Douglas L. Leight, et al., Plaintiffs, John H. Masten, Appellant,v.W7879 LLC, et al., Respondents.BriefN.Y.March 22, 2016TIMOTHY L. COLLINS SETH A. MILLER W. MILLER HALL MICHELE McGUINNESS COLLINS, DOBKIN & MILLER LLP ATTORNEYS AT LAW 277 BROADWAY, FOURTEENTH FLOOR NEW YORK, NEW YORK 10007-2001 TEL: (212) 587-2400 FAX: (212) 587-2410 E-MAIL: SMILLER@COLLINSDOBKINMILLER.COM November 11, 2015 OF COUNSEL: STEPHEN DOBKIN OLIVE KAREN STAMM ANNE JAFFE PARALEGAL: JONATHAN LILIENTHAL Via Overnight Mail and Electronic Filing John P. Asiello, Chief Clerk State of New York Court of Appeals 20 Eagle Street Albany, New York 12207-1095 Re: Leight, et al. v. W7879 LLC, et al. APL-2015-00200 Dear Mr. Asiello: This firm represents John H. Masten ("Appellant" or "Masten") in the above- referenced appeal. Pursuant to Rule 500.11, this letter is respectfully submitted in support of Appellant's appeal from the May 5, 2015 Decision and Order of the Appellate Division, First Department (the "Order Under Review") dismissing his complaint of rent overcharge and declaring his apartment not to be rent stabilized. PRELIMINARY STATEMENT Appellant is one of six tenants of West 78th Street/ West 79th Streee, New York, New York (the "Building") who originally brought this action in April, 2011, seeking a declaration that their apartments are rent stabilized and reimbursement of their overcharges.2 Appellant is one of two plaintiffs in the case whose apartments had purportedly been deregulated in high-income deregulation proceedings before the New York State Division of Housing and Community Renewal ("DHCR") in 1999 and 2000.3 At the time of the deregulation orders, and for several years thereafter, the owners of the Building received J-51 tax abatement subsidies, and therefore forfeited any right to deregulate any ofthe apartments in the Building. See, Rent Stabilization Law (NYC Administrative Code) §26-504(c), 28 RCNY §5-03(f)(1), Roberts v. Tishman Speyer Properties, L.P, 13 N.Y.3d 270 (2009). The Building is a single building with two postal addresses. 2 Pursuant to Rule 500.11 (h), the status of the proceeding in Supreme Court, as of the date of this writing, is as follows. PlaintiffLeight passed away, and his estate representative settled with the Respondents. Plaintiff Stier settled with Respondents. Plaintiff Wiest was a party in the Appellate Division, but did not seek permission to appeal to this Court. The parties are in the process offinalizing a settlement ofany remaining issues involving her Apartment. Plaintiffs Lubin and Resnicow are in the process oflitigating their overcharge claims. As to theIn, the action remains in the discovery stage. The other such plaintiff, Dianne Wiest, was a partybefore the Appellate Division, but did not join in Appellant's Inotion before the Appellate Division for permission to appeal. - 2 - Defendants-Respondents W7879 LLC, N, K AND S LLC, WEST 79TH LLC, MN BROADWAY LLC, EVELYN NAGEL as co-executor of the Estate ofMichael Nagel, and as co-trustee of the Descendants Single Trust u/w Michael Nagel, the Descendants Separate Trust u/w Michael Nagel fuo Steven Nagel, et aI., and the Descendants Separate Trust u/w Michael Nagel fuo Evelyn Nagel, et aI., ALAN NAGEL as co-trustee ofthe Descendants Separate Trust u/w Michael Nagel fuo Clair Nagel Jernick, et aI., and the Descendants Separate Trust u/w Michael Nagel fuo Alan Nagel, et aI., and LISA W. NAGEL IRREVOCABLE T, LLC, ("Respondents"), are the co-owners of the Building. The Order Under Review declared that Appellant's apartment, Apt. (the "Apartment") at West 78th Street/ West 79th Street, New York, New York (the "Building") is not rent-stabilized, notwithstanding the receipt ofJ-51 benefits at the Building. Undisputedly, the Building received J-51 tax abatement benefits from 1992 to June, 2004. (R. 22, R. 286).4 On June 20,2000, the New York State Division ofHousing and Community Renewal ("DHCR") issued a high-income deregulation order (the "Deregulation Order") with respect to Appellant's apartment. (R. 273). Mr. Masten was then offered a "free-market" lease increasing his rent, effective 4 References are to the Appellate Division Record on Appeal, and are denominated as "R." followed by the applicable page nUlnber. - 3 - August 1,2000, from $2,565.21 to $3,500.00 for one year period beginning August 1,2000, and then $4,000.00 for the following year. (R.256). None of the twelve leases between Appellant and Respondents in the Record on Appeal contain any notice, to Appellant, that the Building received J-51 benefits. (R. 234-239,240,241, 242, 243, 244, 256-61, 262, 263, 264, 265, 266, 267). Undisputedly, the Building was "receiving the benefits" ofthe J-51 program at the time ofthe Deregulation Order and thereafter, within the meaning of Rent Stabilization Law §26-504(c). The Decision makes no mention ofthe J-51 benefits, and does not discuss the issue ofthe legal effect they had on Respondent's tenancy. The Order Under Review held that Appellant was not collaterally estopped by the effect of the deregulation orders from claiming that their apartments are rent stabilized, "since the issues in this litigation are not identical" to those in the deregulation proceeding, but that, nevertheless, he "failed to establish, as a matter of law, that [his] apartmen[t] became re-regulated upon [his] execution of subsequent market rate leases." The Appellate Division did not elaborate on its reason for holding that Mr. Masten's apartment remained unregulated while the building was "receiving the benefits" ofthe J-51 program, but said that "the orders ofderegulation ofDHCR remain in all force and effect." In holding that the "force and effect" of a deregulation order prevents J-51 - 4 - benefits from re-regulating a deregulated apartment, the court overlooked four things: (a) the actual language of the deregulation order at issue; (b) the statutes and regulations governing the J-51 program; (c) the statutes and regulations governing high income deregulation; (d) the fundamental operation of the doctrine ofcollateral estoppel, under which a decision that is found not to be binding cannot have any "force and effect" on subsequent litigation. The Deregulation Order found that the rent and the income for Mr. Masten's household exceeded the deregulation threshold, and that therefore the "housing accommodation is deregulated, effective upon the expiration of the existing lease." Compare, Roberts v. Tishman Speyer Properties, L.P., 13 N.Y.3d 270, 286 (2009) (deregulated apartments in already-regulated buildings "become" subject to rent regulation "a second time" by virtue of the receipt of J-51 benefits.) In Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d 270, 286 (2009) this Court implicitly held that apartments that had been deregulated by order ofthe DHCR in high income deregulation proceedings are subject to re-regulation by virtue of the receipt of J-51 benefits. Exhibit A consists of three pages from the Appendix in Roberts, demonstrating that, among the apartments held to be subject to regulation "a second time" (13 N.Y2d at 286) by virtue of J-51 benefits, were at least three that - 5 - had been deregulated by DHCR order.5 Roberts, therefore, stands for the central proposition urged by Appellant: that the ongoing receipt of J-51 benefits subjects a deregulated apartment to renewed rent stabilization. Each of the interlocking statutes and regulations that comprise the J-51 program explicitly say that every apartment in a building receiving benefits is thereby subjected to rent regulation. There is no exception for apartments that were previously deregulated. RSL §26-504 (c) requires that all of the "dwelling units in a building or structure receiving the benefits" be made rent stabilized. RPTL §489 (7)(b)(1), states that, as a condition for receiving benefits, the entire "multiple dwelling, building or structure" must be subjected to rent regulation. The regulations of the New York City Department of Housing, Preservation and Development ("HPD"), governing the J-51 program, require that "for at least so long as a building is receiving the benefits of the Act . . . all dwelling units in buildings or structures converted, altered or improved shall be subject to rent regulation." 28 RCNY §5- 03(f)(1) (emphasis supplied). Under these statutes and regulations, in buildings "receiving the benefits" of the J-51 program, no apartment can be exempted from rent regulation. There is no It is respectfully requested that the Court take judicial notice ofthis material. Property Clerk, New York City Police Dept. v. Seroda, 131 A.D.2d 289,294,521 N.Y.S.2d 233,237 (1st Dept., 1987) (judicial notice ofrecord ofprior litigation); Affronti v. Crosson, 95 N.Y.2d 713 (2001). - 6 - exception in any statute or regulation for apartments that were previously deregulated under a DHCR high-income deregulation order. Apartments that have been deregulated In high income deregulation proceedings are not exempt from the rule that requires every apartment in a building receiving J-51 benefits to be subjected to rent stabilization. RSL §26-504.1 provides that, "[u]pon the issuance of an order by the division, 'housing accommodations' shall not include housing accommodations which" qualify for deregulation, but also carves out the following exception: "this exclusion shall not apply to housing accommodations which became or become subject to this law (a) by virtue of receiving tax benefits pursuant to" the J-51 program. This language does not make the J-51 exemption into an issue for litigation before DHCR in a high-income deregulation proceeding. Rather, it says that the whole deregulation process "shall not apply." Under this provision, apartments that have been deregulated "[u]pon the issuance ofan order" cannot continue to be excluded from rent stabilization, despite the order, where they "became or become subject" to rent stabilization "by virtue of receiving tax benefits." The phrase "this exclusion shall not apply," in the second sentence, cross references the exclusion defined by the first sentence. The "exclusion" from rent stabilization, defined by the first sentence ofRSL §26-504.1, - 7 - is for apartments deregulated by order of the DHCR. Even when there has been a deregulation order, therefore, the exclusion "shall not apply" to apartments in J-51 assisted buildings. The Order Under Review properly recognized that the June 20, 2000 Deregulation Order was not, as a matter ofcollateral estoppel, a binding adjudication of the impact of the Respondents' subsequent receipt ofJ-51 subsidies or their right to treat Appellant's apartment as deregulated. That issue was not, and could not have been, before the DHCR. Contrary to the ruling of the Appellate Division, however, SInce the Deregulation Order was not a binding determination of the impact of subsequently- received J-51 subsidies, it cannot have the "force and effect" of permanently deregulating Appellant's apartment. Simply put, if an administrative decision is neither collateral estoppel nor res judicata, it is not binding. Matter ofJason B. v. Novello, 12 N.Y.3d 107 (2009) (administrative decision not binding, because not res judicata); Jeffries v. Griffin, 1N.Y.3d 34 (2003) (administrative decision not binding, because not collateral estoppel). The Appellate Division's incoherent treatment ofthe effect ofthe Deregulation Order, holding that it is not collateral estoppel on the issue of the impact of J-51 benefits on subsequent leases between Appellant and Respondents but that it - 8 - nevertheless has the "force and effect" of requiring that those leases be permanently deregulated, can be traced back to the errors that court made in deciding Gersten v. 56 7th Ave. LLC, 88 AD3d 189 (1st Dept., 2011), leave granted, 2011 NY Slip Op 89163(U) (1st Dept., 2011), app. withdrawn, 18 N.Y3d 954,2012 NY Slip Op 69029 (2012).6 Gersten held that high-income deregulation orders are binding as a matter of collateral estoppel, finding specifically that, in filling in the blanks contained on the form used for answering a deregulation petition, tenants have the burden of investigating and proving any J-51 exemption, failing which they will have effectively waived one of the most important benefits of rent regulation. In reaching this conclusion Gersten and the Order Under Review disregarded several fundamental principles governing the finality of administrative orders. Gersten rejected the argument that the receipt ofJ-51 subsidies rendered "void 6 This appeal represents the second time the Appellate Division, First Department has certified a question for review on this topic. It certified a similar question for review in Gersten, but that appeal was settled before it could be heard in the Court ofAppeals. See, Gersten v. 56 7th Ave. LLC, 88 AD3d 189 (lst Dept., 2011), leave granted, 2011 NY Slip Op 89163(U) (lst Dept., 2011), app. withdrawn, 18 N.Y.3d 954, 2012 NY Slip Op 69029 (2012). As discussed in detail herein, Gersten was incorrect and should be overruled or limited to its particular facts. However, as argued extensively below, Appellant is entitled to a reversal even if the Court finds that Gersten was correctly decided. A careful reading of Gersten shows that its holding was limited to the issue of whether a deregulation issued in 1999 was "void ab initio." 88 A.D.3d at 196. Gersten did not discuss the separate issue of whether the receipt of J-51 benefits after the issuance of the deregulation order subjected the prelnises to renewed rent regulation. On that separate and distinct issue, Appellant Inust prevail. - 9 - ab initio" a deregulation order issued eleven years earlier.7 Gersten rested on the assumption that the issue ofthe impact ofJ-51 benefits was one for the parties to raise in a high income deregulation proceeding, rather than a jurisdictional issue to be resolved independently by DHCR before such a proceeding can begin. Gersten held that a tenant's omission to raise and litigate the issue of J-51 benefits in responding to a 1999 high-income deregulation petition, an omission that resulted in the issuance of a deregulation order, precluded a lawsuit in 2009 seeking to declare the deregulation order to have been void ab initio. Gersten analyzed the issue under the rubric of collateral estoppel, finding that the "issue" before DHCR was whether the apartment should be deregulated, and that the issue was actually litigated and decided after a full and fair opportunity to be heard. In reality, the issue of J-51 benefits had not been litigated before DHCR, and the issue before the court was not an issue ofcollateral estoppel but, instead, whether the deregulation order was res judicata: preclusive on issues that should have been raised before DHCR but were not. Matter ofHunter, 4 N.Y3d 260,269 (2005) (the "rule applies not only to claims actually litigated but also to claims that could have 7 As a practical matter, since Appellant's cOlnplaint was made more than four years after the Deregulation Order, his rent would be the same whether the Deregulation Order was valid or not. Appellant does not allege that the Deregulation Order was the result of fraud within the meaning ofGrimm v. DHCR, 15 N.Y.3d 358; 362, 912 N.Y.S.2d 491 (2010) and Conason v. Megan Holding LLC, 25 N.Y.3d 1; 6 N.Y.S.3d 206 (2015). - 10 - been raised in the prior litigation."). Viewed under the rubric of res judicata, Gersten was incorrect. An administrative proceeding is res judicata only if it is the product of a formal hearing that is similar to one afforded in a court of law. See, e.g., Matter ofJason B. v. Novello, 12 N.Y.3d 107 (2009). By contrast, a deregulation proceeding beforeDHCR is, and was intended to be, a simplified and expedited procedure from which the trappings of adversary litigation have been stripped away: the petition and answer are forms in which simple information about the rent, the names of the tenants and their addresses are entered, for purposes offacilitating a database check to verify the income reported on the tenants' tax returns. See, RSL 26-504.3. An administrative adjudication is res judicata only if the outcome is intended by the statutory scheme to be a permanent adjudication of rights. Venes v. Community School Board ofDist. 