In the Matter of Brookford, LLC, Appellant,v.New York State Division of Housing and Community Renewal, et al., Respondents.BriefN.Y.May 2, 2018To be Argued by: SANDRA A. JOSEPH TIME REQUESTED: 15 MINUTES (Emirt of Appeals STATE OF NEW YORK In the Matter of the Application of BROOKFORD, LLC, Appellant, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules, - against - NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL and MARGARET SCHUETTE FRIEDMAN, Respondents. APL-2016-00211 New York County Clerk’s Index No. 100065/15 BRIEF FOR RESPONDENT NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL MARK F. PALOMINO, COUNSEL Attorney for Respondent New York State Division of Housing and Community Renewal 25 Beaver Street, 7th Floor New York, New York 10004 (212) 480-7441 (212) 480-7450 Facsimile DATED: SEPTEMBER 6, 2017 Press of Fremont Payne, Inc. • 55 Broad Street, Third Floor, New York, NY 10004 ■ (212) 966-6570 Table of Contents Page No. iTABLE OF AUTHORITIES 1PRELIMINARY STATEMENT COUNTER-STATEMENT OF THE QUESTIONS PRESENTED 2 3COUNTER-STATEMENT OF THE NATURE OF THE CASE 8COUNTER-STATEMENT OF FACTS 14ARGUMENT 14POINT I IN HARMONY WITH THE LEGISLATIVE INTENT THE STATUTORY DEFINITION OF TOTAL ANNUAL INCOME IN RCL §26-403.1 IS THE SUM OF THE ANNUAL INCOME OF ALL PERSONS WHO OCCUPY THE HOUSING ACCOMMODATION AS THEIR PRIMARY RESIDENCE a. The Owner claims the legislative intent in enacting §26-403.1 was to consider the tenant's social and economic unit rather than personal residency 19 Residence and primary residence, sine qua non of the rent control law is theb. 24 c. DTF verified the Tenant's annual income was below the statutory threshold 29 34POINT II TAX LAW 171-b AUTHORIZED AND DIRECTED DTF AND DHCR TO ENTER INTO AN AGREEMENT TO VERIFY INCOME OF TENANTS RESIDING IN HOUSING ACCOMMODATION SUBJECT TO RENT REGULATION The validity of the MOU between DTF and DHCR may not be raised for the first time on appeal a. 36 DTF verified the Tenant's annual income was below the statutory threshold . b. 37 POINT III 40 THE SUPREME COURT PROPERLY FOUND THAT DHCR'S ORDER HAD A RATIONAL BASIS CONCLUSION 42 Table of Authorities Cases Page No. 103 East 86th St. Realty Corp. v. N.Y.S. Div. of Hous. & Comm. Renewal, 12 A.D. 3d 289; 785 N.Y.S. 65 (1st Dept. 2004) 15, 18, 21, 33 315 East 72nd St. Owners, Inc, v. N.Y.S. Div. of Hous. & Comm. Renewal, 101 A.D.3d 647, 958 N.Y.S.2d 39 (1st Dept. 2012) 14, 33 A.J. Clarke Real Estate Corp v. N.Y.S Div. of Hous. and Comm. Renewal, 307 A.D.2d 841, 763 N.Y.S.2d 577 (1st Dept. 2003) 15, 33 Angelo v. Angelo, 74 A.D.2d 327 (2nd Dept. 1980) 20 Brady v. State, 172 A.D.2d 17, 576 N.Y.S.2d 896 (3rd Dept. 1991) 31 Braschi v. Stahl Associates, 74 N.Y.2d 201, 544 N.Y.S.2d 784 (1989) 28 Charles Q. v. Constantine, 85 N.Y.2d 571, 626 N.Y.2d 992 (1995) 39 Chatsworth Realty Corp. v. N.Y.S. Div. of Hous. & Comm, Renewal, 56 A.D.3d 371, 869 N.Y.S.2d 18 (1st Dept. 2008) 33 Classic Residences v. N.Y. State Div. of Hous. & Community Renewal, 212 A.D.2d 418, 622 N.Y.S.2d 693 (1st Dept. 1995) 16 Classic Realty, LLC v. N.Y.S. Div. of Hous. & Comm. Renewal, 2 N.Y.3d 1442, 777 N.Y.S.2d 1 (2004) 21, 32 Doctors Council v. New York City Employees' Retirement System, 71 N.Y.2d 669, 529 N.Y.S.2d 732 (1998) 32 Page No. Doyle v. Calogero, 52 A.D.3d 252; 859 N.Y.S.178 (1st Dept. 2008) ... 33 Giffuni Bros, v. N.Y.S. Div. of Hous. & Comm. Renewal, 293 A.D.2d 402, 742 N.Y.S.2d 205 (1st Dept. 2002) 28 Gilman v. N.Y. Div. of Hous. and Comm. Renewal, 99 N.Y.2d 144, 753 N.Y.2d 1 (2002) 36, 40 Glenbriar v. Lipsman, 5 N.Y.3d 388, 804 N.Y.S.2d 719 (2005) ...31 Howard v. Wyman, 28 N.Y.2d 434, 322 N.Y.S.2d 683 (1971) 41 Murphy v. N.Y.S. Div. of Hous. & Comm. Renewal, 21 N.Y.3d 649, 977 N.Y.S.2d 161 (2013) 27 N.Y.S. Div. of Hous. & Comm. Renewal, 257 A.D. 395,Nestor v. 683 N.Y.S.2d 74 (1st Dept. 1999) 19, 21 Peckham v. Calogero, 12 N.Y.3d 424; 883 N.Y.S.2d 751 (2009) 36, 40, 41 Matter of Pell v. Board of Educ., 34 N.Y.2d 222, 356 N.Y.S.2d 833 (1974) 33, 40 Power v. N.Y.S. Div. of Hous. & Comm. Renewal, 61 A.D. 3d 544, 878 N.Y.S.2d 682 (1st Dept. 2009) 33 Rent Stabilization Association v, Higgins, 83 N.Y.2d 156, 608 N.Y.S.2d 930 (1993) 28 Samuelson v. N.Y. City Transit Authority, 101 A.D.3d 537, 957 N.Y.S.2d 27 (1st Dept. 2012) 36 Schorr v. Housing Preservation and Development, 10 N.Y.3d 776, 857 N.Y.S.2d 1(2008) 27 Schumer v. Holtzman, 60 N.Y.2d 46, 467 N.Y.S.2d 182 (1983) ....36 ii Statutes, Regulations and Rules Page No. CPLR 5713 13 Chapter 116 of the Laws of 1997 27 9 NYCRR 1727-5 29 24 CFR 982.516 29 PHL §14(4) 27, 28 PHL §14(4)(c)(B) 28 PHL §14(4)(c)(C) 28 PHL §14(4)(c)(d) 28 Rent Regulation Reform Act of 1993 passim RRRA of 1993 Chap. 116 §14-17-b, Laws of 1997 3 RRRA of 1993 Chap. 253 14, 23, 26 RRRA of 1993 Chap. 253 §6, 7, L. 1993 3 RRRA of 1993 Chap. 253 §§1, 27-29, eff July 7, 1993 5 RCL §26-401 26 RCL §26-403(e)(2)(i)(10) 26 RCL §26-403.1 passim RCL §26-403.1(a) passim RCL 26-403.1(a)(1) 14, 19 RCL §26-403.1(b) 3 RCL §26-403.1(c)(2) 4, 10, 32 iii Page No. RCL §26-403.1(c)(4) 38 Tax Law §171-a(3)(a) 35 passimTax Law §171-b Tax Law §171-b(3)(a) 4, 5, 34, 35 Tax Law §171-b(3)(b) 5, 15, 21, 23 Tax Law §17l-d 35 Tax Law §171-e 35 Tax Law §171-j 35 Tax Law §651(b)(2) 31 Tax Law §697 25, 38 Treasury Regulation §1613.4(b) 19 Treatises and Administrative Materials 1994 Memorandum of Understanding passim iv PRELIMINARY STATEMENT This is an appeal by Brookford, LLC ("Owner" or "Appellant") from an Order of the Appellate Division, First Department entered on August 4, 2016. The Order of the Appellate Division affirmed the Decision of the Supreme Court, New York County (Lobis, J.) which denied the Appellant's application to luxury deregulate a rent controlled apartment and dismissed the Appellant's Article 78 proceeding. The Appellate Division, First Department affirmed the Supreme Court's dismissal of the Owner's Article 78 petition and found that the final administrative order ("Order") of the Respondent New York State Division of Housing and Community Renewal ("DHCR") properly determined that the Tenant's annual income included on the Tenant's and her deceased husband's joint tax return could be apportioned for the purposes of luxury deregulation. The Supreme court found that it was not arbitrary or capricious for DHCR to provide Department of Taxation and Finance ("DTF") with the percentage of the Tenant's annual income the Tenant affirmed by the Tenant on the Income Certification form ("ICF") from the joint tax return because Rent Control Law §26-403.1 clearly expresses that only the annual income of the occupant(s) of the premises at the time the ICF is served may be counted for deregulation purposes and the Tenant was the sole occupant on the date the ICF was served. COUNTER-STATEMENT OF THE QUESTIONS PRESENTED Did the Supreme Court properly find that income1. listed on a New York State joint tax return may be apportioned between filers in connection with deregulation proceedings pursuant to the definition of "annual income" in RCL §26.403.1? The Appellate Division answered in the affirmative. Did the Supreme Court correctly determine that it2 . was rational for DHCR to request additional information from the Tenant to assure that the Tenant's allocation percentage submitted to DTF was correct in order to confirm the statutory limitation on "total annual income?" The Appellate Division answered in the affirmative. 