Richard Altman, Respondent,v.285 West Fourth LLC, Appellant.BriefN.Y.March 22, 2018 STATE OF NEW YORK COURT OF APPEALS ---------------------------------------------------------------------X RICHARD ALTMAN, Plaintiff-Respondent, - against - 285 WEST FOURTH LLC, Defendant-Appellant. ----------------------------------------------------------------------X BRIEF OF AMICI CURIAE MAKE THE ROAD NEW YORK AND THE ASSOCIATION FOR NEIGHBORHOOD HOUSING AND DEVELOPMENT Make the Road New York Ezra Kautz, Supervising Attorney 301 Grove Street Brooklyn, New York 11237 (718) 418-7690 ext. 1221 ezra.kautz@maketheroadny.org Date Completed: February 5, 2018 APL-2017-00054 New York County Index No. 155942/14 i TABLE OF CONTENTS TABLE OF AUTHORITIES .................................................................................... ii CORPORATE DISCLOSURE STATEMENT ......................................................... v PRELIMINARY STATEMENT ............................................................................... 1 INTERESTS OF AMICI CURIAE ............................................................................. 2 ARGUMENT ............................................................................................................. 5 I. EXPANDING DECONTROL BEYOND THE EXPLICIT LANGUAGE OF SECTION 504.2 WOULD BE INCONSISTENT WITH THE STATUTORY STRUCTURE AND REMEDIAL PURPOSE OF THE RSL ................................... 5 A. In the Statutory Framework of the RSL, a Vacancy Increase May Be Taken in the Next Rent Stabilized Lease, Not Unilaterally When the Apartment Is Vacant ..................................................................................................................... 6 B. The Remedial Purpose of the RSL Would Be Undermined by Expanding the Exemption Beyond the Statutory Text .............................................................. 9 II. NOTHING IN THE TEXT OF THE STATUTE SUPPORTS DEREGULATION BASED ON HYPOTHETICAL RENT INCREASES DURING VACANCY .............................................................................................14 III. INCONCLUSIVE LEGISLATIVE HISTORY CANNOT ENACT WHAT STATUTE FAILS TO EXPRESS ...........................................................................17 CONCLUSION ........................................................................................................19 Printing Specifications Statement ............................................................................20 ii TABLE OF AUTHORITIES Cases Archer v. Equitable Life Assur. Soc. of United States, 218 N.Y. 18, 20 (1916) ......17 Braschi v. Stahl Assocs. Co., 74 N.Y.2d 201, 208 (1989) ...................................9, 17 Cintron v Calogero, 15 NY3d 347, 355 (2010) ......................................................... 9 Coffina v. Div. of Hous. and Community Renewal, 61 AD3d 404 (1st Dept. 2009) . 8 Frank v. Meadowlakes Dev. Corp., 6 N.Y.3d 687, 692 (2006) ...............................16 Henry Modell & Co v. Minister, Elders & Deacons of Ref. Prot. Dutch Church of the City of NY, 68 N.Y.2d 456, 463 (1986) ..........................................................19 In re Charles’ Estate, 200 Misc. 452, 461 (Sur. Ct. NY Co. 1951), aff’d 279 AD 741 (1st Dept. 1951), aff’d 304 NY 776 (1952) ...................................................10 Jericho Water Dist. v One Call Users Council Inc., 10 N.Y.3d 385, 391 (2008) ...10 People v. Bourne, 139 A.D.2d 210, 216, 531 N.Y.S.2d 899 (1st Dept. 1988) .......... 6 People v. Smith, 139 A.D.3d 131, 135 (1st Dept. 2016) .........................................17 Van Amerogen v Donnini, 78 NY2d 880, 882 (1991) .............................................10 Wellbilt Equip. Corp. v. Fireman, 719 N.Y.S.2d 213, 217, (1st Dept. 2000) ........... 6 Statutes Admin. Code (Rent Stabilization Law) § 26-504.2(a) ........................................5, 14 Admin. Code (Rent Stabilization Law) § 26-511(c)(13) ........................................... 8 Admin. Code (Rent Stabilization Law) § 26-511(c)(14) ........................................... 8 Admin. Code (Rent Stabilization Law) § 26-511(c)(5-a) .......................................... 7 Admin. Code (Rent Stabilization Law) § 504.2 ......................................................10 Admin. Code (Rent Stabilization Law) §§ 26-501, 26-502 .................................9, 10 iii McKinney’s Cons. Laws Annot., Statutes § 213 .....................................................10 McKinney’s Cons. Laws Annot., Statutes § 321 ....................................................... 