26, 43 N.Y.2d 520 (1978). As argued extensively herein, a deregulation proceeding is not intended to result in the permanent removal ofapartments that are subsidized under the J-51 program, since such apartments may "become" regulated "a second time" by virtue of the receipt of such benefits. RSL §26-504.1; Roberts, 13 N.Y.3d at 286; cJ, Matter ofJason B., 12 N.Y.3d at 114 (res judicata cannot be applied against agency in a way that would "impermissibly estop it from enforcing its statutory mandate.") - 11 - Even if the issue is analyzed under the rubric of collateral estoppel, as was done by the Gersten court, the Deregulation Order cannot be construed as nullifying the legal effect of Respondents' ongoing receipt of J-51 subsidies. As the Order Under Review correctly held, the Deregulation Order did not adjudicate any issue arising from Respondents' sLtbsequent receipt ofJ-51 benefits at the time they issued a market-rate lease to Appellant in August, 2000. The effect of those benefits is to bring the Apartment within the category of"[d]welling units in a building or structure receiving the benefits" ofthe J-51 program, which, under the express mandate ofRSL §26-504(c), are rent stabilized. These points are made in greater detail, below. Pursuant to §500.11 (f) ofthis Court's rules, Appellant expressly reserves each of the arguments set forth in the Brief he submitted to the Appellate Division, First Department, including those that are stated differently herein. - 12 - JURISDICTIONAL STATEMENT This is an appeal by permission ofthe Appellate Division, First Department on a certified question of law pursuant to CPLR 5602(b)(I). By order dated July 14, 2015, the Appellate Division, First Department granted Appellant permission to appeal to the Court of Appeals, certifying as follows: this Court, pursuant to CPLR 5713, certifies that the following question oflaw, decisive ofthe correctness ofits determination, has arisen, which in its opinion ought to be reviewed by the Court of Appeals: 'Was the order of Supreme Court, as reversed by this Court, properly made?' This Court further certifies that its determination was made as a matter of law and not in the exercise of discretion. By order entered October 20, 2015, this Court denied Respondents' motion to dismiss this appeal on jurisdictional grounds. QUESTION PRESENTED The answer to the following question is dispositive of the question certified by the Appellate Division, First Department: In a building receiving J-51 benefits, does an apartment that was previously the subject of a high-income deregulation order become subject to rent stabilization a second time by virtue of continuing to receive such - 13 - benefits? STATEMENT OF FACTS Appellant John H. Masten began renting Apt. at the Building under a rent stabilized lease for the two year period commencing August 1, 1988. (R. 234-239). Undisputedly, the Building received J-51 tax abatement benefits from 1992 to June, 2004. (R. 22, R. 286). Appellant's 1992 lease contained no rider notifying him that the Building was receiving J-51 benefits. (R. 241; see generally, RSL §26-504(c), which provides for continued rent regulation until vacancy in the absence ofsuch notice) . No subsequent lease between Appellant and Respondents ever contained any notice that the Building was receiving the benefits of a J-51 subsidy. (R. 242, 243, 244, 256-61, 262, 263, 264, 265, 266, 267). On May 27, 1999 Defendants filed a petition with DHCR seeking to deregulate Appellant's apartment. (R.245-246). The Petition contained no assertions about the receipt ofJ-51 benefits at the Building. (The form then in use required that an owner check a box if the building was receiving 421-a benefits, but did not require disclosure of J-51 benefits. See, R. 246, paragraph "E" of the form.) Appellant was required to use DHCR's pre-printed form in answering. (R. - 14 - 247-254). The form mandated answers to questions that were only about the income ofthe members ofhis household. It provided no notice that any other issue was under consideration. In fact, it provided no place for the assertion of any defense arising from the receipt of J-51 benefits: the section where any dispute could be voiced - paragraph 8 of the form (R. 252) - was limited to permitting him to "dispute any assertion made by the owner," thus permitting him to deny statements in the Petition but not to assert any affirmative defense such as the receipt of J-51 benefits. Appellant and his wife filled out the form, and thereby answered the petition, on August 21,1999. On June 20, 2000 DHCR issued an "Order of Deregulation Based on a Determination and Match" with respect to Mr. Masten's apartment. (R.273). The Order found that the rent and the income for Mr. Masten's household exceeded the deregulation threshold, and that therefore the "housing accommodation IS deregulated, effective upon the expiration of the existing lease." Appellant's rent was $2,565.21 as of the date of the deregulation order. Apparently because of the mandate of Rent Stabilization Law §26-504.3(e), he and his wife were offered, and accepted, a lease that increased their rent to the market rent of$3,500.00 for a one year period beginning August 1,2000, and then $4,000.00 for the following year. (R. 256). They paid a 36% rent increase the first year, and - 15 - another 14% rent increase on top ofthat the second year, and they are not challenging those increases in this action. On April 18, 2011, Appellant joined with five other tenants in filing the initial Complaint in this action. He then joined in the First Amended Complaint, verified August 12,2011 (R. 32-34). Defendants made a motion, initially returnable October 12,2011, to dismiss the First Amended Complaint in its entirety, on the basis of Gersten. That motion was denied by the Supreme Court on August 21, 2014, but the court did not reach the merits, stating erroneously that Respondents had not included Appellant and Plaintiff Dianne Wiest in their motion. (R. 8-18). On appeal, the Appellate Division, First Department issued the Order Under Review, finding that the Supreme Court had committed an error of law in failing to address Respondents' motion, and granting that motion in its entirety. It held that Appellant was not collaterally estopped by the effect of the deregulation order from claiming that his apartment is rent stabilized, "since the issues in this litigation are not identical" to those in the deregulation proceeding, but that, nevertheless, he (and Plaintiff Dianne Wiest, who has not sought to appeal to this Court) "failed to establish, as a matter of law, that their apartments became re-regulated upon [their] execution of subsequent market rate leases." The Court did not elaborate on its - 16 - reason for holding that Appellant's apartment remained unregulated while the building was 'receiving the benefits" ofthe J-51 program within the meaning ofRSL §26-504(c), but said that "the orders ofderegulation ofDHCR remain in all force and effect." Appellant then moved for reargument or for permission to appeal to this Court. That motion was granted by order dated July 14, 2015. ARGUMENT POINl'I: THE RENT STABILIZATION LAW AND CODE REQUIRE THE RE-REGULATION OF DEREGULATED APARTMENTS IN BUILDINGS RECEIVING J-51 BENEFITS The Order Under Review held that the fact that the Building was receiving J-51 benefits when Respondent entered into a market rate lease for the apartment following the issuance of a deregulation order, had no impact on the status of the apartment under that lease. In that respect the Order Under Review contradicts Rent Stabilization Law §26-504(c), which subjects "dwelling units in a building or structure receiving the benefits" to rent stabilization, and goes on to repeat that "any such dwelling unit shall be subject to this chapter." Nothing in the statute or regulations governing deregulation orders requires, - 17 - or even permits, a deregulation order to invalidate the effect of a building's ongoing receipt of J-51 benefits. Rather, under the statute (RSL §26-504.1) and regulations (Rent Stabilization Code §2520.l1(s)), a deregulation order cannot remain in effect in apartments that "became or become subject to" rent stabilization "by virtue of receiving tax benefits." Under Rent Stabilization Code §2520.11 (s), apartments are not regulated where they have been deregulated by order ofDHCR in a high-income deregulation proceeding, but the "exemption pursuant to this subdivision shall not apply" to apartments in buildings receiving J-51 benefits. As a matter of plain meaning, for buildings receiving subsidies under the J-51 program, high income deregulation is no more applicable when there has been a deregulation order than when there has not. Specifically, every apartment in a building receiving J-51 benefits is required by statute to be subject to rent stabilization. RSL §26-504(c) provides: This law shall apply to ... (c) Dwelling units located in a building or structure receiving the benefits of section 11-243 or section 11-244 of the [NYC Admin.] code ... Upon the expiration or termination for any reason ofthe benefits ofsection 11-243 or section 11-244 of the code ... any such dwelling unit shall be subject to this chapter until the occurrence of the first vacancy of such unit after such benefits are no longer being received or ifeach lease and renewal thereoffor such unit for the tenant in residence at the time ofthe expiration - 18 - ofthe tax benefit period has included a notice in at least 12 point type informing such tenant that the unit shall become subject to deregulation ... such dwelling unit shall be deregulated as of the end of the tax benefit period. The subject apartment was, at the time ofAppellant's August, 2000 market-rate lease, a "dwelling uni[t] located in a building or structure receiving the benefits" of a J-51 tax abatement. It therefore "shall be subject to this chapter," i.e., rent stabilization. See also, 28 RCNY §5-03(f)(1), the regulations of the New York City Department ofHousing, Preservation and Development ("HPD"), governing the J-51 program, which provide that "all dwelling units" in a building receiving J-51 benefits must remain rent regulated "for at least so long as a building is receiving the benefits." Roberts, 13 N.Y.3d at 280 (citing this regulation). Apartments that have been deregulated in high income deregulation proceedings are not exempt from the rule that requires every apartment in a building receiving J-51 benefits to be subjected to rent stabilization. Specifically, RSL §26- 504.1 provides: Upon the issuance of an order by the division, 'housing accommodations' shall not include housing accommodations which: (1) are occupied by persons who have a total annual income, as defined in and subject to the limitations and process set forth in section 26-504.3 ofthis chapter, in excess of the deregulation income threshold, as defined in section 26-504.3 of this chapter, for each of the two preceding calendar years; and (2) have a legal - 19 - regulated monthly rent that equals or exceeds the deregulation rent threshold, as defined in section 26-504.3 of this chapter. Provided, however, that this exclusion shall not apply to housing accommodations which became or become subject to this law (a) by virtue of receiving tax benefits pursuant to section four hundred twenty-one-a or four hundred eighty-nine of the real property tax law, except as otherwise provided in subparagraph (i) of paragraph (f) of subdivision two of section four hundred twenty-one-a of the real property tax law, or (b) by virtue of article seven-C of the multiple dwelling law. This provision, by its plain meaning, both exempts currently regulated apartments from the process of high-income deregulation and subjects deregulated apartments to renewed regulation. The opening clause limits deregulation to apartments where an order has been issued: apartments that have been deregulated "[u]pon the issuance of an order." The exemption from deregulation refers back to that opening clause: the second sentence refers to "this exclusion," meaning the exclusion from regulation that is brought about by an order ofthe DHCR. By making "this exclusion" inapplicable to apartments that "became" subject to regulation by virtue ofJ-51 benefits, RSL §26-504.1 prevents currently stabilized apartments from being deregulated. By making "this exclusion" inapplicable to apartments that "become" regulated (emphasis supplied) by virtue ofJ-51 benefits, this provision re- - 20- regulates already-deregulated apartments.8 That is its only possible meaning. Appellant's apartment is therefore rent stabilized. This result does not depend in any way on finding that the Deregulation Order was invalid or defective. Compare, Gersten, 88 A.D.3d at 196. Viewed as a final and binding order, the statute merely required that the owner offer a market rate lease, but it nowhere required that the apartment be permanently deregulated. Specifically, when DHCR issued its June 20, 2000 deregulation order, Masten's rent was $2,565.21. Under RSL §26-504.3(e) the landlord was then required to offer a renewal lease "at a rent not in excess of the market rent." Masten then had ten days to accept such offer, failing which "the owner may commence an action or proceeding for the eviction of such tenant." Pursuant to these provisions, Masten and his wife were offered, and accepted, a lease that increased their rent to the market rent of $3,500.00 for a one year period beginning August 1, 2000, and then $4,000.00 for the following year. (R. 256). They paid a 36% rent increase the first year, and another 14% rent increase on top of that the second year. To the SaIne effect is Rent Stabilization Code §2520.11 (s), the regulation implementing the high incolne deregulation provisions of RSL §26-504.1. Insofar as is relevant here, the language is identical, exelnpting apartments deregulated by order of the DHCR in a high income deregulation proceeding, but stating that the exemption "shall not apply" where the apartment became or becolnes subject to rent stabilization by virtue of the receipt of J-51 tax benefits. The regulation adds the word "solely" to the statutory language (as in "solely by virtue of'), but that addition was found to be ultra vires in Roberts. - 21 - The apartment could not, however, remain unregulated while the building was receiving J-51 benefits. The benefits subjected all of the apartments in the building to rent regulation. After Roberts it should no longer be controversial that the receipt of J-51 benefits subjects apartments, including otherwise deregulated apartments, to rent stabilization. That has been the law since at least 1976, under §12 ofNYC Local Law 60 of 1975, when the receipt of J-51 benefits became a basis for applying rent stabilization to a building. (The former language stated that, by applying for benefits an owner ofany eligible buildings or structures "subjects such buildings or structures to regulation" under rent stabilization. This provision, later greatly expanded, is now codified as RSL §26-504(c)). As the Appellate Division, First Department stated in Gersten, "[i]n exchange for receiving such benefits, the landlords subject their properties to the RSL." 88 A.D.3d at 194. In Roberts this Court held that deregulated apartments in already-regulated buildings "become" subject to rent regulation "a second time" by virtue ofthe receipt of J-51 benefits. 13 N.Y3d at 286. Unquestionably, these included apartments that had been deregulated in high-income deregulation proceedings by order of the DHCR. The Appendix filed in the Roberts case contained three such orders, and they - 22- are annexed as Exhibit A.9 This Court's holding, that the receipt of J-51 benefits subjects apartments to rent stabilization "a second time" so as to make them exempt from high income deregulation, operated by its terms to re-regulate apartments that had been deregulated in high income deregulation proceedings before the DHCR. Indeed, it is the very purpose ofRSL §26-504(c) to impose rent regulation until vacancy on every apartment in buildings receiving J-51 benefits, including previously deregulated apartments, unless the tenants have been notified of the receipt of such benefits. Specifically, the "lease notice" provisions ofRSL §26-504(c) were part of1985 legislation that drastically expanded the class of apartments that became rent stabilized by virtue of receiving J-51 tax benefits, imposing rent stabilization upon any apartment that had received tax benefits prior to June 30, 1985, even if those benefits had long since expired. See, L 1985, chs 288 and 289, now codified at RPTL 9 It is respectfully requested that the Court take judicial notice ofthis material. Property Clerk, New York City Police Dept. v. Seroda, 131 A.D.2d 289,294, 521 N.Y.S.2d 233,237 (1st Dept., 1987) (judicial notice ofrecord ofprior litigation); Ajfronti v. Crosson, 95N.Y.2d 713 (2001). - 23 - §489 (7) (b) (2) and RSL §26-504 (c).10 When the legislature enacted high income deregulation in 1993 (and modified it thereafter), it did not see fit to change anything about the operation of RSL §26- 504(c). It continued to provide for the regulation of all previously-unregulated apartments in buildings receiving J-51 benefits. Under RSL §26-504(c), it is clear that deregulated apartments were required to be subjected to re-regulation. Sack v. DHCR, 250 A.D.2d 537,673 N.Y.S.2d 420 (1 st Dept., 1998) (construing the 1985 amendments as retroactively imposing re- regulation on an apartment that had been decontrolled in 1982). In Sack, the fact that the formerly rent-controlled tenant was still in place, and that the building had received J-51 benefits in the past, served to re-regulate his decontrolled tenancy, under rent stabilization. Forexample, in East West Renovating Co. v. DHCR, 16A.D.3d 166 (1 st Dept., 10 The statute by its tenus was intended to apply to all past and future apartments receiving J-51 benefits: L. 1985 Ch. 289 §8 Inade the statute effective using the following sweeping language: This act shall take effect immediately and . . . the provisions of sections six [RPTL] and seven [Rent Stabilization Law] of this act shall apply to any tenant in physical possession of an apartment covered by the provisions of such section, whether or not tax exelnption or abatelnent benefits shall have previously ended and shall also apply to tenancies commencing thereafter . . Appellant's tenancy is one of the "tenancies commencing thereafter" that is subjected to regulation by virtue of this language. - 24- 2005), DHCR correctly held that an othervvise-unregulated apartment rented in October, 1992 was rent stabilized, since the building was receiving J-51 benefits set to expire June 30, 1993. Unregulated apartments become subject to rent stabilization by virtue of the receipt of J-51 benefits, even when the rental takes place at the end of the benefits period. In Spaeda v. Bakirtjy, 189 Misc.2d 222, 730 N.Y.S.2d 826 (App. Term, 1st Dept., 2001) a free market apartment rented in 1980 was held to have become subject to rent stabilization in 1981 when the building began receiving J-51 benefits. In Lomagno v. DHCR, 38 A.D.3d 897 (2d Dept., 2007), DHCR correctly held that "the subject building became rent stabilized when tax abatements went into effect." The receipt of benefits subjected the whole building to rent stabilization. The basic principle is that the receipt of J-51 subsidies imposes rent stabilization on apaliments, including apartments that had once been decontrolled. Moreover, re-regulation of"high-income deregulated" apartments in buildings receiving J-51 benefits, pursuant to RSL 26-504(c), is consistent with the general treatment of exemptions from coverage under rent stabilization. Specifically, there are no permanent exemptions from rent stabilization. Exemptions only last "for so long as" a building fits within their terms. Rent Stabilization Code §2520.l1 (preface); Federal Home Loan Mortgage Corp. v. - 25 - DHCR, 87 N.Y.2d 325,334 (1995). As this Court explained in Federal Home Loan: Consistent with the treatment of other regulatory exemptions, once the reason for the exemption expires or is removed, the building should be treated as all other like buildings subj ect to regulation (cf, Wilson v. One Ten Duane St. Realty Co., 123 A.D.2d 198, 201 [1st Dept., 1987] [building formerly exempt from regulation because not used as housing accommodation became subject to regulation after rehabilitated to contain seven housing units]; Matter of Vindigni v. Altman, 40 A.D.2d 707 [2d Dept., 1972][exemption for single-family use lost upon resumption of multifamily use]; Gandler v. Rosado, 138 Misc.2d 740 [Civ. Ct., Kings Co., 1996] [increase from five to six units in loft building subjects building to rent stabilizationD. 