Scott E. Mollen

Landlord-Tenant—Starrett City Permitted to Reject “Living In Communities” (LINC) Program Tenant—LINC Lease Provisions Violate Urstadt Law

Defendants appealed from a trial court order which granted the plaintiff’s motion for a preliminary injunction, to the extent of requiring the defendants “to process and respond” to the plaintiff’s “application for an apartment in the defendants’ housing complex (complex) and denied the defendants’ CPLR 3211 motion to dismiss the complaint for failure to state a claim.”

The salient issue was whether certain provisions of NYC’s “Living in Communities (LINC) Program violate New York State’s Urstadt Law.” The Appellate Division, First Department (court) held that “the rider provisions contained in the LINC leases do violate the Urstadt Law.”

The Urstadt Law provides in relevant part:

[N]o local law…shall hereafter provide for the regulation and control of residential rents and eviction in respect of any housing accommodations which are (1) presently exempt from such regulation and control or (2) hereafter decontrolled either by operation of law or by a city housing rent agency, by order or otherwise. No housing accommodations presently subject to regulation and control pursuant to local laws…adopted or amended under authority of this subdivision shall hereafter be by local law…or by rule or regulation which has not been theretofore approved by the state commissioner of housing and community renewal subjected to more stringent or restrictive provisions of regulation and control than those presently in effect.

Notwithstanding any other provision of law,…a city having a population of one million or more shall not, either through its local legislative body or otherwise, adopt or amend local laws…with respect to the regulation and control of residential rents and eviction, including but not limited to provision for the establishment and adjustment of rents [or] the regulation of evictions….

The Urstadt Law was intended “to check city attempts, whether by local law or regulation, to expand the set of buildings subject to rent control or stabilization, and particularly to do so in the teeth of State enactments aimed at achieving the opposite effect….” The NYC Human Rights Law bars “discrimination by landlords against tenants based on their lawful source of income, including Section 8 federal housing vouchers.”

The court explained that in 2014-2015, “in an effort to move persons living in homeless and domestic violence shelters into more stable housing,” the city enacted the LINC program. “LINC provides rental supplements or vouchers…directly to the landlord.” The program also pays certain other costs. Most LINC programs require “the landlord to enter into a lease rider” (rider). The rider embodies the landlord’s agreement that “the LINC tenant’s lease shall automatically renew for a second year at the same rent as the first year, and limits rent increases for the following three years to amounts approved by the Rent Guidelines Board for rent-stabilized apartments throughout the city.”

The defendant is “a limited profit housing company” created pursuant to the “Mitchell-Lama Law.” Pursuant to such law, the NYS Division of Housing and Community Renewal determines “rents at the complex under a Budget Rent Determination (BRD) process.” Thus, rents at the complex are neither governed by Rent Control nor Rent Stabilization Laws. Certain apartments are governed by a project based Section 8 contract with HUD and certain tenants have Section 8 vouchers.

In 2015, individual plaintiffs were living in homeless shelters and were employed, but could not find affordable market-rate residences. While in the shelter, each plaintiff obtained a LINC rent voucher.

When each plaintiff sought an apartment in the complex, they were advised that the defendant would not accept LINC vouchers. The plaintiffs then commenced the subject action, claiming that the defendant had engaged in illegal income discrimination under the NYC Human Rights Law. The defendant moved to dismiss “for failure to state a cause of action,” arguing that since “the LINC Program compels landlords to offer covered tenants multiple lease renewals at percentages no greater than prevailing rent stabilized rates, the LINC program constitutes a de facto expansion of buildings subject to city regulatory control, and, therefore, is violative of the Urstadt Law.”

The trial court held that “the initial rent negotiated by the landlord and a potential LINC recipient does not appear to be governed by rent control and rent stabilization programs and that requiring future rent increases to be governed by the guidelines established for those programs does not convert the apartment into a rent-controlled or rent-stabilized apartment, subject to all the requirements of those programs.” The trial court denied the defendant’s motion to dismiss and the defendant then pursued the subject appeal.

The court explained that although “the initial rent need not be determined pursuant to rent control/stabilization restrictions,…the LINC program mandates renewals that are subject to rent stabilization increases.” The court found that “the effect of the local law, not its wording,…determines whether such law expands control over housing units not presently subject to these controls.” The court noted that “although the LINC program focuses on rent control/stabilization,…that is not the only type of expanded control which the Urstadt Law prohibits.”