2 COUNTER-STATEMENT OF THE NATURE OF THE CASE The Rent Regulation Reform Act of 1993 ("RRRA of 1993"), Chap. 253, § 6, 7, L. 1993, provides for the deregulation of certain housing accommodations exempting them from the jurisdiction of the Rent Stabilization Law ("RSL") and the Rent Control Law ("RCL").1 In 1997 the decontrol provisions were amended pursuant to Chap. 116. §§ 14 -17-b, Laws of 1997. An apartment may be deregulated where the apartment has a legal rent greater than $2,000 per month, and the total annual income2 of all the occupants of the apartment exceeds $175,0003 in each of the two calendar years preceding the year in which the landlord files a petition for deregulation. RCL §26-403.1. RCL §26-403.1(b) permits the owner of each housing accommodation for which the monthly rent exceeds the threshold of $2,000.00 on or before May of each calendar year the owner my serve the tenant with an income certification form ("ICF"). The tenant shall identify all persons that occupy the housing accommodation as their primary residence and state whether the 1 Administrative Code of the City of New York, §§ 26-403.1, 26.504.1 through 26-504.3; 65 Mck. Unconsol. Laws, vol. 8601-8700. 2 Total annual income is defined as "the total adjusted gross income as reported on the New York State income tax return". 3 The statutory threshold for both rent and income has subsequently been increased to $2,700 and $200,000 respectively. See; RCL §26-403.1(a)2 and (a)3. 3 total annual income is in excess of the deregulation income of $175,000.00,4 RCL §26-403.1(a) defines total annual income: . . .shall mean the federal adjusted gross income as reported on the New York state income tax return. Total annual income means the sum of the annual incomes of all persons who occupy the housing accommodation as their primary residence other than on a temporary basis . . . (emphasis added). RCL §26-403.1(c)(2) specifically provides that both the owner and tenant shall have thirty days to comment on the DTF's verification results, recognizing there may be issues such as occupancy which may not be answered through the income verification process. Subsection (3)(a) of Tax Law §171-b was added by Rent Regulation Reform Act of 1993 ("RRRA-93") authorized and directed the Commissioner of the Department of Finance("DTF") to enter into an agreement with the Commissioner of the DHCR to verify the income of tenants residing in housing accommodations subject to rent regulation and provided that DTF shall adopt rules and 4 RCL §26-403.1(a)2 states that the deregulation income means total annual income equal or greater than $175,000 in each of the two preceding calendar years. RCL §26-403.1(a)3 provides that the deregulation rent threshold means $2,000.00 for proceedings commenced before July 1, 2011. 4 regulations to effect the provisions of this subdivision. See; Laws 1993, ch 253, §§ 1, 27-29, eff July 7, 1993. Tax Law §171-b(3)(b) provides that the Department of Taxation and Finance: when requested by the division of housing and community renewal, shall verify the total annual income of all persons residing in housing accommodations as their primary residence subject to rent regulation. . . . (emphasis added). The Memorandum of Understanding ("MOU") between DTF and DHCR dated November 1, 1994 pursuant Tax Law §171- b(3)(a) contains DTF's rules, regulations and procedures to verify the "total annual income" of the occupants of a regulated housing accommodation as set forth by RRRA-93. In the MOU it stated that DTF will design a form entitled, "Worksheet for Allocating Federal Adjusted Gross Income." The MOU stated: The form would be used when one or more residents of the rent regulated housing accommodation files a joint New York State Personal income tax return with a spouse who does not live in the rent regulated housing accommodation, but with whom a joint income tax return was filed for one or both of the tax years. This form will be used by such individuals to segregate the items of federal adjusted gross income from the nonresident spouse so those amounts will not be included in the The term nonresident in the preceding sentence means not residing in the rent regulated housing accommodation as primary income determination. 5 residence and does not mean the term defined in Section 605(a)(2) of L one Tax Law. (R 402).5 (emphasis added). Margaret Friedman ("Tenant") indicated on the Answer to Petition and Notice to Tenant to Provide Information for Verification of Income ("ICF") form that her husband's income which was included on their joint tax return should not be included in the calculation of the total annual income because he did not reside in the apartment as he moved to an assisted living facility where he died before the ICF was served. As provided by the instructions on the ICF form item 7 (Allocation) the Tenant supplied the percentage of her income on the joint tax return for each of calendar years that should be included as her income as directed by the instructions on the ICF form. (R.429-434). The Supreme court found that Rent Control Law §26- 403.1 did not bar apportionment of income reported on a New York State joint tax return as only the Tenant resided in the apartment and the expressed statutory definition of "total annual income" is "the sum of the annual incomes of all persons who occupy the housing accommodation as their primary residence." The Supreme court found that while under federal and State tax law, neither the income, nor References to the record on appeal are denoted as (R.00). 6 the resulting tax liability, listed on a joint return may be apportioned between the filers does not bar such apportionment in connection with deregulation proceedings. (R. 10). The Appellate Division, First Department properly affirmed the order of the Supreme Court and found as the Tenant was the sole occupant of the rent controlled housing accommodation, DHCR's determination as to the apportionment of Tenant's income was rationally based upon the information submitted by the Tenant for DTF to verify her income as sole occupant pursuant RRRA-93, RCL §26-403.1 and the procedures outlined in the 1994 Memorandum of Understanding between DTF and DHCR. 7 COUNTER-STATEMENT OF FACTS This proceeding concerns the rent controlled housing accommodation located at 315 West, Apartment New York, New York.6 The Owner filed a Petition by Owner for High Income Rent Deregulation 2006 Filing Period on June 28, 2006. On November 30, 2006 DHCR mailed to Si Friedman (deceased) Answer to Petition and Notice to Tenant to Provide Information for Verification of Household Income (for 2006 Petitions). (R.55-57). Margaret Schuette Friedman ("Tenant") submitted the Answer to Petition and Notice to Tenant to Provide Information for Verification of Household Income (for 2006 Petitions). The Tenant stated that Si Friedman and herself filed joint 2004 and 2005 N.Y.S. Income Tax Returns. The Tenant stated the Income Certification Form ("ICF") was served April 27, 2006 after Si Friedman had vacated the premises and therefore his income should not be considered (R. 62-76).in the Petition for deregulation. The administrative record established that Si Friedman permanently vacated the subject apartment due to his severe 6 The facts prior to reopening of the proceeding are contained in DHCR's Answering Affirmation in Opposition to the Petition and are not recited here. (R.385-397). 