87 N.Y2d at 334. UnderFederal Home Loan, therefore, the deregulation orders cannot be viewed as permanently exempting Plaintiffs' apartments from rent stabilization. The "high income deregulation" exemption, under Rent Stabilization Code §2520.11(s) is among those that only apply, under the preface to Rent Stabilization Code §2520.11, "for so long" as the building maintains a status that permits deregulation. Under the preface, the receipt of J-51 benefits re-regulated Appellant's apartment. The Order Under Review nullifies this principle, but offers no rationale for doing so. Nothing in the language of the Deregulation Order even suggests that the - 26- Apartment will be permanently exempt from regulation, despite the receipt of J-51 benefits. The Deregulation Order said only that the apartment "is deregulated" as of the expiration ofthe lease in effect on the date ofthe order, but said nothing about the future status of the apartment. Nothing in the deregulation provisions of the RSL supports the result reached by the Appellate Division, since RSL §26-504.1 specifically says that deregulation by order of the DHCR "shall not apply" to apartments in buildings receiving J-51 benefits. Therefore, the Order Under Review must be reversed. POINT II: APPELLANT'S APARTMENT IS RENT STABILIZED NOTWITHSTANDING ANY "FORCE AND EFFECT" THE DEREGULATION ORDER MAYH;:£\VE An administrative order has only the "force and effect" provided by its terms and by what the law says about its effect. Once the Order Under Review determined, correctly, that the Deregulation Order is "not subject to collateral estoppel, since the issues in this litigation are not identical to those in the prior DHCR deregulation proceedings," it could not logically find that the Deregulation Order permanently nullified the impact of the J-51 subsidy received by the Respondents. Although the Order Under Review found that Masten had a "full and fair opportunity to participate - 27 - in the deregulation proceedings" in 2000, it also found that the proceedings before DHCR did not decide the impact of the ongoing and future receipt of J-51 benefits. The Order Under Review finds that the Apartment is unregulated, but apparently not because of any consideration anew of the issues that it expressly found had not been litigated or decided in 2000: the court makes no mention of J-51 benefits (an omission that might lead the public to misunderstand its decision), and discusses none ofthe laws governing the receipt ofJ-51 benefits or the effect ofderegulation orders. If, as the Appellate Division has found, the issue was not litigated or decided in 2000, then surely Masten is entitled, at some point in the process, to a reasoned decision about the impact of the J-51 benefits on his tenancy. The 2000 Deregulation Order cannot, as a matter of res judicata or collateral estoppel, permanently deregulate the Apartment and nullify the mandatory effect of the receipt of J-51 subsidies. ll Matter ofJason B. v. Novello, 12 N.Y.3d 107 (2009) (administrative decision not binding, because not res judicata); Jeffries v. Griffin, 1 11 To the extent that Respondents' argument is that a deregulation order has a "force and effect" that is independent of the operation of collateral estoppel and res judicata, that argulnent must be rejected as unsupported. The Court should take judicial notice (Property Clerk, New York City Police Dept., supra, 131 A.D.2d at 294), however, that there is at least one pending eviction proceeding in Housing Court in which a landlord is c1ailning that a deregulation order is binding on a subsequent tenant, who was not a party to the proceedings that led to the order, but who nevertheless moved in while the building received J-51 benefits. Specifically, the Petition in 400 E58 Owner LLC v. DeBourbon et ano, Civ. Ct., NY Co. Index No. L&T 56625/15 is attached as Exhibit B. It appears to be based on the theory that deregulation orders have an impact that is independent of the operation of collateral estoppel and res judicata. - 28 - N.Y3d 34 (2003) (administrative decision not binding, because not collateral estoppel). It was not res judicata because (a) Masten did not, at any point in time, have the burden ofinvestigating, pleading or proving that the Apartment was exempt from deregulation, and cannot have waived his rights under rent stabilization by implication, (b) the simplified procedure governing high income deregulation applications does not qualify as "quasi judicial" so as to make deregulation orders res judicata (Jason B., supra, 12 N.Y.3d at 113), and (c) the statutory scheme does not contemplate that DHCR issue orders permanently deregulating apartments without regard to changes in the law that take place after such orders are issued, and without regard to whether deregulation is consistent with its statutory mandate. Venes, supra, 43 N.Y2d at 524-525. It was not collateral estoppel because (a) the issue of the impact of Respondents' continued receipt of J-51 benefits subsequent to the date of the Deregulation Order, was not litigated or decided, (b) the "realities of litigation" of a DHCR deregulation proceeding (Gilberg v. Barbieri, 53 N.Y2d 285 (1981 )), involving filling out pre-printed forms designed to facilitate cross-checking a tenant's income against a database maintained by the Department ofFinance, particularly in the years before this Court's decision in Roberts, preclude treating a deregulation - 29- order as though it were a binding adjudication, for all time, ofany issue arising from the receipt of J-51 benefits, and (c) a party's omission to raise an issue, such as the issue of the impact ofJ-51 benefits, cannot result in preclusion under the doctrine of collateral estoppel (Kaufman 1J. Eli Lilly & Co., 65 N.Y2d 449, 456-7 (1985)). By design, a DHCR deregulation proceeding is a simplified procedure. In the floor debate leading to the passage ofL 1993, ch 253, the enactment of high income deregulation, Senator Hannon had this to say: The idea in all of the proceedings that have been set forth is that they be administratively simple, administratively expeditious. In fact, this act specifically sets forth the timetable for decontrol proceedings so that no other suits or proceedings, motions or actions can stop these proceedings. Well, we have tried to do a very simple procedure, one that mandates that all privacy considerations remain intact, one that, because this is directed toward level of income, seeks to reform this system and make this - this whole system of general public assistance better, one that can be done with simple verification. It leaves the bureaucracy out of this process at the very beginning. It also then asks DHCR only to check upon appeal and not to check anything else but whether or not the records ofthe state reflect an income that's greater than the eligibility limit. Exhibit C is a copy of the Senate Debate Transcripts for L 1993, ch 253. It is taken - 30 - from the (much longer) Addendum of legislative history material submitted to this Court by the prevailing tenants in Roberts. The quotes appear at RA 66 and RA 86- 87, using the page numbers used in Roberts. 12 The central feature ofahigh-income deregulation proceeding, by design, is that the chief issue is determined by requiring a tenant to supply names and addresses, which are used by DHCR to check an income database maintained by the Department of Finance. See, RSL 26-504.3. Classic Realty, LLC v. N f State Div. ofHous. & Cmty. Renewal, 2 N.Y.3d 142 (2004). For that reason, both the petition to be filed by a landlord and the answer to be filed by a tenant are nothing more than forms, with blank spaces to fill in narrowly prescribed information. Even the "catch-all" portion ofthe form - the section where any dispute could be voiced - paragraph 8 ofthe form (R. 252) - was limited to providing three blank lines for him to "dispute any assertion made by the owner," thus permitting him to deny statements in the Petition but not imposing any burden to assert exemption from deregulation as an affirmative defense. The form in use in 2000 recognized that the burden belonged to the landlord to demonstrate that the Apartment qualified for deregulation proceedings. The petition form used to commence the proceeding required that an owner check a box 12 It is respectfully requested that, as in Roberts, judicial notice once again be taken of this material. Roberts, supra; Affronti, supra. - 31 - if the building was receiving 421-a benefits. See, R. 246, paragraph "E" ofthe form. At the time, DHCR erroneously took the position that apartments in buildings that were rent stabilized independently of the receipt of J-51 benefits were not exempt from deregulation. See generally, Roberts. The 2000 form therefore did not require that the landlord answer any questions about J-51 benefits. It is nevertheless revealing that the question ofwhether the building received 42l-a benefits was posed to the landlord, not the tenant: obviously DHCR believed that it was the landlord who had the burden of proof. It is the landlord, after all, who is charged with knowing that the premises is receiving J-51 benefits. Hargrove v. DHCR, 244 A.D.2d 241 (1st Dept, 1998) (imposing treble damages on landlord who claimed not to know that premises was receiving benefits); Obiora v. DHCR, 77 A.D.3d 755 (2nd Dept., 2010) (same). It is the landlord who must affirmatively notify every tenant, in every renewal lease, of his or her rights under rent regulation (Rent Stabilization Code §2522.5(c)), and who must notify tenants in J-51 buildings of the receipt ofbenefits, or accept such tenants as stabilized until vacancy (RSL §26-504(c); Matter of 73 Warren v. DHCR,13 96 13 73 Warren holds that, when J-51 benefits expire, a landlord may resume the process of high incolne deregulation, but only if each lease given during the benefits period includes such notice. 96 A.D.2d at 529. Gersten, by contrast, states in dicta that, for tenants who were stabilized independently of the receipt of J-51 benefits, such notice need never be given. 88 A.D.3d at 202. The conflict need not be resolved on this appeal, but the Court should be aware of it. - 32 - A.D.3d 524,529 (1 st Dept., 2012)). As with any other proceeding arising under the rent laws, in a deregulation proceeding, the burden is on the landlord to show that the premises are eligible for deregulation. Cf, Jemrock Realty Co., LLC. v. Krugman, 13 N.Y.3d 924 (2010) (involving vacancy deregulation). This principle dovetails with the principle that a tenant cannot waive the benefit of the rent laws. Estro Chemical Co. v. Falk, 303 N.Y. 83, 86-87 ("[k]nowledge on the part of a landlord that he [gendered in original] cannot escape liability for excess payments of rent under any circumstances, tends to insure compliance with the statute."); Riverside Syndicate v. Munroe, 10 N.Y.3d 18, 22 (2008) (agreement to waive rent limits void, even in exchange for landlord agreeing not to evict); Jazilek v. Ahart Holdings LLC, 10 N.Y.3d 943 (2008) (principle of nonwaiver renders court-ordered agreement void); Extell Belnord LLC v. Uppman, 113 A.D.3d 1,10 (1 st Dept., 2013) (principle ofnonwaiver renders DHCR-approved consent order void); Drucker v. Mauro, 30 A.D.3d 37, 41 (1 st Dept., 2006) (agreement to waive rent limits void, even in exchange for agreement not to subject tenant to high income deregulation proceedings). As this Court has recognized, because a tenant cannot waive rights under the rent laws, the failure of a tenant to assert such rights cannot be res judicata. Colton - 33 - v. Berman, 21 N.Y.2d 322,337 (1967) (tenant's failure to complain about the lack of an intercom in prior proceedings does not preclude the tenant, in later litigation, from asserting the issue as a bar to a rent increase). The Order Under Review, citing Gersten, held that Appellant had a full and fair opportunity to "participate" in the 2000 deregulation proceeding. Gersten affirmatively held that a tenant has the burden of raising, in a deregulation proceeding, any issue arising from the receipt of J-51 benefits. 88 A.D.3d at 203 ("since it appears that nothing prevented plaintiffs from raising the J-51 benefits issue before DHCR, plaintiffs are now estopped from relitigating the issue 11 years later.") Because a tenant has no such burden, and cannot waive the benefits of rent regulation, it follovvs that this key holding in Gersten was in error. 14 Both Gersten and the Order Under Review discuss the doctrine of collateral 14 In cOlnlnitting this error the Gersten court appears to have been influenced by the peculiar circumstances of Cora Cahan Gersten and Bernard Gersten. The Court in Gersten took pains to note that the tenants in that case were "not the typical tenants intended to be protected by rent regulation" because they occupied the entire 20th floor of a West Village apartment building, having combined three rent regulated apartlnents . . . to create a single residence that took up 3,259 square feet including four bedroolns, five bathrooms, an office, an eat-in kitchen, separate dining room and a 20-foot-by-34-foot living room." Gersten, 88 A.D.3d at 192. The tenants in Gersten accepted deregulation in 1999 as part ofan overall agreement whereby the parties fonnally recognized that the tenants' three individual apartlnents were combined, and the tenants were given a four-year lease for the cOlnbined apartment, which was extended for an additional nine years. Gersten, 88 AD3d at 193. It was only as the second lease drew to a close that the Gerstens raised the issue of rent stabilization. - 34- estoppel, but they each depend upon a misapplication of the related doctrine of res judicata. In both cases, the central issue - the impact of J-51 benefits - was never raised, litigated or decided in the DHCR deregulation proceedings that were found to be permanently preclusive. Compare, Matter ofHunter, 4 N.Y.3d 260,269 (2005) (for res judicata, the "rule applies not only to claims actually litigated but also to claims that could have been raised in the prior litigation."), with, Matter ofDunn, 24 N.Y3d 699 (2015) (for collateral estoppel, the proponent must demonstrate a strict identity of issues). Agency determinations cannot be res judicata unless they arise from quasi- judicial proceedings that are similar to those that take place in a court of law. Matter ofJason B., 12 N.Y.3d at 113 (determination ofeligibility for disability benefits was not res judicata, because it was "not based on a practice and procedure of an administrative tribunal that is comparable to that ofa court of law."); Josey v. Goord, 9 N.Y.3d 386, 390 (2007) ("res judicata is generally applicable to quasi-judicial administrative determinations that are 'rendered pursuant to the adjudicatory authority ofan agency to decide cases employing procedures substantially similar to those used in a court of law"'), quoting, Ryan v. New York Tel. Co., 62 N.Y.2d 494,499 (1984). The deregulation proceedings at issue were not by any means quasi judicial. There was no hearing. There were no witnesses. Neither party is required to submit - 35 - proofofany kind. Instead, each party fills out a form, under a procedure designed by its authors as one that "leaves the bureaucracy out of this process." Exhibit C, p. RA 87. There were