan 2002 10:17:52 -0500
NYtenants Online/TenantNet 1/6/02
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
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.
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
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
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
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.
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
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
"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.
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
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
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."
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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