8 and debilitating medical problems prior to the date the ICF The Tenant submitted affidavitswas served on the Tenant. that Si Friedman moved into an assisted living facility on March 21, 2005 and remained there on a full-time basis until he passed away on November 3, 2006. (R.41-50). The administrative record showed that based on evidence submitted by the Tenant, Si Friedman was not occupying the subject apartment as his primary residence on April 27, 2006 the date of service of the ICF. (R.41-50). The Tenant indicated on line 7d. of the ICF form the allocation percentage for each of the two preceding calendar years of the spouse whose income should be included in the calculation of "total income" was 34.32% for 2004 and 30.52% for 2005. (R. 67). The Tenant stated that the total annual income of all persons occupying the apartment was $175,000.00 or less for both years 2004 and 2005. (R. 64). DHCR submitted to DTF for verification the percentages of joint income that the Tenant affirmed in her Answer to the Petition were her percentage of the joint income. (R. 67). DTF reported that the total annual income of those persons occupying the subject housing accommodation whose 9 records were located was less than $175,000.00 for both (R.106).relevant tax years. In accordance with RCL §26-403.1(c)(2) the parties were given the opportunity to comment on the results. The Owner requested that DHCR require additional information/documentation concerning line 7d of the Tenant's Answer to Petition that only 34.32% of the Tenant's 2004 Income Tax return and 30.52% of the Tenant's 2005 Income Tax return should be included in the calculation of "total annual income." The Owner specifically requested that DHCR require the Tenant to furnish DHCR with proof that her earnings were limited to (R.77). (R.201).the reported percentage. The Tenant provided her tax returns for both the relevant years and a detailed explanation of the Tenant's allocation of the joint income to DHCR which inadvertently pursuant to the Owner's FOIL request was provided to Owner and an opportunity to comment. (R. 135-140). (Brief: p • 13). To confirm the Tenant's allocation of income, DHCR requested the Tenant provide a transcript of items listed in section 8 of form 4506T which includes data from W-2 (R.240).forms, 1099 forms, 1098 forms and 5498 forms. 10 The Owner claimed that DHCR's demand for confidential tax and income information from the Tenant to verify the Tenant's allocation percentages was a violation of the statute, legislative intent and judicial and DHCR (R. 255-260).precedent. In response and with further opportunity comment, DHCR mailed to both the Tenant and the Owner a copy of 1994 Memorandum of Understanding entered into between the N.Y.S. Department of Taxation and Finance ("DTF") and DHCR concerning the verification of income as authorized and directed by Tax Law §171-b. (R.399-428). The Tenant submitted the IRS 2005 Wage and Income Transcript and the Tenant's attorney stated that the Transcript was confidential and was not to be provided to (R. 261-267).the Owner or any other party.7 DHCR's Order found that the Tenant and Si Friedman filed a joint income tax return for both 2004 and 2005 which are the relevant tax years in this proceeding, and as Si Friedman was not a qualified occupant of the subject apartment on the date of service of the ICF his income should not be included in the total annual income. DHCR's Order determined that only the portion of the joint income 7 The IRS Transcript was not provided in the Administrative Return nor was the IRS transcript requested by the Supreme Court. 11 attributable to the Tenant should be included in the total annual income to determine whether the subject apartment qualifies for high income rent deregulation. DHCR's Order noted that DHCR and DTF entered into a Memorandum of Understanding governing the interaction between the state agencies in consideration of the process for verification of total annual income as set forth by the The Memorandum ofRent Regulation Reform Act of 1993. Understanding specifically provided for the apportionment of income reported on a joint New York State income tax return in situations where a joint filer did not occupy a housing accommodation as his/her primary residence when the (R. 402-404).ICF was served. DHCR's Order stated that RCL §26-403.1 defines annual income as the federal adjusted gross income as reported on a tenant's New York State income tax return. RCL §26-403.1 defines "total annual income" as the "sum of the annual incomes of all persons who occupy the housing accommodation as their primary residence." The Supreme Court found DHCR properly denied the Owner's petition for deregulation in accordance with Rent Control Law §26-403.l's definition of the "total annual income" as the "sum of the annual incomes of all persons 12 who occupy the housing accommodation," as the Tenant was (R.7-15).the only occupant on the date the ICF was served. The Appellate Division, First Department unanimously affirmed the Supreme Court and found that the Supreme Court was correct in its conclusion that DHCR properly apportioned the Tenant's adjusted gross income as reported in joint tax returns for purposes of the Owner's application for high rent deregulation. (R. 501-506). By order entered November 1, 2016 the Appellate Division, First Department, granted Owner-Appellant's motion for leave to appeal to this Court. The Appellate Division pursuant to CPLR 5713 certified the following question of law, decisive of the correctness of its determination, has arisen which in its opinion ought to be reviewed by the Court of Appeals: "Was the order of Supreme Court, as affirmed by this Court, properly made?" This appeal ensued. 