no pleadings, framed by the litigants. Instead, the issues were framed by the DHCR forms that had to be filled out. The forms used by the agency provided nowhere for either party to raise the issue of the J-51 exemption from deregulation. For tenants such as the Appellant, this meant that he was not on notice that the receipt of benefits at the Building, past or present, would be an issue. Due process requires that the notice given to a party of the commencement of a proceeding must be sufficient to allow the party to prepare for that proceeding. It must give notice of the actual issues to be decided. Memphis Light and Water Division v. Craft, 436 US 1,98 S. Ct. 1554 (1978). The deregulation proceedings before DHCR cannot be found to have been the equivalent of judicial proceedings that necessarily ruled upon the impact of future J-51 benefits, where there was no notice of the issue. There was no fact-finding by any impartial decision maker. Instead, DHCR cross-checked a database. As intended by the authors ofthe 1993 deregulation statute, the procedure was more akin to an application for government benefits than to a quasi judicial proceeding. As Senator Hannon put it, it was designed to make "this whole system - 36 - of general public assistance better, one that can be done with simple verification." Exhibit C, p. RA-87. Because the deregulation proceeding was not a quasi judicial proceeding, the Deregulation Order cannot be found to preclude Appellant's claim that his apartment is rent stabilized. Res judicata can only be applied to an agency determination when it is "consistent with the purposes of the tribunal, board or officer." Venes, 43 N.Y.2d at 524. Enforcement of the obligation to rent every apartment as rent stabilized in buildings that continue receiving J-51 subsidies, is a critical part ofDHCR's mandate. RSL §26-504(c). The RSL delegates power to DHCR in a way that makes this clear. RSL §26-516(b) states that, in addition to the power to issue orders, DHCR "shall be empowered to enforce this law." RSL §26-516(b) speaks ofDHCR's "responsibility to enforce this law." (Emphasis supplied). This is not a statutory scheme in which DHCR's only role is that ofadjudicator. The parties appearing before DHCR are not the only ones who, by raising or failing to raise issues, control the outcome of its proceedings. See, e.g., Extell Belnord LLC v. Uppman, 113 A.D.3d at 10 (vacating DHCR consent order as the product of illegality). Rather, in the case ofDHCR, the "purpos[e] of the tribunal" is to enforce rent regulation, including the rule against permitting a building to receive massive taxpayer subsidies while deregulating - 37 - apartments, and not to perpetuate errors of law that conflict with this Court's opInIons. This is particularly true ofDHCR's role in issuing deregulation orders. Under RSL §26-504.1, deregulation "shall not apply" to an apartment that became or becomes regulated by virtue of the receipt of J-51 benefits. The purpose of deregulation orders, therefore, is to adjudicate whether apartments are exempt from regulation, not permanently, but only "for so long as they maintain the status" that entitled them to the exemption in the first place. See, Rent Stabilization Code §2520.11 (preface); Federal Home Loan, supra, 87 N.Y.2d at 334. Therefore, the Deregulation Order cannot, as a matter ofresjudicata, preclude Appellant's claim that his apartment is rent stabilized. As the Order Under Revievv correctly found, the Deregulation Order cannot preclude Appellant's claim as a matter ofcollateral estoppel. DHCR simply could not have made any finding, in the Deregulation Order, regarding the impact of benefits that had not yet been received, on a market rate leasehold that had not yet been entered into. Collateral estoppel is a flexible doctrine that can never be applied mechanically. Gilberg 1J. Barbieri, 53 N.Y. 2d 285 (1981); Schwartz v. Public Adm 'r, 24 N.Y2d 65 (1969). In Gilberg, a City Court harassment conviction was held not - 38 - to have conclusive effect in a subsequent civil action for damages, simply because the "realities of litigation" were such that the prior action had low stakes, and was unlikely to have been litigated with the potential for a large damages award in mind. See also, Jeffries v. Griffin, 1 N.Y.3d 34 (2003) (disciplinary proceeding against doctor for sexually abusing a patient held not to be collateral estoppel in damages action, since he had been convicted criminally at the time of the disciplinary proceeding, but the conviction was overturned by the time of the damages action). In this case, the "realities of litigation" were that the deregulation proceedings at issue were brought at a time when the agency did not consider buildings receiving J-51 benefits to be exempt from deregulation. The petition form raised only the issue ofthe rent for the apartment and the income ofthe household, and the only issues that were permitted to be included in the answer form were issues related to the amount of the rent and the income of the household. Appellant cannot be expected to have raised any issue with respect to the potential effect of future J-51 benefits. As noted above, Appellant had no notice whatsoever that he was expected to raise any issue regarding the J-51 exemption. Memphis Light and Water Division v. Craft, 436 US 1,98 S. Ct. 1554, (1978). In any event, raising any issue before DHCR of the impact of future J-51 benefits, would have been futile. Compare, Watergate II Apartments v. Buffalo - 39 - Sewer Authority, 46 N.Y2d 52 (1978) (issue need not be preserved before an administrative agency ifdoing so would be futile). At the time of the proceedings at issue, the agency's policy was that J-51 benefits did not make otherwise-stabilized apartments exempt from deregulation. Both Gersten and the Order Under Review imply that Appellant was obligated to challenge DHCR's policy. The realities ofthe litigation, however, are that a tenant should not be expected to anticipate and pursue such a broad and far-reaching challenge, anticipating the massive litigation undertaken by class action specialists nine years later in Roberts, in answering a petition that on its face seeks only information to be used to verify household income. Collateral estoppel gives preclusive effect only to those "issues that were actually litigated, squarely addressed and specifically decided [citations omitted]." Ross v. Med. Liab. Mut. Ins. Co., 75 N.Y.2d 825 (1990). In this case, there was no actual litigation before DHCR of the issue of the potential post-deregulation impact of past or future J-51 benefits. The issue was not addressed at all, and it was not decided. It cannot be found to be precluded by the Deregulation Order. An issue cannot be held to have been "actually litigated" for collateral estoppel purposes ifit was the subject ofa consent agreement, a plea ofno contest, or a failure to plead. Kaufman v. Eli Lilly & Co., 65 N.Y2d 449, 456-7 (1985) (an "issue is not - 40 - actually litigated if, for example, there has been a default, a confession of liability, a failure to place a matter in issue by proper pleading or even because of a stipulation [citations omitted]"). Masten did not raise any issue before DHCR concerning the impact ofpast J-51 benefits on Respondents' right to deregulate his apartment, or the impact of future J- 51 benefits on their right to continue to rent it as a deregulated unit. Even assuming that he had an obligation to raise this issue, his "failure to place [the] matter in issue by proper pleading" cannot result in a finding that the deregulation order precludes him from doing so in this action. Kaufman, 65 N.Y.2d at 456-57. It is Respondents' burden to show that "the issue sought to be precluded is identical to a material issue necessarily decided by the administrative agency." Jeffreys, 1 N.Y3d at 39. They did not meet that burden here. DHCR deregulated the apartment without deciding anything at all about the J-51 issue, since the issue had not been raised. DHCR certainly did not decide the issue of what might happen if, after issuing a deregulation order, Plaintiffs apartments are re-rented to them at market rents at a time when J-51 benefits are in effect. The Deregulation Order, therefore, should not have been found to have established a basis for dismissing the Complaint. It had no preclusive effect on later litigation concerning the impact of J-51 benefits on the status of the Apartment, an - 41 - issue that has never been actually litigated and decided. Therefore, the Order Under Review should be reversed. CONCLUSION For the foregoing reasons, the Order Under Review should be reversed. Respectfully submitted, COLLINS DOBKIN & MILLER, LLP Attorneys for Appellant John H Masten 277 Broadway, Suite 1410 New York, New York 10007 Telephone: (212) 587-2400 ~ By: Seth A. Miller smiller@collinsdobkinmiller.com - 42- CERTIFICATION Pursuant to 22 N.Y.C.R.R. § 130-1.1a, the undersigned, an attorney duly admitted to practice law before the Courts of the State ofNew York, certifies that, upon information and belief formed after reasonable inquiry under the circumstances, the contents ofthe annexed document(s) are not frivolous. Dated: New York, New York November 13,2015 By: Seth A. Miller " ,.I ~•..••4.·.....·... ·· ...... ·· ...• I A-111 f EXHIBIT E TO ANSELL AFFIRMATION - ORDERS OF DEREGULATION [A-111-A-113] .:-..... ,; ...~) _.. . St.aie.01.NeW'.York... .... . . Gt;xtdl)w. . Divis}QJt of BOllSlng and Comino:Btfy ltene'l'nl 92·31 Union Hall Street OfflCf: orRentAdni~~ ..' .1a.lmtic3~ NY 11413 Web 'Sjk:: 'fVVW.dbl;£.$CIln;~~; . (7~)i39--6400 w'"o.'" ::.. : . . :_I>~.Numtrer. ZUF-fIl)674-LD Mailing Address of Tenllnt: ~:i~' ': .' ., WCffiieI & Bciiitii"Da'u TunUi Num.ti ..',& . .' ." - .':'. :: ..:,,~.. ". :StT~~~'" : ,:'.:' . 3:~tii~tA: ..(Noi. " ,,' ' , :P:. :~tJIte, Zip' 0xle; New Yorl\1:NY·lQOO9 'Sabject JluUdfft~ (If diffef"eBt (rom tenant's'mailing addre:u) ... \ ..":' .. ;'um~erJi~:r's'tftet' . ·~pt:Nb.··i .";.' . :.- ":." , . .On June 19, 2006 . P1e 9V(Iler file~ a .f~etitiO!l for High 1~0JlfleRe~.l?~z:egg.l~tion.Q~~ ~?J~~t.l:)C)~~g acco~odation. Mel' ~.id~ra;rori·Of.thep'etition and,ttie'.r~.rs idri:l#S~9ii~,~" '.:, .' .. :":.', .... :"':" ~;it» .. 'r}' :L;¥h~~"rn;;o~e ~rtificittion porn; 2·.t; .. ~. t8J The Answer to Petition and Notice to Tenant The Rent Adn'linislr'ator finds 'that: . The housing f;ccOmrriodation is-subjeCt to the·Rent Sw.1:>i1ization Law of "l969andloi the ·Em¢gency Tenant Protection Act of 1974, aI:ld thai the legal regulated reJIt was' $2:,000.00 or mOre per uiouth on the' applicable date(s). In addition; ~ sum oftlie annuaLincomes' ottenant(sYn.amed cn the lease ':Voo ocCupi~ this housing ~rn.m9g..ationand of~~ ~:,-~her per~of!.S wbo occupied tills hotlsmgMcommodation as a primary fl:sidence on pther than- a temPDrary basi~ (qcl':lding b9~ floe eqlploye~ and. qppa: fide ~ubt~~.ants)w~ in QC~~ of. $175,000.00 in each ofthe two p~e'c~dmg"caleniliu- yea~,' A~rdingly~'and'iipaii'the groUnds .~ted ill 'the _ Rent Stabilization Code Section 2520.11 (5) or Emergency Tenant Protection Regulations Section 25(}O~9 (n), itis . . . . pRDERED, tbat the subject housing acconunodation is deregulated, effe~tive upon the expiration of the existing leas,::, OCT 3 1 2OC~ lmJ~ Date .-... ';1 I A-112 I .0) .:'j .W State ofNew Yotic Division of Housing .ad Community Renewal Office of Rent Administration Web Site: www..dbcr.slate..ny.Ltl Gertz Plaza . 92·31 Union Hall Street Jamaica, NY 11413 (71&) 73%400 Docket Number: ZUF-410644-LD Mailing Address of Tenant: Mailing Address of Owner: Name: 'Number & Street: State, ZIp Code: Carl Crego & Carol A Lattennan IName: . - Number & Peter Cooper Road Apt. No: Street: . New York, NY 10010 State, Zip Code: Metropolit3n Tower Life Ins Co % Belkin Burden Wenig GOldman 270 Madison Avenue New Yri~k, NY 10016 Subject BulJdlng: (If different from tenant's maiUng address) Number and Street Apt. No•. City, State, Zip Code On June 19,2006 the owner filed a Petition fOf High Income Rent Deregulation of the subject housing. accommodation. J\fter consideration of the pe~ition an~.llie tenant's admissions in: .[8] . The Income Certification Form ',.~ .., :".-_.:, "~':" :;~~ /~"~:~ l. ~. r:'~ ~,';:r",;:- ..-..... :.~ ._~ ~ , ..~ ..~".. .: ... ::'·~_,",;~·:-t~~~_:~~j~.~:I~~.';~~~~~~p~" ;;~~~~ ~: ..~;:: '" ~ o .The Answer to Petition and Notice to Tenant The Rent Administrator finds that: 't' '-0"'';-: .: ••... . .: :.~:... The housing accommodation is subject to the Rent Stabilization Law of 1969 and/or the Emerge~cy Tenant Protection Act of 1974, and that the legal regulated rent was $2,000.00 or more per month on the applicable date(s). In addition, the sum of the annual incomes oftenant(s) named on the lease who occupied this housing acconunodation and of the other persons who occupied this housing accommodation as a primary residence on other than a temporary basis (excluding bona fide employees and bona fide. subtcna~ts) was in excess of :$175,000.00 in each of the two preceding calendar years. Accordingly, and upon the g'rounds stated in the Rent Stabilization Code Section 2520.11 (5) or Emergency Tenant Protection Regulations Section 2500.9 (n), it ~ . ORDERED, that the subject housing accommodation is deregulated, effective upon the expiration of the existing lease. OCT 1 I 2000 ~o-?JD IRS! (.3i05) f A-113 I State of New York Division of Housing and CommunitY Renewal Office of Rent Administration :,eb Site: ~.dhcr.:state.oy.us =~==~..;,.,.,...".,.,.,."" Gertz Plaza 92-31 Union Hall Street Jamaica. NY 11433 (118) 739-6400 Docxet Number UF 410709 LD Issue Date 12/12/2006 Mailing Address or Tenant: OJlene L1antino Avenue C . New York NY 10009 Subject Housing Accommodation.: Apl No: Avenue C New Yorl::'NY 10009 Mailing Address of Owner. Metropolitan Tower Life Ins,.Co % Belkin Burden Wenig Goldman :nO Madison Avenue New York. NY' 10016 \ On June 19. ~ the Owner of the bu11ding filed a .petition. for'lligh Inwme Rent Deregulati<>n fOl f:h~ subjeJ;:t hous~ acc<::::r 0= ;:::j." co PETITION HOLDOVER CIVIL COURT OF THE CITY OF NEW YORK COUNTY OF NEW YORK: HOUSING PART E58 OWNER LLC, Petitioner-Landlord, -against- MICHELE M. DE BOURBON AND PETER H. LAURELU East 58th Street Apt. New York, New York 10022 Respondents-Tenants, Respondents-Undertenants. Index No. L&T 12015 The petition of E58 OWNER LLC shows that: 1. Petitioner is the owner and landlord of the Premises described as defined below and authorized to do business in New York. 2. Respondents MICHELE M. DE BOURBON AND PETER H. LAURELL( are the tenants of the Premises who entered into possession under a written rental agreement made on or about February 10, 2010 between Respondents and the Petitioner's predecessor,as extended byrenewallease agreement for a term expiringon February 28, 2015. Respondents,HJOHN DOE" and "JANEDOE",arethe undertenants of the Respondents-Tenants. Respondents are now in possession of the Premises. 3. The Premises is described as follows: All rooms, Apt. in the building known as and located at East 58th Street, New York, New York 10022, Borough ofManhattan, which .is situated within the territorial jurisdiction ofthe Civil Court of the City ofNew York, County ofNew York. 4. Pursuant to the Rent Regulation Reform Act of 1993, as amended, this apartment is exempt from Rent Regulation because the State of New York Division of Housing andCommunity issued an orderof deregulation on September14, 2009, Docket N().ZXF-411927-LD,and .further confirmed via DocketNumberZBR-41 0606-LDwhich exempt~d the Apartmentfromregulation.··.Respondentwas offered a deregulatedl~aseby . fetterdated.~anuary23,.2015.···8espondentrejected.th~ petitioner's offer ofacieregulatecj ~ ;,' - ,-, -; ": ", -';: ;"': ': ,: ion~r.Jhepers~ni·ntendedis .... . ! 1 lease. (Copies of the two Orders and the letter are annexed hereto and incorporated herein). 5. The term for which said Premises were rented by Respondents-Tenants expired on February 28,2015 and has not been renewed. 6, The Respondents continue to be in possession of the Premises without permission of the Petitioner, after the expiration of said term, 7. The Premises is in a building that is a multiple dwelling and pursuant to the Housing Maintenance Code, § 27-2097, et seq, there is a currently effective registration statement on file with the Office of Code Enforcement in which the owner has designated the managing agent named below, a natural person. over 21 years of age, to be in control of and responsible for the maintenance and operation of the dwelling, MDR Number: 115401; registered managing agent: Adam Grushko; business address: 888 Seventh Avenue, New York, New York 10106, 8, Petitio~er lacks written information or notice of any address where the Respondents-Tenants reside/are employed/have a place of business in New York State other than the Premises. ' 9. In accordance with the terms of the most recent rental agreement between the parties herein, Respondents-Tenants agreed to pay for Respondents' use and occupancy of the Premises at the rental rate of $3,751.40, plus the costs and disbursements, upon information and belief, including reasonable lega\ fees, wh\ch m\Qht be incurred by Petitioner in any action to enforce the landlord's rights under the rental agreement No monies for rent and/or "use and occupancy" has been received and/or accepted since March 1, 2015 and Petitioner has or will incur reasonable attorneys' fees in an amount to be determined at trial. In addition, Petitioner will seek the fair and reasonab\e value of the use and occupancy of the Premises in an amount to be determined by the court. WHEREFORE, Petitioner requests a final judgment awarding possession of the Premises to Petitioner, the issuance of a warrant to remove Respondents from possession, a judgment for the fair value of use and occupancy in an amount to be determined by the court, plus legal interest from March 1,2015, and upon information and belief, attorneys' fees inan amount to be determined at trial, and costs and disbursements ofthis proceeding. Dated: New York, New York 2015 E58 OWNER LLC Petitioner-Landlord BELKIN BURDEN WENIG & GOLDMAN, LLP Attorneys for Petitioner-Landlord 270 Madison Avenue New York, New York 10016 (212) 867;4466 /~J / B II·'" ~~~ . /"y: [J/(1 ( l't~,' '-./ Briah C. Harferl1,Esq. (Rule 130-1.1-a) -2- STATE OF NEW YORK COUNTY OF NEW YORK) 55.: VERIFICATION ADAM GRUSHKO, being duly sworn, deposes and says: 1. I am the Registered Managing Agent for E58 OWNER lLC, Petitioner in the within action. 