9 McKinney’s Uncons. Laws (Emergency Tenant Protection Act of 1974) § 8622 .... 9 Other Assembly Debate Transcript, 1997 ch. 116, 6/19/97 ...............................................18 Attorney General’s Memorandum of Law in Opposition to Plaintiff's Motion for Preliminary Injunction and in Support of Defendants' Cross-Motion to Dismiss, e-filed 3/24/2014, Portofino Realty Corp. v DHCR, NYSCEF 501554/2014 (Sup. Ct. N.Y. Co.) .........................................................................................................11 Cezary Podkul and Marcelo Rochabrun, "Rent Limits Just a Fiction for Thousands of NYC Tenants, Records Disclose," ProPublica, 3/10/16 ..................................12 Cezary Podkul, "Many ‘Rent-Stabilized’ NYC Apartments Are Not Really Stabilized. See Where They Are," ProPublica, 6/22/17 .......................................12 Community Service Society, MAKING THE RENT 2016: TENANT CONDITIONS IN NEW YORK CITY'S CHANGING NEIGHBORHOODS, 5/2016 .................................3, 11 Elizabeth Kolbert, “All Eyes on Three Men and a Clock,” NY Times, 6/16/97 .....18 James Dao, “As Usual, Down to the Wire in Albany,” NY Times, 6/17/97 ...........18 Make the Road New York, RENT FRAUD: ILLEGAL RENT INCREASES AND THE LOSS OF AFFORDABLE HOUSING IN NEW YORK CITY, 8/2011 ................................. 11, 13 New York City Housing and Vacancy Survey 2014 ................................................. 3 NYU Furman Center for Real Estate and Urban Policy, STATE OF NEW YORK CITY’S HOUSING AND NEIGHBORHOODS IN 2016 ..................................................... 5 Randy Kennedy, “Landlords Divided on Benefits of the Plan,” NY Times, 6/17/97 ...............................................................................................................................18 Randy Kennedy, “Some Gains Emerge for Landlords in the Fine Print,” NY Times, 6/20/97 ......................................................................................................18 iv Rent Guidelines Board, CHANGES TO RENT STABILIZED HOUSING STOCK IN 2016 ... 3 Richard Perez-Peña, “After Handshake Deal, Albany Bogs Down in Writing a Rent Bill,” NY Times, 6/17/97 .............................................................................18 Senate Debate Transcript, 1997 ch. 116, 6/19/97 ....................................................18 v CORPORATE DISCLOSURE STATEMENT Make the Road New York is a not-for-profit corporation with no parent or subsidiary. Children’s Grove Park Inc. and Make the Road Action Inc. are not-for- profit corporations that are affiliates of Make the Road New York. The Association for Neighborhood Housing and Development is a not-for- profit corporation with no parent, subsidiary, or affiliate. 1 PRELIMINARY STATEMENT Make the Road New York and the Association for Neighborhood Housing and Development respectfully submit this memorandum as amici curiae to show the impact that this decision may have on low- and moderate-income tenants throughout New York City. In this appeal, the Court must decide whether to sanction the practice of deregulating rent stabilized apartments that became vacant with a rent lower than $2000. In plain contrast to the text of the “high rent” decontrol provision of the Rent Stabilization Law, many landlords took the opportunity of a departing tenant to declare their apartment exempt by preemptively adding rent increases that could have been applied to the next rent stabilized tenancy—including the vacancy bonus, which cannot even be calculated before a new tenant signs a lease. The opaque mechanism of this practice has fostered a culture of gamesmanship and fraud among unscrupulous landlords, and the high financial reward contributed to the frenzy of speculation and displacement in gentrifying neighborhoods. The Court should defend the broad, remedial policy of the Rent Stabilization Law and not allow a narrow exception to expand to the point of undermining the whole. The April 28, 2015 order of the Appellate Division (“Altman I”) should be affirmed. 