13 ARGUMENT POINT I IN HARMONY WITH THE LEGISLATIVE INTENT THE STATUTORY DEFINITION OF TOTAL ANNUAL INCOME IN RCL §26-403.1 IS THE SUM OF THE ANNUAL INCOME OF ALL PERSONS WHO OCCUPY THE HOUSING ACCOMMODATION AS THEIR PRIMARY RESIDENCE. The Rent Regulation Reform Act of 1993 ("RRRA-93")(L 1993, ch 253) provides for the deregulation of housing accommodations subject to Rent Control Law when the monthly rent exceeds $2,0008 and when the "total annual income" of the occupants of the housing accommodation exceeds $175,0009 in each of the two immediate preceding years. RCL §26-403.1(a) provides that the statutory definition of total annual income is "the sum of the annual incomes of all persons who occupy the housing accommodation as their primary residence." Only the total annual income of occupant(s) of a housing accommodation may be taken into account when determining whether an apartment can be deregulated. See; RCL 26-403.1(a)(1); 315 East 72nd St. Owners, Inc, v. N.Y.S. Div. of Hous. & Comm. Renewal, 101 A.D.3d 647, 958 N.Y.S.2d 39 (1st Dept. 2012)(DHCR rationally found that the tenant's daughter had vacated the unit approximately one year prior 8 $2,500 for proceedings commenced after July 1, 2011. 9 $200,000 for proceedings commenced after July 1, 2011. 14 to the service of the ICF); 103 East 86th St. Realty Corp. v. ftf.Y.S. Div. of Hous. & Comm. Renewal, 12 A.D. 3d 289; 785 N.Y.S.2d 65 (1st Dept. 2004)(The operative date for determining whose income, if any, will be included in total annual income is the date when the ICF is served); A.J. Clarke Real Estate Corp v. N.Y.S Div. of Hous. and Comm. Renewal, 307 A.D.2d 841, 763 N.Y.S.2d 577 (1st Dept. 2003)(The statute speaks in present tense about the persons incomes to be considered and if the Legislature intended inclusion of all the incomes of all persons prior to time of service it would have said so). Allocating the income reported on the Tenant's and her deceased husband, Si Friedman's joint New York State tax return was in accord with RRRA-93, RCL §26-403.1(a) and Tax Law §171-b(3)(b) as Si Friedman had moved to an assisted living facility in March 2005 and died there on November 3, 2006, and was not an occupant of the rent controlled housing accommodation on the day the ICF was served. RCL §26-403.1(a) does not authorize or prohibit the filing of a joint tax return but clearly provides, as does the legislative intent that it is the sum of the annual incomes of all persons who occupy the housing accommodation as their primary residence. The issue of statutory 15 construction is well settled. In Classic Residences v. N.Y. State Div. of Hous, & Community Renewal, 212 A.D.2d 418, 622 N.Y.S.2d 693 (1st Dept. 1995) the widowed tenant was uncertain whether the income of her recently deceased husband's estate that she originally included on the ICF should be included in her income as tenant. The First Department found neither RCL §26-403.1(a) nor RRRA-93 expressly authorizes or prohibits corrections to an ICF, and it makes little sense to prohibit corrections by implication. The Tenant stated on the Income Certification Form ("ICF") designed by DTF pursuant to the MOU that she and her husband, Si Friedman filed 2004 and 2005 joint N.Y.S. Income Tax Returns which are the relevant tax years in this proceeding. The Tenant further stated that because Si Friedman was in an assisted living facility and was not an occupant of the subject apartment his income should not be included in the total household income. (R.434). The pre¬ printed form Answer to Petition and Notice to Provide Information for Verification of Household Income at "Item 7 (Allocation)" stated: In some cases, the income of certain spouses is not included in determining "total annual income." In order to insure that the income of such spouses is not included in the total annual 16 income, the Worksheet for Allocating Federal Adjusted Gross Income (Form RA-93AI) should be completed .... (R.430). Item 7a states: For either of the two proceeding calendar years, did a tenant or an occupant identified in Part A file a joint New York State income tax return with someone whose income you believe should not be included in the calculation of total annual income in Item 4? (R.434). Items 7b and 7c require the tenant to state the name of the person and the basis for not including the person's income in the total annual income. The tenant must then enter the allocation percentage for each of the two preceding calendar years of the spouse whose income should be included in the calculation of "total annual income." (R.434). The Tenant indicated on line 7d. of the ICF an allocation percentage for each of the two preceding calendar years for the spouse whose income, her income, that should be included in the calculation of "total income" was 34.32% for 2004 and 30.52% for 2005. (R. 434). The Supreme court found that it was not arbitrary or capricious for DHCR to provide Department of Taxation and Finance ("DTF") with the percentage of the Tenant's annual income provided by the Tenant from the joint tax return 17 because Rent Control Law §26-403.1 and the RRRA-93 clearly expresses that only the annual income of the occupant(s) of the premises at the time the ICF is served may be counted for deregulation purposes and the Tenant was the sole occupant on the date the ICF was served. Similarly, the methodology utilized by the Tenant which was authorized and directed by the Memorandum of Understanding was utilized in 103 East 86th St. Realty Corp. v. N.Y.S. Div. of Hous. & Comm. Renewal, 12 A.D. 3d 289; 785 N.Y.S.2d 65 (1st Dept. 2004) because the husband like Si Friedman, here had vacated the subject housing accommodation prior to the service of the ICF. The First Department in 103 East 86th St. affirmed the Supreme court's finding that only the income of the occupant and her children may be counted as the husband had permanently vacated the rent regulated housing accommodation before the ICF was served. 18 a. The Owner claims the legislative intent in enacting §26- 403.1 was to consider the tenant's social and economic unit rather than personal residency. It is well established that where the statutory language is clear and unambiguous, it is the function of the court to enforce a statute that is consistent with the legislative intent. Nestor v, N.Y. State Div. of Hous. & Comm. Renewal, 257 A.D. 395, 683 N.Y.S.2d 74 (1st Dept. 1999). the pertinent language of RCL §26-403.1 isHere unambiguous. It clearly states: "total income means the sum of the annual incomes of all persons who occupy the housing accommodation as their primary residence. . .. The Owner argues that the language of RCL 26- 403.1(a)(1) and the legislative intent provide that no apportionment of income is permitted but fails to provide any support for its argument other than stating that treasury regulations establish that "although there are two taxpayers on a joint return, there is only one taxable income" citing to Treasury Regulation §1.613-4(b). (Brief: p.22-23,25). The Owner provides its own interpretation of RCL §26- 403.1 and claims that the courts and DHCR failed to harmonize "primary residence" with the basic precepts of tax law in that joint income is not divisible and created 19 conflicts. (Brief: p.25-27). The Owner further argues that the legislative history "says