2. f have read the foregoing Petition and know the contents thereof; and the same is true to my own knowledge, except as to those matters therein stated to be alleged upon information and belief, and as to those matters, deponent believes them to be true. for Petitioner. 3. f make this verification because I am the Registered Managing Agent /~ ADAM GRUSHKO, Registered Managing Agent \ Docket N um her \ '\ (For DIlen 'U'iC Only); \ , ZBR-410606-L~ \ CJCr\l~ PLLl:J 92'H 31 tlilian l"{ali Stn:e.L NY 1[433 Mailing Addn:ss of Owner: E 58 Ovvner lLC % BelkIn Burden VJenig Goldman, LlP 270 Madison {::I,venue New York, NY 10016 deregulated under Docket Number XF-41 i927-LDwhich Petition for Admlnlstranve Reviewhas been med. OnJcr DcnyingPctition orTcrminatingProcccding } 011- Filing Per-iod c=J The owner's peUtion lor high income ren~ deregulation (Form RA-93 OPO) was not filed \vith DI feR by June 30th. [::J The owner's petition for high income rent deregulation (Form RA-9J OPO) was incomplete, and,a complete application was not f11ed by June 30th. M. De Bourbon/P. Laureill East 58th Street, Apt. New York, NY 10022 !dler consideration of all the e.vidcnc.~ in the record, the Rent Administrator finds: Mailing Address of Ten:ll1t: SUbject Building (i f di fferent !i'om tenant's mailing address): Docket Numbe..~ 11927-LD 1427 Sturl Avenue Hewlett, NY 1155'7 . I\'faiHng Address of Tenant: Mailing Address of Owner: Name: ,_A_nt_h_o_n_y_&_A_n_d_T_ea_S_co_'_n_ic_k_-,-- Name; E 58 St % Sidrane & Schwartz-Sidrane Number and, Number and Street: 4 E_as_l_5_8_S_tr_c_et_,_"_-.aA,Pt...l Street: City,' New York, NY 10022 City, State, Zip Code: State, Zip Code: Subject Building (rfdifferent from tconnt's mailing address): Number and Street Apt No. City, State, Zip Code On June 24,2009 the owner filed a Petition for High Income Rent Deregulation of the s~bject housing accommodation. After consideration of the petition and the tenant's admisslons in:. , [ZJ The In~ome Certification Form o The Answer to Petition apd Notice.to Tenant The Rent Administrator finds that: . . . The housing accommodation is subject to.the Rent Stabilization Law of 1969 and/or the Emergency Tenant . Protection Act of 1974~ and tryat the legal regulated rent was $2,000.00 or more per month on the applicable date(s). In addition, the sum of the annual incomes of the tenant(s) named on the lease who occupied this housing accommodation and of the other persons who occupied this housing accommodation as a primary residence on other than a temporary basis (excluding bona fide employees and bona fide subtenants) was in excessof$I7'stOOO.OOIn each of the two preceding calendar years. Accordingly, and upon ~he grounds stated in the.. ·.Re..·n,.t•..S,tabi..li.Z,at.. i.•..on.,••...Cod..e ,Section2520. J1(5) or Emerg.ency T.e.. nant Protection Regulations Section.... 25QO,9(n),Jtis ~' . ,_, C,' •• '.' -,. ... _ ORDERED,it,hatthe.su.bjecthousing accommodation is deregulated, effectiveupon the expiration of the eXIsting.lease. . . J Brooklyn 55 Hanson Place en(i7~h f\lopr n'J? \J Brooklyn~N¥t.12l7 Staten Island. 60 Bay St 7th Floor ~taten)sland,NY lO~Ol Upper Manhattan J63 West 125th St. 5th Floor New'Yorkt NY 10027 : Queens .. 92..3'1'·UnionHall St. 4th 'Floor Jamaica,<~Y.l I433 ---;------------_.~ State' of New York . Renewal Division of Housing and co,~mu~l~ Office of Rent Admlnlstra 10 Gertz Plaza 92,-31 Union HaH Street Jamaica, New York 11433 . . . " t' e Review' . . Notice of Right to Administra IV • 'strater. (fyeu... h' . . d by a Rent Adm l.nl , ask the DIVIsion b 'f' T hIS NotIce explains your right to appeal seeking review of orders ~SU~ yoU have the nght,to ..uest is caBedf~;Ye ~ at an orper is ba~ed on an error of'raw 'and/or fact, a'l an aggriev~ P y claim of error. ThIs rd1he informationo ?~Stng and Community Renewal (OlieR) to review the order based o~ your fiI a PAR:! please r~a . 1 verning a ~e~ltlon f~r Administrative Review, and is referred to as a PAR. If you Wish dO. I~perational Bulletm 84- go an . Jnstruc.tlOns ?clow a~d foll~w them carefully', F~rther details may be faun. In a PAR. .... PARs a~d In the instructIOns printed on the reverse sIde of the form used fo.r filing . "VhQ may File. a PAR.;. . . ' file . . . " tive of such person(S~, may An owner, tenant, or other party affecteo by an order, 'or an authorized repreDs~~'k. encourages joint filtngs by a PAR. Two or more affected ownerS or lenarlts may join in filing a PAR. The ~ affect~d parties filing on common grounds. How to File a PARi . ':,. DLICR fi m RAR-2 in accordance 1. Use the correct form. PARs must be filed In dupltcate usmg 1 . or. 'b accepted with the instructions on the form. PARs filed on other forms or by letter WIll pot e . h .: 1 f your PAR 2.. Yo~ must attach a complete copy of the order which you are appealing to t e ongl~a ,0. . Time Limit for Filing a PAR: , The PAR must be either hand-d~liYeredor mailed.to DHCR at Ge'rtz Plaza, 92-31 Union Hall Street. Jamaica, New York 11433. . . 1. ffthe PA~ is hand-delivered, it must be rec~ived no later than 35 days after the date the ord~r was. issued. The date issued usually appears in the lower left portion of the order• .2. If the PAR is mailed, it must be postmarked no iater than 35 days after the date the ord~r ~as issued'. , ff you use a private postage meter and the envelope does not have an official U.S. Postal Serv lce postmark; the PAR must be received by the DHCR office not later than 35 days after the order's, issuance d?te, or you will be required to subr:nit other adequate proof (such as anofficial Postal Service receipt or certificate 9f maWng! that the PAR was mailed within the '35-day limit. :." , PARs filed after tile time limj~ wiJIbe considered untimely and win be dismissed: How to,Obtain the PAR 'Form; 'YoumaYTequestth~PARfonnRAR-2bycoming to any DHCR Borough Rent'Office listed below or to the Office ofRentAdministration's main office at Gertz Plaza, 92·3] Union Hall Street, Jamaica, New Yo'rk 11433. You mar-also request that the fcnn be mailed to you by calling (718) 739-6400. Please note that any delay resulting from cnal1~d geHv;ryofthe form to you does not ~xt~nd the 'time limlt for filing the PAR. . . F':S8 O'VNEl~LLC CIO STONr":IIENGE M.t\..NAGEMENT LLC 888 SEVENTH AVENUE 3 RD FLOOR NEW YORK, NY 10106 (212) 977-5000 January 23,2015 VIA CERTIFIED i\'IAIL, RETURN RECEIPT REQUESTED AND REGULAR lVlAIL MichelelVI. De Bourbon Peter H.Laurelli East 58th Street, Apt. New Yorkt New York 10022 Re: DHCR Order of Deregulation - Docket Nos. ZBR-410QQ6-LD and XF-411927-LD Dear Ms'. De Bourbon undIv1r. LaureIli: Slonehenge Y.UU.1Cl.j:o:,,"-'AU\,;iIH LLC is the managing agent for E58 OWNER LtC, the owner ('~Ownern) of "' .... "l, ...tM",,,.... t as Agent E5R O\VNER LLC By: ;)H]!f1c.nerUJ,e 'Very truly yours, Jason Director of Residential Leasing Thank you tt1r your kind attention to this matter. Failure to res{')ond to this offer in 'sr"iting within ten (10) days of receipt shaH be dccrneu a rejection or the Owner's ofTel' of a Hev,' non-rc£:,'l.llatcd lease, and the offer contalned herein shalI be deem.ed withdrawn v,.!ithout further notice. If you choose not to accept the offer contained herein within ten (10) days of r~ccipt of this letter, you will be required to vacate the Apartment on or before February 28, 2015. If you fail to vacate on or before that date, a holdover proceeding to recover possession of the Apmiment shaH be commenced. THE ABOVE OFFER IS HEREBY AGREED TO: () i 1 { t { I I RA·61 I SENATE DEBATE TRANSCRIPTS· 1993 CHAPTER 253 55 PAGES EMERGENCY HOUSING RENT CONTROL NEW YORK LEGISLATIVE SERVICE, INC. The Research Specialists on Legislative Intent and Currer:tt LegIslation. AN8NYORKNO~FOR·PROATCORPORATION. ESTABUSHED1~~ 15 Maiden lane, NewYorkl NY 10038 (212) 962-2826 www.nyls.org I RA·62 I 8187' 1 2 3 4 5 6 7 a 9 10 •• 11 12 13 14 15 16 17 18 19 20 21 22 23- THE PRESIDENT: Secretary will read, and we'll have order in the chamber. THE SECRETARY: On Supplemental Ca~endar Number 2, Calendar Number 166B, substituted earlier, by the Assembly Committee on Rules, Assembly Bill Number 8859, Emergency Housing Rent Control. VOICE: Explanation. THE PRESIDENT: Explanation is requested. So, I'm not -- yes, .we do. The message has 'been accepted. Senator Hannon. Senator Hannon is recognized. SENATOR HANNON: Mr. President, may I inquire, has the bill been substituted? THE PRESIDENT: Yes; it was earlier today. SENATOR HANNON: Yes, it was? Thank ·you. THE PRESIDEN~: It was substituted, and the message was accepted. SENATOR HANNON: This bill is entitled the Rent Regulation Refo~m Act of P.... ra.l~F. E. '''·IL1.!MA~ CF.'RTI:l"IY.D ~HOJtTHA..-';J:) Rl!:POI'l:TER ·1 8188 It also provides It represents a compromise between the forth in the bill. prior to vacancy in accordance with the PACU:-n:: E. WU.LlMAN C'l!R'T!FIED ~H01n"HA."'i1) REPORTER rent charged as of october. 1st, , 93 is equal to or greater than $2,000 per month and the verification and deregulation procedures set apartment is occupied by a high income household, the apartment may be deregulated for a second decontrol mechanism. If the legal I RA..63 I The bIll provides that such apart~~nt is presently vacant. deregulation shall either occur upon vacancy of the current occupants or immediately ,if the act .. would just like to mention them. It would provide that apartments which have a legal requlated rent of $2,0~b or more per month at any time between the effective date of this act and Octobe; 1st, '93, shall be subject to the decontrol provisions of this and in order to make sure the record is clear, I 1993. laws in this state. It does a number of things, two houses in regards to the rent regulation t ) 1 { l ~ •{ 1 2 3 4 5 6 7 8 9 10 e 11 12 13 14 15 16 17 18 19 ~ [ 2021 ( 22 23 l (; \ jj, \ t r IRA-64 I 8189 1 2 3 4 5 6 7 8 9 10 e 11 12 13 14 15 16 17 18 19 20 21 22 23 e For the purposes of this mechanism, a high income household is defined as one where the total federal adjusted gross income of all the occupants residing in the apartment as thei~ primary residence Is in _xces~ of"$250,OOO in each of the two preceding yea"rs. In the case of buildings which have received an exemption under Section 421 of the Real Property Tax Law, the decontrol provi~ions of this bill would apply to high income tenants in those units where "rent regUlation would otherwise continue upon the expiration of the real property tax benefits prov~ded to the owner. This bill also amends the ETPA, Emergency Tenant Protect~on Act to prOVide that housing accommodations owned as cooperatives or condo ~nlts which are vacant or which become vacant after the effective date of this ac"t, sha~l not be subject to the provisions of this act provided, however, that the existing rights of the non-purchasing tenants will" not be P.'I:U~P. E. Wu..u~I\.S C£.RTU'SP.:O SHORTIfA..,..U) RePOAT!!1iC ( t l • I I.• 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 , RA·65 I 8190 affected by this provision. The bill also codifies existIng regulations which allow owners to increase the rent to the stab~li%ed apartment in amounts equal to one-fortieth of the cost of the improvements p~ovided to an apartment when requested by the ~enant. If the tenants are in plaee l obviously then this increase can only take. place with the tenants' consent. For vacant apartments no consent is required. There is also a provision that where an owner failed to file a timely registration under rent stabilization or ETPA, the owner shall not be subject to rent over- charge penalties if the rent~l increases were otherwise lawful, and the owner files the missing registration, although the owner can be fined or will be fined a 50 percent surcharge for late filing. There is a study form to be done in conjunction with the senate and Assembly Housing Committees in regard to a whole host of pressing major problems for the housing in the PAr;UNl:: E. WILLIY.....S CF.Jn"!FH';n ~U01(TU""'''In R~POwrll'm : .. • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 I RA-66 I 8191 metropolitan area, with a report by June 30th, 1995. There is a four-year extender of the ETPA, the state and the New York City rent control condo and could open laws, to June 15th, 1997. This basically is the outline of the provision that has been a sUbject of much debate, 22 ye~rs ~f discussion, 22 days of round-the-clock negotiations. We have not allowed ~or the curtailment or abrogation of any eXisting rights, which are set forth in the bill· that would be done prior to any order of decontrol by DHCR. The idea in all of the proceed- ings that have been set forth is ~hat they be administratively simple, administratively ex- peditious. In fact, this act specifically sets forth the timetable for decontrol proceedings so that no other s~itg or proceedings, motions or actions can act to stop or stay these proceedings. SENATOR KUHL: Explanation 1s satisfactory .. .pAC:"J~E E. WU.Lu......~ CE:RTU"Sr.O ~HOfrrHA."U) R~roRTE1\t I RA·67 I 8192 j, r I • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 THE PR£SIDENT: Senator Goodman. SENATOR GOODMAN: Mr. President, £n the year 1974, und~r the Governorship of Malcolm Wilson, when both of the houses of this Legislature were controlled by Republicans, a law was passed' known as the Emergency Tenant Protection Act. That act was an omnibus act which was ,designed, through its many provisions, to provide manifold protections to tenants who were occupying the housing stock around the state, and that law came into existence after an experiment had been attempted called vacancy de'control. Vacancy decontrol was an attempt to dismantle a law that had been in existence since' World War II for the purpose of recog- nizing that the supply and demand of housing stock was such that there was far less supply and far more demand than one would have wished I I I I - I " J 20 21 22 23 and, therefore, that if there were no controls imp9sed upon the relationship of supply and demand, rents would have skyrocketed. Because of the great hardship PA.CLl~e. E. 'WJLUMAS CE:RT[YtE:n 5;HOHTHA,ND REPORTY.R IRA-68 I ~,., 1 2 3 4 5 6 7 B 9 10 it 11 12 13 14 15 15 17 18 19 20 21 22 23 B193 that such skyrocketing rents would have imposed, it was found necessary to create something . called rent control, and then an attempt was made to roll it back completely on the theory that, If an apartment became vacant, it could then be placed upon the market at a free market level, and there would be no need for any further rent control. A fine theory, but unfortunately one that proved to be disastrously inadequate in practice for a very simple reason: A number of landlords, and I'm I not sure the exact number, I hope it was not' a' majority, but a significant number'decided that there was a bonanza on the horizon and ~hat the way to accomplish the goal of increased profits was to find a variety of methods to harass tenants out of their apartments, and the methods .were appalling. We have on th~ record, based upon the, hearings of thes,e days, specific reports of ~andlords hiring goons to go into apart.ents with sledgehammersl banging on the front doors of apartmefits to frighten tenants, of landlords PAI:u:!'a: E. WILLJ~AS ("EHTU"'ZY-O ~!tO""i'HA.'ln R!!:PORTY.R & 'I b ( ! ( ( ( ( [ l 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 IS' 19 20 21 22 23 I RA·69 I 8194 using literally large dogs to patrol the corridors of the apartment, often out of control and once again to frighten tenants. The result was that vacancy decontrol became 50 odoriferous and unacceptable that it became necessary to repeal it, and that's what was done in 1974, and that's what ushered in the era of the. Emergency Tenant Protection Act. Briefly, that act sought to change the ground rules of rent control and to provide a regUlar annual review by a supposedly objective board which would determine on what basis rents could i.ncrease~ and that, in turn, was directly related to the question of supply and demand of apartments. Over the years, the Emergency Tenant Protection Act was extended in two-year intervals by this and the other house and over the years every two years the tenants were thrown into a fright when they wondered what would become of them if the Emergency Tenant Protection Act were repealed in view of the PAt:LJ~E E. WILLIMAN C~tn'IJl'I£D SHORTU....."'O RZ:POR'T'l!!:'A H t t e &# 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23• I RA·70 , 8195 persistent continuance of a very low vacancy rate of the great bulk of apartments especially in the city of New Yo~k, but also in Westchester and some of the areas surrounding New York. The results over the years have been moderately satisfactory in the sense that, although there are a variety of evasions attempted to get around the strictures of the Emergency Tenant Protection Act, by and large they were a kind of a safety vest for tenants ~ho were desperately in need of some degree of security in their home. Now, in recent years, we're very familiar with the fact that there has baen persistent inflatio~. We're also familiar with the fact that, in the last couple of years t'here's been a very deep recession I and let's be ·quite clear what the central issue is in considering this whole issue of whether to go with rent control and rent stabilization. The core question which we've had to grapple with is the question of how to provide some relief from the vast middle class PA{;t.nu~ E. \\·It.U~.A.S ('F.RTX?IE1'l ~"ORT"A...