2 INTERESTS OF AMICI CURIAE Make the Road New York (MRNY) is a nonprofit, membership-based community organization that integrates adult and youth education, legal and survival services, and community/civic engagement in a holistic approach to help working class and low-income New Yorkers improve their lives and neighborhoods. MRNY has a membership of 21,000 primarily immigrant New Yorkers focused around vibrant community centers in Bushwick, Brooklyn; Jackson Heights, Queens; Port Richmond, Staten Island; Brentwood, Long Island; and Westchester County. MRNY members and their families are among the most severely affected by New York City’s housing affordability crisis. Because stable, affordable housing is critical to our members and to preserving our communities, MRNY provides free legal services to hundreds of tenants each year, educates tenants about their rights, and organizes tenants to advocate for safe, accessible housing conditions. Tenant rights meetings in our community offices are attended by more than one hundred community members each week, in addition to tenant association meetings organized by MRNY in apartment buildings in Brooklyn, Queens, and Staten Island. Founded in 1974, the Association for Neighborhood and Housing Development (ANHD) is the umbrella organization of 101 non-profit affordable 3 housing and economic development groups, serving low- and moderate-income New Yorkers. ANHD is dedicated to research, advocacy, strategic communications, and leadership development to support these members and to ensure flourishing neighborhoods and decent, affordable housing for all New Yorkers. Over the past 43 years, ANHD’s non-profit members have built over 120,000 units of affordable housing in the city’s most distressed neighborhoods, worked directly with tenants and homeowners to save thousands of at-risk affordable apartments and homes, and consistently mobilized to shape the housing policy landscape to better meet the needs of low- and moderate-income New Yorkers. Rent stabilization is the major source of housing for low-income and working-class residents of New York.1 On average, rent stabilized tenants are lower income, older, and more likely to be people of color.2 High rent vacancy deregulation has been the primary cause of the loss of rent stabilized apartments in New York City and a main driver of the affordability crisis. Approximately 144,000 apartments were registered as exempt due to high rent vacancy between 1997 and 2015.3 1 Community Service Society, MAKING THE RENT 2016: TENANT CONDITIONS IN NEW YORK CITY'S CHANGING NEIGHBORHOODS, 5/2016, http://www.cssny.org/publications/entry/making- the-rent-2016 (accessed 2/3/2018), at 2. 2 New York City Housing and Vacancy Survey 2014, Tables 7A-83, 7A-82, and 1A-9. 3 Rent Guidelines Board, CHANGES TO RENT STABILIZED HOUSING STOCK IN 2016, https://www1.nyc.gov/assets/rentguidelinesboard/pdf/changes17.pdf (accessed 2/4/2018), at 15. 4 Members and clients of MRNY and ANHD in neighborhoods such as Bushwick or Corona do not live in “luxury” housing. Nevertheless, they face the brunt of the impact of the high rent vacancy decontrol law. The loose implementation of vacancy decontrol, in conjunction with other rent stabilization loopholes, has contributed to a pattern of speculative housing investment that rewards landlords who can game the system to displace long-term tenants and flip units out of rent stabilization entirely. This rapid and aggressive form of gentrification has had devastating impact both on individual families and on once- stable communities. This Court’s decision will have a direct impact on members of the communities that the Amici Curiae serve. MRNY member Lucero Rogel, a working-class immigrant and a mother of two young children, is typical. In 2009, Ms. Rogel moved to Street, a 20-unit building in Jackson Heights, Queens, with a two-year lease for $1500.00. She was given successive renewal leases with moderate increases until 2016, when the landlord filed a summary holdover proceeding in Queens Housing Court based on expiration of her unregulated lease.4 Although the prior tenant had paid a preferential rent of $1290.00, with a legal rent of $1439.10, the owner claimed to have deregulated the unit by raising the legal rent above $2000.00 before Ms. Rogel moved in through a 4 Dazalution Ltd. v Lucero Rogel, L&T index number 50659/2016. 