nothing" about primary residence. (Brief: p•29, p.41). The Owner opines that the legislature did not consider the primary residence provision contained in RCL §26-403.1 to be of paramount importance. The Owner claims that the legislature instead considered whether the person in question was likely to be part of the "tenant's social and economic unit," but again provides no support for its conjecture other than to cite to Angelo v.4 Angelo, 74 A.D.2d 327 (2nd Dept. 1980) which involved the awarding of tax refund in a Domestic Relation case. (Brief: p.42). The Owner further opines that joint filers elect to hold themselves out as a single economic unit with a single income. The Owner claims it makes little sense to treat them as strangers with separate incomes, lifestyles and standards of living. (Brief: p.44). However, the applicable statutes in luxury deregulation pursuant to RRRA-93, clearly state that it is the "total annual income" of persons who occupy the housing accommodation as their primary residence. RCL §26-403.1(a) provides: 20 Total annual income means the sum of the annual incomes of all persons who occupy the housing accommodation as their primary residence. Similarly, Tax Law §171-b(3)(b) provides: The department, when requested by the division of housing and community renewal, shall verify the total annual income of all persons residing in housing accommodations as their primary residence subject to rent regulation . . . The Owner's argument suggests that a tenant in a rent regulated housing accommodation should consider filing separate returns years prior to when a spouse has a debilitating illness or when a spouse leaves the martial home like in 103 East 86th St. Realty Corp. v. N.Y.S. Div. (Sup. Ct. N.Y. County)(avail atof Hous. & Comm. Renewal, 2003 WL 25780800) aff'd 12 A.D. 3d 289; 785 N.Y.S. 65 (1st In 103 East 86th DHCR utilized the methodologyDept. 2004). in the Memorandum of Understanding because the husband like Si Friedman, here had vacated the subject housing accommodation prior to the service of the ICF. In 103 East 86th St. the First Department affirmed the lower court's finding that only the income of the occupant and her children may be counted on the joint tax return. This is not like the cases cites by Owner where the tenant attempted to amend its tax return below the statutory threshold, Classic Realty, LLC v. N.Y.S, Div. of 21 Hous. & Comm. Renewal, 309 A.D.2d 205, 763 N.Y.S.2d 271 (1st Dept. 2003) or where the owner requested that DHCR ask for actual tax return to look for additional income, Giffuni Bros, v. N.Y.S. Div. of Hous. & Comm. Renewal, 293 A.D.2d 402, 742 N.Y.S.2d 205 (1st Dept. 2002), or where the owner attempted to have corporate income included that was not part of the tenant's adjusted gross income. Nestor v, N.Y.S. Div. of Hous. & Comm. Renewal, 257 A.D. 395, 683 N.Y.S.2d 74 (1st Dept. 1999). It is instead in conformance with RCL §26-403.1(a) to allocate the Tenant's adjusted gross income from the joint tax return as she was the sole only occupant on the date the ICF was served. The Owner's interpretation of the Luxury Deregulation Statute would require enactment of a regulation that if a tenant files a joint federal tax return with a spouse that does not occupy the housing accommodation as his/her primary residence that the non-resident spouse's income shall be included in total annual income. Nevertheless, the regulation would violate RCL §26-403.1(a) which provides that "the total annual income of all the persons who occupy the housing accommodation as their primary residence." 22 While the Owner cites and argues that Treasury- Regulations provide that income on a Federal joint tax return is not divisible, the Owner fails to provide any authority that precludes separation of joint income reported on a New York State tax return for the purposes of determining total annual income of all persons who reside in the housing accommodation as their primary residence pursuant to RCL §26-403.1 and Tax Law §171-b(3)(b). DHCR and DTF followed the joint commands of the statute to use the income reported on the tax return as applicable to the occupant using housing accommodation as their primary residence. The Owner argues that a tenant cannot obtain the benefits of filing joint tax return because the statute requires DTF to examine federal adjusted gross income as reported. The Owner claims that the legislature did not contemplate the possibility of an income tax return that includes the income of a non-occupant but fails to point to any language in Chapter 253 of the Laws of 1993 or in RCL §26-403.1(a) and Tax Law §171-b(3)(b) that total income is defined as any amount other than "the annual incomes of all the persons who occupy the housing accommodation as their primary residence other than on a temporary basis." 23 b. Residence and primary residence, is the sine qua non of the rent control law. The Owner's argument that the choice several years before, of filing of joint tax return controls the deregulation of the remaining occupant is based primarily on an extrapolation of a Senate Memorandum stressing the need for operational efficiencies and assuage concerns over privileged tax returns. The Senate Memorandum did not address what DHCR or DTF should do in the event of death of The plain wording of the statute itself howevera spouse. leaves these kinds of detailed factual and operational issues to the subsequent decision-making of the administrative agencies. That enforcement was specifically delegated through two avenues. The first is an income verification agreement that will be entered into by DTF and The second is an opportunity by both owner andDHCR. tenant to submit comments on the DTF verification as part of DHCR processing prior to the issuance of a deregulation order. Both of these processes must be informed by the fact that the Rent Control Law is not a tax law compliance statute but is based on legislative declaration regarding the need for occupancy protection. 24 In ascertaining what occupancy protection means here, pose the question as follows:one can DHCR is faced with two identically situated married couples. In each marriage, one partner due to mental and physical debilitation is required to move from the couple's long-time abode to an assisted living facility where that partner will die. Each couple collectively earned identical income. Each deceased partner's income identically brought the couple over the income threshold for deregulation. The remaining partner is identically below the income threshold when judged by their own taxable income. One couple filed in a prior year a joint tax return; the other did not. According to the Owner, the surviving spouse that filed a joint tax return will now lose the marital abode while the other surviving spouse will not, dictated by administrative convenience and protecting the confidentiality of the soon to be evicted spouse. 