~D REPORTER II~ -----~~---~-_.... t .(t ! ! 1 2 3 4 5 6 7 a 9 10 11 12 13' 14 15 16 17 18 19 20 21 22 23 I RA-71 I 8196 which occupies our ~rban areas to protect them against the possibility of their rent skyrocket- ing. NoW, rents are not a small matter to the average tenant. Typically, the relatlon- ship of income to rent is that rent occupies about one-third of the average income. You can readily see that,' if one out of every three dollars of income goes to pay rent, we're then in a posi tion where a sudden upward' lurch in rent could throw a family's finances into rude disarray. Over the ~ears, this house, through the efforts of a number of Senators, and I ,believe my own ~ere very much involved here, passed several measures of some significant help to tenants. For my first eight years in this house, I was chairman of the Housing Committee and during that period and after a number of l,aws. c,ame into being, first the two-year extensions of the 1974 E~PAj then a law which made it easier for tenants to pay for major capital improvements -- I'll speak more about PA.CUSE E. WU..LJ~AN CERT1!'I!:D SffORTHA.... O RZ:POP.TER 'l'~.~1 .; I I RA-72 I e G 8197 '~1 .~ I, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 that in a moment -- a law requiring 51 percent tenant approval for co-op or condominium eviction plans; a law to protect the elderly and disabled from evictions when their buildings were converted to co-ops and condo's~ a law to create a system of rent registration developed by tenants and to determine their legality, a crucial piece of the backbone of the ETPA because landlords were required to register apartments and there was then oversight exercised to be certain that they didn't over- charge the legally permissible amount for tho~e apartments; and then there was a law which mandated treble damages in the event that the landlords did transgress and did, in fact, over- 16 charge. That law has had teeth in it, and then I I I I I .. i I 17 IS 19 20 21 22 a law to prohibit rent surcharges and pass- alongs In rent-stabilized ·apartments and one to extend tax abatement to hold down rents in such major urban enclaves for the middle class as Stuyvesant Town and one to strengthen housing code enforcement and give tenants recourse if 23 violations are not corrected. rACUSE E. WILU!o{AS CERTIVU:O ~nORTlu..··n) REPORTER Brick upon brick I RA·73 I 8198 . es.ta te taxes. and others in this house for the benefit of Now, be it noted, however, that We wanted to stimulate this new housing In addit~on, ~here were other I refer sp~cifica11y to the outside it. we didn't have a totally one-sided approach. measures which were helpful to landlords so that That proved to be a tremendously potent incentive, and billions of dolla~s in housing were erected in the city of New York and building to have rent-stabilized apartments, . amounts to a 50 percent discount in your real upon the completion of it, we wLll give you what landlords. so-called 421-A legislation which said to the landlords, if y~u will build a building upon under-developed land and if you will allow that ~hile all of that was going on, some other things were happening, also originated by myself of a solid wall of protection was erected for the purpose of protecting those whose incomes would be heavily impacted if this system were thrown out of kilter. 1 2 J 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23e t ( ( ( I PA.t:L1~E E. WU.LIM ......~ CER'TIJ"lf:D SHORTH.A...~D REPORTER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 IRA-74 I 8199 construction, and there was something called J. 51, and there were changes made in the loft law construction. In short, what was attempted dur- , . ing this period was some degree of equilibrium and lest it escape our notice, a number of the la~dlords duri~g this period, many of them respectable New Yorkers, made vast fortunes as a r~sult of the opportinities provided to them to build this type of subsidized housing, not to mention the Mitchell~Lama l~ws and a whole group of related direct government subsidies. Things were going along reason- ably well until the year 1992, and that brings 15 us to the present. In addition to a recession e 16 17 18 19 20 21 22 23 which also affected the landlords, there was an enormous pressure building .up to sweep away the whole scheme of rent legislation and rent control. A lot of peopl"e said allow the free market to come into play. They ignored the fact there was a 3.5 percent overall vacancy rate and that·s the latest number which has not PACUN II!: E. WXLL1MAN' Cr::lntJ"tl!tD SHORTHAND R.£PORTltR ~ l f I RA-75 I 8200·· and it has some vices. The virtues of the equilibrium. legislation are ver~ briefly as follows: meaning that supply and demand are nowhere near It is no longer a specific aspects of this.series of specific syndrome" has been broken. significant benefits. These benefits basically In addition, there are some other move to and/or where they're going to be after we act for another four y~ars. not have to worry about where they are going to to tenants because the great mass of them will two-year cycle; it has become a four-year cycle and, ~n my view, that is a very great advantage relate to the fact that we are going to have a law ~hich will enable the tenant to have certain Now, my friends, with that having The two-year "nervous breakdown been said, we are at this moment confronted with a piece of legislati~n which has some 'virtues, Overall there is.a 3.5 percent 'vacancy rate, yet been published, but we just received it from the official sources. Let me just repeat it: 1 2 3 4 5 6 7 8 9 10 e 11 12 13 14 15 16 17 18 19 20 21 22 23 fi) P..... r:I.lSE E. WU.LlM....S CERTU"H:O ~1I0RTH.'I.."iO RY.POin'EH I~.~~~~~~~ ~ ~~~ I RA-76 I • •• .:. 1: ••• ~ • • •• ib0 th! la. _ ..~ house on both sides of the aisle -- but I'll what we have failed to achieve. There has been But, Mr. ~res!de~t, let me say proposition, I'm sure, that millionaires should 9201 It is an indisputable particularly single out the mem~ers from the deal t with was to sweep away all controls" a gross~y unsatisfactory solution because it would h~ve wounded, if not killed, a number of people who vitally depend on these laws for their security, and so what happened init~ally was that whereas it appe~red for a time as though th~re might be an effort for total vacancy decontrol, a number of the Senators in this not be living in rent-controlled or rent- their rents. Unarguable proposition, but then the question arises,how to ~eal with it. Had they, the real estate lobb~, had its way, the way in -which it would have been stabilized apartments where they do not need to have the benefit of landlord subsidization of luxury apartments. assurances with respect· to his basic security. proposed a vacancy dec¢ntrol applicable to 0, 1 2 J 4 5 6 7 8 9 10 • 1112 13 14 15 1-6 17 18 19 20 21 22 23 P.'l.CU~E. E. WILUMAN C.I!.RTI:I"Ien ~HOtr.'U""'''I:D RZ::PORT!!:H ual; i WSMMh e ; ) I ·1 2 3 4 5 6 7 8 9 10 e 11 I 12 13 I I 14 15 15 17 18 I I' t 19 I 20 ! 21 22 23- I RA-77 I 8202 city of New York on this side -- did everything within their power to persuade those who were considering other p~ssibilitiest including the distinguished chairman of Honsing and the Majority Leader, that to listen to the siren song of the landlords and to sweep away all controls would have a devastating effect~· Now, let it be noted that had it been the desire of those involved in the leadership of this house to bring about the end of rent control, it would have been a very simple matter to accomplish that. Why? Because June 15th at midnight was the deadline for that law to expire, and all that would have had to have happened, if there had been the devilish plot that has been described in the other house in a really macabre debate this evening, would have been to let the whole system go over the cliff at one minute after midnight on the 15th. That did not happen, but note how simple it would have been to have let it happen if that had been the desire of the leadership of th'e house. P.A.CLl~E: E. WBLLn.....N ('l!!RTIY'Y.1'1I ~HORTHA...-':D Rl!:POlliTl!:R 11'- _ 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 I RA-78 I 8203 I must admit that.we came perilously close, due to a breakdown in discussions which did not refLect the "true intention of the leadership, and I did find myself in a rather rapid shuttle back and forth between this house and the Assembly on the night of June 15th to make certain that the two leaders' were able to confer through an open phone line, and thank God that Conference di~ result in an extension which enabled clearer heads to, prevail in the further development of l!!gislation. There have been three more extensions, and the latest one is coming ~p at 12:00 midnight; so I'll try to. wrap this up as quickly a~ I can to give others a chance to talk, and let me just say that the final result 18 which has emerged is a mixed bag. It does seek '19 20 21 22 23 vacancy luxury decont~o~, and it seeks ~o weed out that millionaires' club and subsidized bui~dings, but it does it 1n a way th~t, unfortunately, brings into play something.which has a very dangerous possible future, and that P.U:USE E. WJLUlIU..."'l C'EwnJ"u:tl SnORTKASD REPOJtTER '&tC did ~ l [ I RA-79 I ( t [ r ~ f I I ~ fj 1 2 3 4 5 6 7 8 9 10 ·e 11 12 13 14 15 16 17 IS 19 20 21 22 2~ 8204 is the concept of income verification. The specific level selected of a quarter of a million dollars a year 1s not a level that causes great concern in my bosom, because there are only 4,000 apartments which have $ 2, 000 a month or ~o're rent, and wi thin that I dare say the significant majority are not occupied by people who earn more than a quarter of a million dollars a year. Therefore, out of the 4,000 eliqible apartments, there's not only a very sm~ll number that·meet the income test for decontrol, but within that segment and mark this well, there is a situation in which we find that the free market has come into play. This is amply described in the other house by Assemblyman Friedman, by Assem- blyman Koppell, and some others who pointed out very properly that many of the rents being paid in those luxury apartments are below the 'permls- sible rent level under rent stabilization. So the fact of the matter is that this segment that has been singled out for income verification is PA1:U:-:i-: E. WU..1.1MA~ C&RTU'1l1'.:D SnORTUA.... 'O RJePORTr.kI IRA-80 I clear. from ava~lable statistics. 8205 Whom do we select to handle the It'sits work load and it can hardly breathe. about to suffocate becaus~ we've decided that we're going to hand it the interesting problem bubbling as its nose goes below the surface of income verification? You guessed itI DHeR, The problem, however, is that Mississippi River and will take six years to which is already swamped and at t~e ~oment business, people who are charging that they're paying too much rent, people with other complaints on a line that's from here to the administering the rent laws. There are six entity charged with the responsibility of years of arrearages in the handling of their there is something c~lled the Department of' Housing and Community Renewal which is the state million tenants in New York, I've got a hunch that this might affect a thousand tenants, maybe less, maybe a little more. We can't be precise r~latively tiny. out of the two and a half • 1 2 J 4 5 6 7 B 9 10 e 11 12 13 14 15 16 17 18 19 20 21 22 23e P""CL1:a: E. WIU.I~""'S C£R'TI!'IY-D S.IOHTUA.~O RePOn-TF.R I RA-81 I t 8206 I have with this bill. Number one is this process of I submit that this is not the way I do not a Republican-controlled house, are being dismantled in the bill that's before us. land~ord over-charges, those measures passed in to verify l~gal rents through a system of rent regulation and one to charge treble damages for the plea~ure of sponsoring some years ago, one of the laws which I proudly informed you I had collapse of its own weight. Number two is the fact that two income verification which I submit to you is an unworkable Rube Goldberg invention about to negative vote, but my negative vote is predicated upon three very severe problems that case, I will change what I expect to cast as a expect that that is the case. If it becomes the would feel constrained to vote for it. this bill, let me say to you in utmost candor I to go. My colleagues, if mine were the vote that had to be cast to decide the outcome of of performing income verification. • 1 2 3 4 5 6 7 B 9 10 11 12 13 14 15 16 17· 18 19 20 21 22 23 t l r P....La.l~E E. WXLI.B-U.N I ('FoRTIFIED ~HORT1U••-':D Rel"Cl~n:~R ::t...........1 _ ''I' I' 1 2 3 4 5 6 7 8 9 10 11 12 1 ., ... oj 14 15 16 17 18 19 . 20 21 22 23 ( RA-82 I 8207 The problem 1s very clear and very simple: If you need rent registrat£on to create the skeletal structure around which this whole thing is to be made viable and if you pull apart rent registration by saying instead of the treble damage penalty, we'll g1ve you A small, slap on the wrist, Mr. Landlord, if· you have not registered your apartment, you are severely impinging upon the ability of this system to functiop and tha~, in my opinion, 1s unfortunate. I am breathing an enormous sigh of relief in conclusion because I know that the great overwhelming majority of the tenants in my district, hundreds of thousands of- th'em and hundreds of thousands in your districts, will be protected for four more years. as a result of the action we. take tonight If this bill passes which I confidently expect it will. It did so ov~rwhelmingly in the Assembly, I might add, with a significant number of both Democratic- and Republican votes. But my negative vote Is intended P.\,CLl:-; E E. WU.LIMJl.:-: C£RTS.l"!1!:l') SHOBlTJrA.'H) REPORTER IRA-83 I H#Q I Wi 8208 1&;;; :'$)1'* i So this is the way I see things from here. We have stopped dead in their tracks the onslaught of those who sought to run this ball right ever us across the goal line. We held the line, but we end the game in better shape than we began because of the four-year extension. That, my friends, ~s not the complete solution, but it's better than what I t~ought we might have that night when I got on the shuttle from here to the Assembly, and thank stopped them dead on the ten yard 1ine and we've a shame. . . sh?rp teeth keeping transgressors in line, and I say to you that's nuts, and it'S wrong, and it's chopping sounding noise instead of the.click of being yanked from US' so that what we. will have to symbolize my concern that the very measures to have is not a tiger with teeth in it but ~ tiger whose gums ~re expected to inflict wound~ upon those who transgress. Thus you will hear a able teeth to this enforcement procedure are we took previously to try to give some reason- *4 s iJ *;g @¥&&5iW&4C$ • 1 2 I 3 4 5 6 7 8 9 10 it 1i 12 13 14 15 16 17 18 19 20 21 22 23e P.A.r:usE E. WH.UMA~ Cr.RTU"Xll:D SUORTHA... D R!!:PORTe::R ·~'i?iaIiN3t5 la I RA-84 I $ ~ .... ~ ..:' :' • 1 2 3 4 5 6' 7 a 9 10 e- II 12 13 14 15 16 17 18 19 20 21 22 23 'me 'ifS Q 25 8209 goodness, what we have is a compromisa that has its good and bad points. I shall vote against it unless mine is the decisive vote. Thank you. THE PRESIDENT: Senator Espada. SENATOR ESPADA: Mr. President, throughout this protracted debate -- and I won't speak to process, because I think everyone here is tired, everyone here from the past several weeks. who has'. experienced this essentially was taking millions of people hostage through a process that was absolutely unnecessary, .but to the merits of the case. This whole thing has been mis- cast. This debate is not about iuxury decontrol of anything. This has always been about 2 million people, the majority of whom earn less than $20,000 per year~ 25 percent of whom are under the federal poverty guidelines. That is what this whole thing was about. Luxury decontrol had, in fact, taken place de facto for the 2,OOO-plus households; for those who enjoy a $250,000 income level, they've always h~d their PACUNE E. WILLIMAN" C!:R7::l":;C1J Snce.:oH.....'l':D R1:rom"E~ I RA-85 I .f) 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23-. e ; 8210 option. There is a ten percent plus of vacancy, of vacancy·rate, for those apartments that are in that income strata. So this whole thing has been miscast." But since we've had it out and since we've come to this moment, I hope that rent regulation, that those that say rent regulation causes them embarrassment will sh~t up, that those who say that rent regulation benefits the rich will shut up, and that those who say that rent regulation impedes construction of new housing will shut up and, in effect, start talking about the construction of new housing opportunities and homes for the people who have no ~partm~ntsl for the people who are doubling a~d tripling up in public housing because, indeed, that's where the debate needs to be focused, that's where the state's resources need to be coordinated with the federal initiative that hopefully will come and, even if they don't come, we have a responsibility now Ln the next four years to devote as much time to the people that are waiting outside my district office PA.CUSE E. W1LUMAN CEln"ll"U:O SHOIn"HA...."D REPOnTl::R • 1 2 3 4 I RA-86 I 8211 every day in the South Bronx and throughout the City and other cities in this state, waiting for housing. They can't negotiate leases. 