5 combination of improvement, vacancy, and longevity increases. The housing court is reserving decision on Ms. Rogel’s motion for summary judgment pending this Court’s decision on this appeal. Therefore, one consequence of this Court’s decision will be to determine whether Ms. Rogel and her family will be evicted. Because the asking rent in her rapidly gentrifying area has risen significantly in the last few years, it is likely that this family would be displaced from the neighborhood entirely.5 ARGUMENT I. EXPANDING DECONTROL BEYOND THE EXPLICIT LANGUAGE OF SECTION 504.2 WOULD BE INCONSISTENT WITH THE STATUTORY STRUCTURE AND REMEDIAL PURPOSE OF THE RSL High rent vacancy decontrol permits owners of rent stabilized apartments to deregulate a unit that becomes vacant with a legal regulated rent at or above a statutory threshold—currently $2733.75 per month. N.Y. Admin. Code (Rent Stabilization Law or “RSL”) § 26-504.2(a). This appeal, for the first time, asks the Court to consider whether the statutory language permits an owner to reach this threshold by adding post-vacancy increases, including the vacancy increase that 5 Ms. Rogel’s home lies close to the border between Jackson Heights and Corona. Between 2010 and 2016, the median asking rent increased by 33 percent in Jackson Heights and by 53 percent in Corona/Elmhurst. NYU Furman Center for Real Estate and Urban Policy, STATE OF NEW YORK CITY’S HOUSING AND NEIGHBORHOODS IN 2016, http://furmancenter.org/research/sonychan (accessed 2/4/2018), at 90-91. 6 would apply to a tenant who has not moved in yet.6 The Appellant argues that subtle changes in the wording of the statute operated to open this loophole between 1997 and 2015—even though the statute has never actually mentioned post- vacancy increases of any kind. Because Appellant’s interpretation is not soundly based in the statutory text, and runs counter to the purpose and structure of the Rent Stabilization Law, the Court should affirm the Appellate Division. A. In the Statutory Framework of the RSL, a Vacancy Increase May Be Taken in the Next Rent Stabilized Lease, Not Unilaterally When the Apartment Is Vacant An apartment cannot be “high rent decontrolled” during a vacancy because the legal regulated rent is set based on leases between the owner and a tenant. Under rent stabilization, in the absence of a new rent stabilized lease, the owner cannot unilaterally set the legal regulated rent through a vacancy increase or otherwise. The requirement of a lease to raise the legal rent is especially clear as to the vacancy increase. Contrary to the Landlord’s argument, App. Br. 29-30, there is no automatic 20 percent rent increase that occurs upon the vacancy of a rent stabilized 6 Although Appellant cites to decisions that either apply a vacancy increase to deregulate an apartment before there is a new tenant, or merely refer to such a practice in dicta, those cases are not controlling on the Court because the statutory question raised in the instant appeal was not argued or considered in those cases. “A case . . . is only precedent as to those questions presented, considered, and squarely decided.” Wellbilt Equip. Corp. v. Fireman, 719 N.Y.S.2d 213, 217, (1st Dept. 2000); People v. Bourne, 139 A.D.2d 210, 216, 531 N.Y.S.2d 899 (1st Dept. 1988). 7 tenant. The vacancy increase cannot be applied until a new tenant signs a vacancy lease and creates a new (rent stabilized) tenancy. This is because the amount of the vacancy increase varies depending on whether the new lease is for a one- or two- year initial term: [T]he legal regulated rent for any vacancy lease entered into after the effective date of this paragraph shall be as hereinafter provided in this paragraph. The previous legal regulated rent for such housing accommodation shall be increased by the following: (i) if the vacancy lease is for a term of two years, twenty percent of the previous legal regulated rent; or (ii) if the vacancy lease is for a term of one year the increase shall be twenty percent of the previous legal regulated rent less an amount equal to the difference between (a) the two year renewal lease guideline promulgated by the guidelines board of the city of New York applied to the previous legal regulated rent and (b) the one year renewal lease guideline promulgated by the guidelines board of the city of New York applied to the previous legal regulated rent. RSL § 26-511(c)(5-a). Because the owner cannot increase the legal regulated rent pursuant to this statute unless and until a new tenant signs a rent stabilized lease pursuant to this statute, the vacancy increase cannot be the basis for high rent decontrol during vacancy. Although it is not at issue in the present case, the same principle applies to other rent increases. When an owner performs individual apartment improvements (IAIs) on a vacant apartment, there is no administrative procedure to raise the legal rent by 1/40th or 1/60th the cost. RSL § 26-511(c)(13). Instead, the owner is 8 permitted to raise the legal rent in the next rent stabilized lease in accordance with its bona fide expenses, either by charging the full legal rent or by