25 This is not how the rent regulation works: The most dispositive "legislative history" are the legislative findings embedded in the statute itself reaffirmed that by Chapter 253 of the Laws of 1993, that a serious public emergency exists based on an acute shortage of dwelling units, shortage of such housing necessitating the regulation residential rents and evictions, and that while transition from regulation to a normal market of free bargaining is the ultimate objective of the state, this law "must be administered with due regard for such emergency". See; RCL §26-401. Residence and primary residence, is the sine qua non of the rent control law. RCL §26-403(e)(2)(i)(10) The additional remedy here may use reported income as reported on the tax return as a vehicle to ascertain income, but there is nothing that indicates that the form of tax return itself governs everything to the exclusion of all other legislative concerns. The statute emphasizes the need to consider primary residence by limiting total annual income to those who occupy the apartment on other than a temporary basis. Here, the Owner is attempting to add the income of a deceased person who did not occupy the apartment at all. 26 Even the Senate Memorandum notes that the verification process is analogous to that used for Mitchell-Lama apartments, a statute which pursuant to Private Housing Finance Laws §11 is analogously based on New York's housing In the Mitchell-Lama context, this court alreadyshortage. had occasion to rule, as it is a resident's actual occupancy of a unit as his or her primary residence that governs the continued right to occupancy, not the filing or non-filing of an income affidavit (to be matched by DTF) or even a non¬ resident's claim that his name on a lease controlled over whether he occupied the apartment. See; Murphy v. N.Y.S. Div. of Hous. & Comm, Renewal, 21 N.Y.3d 649, 977 N.Y.S.2d 161 (2013); Schorr v. Housing Preservation and Development, 10 N.Y.3d 776, 857 N.Y.S.2d 1 (2008). ThisOther acts by the legislature add context. income based deregulation remedy has been subsequently limited by increasing the applicable rent threshold and the legislature decreased the income threshold originally in place in 1993. The legislature has not acted since the MOU's execution to change DHCR and DTF's long standing procedures. By chapter 116 of the Laws of 1997 the legislature also enacted Public Housing Law ("PHL") §14(4). PHL §14(4) codified the continued occupancy rights of 27 remaining family members referred to as "succession" in rent regulated apartments in the event that the named leasehold died or departed, with limited exceptions tracked verbatim DHCR regulations while followed this Court's decisions in Braschi v. Stahl Associates, 74 N.Y.2d 201, 544 N.Y.S.2d 784 (1989) and as upheld in Rent Stabilization Association v. Higgins, 83 N.Y.2d 156, 608 N.Y.S.2d 930 (1993). For "non-wedded" families the statute noted that the "intermingling of finances" (PHL §14 (4)(c)(d)), the sharing and relying on each other for payment of household expenses or family expenses and other necessities, (PHL §14(4)(c)(B)) the formalization of legal obligations, intentions and responsibilities to each other, (PHL §14(4)(c)(C)) can be used to test that whether a remaining family member was indeed part of a "family" and should be assured continued occupancy under the rent laws. There will be no more intermingling of finances, no more formalization of the relationships, no future sharing of expenses. The legislature was nonetheless looking to protect continued occupancy of the remaining family member. The Owner cannot credibly argue that such protection of 28 continued occupancy would be an anomaly and the prior formalization of legal obligations and sharing of expenses by married couples indicated by a joint tax return here was instead meant to be an absolute stop to any inquiry as to who should be protected. Just as with the Mitchell-Lama program as well as other programs administered by DHCR which are sensitive to changes in family composition, this law by limiting the income to those who as of the date of the application used the apartment as their primary residence was similarly sensitive to this kind of change in family composition. (See, eg. 9 N.Y.C.R.R. §1727-5, 24 CFR 982.516). c. The rules and regulations pursuant to Tax Law 171-b adopted by DTF included provisions for segregating federal adjusted income from a non-resident spouse. Tax Law 171-b authorized and directed DTF, not DHCR to adopt rules and regulations to verify the income of tenants residing in rent regulated housing accommodations. DTF provided in the MOU for the segregation of items of federal adjusted income from the nonresident spouse so those amounts would not be included in the income determination. The form would be used when one or more residents of the rent regulated housing accommodation files a joint New York State Personal income tax return with a spouse who does not live in the rent regulated housing accommodation, but with whom a joint income tax return was filed for one or both 29 of the tax years. This form will be used by such individuals to segregate the items of federal adjusted gross income from the nonresident spouse so those amounts will not be included in the income determination, (emphasis added). (R.402). The form designed by DTF - Worksheet for allocating Federal Adjusted Gross Income ("Worksheet") was described in the MOU: . . "Worksheet for Allocating Federal This form will be usedAdjusted Gross Income." when one or more residents of the rent regulated housing accommodations files a joint New York State Personal income tax return with a spouse who does not live in the rent regulated housing accommodation, but with whom a joint income tax return was filed for one or both of the tax years involved. This form will be used by such individuals to segregate the items of federal adjusted gross income of the nonresident spouse so those amounts will not be included in the income determination. the preceding sentence means not residing in the rent-regulated housing accommodation as a primary residence and does not mean the term defined in section 605(a)(2) of the Tax Law. (emphasis added). The term "nonresident" in (R. 402). The Worksheet designed and approved by DTF has been included with ICF form for over twenty years with instructions to the tenant to keep this worksheet for their (R. 74-75).records. The Owner claims that tenants who live in rent regulated housing accommodations may not file joint income tax returns, enjoy tax saving while maintaining two separate 30 primary residences. (Brief: p.24). This Court in Glenbriar v. Lipsman, 5 N.Y.3d 388, 804 N.Y.S.2d 719 (2005) found that husband and wife can maintain separate primary residences and file federal joint tax returns even if one spouse maintains a New York City rent regulated apartment and the other spouse maintains a Florida residence and claims a Florida homestead exemption. Even absent direction in RRRA-93, New