5 They have none. They're not even welcomed in 6 shelters. In fact, they don't want to be in • 7 8 9 10 11 12 13 14 15 16 17 18 19 shelters, so we have a unique opportunity to put all that behind us and to have the housing committee of' this senate really hold true to two choices, housing and community renewal. We stand ready in support of this bill so that we can get on with the business of real housing and real community development. THE PRESIDENT: Senator Daly. SENATOR DALY: Mr. President, would senator Hannon yield? SENATOR HANNON: Yes. SENATOR DALY: senator, I note there was a strong criticism 'of the verification 20 of income part of this bill. could you explain 21 22 how this will be implemented and administrated administered? SENATOR HANNON: PACLl1Il& E. WXLLIMAS CZRTU'IED ~HORTU.A..'l1) RZPOiiTl:!:111 Well, we have J t ') • 1 2 3 4 5 7 8 I RA-87 I .... ..:. ~ 8212 tried to do ~ very simple procedure, one that mandates that a1+ privacy considerations remain intact, one that, because this is directed towards level of income, seeks to re~orm this system and make this -- this whole system of general public assistance better, one that can be done with simple verification. It leaves the. bureaucracy out of 9 this process at the very beginning. It also 10 11 12 13 14 15 16 17 18 19 20 .21 thsn asks DHCR only to check upon appeal and not to check anything else but whether or not the records of the state reflect an income that~s greater than the eligibility limit. It presumes, and I think it can be shown from the experience with Mitchell-Lama, that the whole system.?an work in a fairly simple and easy manner." It takes actually the sting out of the system because the qreatest criticism, notwithstanding my good f+iend Senator Espada's remark about criticism of the rich benefiting; that's what's harming the whole 22 system. That's what led to the great reform 23 here, and so we have tried.to do it in a way I Lei! P.u.::u~.E E. WJLUMAN CE:n-rU"IED SKORTHA....n REPORTER • I RA-88 I ':, : • 1 ~':. ":~ • ::,. H 9;; f if tiiBI 8213 [. • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 . 21 22 23 that can be done with names and ad~re8ses alone and you're dealing with a very small universe. It provides for an absolutely simple administrative procedure: THE PRESIDENT: Senator Mendez. SENATOR MENDEZ: Mr. President, will sen~tor Hannon yield for a question? SENATOR HANNON: Yes. SENATOR MENDEZ: senator Hannon, your bill will include -- will affect those renters who are in apartments J.51s and 421-As. O.K. Those buildings were constructed with some part of taxpayers' monies, monies from all of us, and all of the people out there in the state of New York to help the developers build thos~ apartments. My question ~o you is, once this bill is approved here and it will pass this chamber, will those landlords keep and not get taken away, keep the decontrol of the so-called luxury apartments with the abatements, those tax abatements that they have negotiated, or will they be returned to the taxpayers? PACUNE E. WU..UMA..-.r C?R"t'U'Iy'O SUQRTHA.-.rD RZIrOtn'ER [ ( J co 1 2 3 4 5 6 7 I RA-89 I .. 0 ••0',. .. 8214 SENATOR HANNON: Well, in answer to your question, Senator, which is an excellent one, we ~ave provided that, because some buildings.are enjoying another sy~tem of general pUblic assistanqe, namely the tax exemptions, that to the exten~ the building is cu~rently receiving a 421 tax exemption, it is not subject 8 to the decontrol provisions here. Shou+d those 9 10 11 12 13 14 exemptions end or should the exemptions contained in section 499 end, that's -- those J.51s and 489s end, then they would be subject so that at no point do you have the decontrol p~ovisidns applying to the buildings which have received the tax exemptions that I just abatement or the J.51 tax abatement, as long as the landlord has a building which was occupied with tenants that receive the 421-A tax that building is receiving those benefits, those apartments will not be decontrolled; is that r I > I ·15 16 17 18 19 20 21 mentioned. SENATOR MENDEZ: So as long as 22 23 what you're saying? SENATOR HANNON: PAULINE E. WJLUM.~N CERTJJOrJP;o SUORTHA.'JD RZPORTEiiII Let me repeat .e'! • • • 1 2 3 4 5 6 7 s 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 I RA-90 I • 9215 myself: So long as there are tax oxemptions or abatements contained in Section 421 or Section 489, then the decontrol provisions would not apply, but once those abatements or exemptions end, and if the rest of the eligibility standards ~f this statute are present, then they would apply. SENATOR MENDEZ~ So that In the final' -- so that then assuming that ten years go by and the tax abatements for the 421-A or J.S1 ends, once those apartments are decontrolled, the -- the landlord no longer would probably. retain taxes, I want to know, I'm just interested in finding out if in any even~ there is any possibility that an owner of a building will, in fact, be able to decontrol the rent in his apartment at the same time,that he's receiving taxpayers' dollars through tax abatements. SENATOR HANNON: To the extent there are tax exemptions or abatements as I've previously mentioned. SENATOR MENDEZ: Yes. They do PACLISE E. \'v·U.UM.....'l CZRT1Flf:O ~HORTH""'''fD 'RE.POR1'ER I RA·91 I 3# $ ewes ;; I 8216, l 1 \ 2 3 I 4 5 6 ~ I 7a r 9 r 10 \ 11 r 8 12 13 14 15 16 17 18 19 20 21 22 23 G not apply. SENATOR HANNON: And -- they do not apply, but so long as they end and·there Is otherwise the eligibility, because tbere's not a general eligibility here, it!s specifically designed, and it's specifically designed so DHCR will make it simple and Is directed to make it simple, then they would get it, but there is not an overlap. SENATOR MENDEZ: Thank you. Thank you, Senator. Mr • ." President, I am not going to, support this bill while the majority of my constituents do not live in apartme~ts that receive tax abatement, 421-A's and J. 51s. How~ver, I do have a good number of families, c~nstituents of mine, that are living under those conditions. I think that to think of a family of two children and a couple living in a 421 -- in an ,apartment paying $2,000 a month thinking of them as wealthy, that -- that Is a fantasy, beoause the -- through the taxes that are paid PA,I:USF. Eo WU.UMA""; C&ROITI"U>;O SHOIlTHASD REPORTER I RA·92 I .... ,. , . ',LfYM 8217 by all of us in New York City and in New York State for a family of four having an income of -- a gross income of $150,000 or even $200,000 a year, the price of the 250, the dec~ntrol, is not' a lot of money when they have -- they send their kids to private schools or to public schools and they have a lot of expenses because living in New York City, which is the biggest city, is an expensive affair. I think that, most of· all, I'm very concerned and very wQ~ried that this bill affects eventually, even though we are providing four years them to have -- for the law to be in I place, it will maintain a lot of people ~n New York City and in the suburbs in an eternal state of anxiety bec~ude at four yea~s, maybe they're thinking, wou~d they come for now to extract another pound of flesh, ~o that the security that many renters have, and the sec~rlty ~hat they have in·terms of s~abilized communities where they are participating and everything else, is being shattered. I think that this is not the way PAr;U~E E. Wi LUMAN' CEnTXrn:o S'iORT!iA.."ID REPORTJ!:R .t 8218 rights bill. the suburbs have earned through hard work a on the with should stay like that. It affects my constituents in a negative I RA·93 , Tenants in New York City and in bill. and I hope that -- that my colleagues will have some second thoughts and not go with it • way and, therefore, I will not ·be supporting it bill has been accepted by the -- by the Assembly, by the -- by the Senate and by the and by the Governor, but I think it's a bad nQt to be harassed, and they have earned that conscience here that they deserve better. So, Mr. President, I know this thro~gh their activity and through our consciences, all of us, our collective right to pay adequate rent, not to be exploited, apportionment, and the active' role of the senior the relief in the last decision on .the Court, Mr. President, started with the activities, should be to go and rights that have been earned by qroups of people after a lot of fight and concern and This would be my money, just like the Supreme • 1 2 3. 4 5 6 7 B 9 10 e 11· 12 13 14 15 16 17 18 19 20 21 22 23........., .- \ I f I ~ t l ( t ( ?\CLZ:': 1': E. WILUM............ CE;ll'TIP'U~D SHOR'!:H........~D Rl!!:POnTEI!iI • 1 2 3 4 5 6 7 B 9 10 • 1112 13 14 15 16 17 19 19 20 21 22 23 I RA-94 I • \.. • :H. ~:- .~ " :.. 7 ..-~"••~." 1: ; to: • . " 8219 Thank you, Mr. President. THE PRESIDENT: Senator Padavan. SENATO~ PADAVAN: Thank yeu, Mr. President. . My tenants, the te'nants in my- district, of c~urse, are very relieved tonight, will be hopefully if we get to this by midnight and I'm sure we will, that rent stabilization will continue £or four more ye~rs, ~nd they have absolutely no problem with the concept that those whose incomes are in excess of a quarter of a million dollars, whose rentals are 2,000 or more, would no l~nger be given the kind of protection previously provided to that category. senator Goodman outlined to you a scenario of events and historical perspective which was both articulate and erUdite, but ~ne area he ~verlooked inadvertently, and I have to add that to t~a equation and to the problems that we do envision for all the tenants in this city of New York and in the surrounding areas who will be affected by what we do tonight, and PA..a ..na~ E. WILUMJt.:i CERTU""IED SKORTUJ...-':O HEPORTI!!:1f ..(1 ~. k l ,"1 .~ ( > 1 t 1 .2 3 4 5 6 7 8 I 9 10 11 12 13 14 15 ( 16 ! 17 18 19 20 21 22 23 I I RA-95 I 8220 that is commonly referred to as the one-fortieth rule. Now, for your clarification and understanding, by regulation, DHCR allows a landlord to take the improvements that he might provide in a given apartment that could be a stove or refrigerator, an appliance that has become defective and must be replaced, and take the value of that improvement, divide it by 40 months and add that figure to the monthly rent, in"an amount that wou~d be perm~nent forever, an amount on top of which regulatory allowable increases would be applied. As an example, it doesn't take very much to go in an apartment and replace $4,000 worth of applia~ces. Divide that by 40 and now that tenant will pay an additional $100 per month rent, if you consider the fact that in the city of New York the average rentalS are somewher~ between 5- and $600, so w~~re talking about a 20 percent increase with that equation that I.just gave you. Now, that works by regulation; as PACU:S£ E" W1LUMAN C£R7TFi£D SUOrtTH"'-"fD R~PORTP.R I RA-96 I .. ::. ... • t". ".:. •I •. '0.:-: ~';':::'~5~'" " ~~~~ . -. ", . ~.'" .;" ." .~.·.r .. c...•·· r'- .. • • '," 8221 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 I ! 18 I I 19 I I 20II I 2}. I 22 23 of this moment, it is by regulation. DHCR is in the process, was in the process of providing some degree of relief to tenants caught in that maze. The relief was put back in the form of 72 months, so the increase that I just dl~cussed with you would be spread over a longer per10d of time and the impact on that monthly rent would be somewhat diminished. That is reasonable, in my view, and should have been allowed to happen, but the bill that we are about to adopt recognizes the one-fortieth rule, thereby precluding what was "to have happened by all indicators that we have at our disposal some time in October. " Now, I emphasize what I said at the very ,beginning, that applies to all 2 million or more residents in apartments in the city of New York. Granted, if someone is o~cupying an apartment and this was included and thank you, Senator Hannon, for doing that, that tenant can refuse to accept that improvement. Of course, If the refrigerator breaks or the stove isn't working, obviously such refusal P....CUNE E. WILUMAN C&:RTI?lED SnORTH.\..'U) Rf.:PORTIUI ~ l l l f l l j I I 1 ! I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 I RA·97 I 8222 would be academic. But when that apartment. becomes vacant, they can work out everything in that apartme~tl cabinets, stoves, ref~lgerators and divide that sum by 40 months and add that to the rent. Remember, Senator told you about the horror stories back when we had vacancy decontrol. I envision the same kinds of similar problems, not the decontrolled rent, but for the one-fortieth rent increase. So while we are happy tonight that rent stabilization will continue for four years and that it will affect 99 percent perhaps of the tenants in the city of New York with regard to the threshold, the monthly.rent, we are unh~ppy by what is about to- happen in regard to this one-fortieth'rule. Thank you, Mr. president. THE PRESIDEN~: Senator Markowitz. SENATOR MARKOWITZ: Mr. President, Senator Hannon, I know that the approach you have reached is extremely fundamentalist whe~e'you are dealing with the PACUSE E. WILl-1M......... C2:nTJ2PUl:1) SHORTH.....•..II:> RZP'OR'Tl:R '1 i I 1 i . , 1 I RA·98 I .'t. .... , fl 1 2 3 4 5 {) 7 10 11 12 13 14 15 15 11 18 19 20 21 22· 23 8223 tenants. I have some rema~ks, the good news of why I think we're voting in the affirmative on this bill is that the great majority of the tenants in New York City and especially in the borough that I'm proud to serve in Brooklyn will be safeguarded for years because the great majority of the tenants are nowhere near the $2,000 threshold of rent, that's for sure, but tonight, I serve notice clearly on the tenant voters that what we have assumed in the past to be a secure safe rent regulation system has been opened up by our vote tonight. It's been opened up and, if this vote tonight serves the tenants to recognize that they must organize, organize, that ~hey confront this issue in the years to come, then perhaps· there is someth~ng good that happened to revitalize the tenant movement in New York City. Secondly; as to the rule itself, I'm concerned. that -- not with the multi- millionaires that you want to remove from r'ACLlSE E. WU..UM......... C.e:fn'U·U:O SUOkTUANO REPORTER ;gi" 'lib' 'ni wi ~ l l l.. .' -&¥tW&?f I@ Bete'tr..... ,..,,: ...... '. I RA·99 I :ti~~:'·~':"·:%t~ ; j 8224 1 2 3 4 5 6 7 S ·9 10 11 12 13 14 is 16 17 18 19- 20 21 22 23 .. ',.-------------------------- from the rent regulation system, although the multi-millionaire or the person who earns over $250,000 who's able to convince me that they l~ve in an apartment under "$2,000, and make no mls~ake there are quite a few of those people, we're not going to cut them off, but we also see under the $2,000 rent that could open the door, and my concern is not with them at all, but I do have concern that once this door is open, we're all concerned about, in fact, once the door is open, it will be our j~b to make sure that this door doesn't open up any wider in the future. I think that there are things that co~ld have been done that would have been rationally and reasonably done, good ~hings that could have been done. Number one, what is the relationship, senator Hannon, between rent and services? And once you open up your mInd and your intellectual ability, because I know you have it, you wil~ recognize that as you look into the issue more about it, you will discover that higher rent does not bring better services, PACLINE E. WILI.JMA..'1 CERTU"XED SHORTH....."fl) RE:PORTE:R t 1.. ;r 1 2 3 4 5 6 7 B 9 ·10 11 12 13 14 15 16 11 18 19 20 21 22 23 I RA·100 I 6225 that there are landlords that have rent rolls that are not as high as you would maybe like them to have and yet keep their bUildings in wonderful shape. And how about the others in New York that have very high rents and keep their buildings horribly because they want to get every penny they can with no interest in providing decent services? What about ~he tenants in New York City, Senator Hannon, whose incomes are moderate and who are paying more than a third of it for rent? What do we do with those people that are far more, far more in the City and state, than those that are in that upper $250,000 bracket? There's nothing in this bill, Senator Hannon, that addresses their concerns or addr~sses the concerns of the deteriorated state of services of apartments in New York City. I would hope in the last part of your bill· that calls at the end of two years for the study, that we can look into these issues and other issues, for Inetance, the small land- PACU:,,%: E. Wn.UMAN C£RTU"If:n SMOiITHA..U;> :R~PORTER .. " : I RA-1011 '. '~' ..