preserving the legal rent in the lease through a preferential rent agreement. See RSL § 26- 511(c)(14). Notably, the IAI increase is added after the vacancy and longevity increases are applied—the owner does not get to add another 20% on top of the 1/40th.7 Even if an owner is entitled to charge a new tenant an IAI increase or vacancy increase, there is nothing forcing the owner to do so. It is well established that, if the owner declines to either charge the allowable increase or preserve it in a preferential rent agreement, then he waives whatever hypothetical increase he could have been entitled to. Coffina v. Div. of Hous. and Community Renewal, 61 AD3d 404 (1st Dept. 2009). Appellant’s interpretation of Section 504.2 would create a paradoxical position for such a tenant, who may think herself rent stabilized with a lease under $2000 but be subject to deregulation years later, when the landlord—or more likely, his successor—decides to count the increases in hindsight. Thus, the legal regulated rent is only set when there is a rent stabilized lease. There is no unilateral mechanism for an owner to raise the legal rent during 7 Compare DHCR Form RA-LR1, New York City Lease Rider for Rent Stabilized Tenants, rev. 3/2016, §1 (“Vacancy Lease Rent Calculation”), http://www.nyshcr.org/Forms/Rent/ralr1.pdf (accessed 2/4/2018). 9 vacancy, and so it would be illogical and inconsistent with the statutory structure to make that the very basis for permanent deregulation. Compare Cintron v. Calogero, 15 N.Y.3d 347, 355 (2010) (use interpretation that “best reconciles and harmonizes the legislative aims” of different sections of the RSL). B. The Remedial Purpose of the RSL Would Be Undermined by Expanding the Exemption Beyond the Statutory Text Rent regulation laws “are remedial in nature and designed to promote the public good,” and so “their provisions should be interpreted broadly to effectuate their purposes.” Braschi v. Stahl Assocs. Co., 74 N.Y.2d 201, 208 (1989); McKinney’s Cons. Laws, Statutes § 321 (“remedial statutes are liberally construed to carry out the reforms intended and to promote justice”); see also Cintron v. Calogero, 15 N.Y.3d at 355-56. The Rent Stabilization Law was enacted and repeatedly renewed under a declaration of a state of emergency in rental housing in New York, with the purpose “to prevent exactions of unjust, unreasonable and oppressive rents and rental agreements and to forestall profiteering, speculation and other disruptive practices tending to produce threats to the public health, safety and general welfare.” RSL §§ 26-501, 26-502; see also Emergency Tenant Protection Act of 1974 (McKinney’s Uncons. Laws) § 8622. In particular, after a three-year experiment with unfettered vacancy decontrol which resulted in “sharp increases in rent levels,” the Rent Stabilization Law was re-enabled in 1974 having learned the lesson that “transition from regulation to a normal market of free 10 bargaining between landlord and tenant . . . must be administered with due regard for [the housing] emergency.” RSL § 26-501. High rent deregulation, first enacted in 1993, is one of the few exemptions that the RSL provides for pre-1974 buildings with six or more units. It is a “maxim that exceptions to generally applicable statutory provisions should be strictly construed.” Jericho Water Dist. v One Call Users Council Inc., 10 N.Y.3d 385, 391 (2008). The exception “may properly be extended only so far as the language of the exception fairly warrants, and all doubts should be resolved in favor of the general provision rather than the exception.” Van Amerogen v Donnini, 78 NY2d 880, 882 (1991) (citations and internal quotation marks removed). “A person who would benefit from an exemption to a remedial statute must bring themselves within both the letter and spirit of the exceptions.” McKinney’s Cons. Laws Annot., Statutes § 213 comment (citing In re Charles’ Estate, 200 Misc. 452, 461 (Sur. Ct. NY Co. 1951), aff’d 279 AD 741 (1st Dept. 1951), aff’d 304 NY 776 (1952)). The policy rationale for high rent decontrol is that there is no "housing emergency" for apartments renting for more than the decontrol threshold. App. Br. at 6-7. However, the expansive interpretation of Section 504.2 urged by Appellant has contributed to widespread deregulation of affordable, non-luxury apartments, 11 well beyond this limited policy rationale, due to its use in conjunction with other loopholes in the RSL: • The vacancy increase, meant to compensate for units stuck well below market, allows a landlord