Although the Urstadt Law addresses rent and evictions, it “also speaks of ‘more stringent or restrictive provisions of regulation and control than those presently in effect.’” Thus, “[t]he Urstadt prohibitions on expanding control…go beyond the issue of rent regulation, and encompass attempts by the local municipality to expand its control over housing units unless approved by the state DCHR.” Consequently, the court found that although a landlord’s acceptance of a LINC applicant did not render the housing unit a rent-controlled unit, such act “did not take that unit out of the Urstadt prohibitions.” The court reasoned that such “unit now became subject to additional controls to which it had not been subject to prior to signing the LINC lease, thereby extending the city’s control over that unit, in violation of the Urstadt Law.”

The court also stated that “[s]tanding alone, neither Local Law 10 nor the LINC Program’s use of rent vouchers violates the Urstadt Law.” However, the LINC program violates the Urstadt Law by “its use of mandatory riders that compel a landlord to renew a lease for up to five years at a minimum increase specifically tied to other city rent regulatory programs to which the housing unit is not presently subject.” The court emphasized that “the ‘substance rather than the form of the local law is determinative’” and “the effect of the LINC lease riders clearly and improperly expands city regulatory control to housing units not presently subject to that control.”

Accordingly, the court held that requiring defendant “to accept tenants with LINC Program rent vouchers as structured herein, violates the Urstadt Law” and granted the motion to dismiss the complaint.

Alston v. Starrett City Inc., App. Div., 1st Dep’t, Case Number: 452674/15, decided April 5, 2018. Opinion by Sweeny, J.P. Manzanet-Daniels, Webber, Kahn, Moulton, JJ. All concur.

 


Landlord-Tenant—Holdover Proceeding—Alleged Failure to Provide Access On Two Dates, More Than Seven Months Apart—Landlord Denied Right to Terminate Tenant’s Occupancy-Predicate Notice Failed to State, Inter Alia, What Repairs Were To Be Completed—Evidence Failed to Establish That Repairs Were “Urgently Needed” Or Impacted Other Tenants—Alleged Violation Was De Minimis

A landlord commenced a holdover proceeding, alleging a failure “to provide access for repairs on two dates, Dec. 7, 2016 and July 13, 2017.” The petition did not specify which section of the Real Property and Proceedings Law the petitioner was relying upon. The tenant moved to dismiss pursuant to CPLR 3211 (a)(1), (2) and/or (7)) or alternatively, for leave to conduct discovery.

The tenancy was subject to regulation by the NYC Housing Authority (NYCHA). The petition had to state the tenant’s regulatory status, including any receipt of Section 8 benefits and pursuant to “the Williams Consent Decree, the landlord was required to serve the public housing authority in question.”

The petition did not state that the tenant receives Section 8 benefits. The petition stated that the property was “operated as a low-income property for the elderly pursuant to Section 236 of the National Housing Act” and the property is a Mitchell-Lama property regulated by the NYS Division of Housing and Community Renewal (DHCR) and the U.S. Dep’t of Housing and Urban Development (HUD). Affidavits of service did not show that the landlord served NYCHA. Rather, the affidavits showed that the landlord served DHCR.

The court stated that failure to serve NYCHA was “a defect justifying dismissal” and even if service on DHCR satisfied the service requirement, other grounds warranted dismissal. The predicate notice had to specify “specific facts so as to provide the tenants with sufficient notice of the case against them.” “HUD’s Handbook states that ‘an owner must establish that the basis for the termination is consistent with…b. allowable lease provisions set forth in the lease….” Here, the predicate notice did not state which lease provision was breached or “what repairs need to be completed.” Thus, the predicate notice was “insufficient.”

Additionally, the petition alleged “material noncompliance” by the tenant in that the tenant failed “to provide access for repairs on December 7, 2016 and July 13, 2017.” The court observed that in a HUD tenancy, material noncompliance includes:

failure to timely submit household income and composition;

extended absence from or abandonment of the unit;

fraud;

nonpayment of rent;

repeated minor violations that: disrupt the livability of the property; adversely affect the health or safety of any person, or the right of any tenant to the peaceful enjoyment of the property; or have an adverse financial effect on the property; or failure to disclose and provide verification of Social Security Numbers.

Thus, the landlord had to demonstrate that “the violation was a significant one-i.e., not a technical or a de minimis violation.”

Since the predicate notice only alleged that the tenant “failed to provide access on two dates over seven months apart,” the court opined that the allegations undermine “any claim that repairs are urgently needed or even affecting the unit or other tenants.” Moreover, the predicate notice failed to state what repairs were necessary. The court held that the alleged violation alleged was “de minimis and does not rise to the level of material noncompliance as defined in the HUD handbook” and granted the motion to dismiss without prejudice.

Brookdale Vill. Hous. Corp. v. Garcia, Civ. Ct., Queens Co., Index No. 79806/17, decided April 30, 2018, Kullas, J.