~':' r:.::~'':.~:'., : :~·.7'· .-':,,' ~ ; ~:;.:, ......-.. 8226 1 2 3 4 5 6 7 8 9 10 11 12 13 lords, the small landlord who, in many cases, has a legitimate beef; landlords -- small land~ lords who are not sophisticated or educated, that can use some help in buying the necessi- ties, and in maintaining their property, small landlords, that the state of New York perhaps should put in something ~nsofar as he~ping them with the cost of heating their bUilding, maybe providing credit for redoing their boiler systems to make their bUildings more energy- efficient. These are areas that'we can help the small owner in New York who, in turn, maybe would not be adversely affecting at all the14 15 tenants in the city of New York. Those are the 16 things that I hope that we will move ahead 17. towards the future, but for tonight, this is a 18 19 bill that confronts us, Senator Hannon. Before I complete my comments, I 20 just want to say something else. I'm very 21 22 23 concerned, Senator Hannon, and this doesn't only affect you, it affects, the majority of all the Democrats and Republicans, the majority wish to PACU~E E. WU..L1MA."l C£ln'U"l:E::O SliORTUA..~D REPOIn'ER ," • • 1 2 3 4 5 6 9 10 11 12 13 14 15 17 18 19 I RA-102 I 8227 maintain the property value and today in New York in order to maintain the majority status, we. need money. In orde~ to even be elected here, we need money and, therefore, very often we vote on items that may pe in our best inter- est, something else, but because of qualifica- tions and the fact that we have a philosophy that we wish to maintain that we have to be concerned ~lth the campaign financing. It's my hope, as I look around this chamber and listen to some of the members who are Republicans, for instance, in this house ~ho don't represent ~ne rent-controlled apartment, not one rent-stabilized apartment in this district, yes, have such a feeling about the future of tenants in New York City. It's my hope, Senator Hannon, for the betterment of government, Republican and Democrats, liberal and conservative, tenant, homeowner, landlord, 20 21 22 23 that soon, very ~oon the day will come that we eliminate in our system of government private contributions to political campaigns and make' all campaigns in this state publicly funded. P.\.CI.JOS E E. 'WU.UMA... ... C:e::R'TIlJ"IED ~HORTHA."D R£PORT~R. In ~ l l \ :~ J~ l •)Ii ! 1 2 3 4 5 6 7 a 9 10 11 I RA-103 I be e 6~ 82211 this way, all of us would be free to vote what we -know is right. Thank you very much, Mr. President. THE PRESIDENT: Senator Bruno. SENATOR BRUNO: Thank you, Mr. President. I'm ve~y conscious of the time in that, if we keep going on, that what we're about to do will be unnecessary. I just want to observe that this t~ ":·1 I 12 system of our government really does work. I 13 have a debate packet here that I think goes back 14 six or seven years. I first introduced a luxury 15 apartment decontrol bill six or seven years 16 ago. I think we passed it in this chamber by 31 17 18 19 20 21 votes or 32 votes every year, after hours of debate. But, Senator Markowitz, and my colleagues, let's recognize the debate for years has not been simply ~ver rent control; i~'s over been editorials that I will not read, but I will 22 23 luxury apartment rent decontrol. There have PA,L:U:ofE E. WILLIM,C'r CERT1PIED SHORTHA....·U) RZPORTE:2 • 1 2 3 4 5 6 7 8 g. 10 11 12 13 14 15 16 I RA·104 I 8229 relate to you, by every major newspaper in this state, and especially in New York City. Top- flight rent deal of the rich and famous. Tha~'s what this debate has been about for the last sev·eral years. So: Itt s nice to talk about rent control for the poor, but I will state ~qain that t~e poor have been subs~dizing the rich for a lot of years in this state and tonight is ~ very happy occasion for all of the people of .this state, alJ. of the people, because it will prove that the free enterprise system, the private sector, means something to the people of this state. So I want to commend our chair, 'Senator Hannon, all of the people that have ~ worked so diligently, the Governor, the 17 Assembly, to get us to, ~his moment. I think 18 19 20 '21 22 it's a happy moment for all of ~he people of this state and I hope all of us can join in unanimously approvi~9 this legislation. Thank you, Mr. President. SENATOR JOHNSON: Mr. President. 23 THE PRESIDENT: PAr.:Lll~r; E. WILUMAS" Cz:::n-rU"'IE.D SHORTH.A-'\I[) ib:POR'l"EIlI Senator Johnson. I t t l • 1 2 3 , RA·105 I ¥ iMMEn 923°0 SENATOR JOHNSON: Mr. President, 1 did want to speak on thLs because, first, I'd like to congratulate £enator Hannon on the job 4 he's done. It has established the principle at \ p- I ! J 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 least, whether it's going to affectoa great number of units is questionable, but the principle that the majority of the working people in this state should not be called upon any more to subsidize the number of millionaires, of people I'm sure whose assets are in the millions, who earn a quarter of a million or more each year. I mean people that we're protecting under this law essentially could bUy two of the typical houses in my district every year with their income. I mean it's obscene to think that we should be protecting these people so that they can live in a life style that they like to enjoy but don't want to spend their own money for it. Everyone else in this ,state who lives in a house or what,ever or a trailer on the si'de of a hill or a city apartment, legal or illegal, they are living in places wtiich they PA.CLINE E. WILLlWAN CJ!:RTU"I~fbSHORTHA.'i'P R:&:PORT~'B i ;" i • 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 18 19 , '20 21 22 23 I RA·106 I 8231 can afford and they're not asking other people in this state or the city of New York to subsidize their housing facilities. This bill doesn't do anyth~n9 about the real problem, which is the' housing' abandonment in New York City. 30-, 40,000 rooms abandoned year after year a~ter year taken over by the' world's largest slumlord and probably managed worse than the landlords did before. It's really obscene when you think about it that the great city of New York, built by private enterprise, by individuals, putting their own money, their own labor, their own sweat in it, to create housing facilities from which they could hopefully make a living and support their family and mayba leave to their family, are being taken over and condemned by this terrible process of rent control and the housing court which is so corrupt that they really have to destroy housing units by denyLnq the landlord the opportunity to manage his own property, and the government has to manage it for them; and the government, of course, brings them to the PAI'.::f..lSE E, WILLIMA... C~£fTxl"u:bSffORTs..u:r; n.Z:P02"fl!:R t l I [ ) I RA..107 I -- gi.~-~aB=~im=_a__m ....,.." ~.. "': ·;····;-:'::!~~:~F.··~:~{~·~-J::-:.;~\~:t:.~'J':~~:. .. ·H~~~:i,:r:::--:'::r~:(:·::-:,,\!r::::;~·~·~·::·(;'~{~?:~~r·: ..: ..:....;. "..J:';:: ~1. ~;, 8232 ( 1 .2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 point of bankruptcy. You know, 1'-- I don't know what else to say, but that the only way to really make reforms is to rejuvenate, revitalize and give permission to ~ndlvlduals to create wealth and to profit by that wealth and not to have the government intrude in the process and take away J their wealth. Just as the great majority of the housing units in the city were built by private enterprise and individuals over the last hundred ye~rs, they will do it again If we give them a break. Start off by scrapping rent control, tell us the property condemned in the last ten years we'll.give you back your property for a reasonable price; you can charge whatever the market is, you can get more, you fix it up you17 18 can net less. The ~ousing court won't be taking 19 away your properties. I think you would have a 20 21 22 23 great ~evival in the city of New York and just as a point, senator Ma~kowitz said something to the fact you don't have rent control, you have rent regulation, you have areas that yo~ are ?ACUSE E. Wu..U~A.'" Cen-r!:-leo SHORTHAND Hl!!:PORTER I· 1 2 3 4 5 6 7 8 9 10 11 12 13 14 f RA·108 I 8233 talking about. The fact is, Senator Markowitz, that ten years Ago or more, we got time, ten more years ago, when rent regulation, rent stabilization was extended to Nassau county, I personally kept it out of Suffolk County because I believe what I say, let people create housing, it will be available and competition will set the market rent. What do you think happened, t Senator Markowitz? When Nassau county went to rent stabilization all the landlords quickly condo-ad their bUildings, -peddled them out because they didn't want to be under rent .15 control. In Suffolk County, mo~e housing was 16. 17 18 '19 20 21 22 23 built, and I almost regretted it. We have a lot more cliff dwellers in Suffolk County, which we can do without. But:they're there, they're available, the landlords are providing free rent, two three mon~hs free rent if you 8e11'a lease. They provide a cornucopia of goods and services 1f you let it work. So let's P..... CLISE E. WU..LUU..."'l CERTIFIED ~H'OR'THA."'D ~ZPOBTE:R I RA-109 I t [ ( I I I e· 1 2 3 4 5 6 7 a 9 10 11 12 13 14 8234 let it work, let's talk after 12:00 o'clock, watch this whole thing go down. Watch the economic revival of New York City. It will be a great thing to behold. ~HE PRESIDENT: Senator Farley_ SENATOR FARLEY: I just want to say that this bill has got to be h~nd-carried over to the Assembly, hand-carried down to the Governor and signed by ~!dn!9ht and all these wonderful things are going to be for nought unless we read the last section pretty soon. THE PRESIDENT: Senator stav!sky. SENATOR STAVISKY: If I may, 15- after you call the last 'section of the bill, I 16 would like to rise to explain my vote and -- i. 17 18 19 20 21 22 23 THE PRESIDENT: Senator Hannon. .SENATOR HANNON: There are a great number of problems that remain. Senator Markowitz talked about some of the loopholes that are still there, the quarter of a million dollar a year person who can still be in a unit under $2,000. That was PACLINE. E. WI LUMA.."'l CERT1Y!ED S.fORTI:fA..'J1') ~~PO!n"E:R I RA-110 I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 8235 part of the compromise that was made with the Assembly but that debate will continue because this bill only has t~e achievement of the rent level once, so we will leave these glaring examples out there, and I guess If we continue this debate, and I m.ean the generic ,debate . . between landlord and tenant, we will never properly addre~s the real housing needs of New York City and, if it's a housing need of New York City, it's one for all of the suburbs which affected so many of us here. So I start out, I conclude where I started out by saying this is the middle of the road approach. This was the compromise and the things, t'hat people complained about were something when we finally got negotiated were given up for other things. I would suggest that it's well worthy of an affirmative vote, and I would urge everybody in this chamber to do so and I couldn't close though without thanking counsel Ange10 MangIa, senior analyst McGarry .' for what has to be 20 hours a day for the last 22 days in negotIatIng this bill. PAl:UNE E. W.n.UM.A..~ CER"1'S1"U:C SUORTHA..~n Rf:PORTf:R 1 i ! I t I RA-111 I THE SECRETARY: section 2. This 8236 (The Secretary called the. roll.) THE PRESIDENT: Senator Thank you. THE PRE~IDENT: Read the last act shall take effect immediately. THE PRESIDENT: Call the roll. section. 8 J 4 5 6 7 2 1 r"~'-~~__ ;. ~ - ' .~~.~:A~~ ·1 { l f ( 9 stavisky. 10 SENATOR STAVISKY: To explain my vote. THE PRESIDENT: And excuse me,r r 11 12 13 Senator Stavisky. It would be helpful if the I 14 15 negatiyes would raise their hand during this period'of time. 16 17 Senator Stav!sky. SENATOR STAVISKY: ~e could have 19 19 20 21 22 23 done a number of things. We could have made the extension of rent re9ulatio~s permanent and we did not do that. We could have provided for a four-year extension, and we are doing that. But we're doing that at a dreadful price, which severely undermines the integrity of tenant PA.CU~U:: E. WILU'MAN CERTU"U::D SHOft"fHA.!·4D REPO'RTER I!..".1IIIilIIII!III_5IIIIIIIiIII_1IiIIIIIIIIIIII ·.;;.'·...·· ,.;".. .....................--......,;-.......--....... - IRA-112 I 1 2 J 4 5 6 7 8 9 10 11 12 13 8237 protection. I think this is the first step towards statewide vacancy decontrol for those those properties that presently give tenants protection. We're doing it a little at a t~me. we~re doing it now under the pretext that ~e're decontrolling luxury apartments, but it's either or. No~ody would object to the decontrol of apartments of people who were' earning a quarter of a million a year or more. Nobody is arguing that, but there are people living in apartm'ents where the rents have risen and where there are mUltiple individuals sharing the rents,and their incomes are not a quarter of We're doing other things ~lth this legislation. We're making it possible. a million. We are also gutting the legislative procedure with a $5 penalty for a la~dlord failing to register the apartment in a timely 14 15 i6 17 18 19 '20 21 manner. I think that's obscene. 22 23 I'm expla!n~ng my vote, Senator Hannon. not PAUU~E E. WU•.LJKA.N CERTIFIED SHO!n"HAND REPOJn'E8 I do 8238 SENATOR HANNON: Two minutes, , RA-113 , I will doSENATOR STAVISKY: only in the interest of meeting the 12:00 midnight deadline. 4 2 3 1 • r ~ l l l l \ l 5 that. For the reasons that Senator Padavan 6 cited, the ability to put into statute, f \ > I I 7 8 9 10 11 12 13 14 15 proceedings for improvement increases that are now on the verge of being negotiated by the regulatory agency is a mistake and then to assume that we're going to get an ~onest count on whether people really do exceed.the' maximum allowable income, I must tell you, we have this in other types of housing and there has not been there has not been -- THE PRESIDENT: The chair will 16 advise -- 17 SENATOR S~AVISKY: I am coming to 18 a conclusion. Thera has not always bean a 19 timely response from the agencies involved. For 20 21 these reasons, because I don't want to see rent regulations unravel in this piecemeal manner, I 22 23 think that we should reflect carefully and I wish to be recorded in the negative. PAUWNE E. Wn.UMAN CERrU"!~D SI!Ofr.'fU-'fD REPORTER : .... I RA-114 I 8239 THE PRESIDENT: Senator Stavisky votes no. Senator DeFrancisco is recognized to explain his vote. SENATOR DeFRANCISCO: To explain my vote. I know everybody is anxious, but some people are voting no this evening who spoke for at least 45 minutes' on this issue, and I think I can have a minute to explain my vote. I've been amazed at the debate on this particular bill. The concept that the rich landlords are being protected by this side of the house 1s absolutely unbel!eveable to me when all that's happening is those who have an adjusted gross income of more than $250,000 no longer get a $2,000 a month apartment. It's unbelieveable to me that we would be accused of being the side of the house that are protecting the rich. Thi-s concept of people speaki.ng in the galleries and, singing of the rising rents, but I just want to make one thing clear, PACLISE E. W.lLUMA..~ C2RT%l"IED SJlORrHA..'IID RZPORTEB which Is ludicrous. 8240 DeFrancisco vot~s yes. Ohrenstein, Padavan and Stavisky. Ayes 51, nays senators Goodman, Haiperin, Leichter, Mendez, the negative on Calendar Number 1668 are call -- Secretary will call the roll. (The Secretary called the roll. ) THE SECRETARY: Those recorded in SENATOR. GOLD: Results. THE PRESIDENT: The clerk will I vote 'yes. THE ~RESIDENT: Senator I RA-115 I those who are voting no in protest of this bill ~re truly voting no in honesty to protect those individuals who have incomes above $250,000, .. suggest ~hat we did anything to hurt the people . . . who truly need rent control'is ridiculous and included in your $250 ,000.. c~mputatlon, 80 to ..~ no one is going to be hurt by this bill other than those who should be hurt by this bill and lastly, tho~e that are:~orrled about this $250,000 adjusted gross '~ncome, don-t worry because the income of your maids will not be I 2 3 ,,~ 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 . '! i [ [ l [ PAl1UNE E. W.n..U'M.AN C.E'.RTlrtED SHOR'TU.A..ND REPORTER I RA·116 I 8241. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 7. THE PRESIDENT: The bill Is passed. Senator Present. SENATOR ·PRESENT: Mr. president, could we return to reports of standing committees. THE PRESIDENT: The chair will observe that the Senate has been in excellent order tonight for ~n evening like this,. and I hope that it continues because it will expedite the proceedings and allow each Senator to be heard. We will return to reports of standing committees. The secretary will read. THE SECRETARY: Senator Stafford, from the Committee on Finance, reports the folloWing nomination: Director of Rural Affairs, June F. O'Neill of Canton. THE PRESIDENT: Senator wright. SENATOR WRIGHT: Mr. President, I rise in support of the nomination of and 'confirmation of June O'Neill as the Director of Rural Affairs this evening. PACLlSI: .c.. WXU.IM..uf C~R'TU"JED SaORTHA."{D REPORTE, .....0 ,.'