York Tax Law10 in certain circumstances like the MOU provides for separation of income for filing a New York Tax Return when spouses have filed a Federal joint tax return. The separation of Federal Joint Income reported on a New York State tax return pursuant to RRRA-93 is not unprecedented. In Brady v. State, 172 A.D.2d 17, 576 N.Y.S.2d 896 (3rd Dept. 1991) the Third Department found that 10 Tax Law §651(b)(2) provides: If the federal income tax liabilities of husband and wife. determined on a joint federal return, they shall file a joint New York income tax return, and their tax liabilities shall be joint and several except as provided in paragraph six of this subsection, section six hundred fifty-four and subsection (e) of section six hundred eighty-five. (emphasis added). . are Tax Law §171 Powers and Duties of commissioner of taxation and finance provides: Eighteenth-c. . . .have the authority to require a husband and wife whose federal income tax liabilities are determined on a joint federal return and who have not filed a joint New York income tax return to file separate income tax returns, in which case their tax liabilities shall be separate, (emphasis added). 31 husband and wife may elect to file separate New York State income tax returns even if they filed a joint Federal tax return if one of the spouses is a New York resident and the other is a non-resident. The statute specifically provides that both the owner and tenant shall have thirty days to comment on the DTF's verification results, recognizing there may be issues such as occupancy which may not be answered through the income verification process and the Owner. RCL §26-403.1(c)(2). This comment period was specifically cited by this Court in Classic Realty LLC v. N.Y. State Div. of Hous. and Comm. Renewal, 2 N.Y.3d 1442, 777 N.Y.S.2d 1 (2004) as part of the deregulation procedure. When interpreting a statute, a court should attempt to effectuate the intent of the legislature. Doctors Council v. New York City Employees' Retirement System, 71 N.Y.2d 669, 529 N.Y.S.2d 732 (1988). It is clear, that the legislature in enacting RRRA-93 clearly defined "total annual income" as "the sum of the annual incomes of all persons who occupy the housing accommodation as their primary residence." The courts have repeatedly found that legislature intended that only the income of those persons residing in the premises as their primary residence on the date that 32 ICF is served should be included in the determination of the total annual income of the occupants of a rent regulated apartment for deregulation. 315 East 72nd St. Owners, Inc, v. N.Y.S. Div. of Hous. & Comm. Renewal, 101 A.D.3d 647, 958 N.Y.S.2d 39 (1st Dept. 2012); Chatsworth Realty Corp. v. N.Y.S. Div. of Hous. & Comm. Renewal, 56 A.D.3d 371, 869 N.Y.S. 2d 18 (1st Dept. 2008); Doyle v. Calogero, 52 A.D.3d 252; 859 N.Y.S.2d 178 (1st Dept. 2008); 103 East 86th St. Realty Corp. v. N.Y.S. Div. of Hous. & Comm, Renewal, 12 A.D. 3d 289; 785 N.Y.S.2d 65 (1st Dept. 2004; A.J. Clarke Real Estate Corp v. N.Y.S Div. of Hous. and Comm. Renewal, 307 A.D.2d 841, 763 N.Y.S.2d 577 (1st Dept. 2003).11 Under well settled principles of administrative law the court's function is accomplished upon finding a rational basis. Matter of Pell v. Board of Educ., 34 N.Y.2d 222, 356 N.Y.S.2d 833 (1974). Both the Supreme court and the First Department found that DHCR determination as to the apportionment of income had a rational basis as the Tenant was the sole occupant of the apartment and pursuant to RRRA-93 and RCL §26-403.1(a), the definition of total 11 In accord, Power v. N.Y.S. Div. of Hous. & Comm, Renewal, 61 A.D.3d 544, 878 N.Y.S. 2d 682 (1st Dept. 2009) the date the ICF is served is the operative date even if the occupant did not occupy the apartment the two years preceding the service of the ICF. 33 annual income means the sum of the annual incomes of all persons who occupy the housing accommodation as their primary residence. This Court should affirm the First Department's findings that the Supreme court correctly concluded that DHCR was not arbitrary or irrational when the Tenant's income was apportioned on a joint tax return for purposes of determining "total annual income" of the sole occupant of the housing accommodation in accord with RRRA-93 and RCL §26-403.1. POINT II TAX LAW 171-b AUTHORIZED AND DIRECTED DTF AND DHCR TO ENTER INTO AN AGREEMENT TO VERIFY INCOME OF TENANTS RESIDING IN HOUSING ACCOMMODATION SUBJECT TO RENT REGULATION. Chapter 253 of the laws of 1993 ("RRRA-93") provides for the Tax Commissioner to enter into an agreement with the Division of Housing and Community Renewal to verify income of tenants residing in housing accommodations subject to rent regulation. It further authorized the Department of Finance ("DTF") to adopt rules, regulations and to design the forms to effect the "rent regulation reform act of 1993." Section 10 of the chapter added a new subdivision 3 to Tax law 171-b which provided: 34 (3)(a) The commissioner is authorized and directed to enter into an agreement with the Commissioner of the Division of Housing and Community Renewal to verify the income of tenants residing in housing accommodations subject to rent regulations. (emphasis added). Contrary to the Owner's argument, the legislature in amending Tax Law 171-b, directed DTF, not DHCR to adopt rules and regulations to verify the income of rent regulated tenants and the MOU clearly provide for apportionment. (Brief: p.46). The MOU in pertinent part: This form will be used by such individuals to segregate the items of federal adjusted gross income from the nonresident spouse so those amounts will not be included in the income determination, (emphasis added). (R.402). The agreement or Memorandum of Understanding ("MOU") between DTF and DHCR pursuant to Tax Law 171-b(3) to verify income of rent regulated tenants is not unusual. The legislature has authorized MOUs for income verification between DTF and other New York State agencies including Tax Law 171-a(3)(a) which provides for an agreement between DTF and the Office of Temporary Disability Assistance; Tax Law 171-d an agreement with DTF and New York State Higher Education Services; Tax Law 171-j an agreement with DTF and the State Insurance Fund; Tax Law 171-e an agreement with DTF and the City and State University of New York. 35 a. The validity of the MOU between DTF and DHCR may not be raised for the first time on appeal. The MOU was enacted over 22 years ago and the time to challenge the validity of the MOU has long since expired. Even more fundamentally the Owner claims that MOU contains provisions that contradict the statute but fails to provide specifics as to which statute the MOU violates. See; Samuelsen v, N.Y. City Transit Authority, 101 A.D.3d 537, 957 N.Y.S.2d 27 (1st Dept. 2012) (the statute prohibited the consolidation established in the MOU). The Owner cites to Schumer v. Holtzman, 60 N.Y.2d 46, 467 N.Y.S.2d 182 (1983) for the proposition that a MOU issued in contravention of law is of no force and effect. In Schumer, the Congressman unlike the Owner here, cited a potential conflict of interest and challenged the MOU by commencing an Article 78. The Owner conceded in its letter brief to this Court that it raised for the first time the validity of the MOU between DTF and DHCR in its Appellate Division reply brief. This Court has repeatedly held that issues not raised before DHCR may not be raised for the first time on appeal. See; Peckham v. Calogero, 12 N.Y.3d 424; 883 N.Y.S.2d 751 (2009); Gilman v. N.Y. Div, of Hous. and Comm. Renewal, 99 N.Y.2d 144, 753 N.Y.S.2d 1 (2002). 