Land Use—NYC Board of Standards and Appeals Decision Denying A Variance Annulled—The BSA Failed to Address the Five Relevant Factors

A petitioner commenced a CPLR Art. 78 proceeding against the NYC Board of Standards and Appeals (BSA). The court granted the petition and annulled the BSA’s determination.

The petitioner had applied to the BSA for a zoning variance to permit the development of a one-family home on a vacant lot having 3,400 sq. ft. (an undersized lot). The subject premises is located in n R3-1 residential zoning district. NYC Zoning Resolution (ZR) §107-42 provides that the minimum lot needed to build a one-family home on the subject land is 3,800 sq. ft.

The petitioner cited prior BSA decisions which granted variances based on similar facts. The petitioner noted that the subject premises previously “had a detached one-family home, which was destroyed by a fire in 1979” and under the applicable zoning law effective prior to December 8, 2005, the proposed home could “have been built ‘as-of-right’ without any variance.” The petitioner further argued that a Dec. 8, 2005 change to the ZR had been promulgated “to prevent developers from subdividing zoning lots to erect multiple buildings on small lots, and therefore, it was never intended to burden lots such as those owned by the petitioner.” Additionally, the petitioner argued that “absent a variance, the subject premises, being 400 square feet too small, is undevelopable.” Moreover, the petitioner contended that “[t]he only alternative is to combine the subject premises with the neighboring lot owned by petitioner, and create an oversized home ‘completely out of character’ with the neighborhood.”

The petitioner owns the subject vacant lot and the neighboring lot “separately and individually.” The local community planning board had voted 37-0 in favor of granting the variance. The BSA had voted 2-2 on the variance application, which “resulted in a denial of the variance application.”

The court explained that NYC Charter §659 provides that “the BSA ‘shall consist of five…commissioners to be appointed by the mayor each for a term of six years.’” NYC Charter §663 provides that “[a]ll hearings before the board shall be open to the public and shall be before at least three members of the board, and a concurring vote of at least three members shall be necessary to a decision to grant an application.” Thus, the court stated that “under §663, the denial of an application for variance, held to require three concurring votes, just as does the grant of a variance, and hence where the board was divided 2-2 on the instant application, no relief could be granted….” The petition requested that the BSA denial of the variance application be annulled.

The court further explained:

In considering an application for area variances, a zoning board is required to engage in a balancing test, weighing the benefit to the petitioner against the detriment to the health, safety, and welfare of the neighborhood…if the area variances are granted. In particular, a zoning board must consider: (1) whether an undesirable change will be produced in the character of the neighborhood or a detriment to a nearby properties will be created by the granting of the area variance; (2) whether the benefit sought by the applicant can be achieved by some method, feasible for the applicant to pursue, other than an area variance; (3) whether the requested area variance is substantial; (4) whether the proposed variance will have an adverse effect or impact on the physical or environmental conditions in the neighborhood or district; and (5) whether the alleged difficulty was self-created, which consideration shall be relevant to the decision of the board of appeals, but shall not necessarily preclude the granting of the area variance….

The petitioner claimed that “the subject premises had unique physical conditions resulting in practical difficulties, as it is the only vacant undersized lot in the area which cannot be developed as-of-right, and…there was formerly a house on the subject premises which had been destroyed by a fire….” The petitioner further argued that the hardship “was not self-created,” since he had purchased the lot prior to the 2005 zoning amendment.

The court noted that the respondents had “used the hearing to emphasize feasible alternative uses of the land that did not require a variance, i.e., petitioner’s option to enlarge his existing home onto the adjoining vacant lot, or build an attached home, and have two semi-attached homes on the lots….”

The court found that “the hearing transcripts were devoid of any indication of the respondents’ consideration of the elements of the necessary balancing test.” Moreover, “[t]here was no evidence that the grant of the variance would have an undesirable effect on the character of the neighborhood or adversely impact on physical and environmental conditions…or otherwise result in a detriment to the health, safety, and welfare of the neighborhood….”

Accordingly, the court found that the BSA’s determination to deny the variance was “arbitrary and unsupported by substantial evidence.” The respondents had “failed to demonstrate that the determination was grounded upon a rational basis due to its failure to consider the elements of the necessary balancing test.” Thus, the court annulled the BSA’s decision denying the variance and ordered that the petitioner’s application for variance be granted.

Matter of De Francesco v. Perlmutter, Sup. Ct., Richmond Co., Index No. 80076/17, decided May 4, 2018, Marrazzo, J.

Scott E. Mollen is a partner at Herrick, Feinstein.