claim an enormous percentage increase even when the existing legal rent is at or above market rate. This is often called the "eviction bonus," because the more frequently the landlord can "churn" through tenants, the more it can compound this already sizeable interest to astronomical levels, often over 100% in a few years.8 • The permanent increase of 1/60 to 1/40 of the cost of individual apartment improvements (IAIs) is another investment that is irresistible when rents are rising, because the rent increase lasts long after the expenses are recouped. Unlike building-wide major capital improvements (MCIs), there is no need to apply for this increase—it is self-reported, with minimal enforcement. Fraud is widespread.9 When combined with 8 Community Service Society, MAKING THE RENT 2016: TENANT CONDITIONS IN NEW YORK CITY'S CHANGING NEIGHBORHOODS, 5/2016, at 2 http://www.cssny.org/publications/entry/making-the-rent-2016 (accessed 2/3/2018) ("The largest contributor to rent increases in rent stabilized apartments is the statutory vacancy allowance or ‘eviction bonus’ that allows an automatic increase of about 20 percent when an apartment becomes vacant and turns over to a new tenant. This mechanism explains 49 percent of the citywide total increase in stabilized rents above inflation.”) 9 Make the Road New York, RENT FRAUD: ILLEGAL RENT INCREASES AND THE LOSS OF AFFORDABLE HOUSING IN NEW YORK CITY, 8/2011, http://www.maketheroad.org/report.php?ID=1939 (accessed 2/3/2018), at 5. See also Attorney General’s Memorandum of Law in Opposition to Plaintiff's Motion for Preliminary Injunction and in Support of Defendants' Cross-Motion to Dismiss, e-filed 3/24/2014, Portofino Realty Corp. v DHCR, NYSCEF 501554/2014 (Sup. Ct. N.Y. Co.), at 19-20 ("The Division's recent 12 the eviction bonus, this permanent increase can be leveraged into higher and higher returns. • While the eviction bonus and unaccountable IAIs give owners the means to rapidly raise the legal rent, preferential rent agreements allow landlords to maintain the legal rent well above market rate—banking their increases and also taking away tenants’ security of tenure, since the landlord can hand a supposedly stabilized tenant an enormous rent hike on renewal.10 Once that tenant is priced out, the landlord can then add another vacancy increase to the legal rent. Use of these loopholes is not limited to “luxury” apartments in lower Manhattan. More than 30 percent of apartment registrations contain a preferential rent, and six of the ten zip codes with the most preferential rent registrations are in the Bronx.11 Ultimately, the end result of these mechanisms is deregulation of the unit through Section 504.2. The ability of owners to game the system and “flip” rent experience has shown that landlords can and increasingly do use preferential rents to subvert rent limits at tenants' expense. . . . [I]n some 55% of instances where landlords claim to be charging a preferential rent, the Unit has assessed that the claimed legal rent was unsupported.") 10 Cezary Podkul and Marcelo Rochabrun, "Rent Limits Just a Fiction for Thousands of NYC Tenants, Records Disclose," ProPublica, 3/10/16, https://www.propublica.org/article/rent-limits- just-a-fiction-for-thousands-of-nyc-tenants-records-disclose (accessed 2/3/2018). 11 Cezary Podkul, "Many ‘Rent-Stabilized’ NYC Apartments Are Not Really Stabilized. See Where They Are," ProPublica, 6/22/17, https://www.propublica.org/article/rent-stabilized-nyc- apartments-preferential-rent-mapped-zip-code (accessed 2/3/2018) (“In South Bronx’s Mott Haven, for example — where around 48 percent of residents live below the poverty line — about 43 percent of rent-stabilized apartments are charged preferential rents, the data shows.”) 13 stabilized apartments makes use of these loopholes a key driver of speculation and displacement in gentrifying neighborhoods. Allowing landlords to unilaterally deregulate during vacancy—the interpretation urged by Appellant—exacerbates the effect of these loopholes, not just by hastening the coup de grâce of decontrol, but also by removing the limited oversight and accountability that exists when there is a tenant who actually signs a lease with a legal rent above the threshold. A 2011 survey of rent registration histories found 64 percent contained irregularities (illegal increase or gap in registration), and 62 percent of these irregularities occurred when a new tenant moved in.12 In practice, owners often ignored even the minimal requirements such as voluntary registration of decontrolled apartments and the notice to the first unregulated tenant, because there were no penalties whatsoever. Because enforcement of rent laws is driven by tenant complaints, the option of immediately deregulating a unit after applying questionable increases during vacancy created an irresistible economic incentive to circumvent the law. Thus, the interpretation urged by Appellant would expand the narrow exception to undermine the whole purpose of the Rent Stabilization Law, in categories far removed from actual luxury. 