36 The Supreme Court appropriately concluded that the methodology for ascertaining the Tenant's income may not trump the expressed statutory determination that only the income of the tenant(s) occupying the premises on the date the ICF is served may be counted. (R.12). b. DTF verified the Tenant's annual income was below the statutory threshold. The Owner alleges that DHCR made its "apportionment" determination without any input from DTF and usurped DTF's statutory role in the income verification process. (Brief: p.6, 38-40). Nonetheless, it was after DTF verified and reported that the Tenant's total annual income was below the statutory threshold by applying the percentages submitted by the Tenant that DHCR sought to verify the income allocation by requesting an IRS transcript from the Tenant of the Tenant's reported income which is entirely consistent with the RCL §26-403.1. (R. 106). The Supreme Court found that it was not irrational for DHCR to request additional information to confirm the Tenant's allocation percentage indicated on her ICF that DHCR submitted to DTF rather than to blindly accept the Tenant's apportionment. The Owner argued that at the very least that if apportionment is to be performed it must require a tenant 37 to submit 1099 forms, W-2 forms and IRS transcripts but fails again to offer support for its proposition. However, the legislative intent as noted by the Owner was to provide, an income verification procedure that was "simple" (Brief:and "relies on a voluntary certification process." p.9). The Tenant provided her tax returns for both the relevant years and a detailed explanation of the Tenant's allocation of the joint income to DHCR which inadvertently pursuant to the Owner's FOIL request was provided to Owner. (R. 135-140). (Brief: p.13). Subsequently, DHCR requested the exact information the Owner argues is necessary to verify the Tenant's apportionment of her income from the joint tax return with her deceased husband. DHCR requested that the Tenant provide a transcript of items listed in section 8 of form 4506T to verify the percentages and allocation of the Tenant's income. The Tenant voluntarily submitted the IRS 2005 Wage and Income Transcript. The Tenant's attorney stated that the Transcript was confidential and was not to be provided to the Owner or any other party. Both N.Y. Tax Law §697 and RCL §26-403.1(c)(4) require that DHCR maintain the secrecy of the Tenant's income tax 38 records. Similarly, the Tenant's income tax information is expressly exempt from FOIL. The Tenant's provision of this information to DHCR was created by the legislature in a manner akin to an in camera review of confidential information by the courts, which maintains the confidentiality of the information provided, but permits review by the fact finder for various purposes. The Owner argues because DHCR requested confidential information intruding on the tenant's privacy, the Owner is entitled to have DHCR's determination reversed on the basis that DHCR violated the statute. This argument is without merit. In Charles Q. v. Constantine, 85 N.Y.2d 571, 626 N.Y. 2d 992 (1995) this Court held that the evidence obtained in violation of a statute in an administrative proceeding is insufficient basis for annulment of the determination. DHCR's determination was based on DTF'sMoreover, finding included in the administrative record that the Tenant's annual income was below the statutory threshold. DHCR used the Tenant's IRS transcript only to confirm DTF's finding that the Tenant's income was below the statutory threshold. 39 The Supreme Court found that in the unusual circumstances of this case, where complying with DHCR own rule would have required to DHCR to either accept the Tenant's allocation without question or to violate the statutory limitation on those whose "annual income" is be included in ascertaining "total annual income" was neither irrational, nor contrary to law, for DHCR to violate its own rule and request additional information to verify the Tenant's allocation of her income on the joint tax return. POINT III THE SUPREME COURT PROPERLY FOUND THAT DHCR'S ORDER HAD A RATIONAL BASIS. Under well settled principles of administrative law the court's function is accomplished upon finding a rational basis. Matter of Pell v. Board of Educ., 34 N.Y.2d 222, 356 N.Y.S.2d 833 (1974). Judicial review is limited to a review of the record before DHCR and whether the agency's determination is arbitrary and capricious or without rational support. Peckham v. Calogero, 12 N.Y.3d 424; 883 N.Y.S.2d 751 (2009); Gilman v. N.Y. Div. of Hous. and Comm. Renewal, 99 N.Y.2d 144, 753 N.Y.2d 1 (2002). 40 Courts must defer to an administrative agency's rational interpretation of its own regulations in its area of expertise. 12 N.Y.3d, 883 N.Y.S. 2d 751 (2009). AsPeckham v. Caolgero the agency charged with administering and enforcing the Rent Control Law, DHCR is entitled to considerable deference in its construction and application of the program's enabling legislation. Howard v. Wyman, 28 N.Y.2d 434, 322 N.Y.S.2d 683 (1971). The Appellate Division found the record in this matter clearly showed that DHCR's Order was in all respects rational, and the Supreme Court properly found that DHCR's determination was in accord with RCL §26-403.1 and Tax Law §171-b and was not arbitrary or irrational. 41 CONCLUSION WHEREFORE, for all the forgoing reasons, the Order of the Appellate Division, First Department, entered August 4, 2016, should be affirmed Dated: New York, New York September 6, 2017 Respectfully submitted, Mark F. Palomino Attorney for Respondent New York State Division of Housing and Community Renewal 25 Beaver Street New York NY 10004 (212) 480-7441 Email: . Sandra.j?pseph@nyshcr.org By: . // y}JsSd?ÿ4V$o|lph f / l) L/ 42 CERTIFICATE OF COMPLIANCE The foregoing brief was prepared on a computer. A monospaced typeface was used, as follows: Name of typeface: Courier New Point size: 12 Line Spacing: Double The total number of words in the brief, inclusive of point headings and footnotes and exclusive of pages containing the table of contents, table of citations, proof of service, certificate of compliance, or any authorized addendum containing statutes, rules, regulations, etc., is 7,990. Dated: September 6, 2017 / /, r'Jj/ZA,/MJL- ML JML /