12 MRNY, RENT FRAUD, n. 9, supra, at 5. 14 II. NOTHING IN THE TEXT OF THE STATUTE SUPPORTS DEREGULATION BASED ON HYPOTHETICAL RENT INCREASES DURING VACANCY This Court should affirm because the Appellate Division correctly interpreted the Rent Stabilization Law according to the plain meaning of the text, rather than injecting expansive terms that are nowhere to be found. Section 26-504.2(a) of the Administrative Code (“Exclusion of high rent accommodations”) outlines the rent threshold required for vacancy decontrol for four distinct time periods, each expressed in unique phraseology: "Housing accommodations" shall not include: any housing accommodation which becomes vacant on or after April first, nineteen hundred ninety-seven and before the effective date of the rent act of 2011 and where at the time the tenant vacated such housing accommodation the legal regulated rent was two thousand dollars or more per month; or, for any housing accommodation which is or becomes vacant on or after the effective date of the rent regulation reform act of 1997 and before the effective date of the rent act of 2011, with a legal regulated rent of two thousand dollars or more per month; or for any housing accommodation that becomes vacant on or after the effective date of the rent act of 2015, where such legal regulated rent was two thousand seven hundred dollars or more, and as further adjusted by this section. Starting on January 1, 2016, and annually thereafter, the maximum legal regulated rent for this deregulation threshold, shall also be increased by the same percent as the most recent one year renewal adjustment, adopted by the New York city rent guidelines board pursuant to the rent stabilization law. This exclusion shall apply regardless of whether the next tenant in occupancy or any subsequent tenant in occupancy is charged or pays less than two thousand dollars a month; or, for any housing accommodation with a legal regulated rent of two thousand five 15 hundred dollars or more per month at any time on or after the effective date of the rent act of 2011, which is or becomes vacant on or after such effective date, but prior to the effective date of the rent act of 2015; or, any housing accommodation with a legal regulated rent that was two thousand seven hundred dollars or more per month at any time on or after the effective date of the rent act of 2015, which becomes vacant after the effective date of the rent act of 2015, provided, however, that starting on January 1, 2016, and annually thereafter, such legal regulated rent for this deregulation threshold, shall also be increased by the same percentage as the most recent one year renewal adjustment, adopted by the New York city rent guidelines board. This exclusion shall apply regardless of whether the next tenant in occupancy or any subsequent tenant in occupancy actually is charged or pays less than two thousand seven hundred dollars, as adjusted by the applicable rent guidelines board, a month. RSL § 26-504.2(a) (emphasis added to clause at issue). Of the three clauses in the first sentence, there is no dispute about the first and the third: Both require the outgoing, still-stabilized tenant to have had a legal regulated rent at or above the threshold level. This appeal is about the middle clause: Appellant argues that, unlike the others, this clause lets an owner freely raise the legal regulated rent and hit the threshold with no tenant or lease in place. However, there is nothing in the text of Section 26-504.2(a) that gives an owner the right to decontrol an apartment by taking the benefit of the increases that the owner could have added to the legal regulated rent, had the owner entered into a rent stabilized lease with a new tenant. Indeed, there is no mention of vacancy 16 increases, individual apartment improvements, or any other language that would indicate that such a rent-setting and decontrol process could be performed. Furthermore, there is simply no way for the Appellant’s interpretation to make sense. Appellant argues that the word “or” creates a completely isolated and disjointed clause, App. Br. at 25-26, but the very next word, “for,” means that second clause cannot be read independently of the first clause.13 See Frank v. Meadowlakes Dev. Corp., 6 N.Y.3d 687, 692 (2006) (interpret statute “according to its natural and most obvious sense, without resorting to an artificial or forced construction”). Nor can the phrase “is or becomes vacant on or after the effective date [of the RRRA of 1997]” operate to imbue the statute with more profound significance. In other words, units that happened to be vacant on June 19, 1997 (“is vacant on the effective date”) would not have to once again “become vacant after the effective date.” The Altman apartment was not vacant with a legal rent of $2000.00 on June 19, 1997, and so the “is” term is not applicable. Reading the section in its entirety, it should not be surprising to see these small differences in the phraseology of the clauses. The statute is poorly organized 13 The sequence of words resulting from Appellant’s interpretation is not a coherent sentence: “‘Housing accommodation’ shall not include . . . for any housing accommodation which is or becomes vacant on or after the effective date of the rent regulation reform act of 1997 and before the effective date of the rent act of 2011, with a legal regulated rent of two thousand dollars or more per month.” Instead, the word “for” creates a parallel structure that is grammatically dependent on and logically in sequence with the first clause. 17 and duplicative. For example, the fourth threshold period, effective from 2011 to 2015, is not located with the other three in the first sentence, but is relegated to a subordinate clause in the third sentence. Many legislative cooks have had their hands in creating this syntactic soup—but that does not mean the unwritten intent of any one of them should prevail. III. INCONCLUSIVE LEGISLATIVE HISTORY CANNOT ENACT WHAT STATUTE FAILS TO EXPRESS The sole interpretive basis that Appellant offers to justify its position is the purported legislative intent, as represented by the Senate Introducer’s Memorandum and Governor’s Memorandum occasioning the enactment of the RRRA of 1997. However, these secondary documents alone cannot override the plain language of the statutory text, which is “the clearest indicator of legislative intent.” People v. Smith, 139 A.D.3d 131, 135 (1st Dept. 2016). As this Court has held, “where a problem as to the meaning of a given term arises, a court's role is not to delve into the minds of legislators, but rather to effectuate the statute by carrying out the purpose of the statute as it is embodied in the words chosen by the Legislature.” Braschi, 74 N.Y.2d at 208; see also Archer v. Equitable Life Assur. Soc. of United States, 218 N.Y. 18, 20 (1916) (courts “may not . . . through construction, enact an intent which the Legislature has not expressed at all”). The actual history of the enactment of the RRRA of 1997 shows that decontrol by post-vacancy increases was not part of the debate. As lawmakers 18 negotiated on an extension, the rent laws were allowed to expire on June 15, 1997, before a compromise was reached early the next morning.14 Reports on this “handshake deal” noted the salient terms that would become law—but there was no mention of post-vacancy increases.15 The final bill was introduced late at night on June 19 certified as an emergency bill for immediate vote. Dozens of members of the Assembly and Senate spoke on the merits of the deal, but not one legislator mentioned adding post-vacancy increases to decontrol an apartment.16 Only afterward came the assertion that such a provision was contained in the “fine print.”17 Thus, the memoranda offered by Appellant can hardly be taken as indicative of the intent of the legislature, as they were introduced in a late-night emergency vote—a fait accompli. Notably, while the memoranda were able to clearly and concisely state a desire to allow “vacancy bonuses and owner improvements” to be 14 Elizabeth Kolbert, “All Eyes on Three Men and a Clock,” NY Times, 6/16/97 (“in Albany, it is well known that nothing happens until everything happens and that the last hour counts more than the first six months.”); James Dao, “As Usual, Down to the Wire in Albany,” NY Times, 6/17/97. 15 Richard Perez-Peña, “After Handshake Deal, Albany Bogs Down in Writing a Rent Bill,” NY Times, 6/17/97; Randy Kennedy, “Landlords Divided on Benefits of the Plan,” NY Times, 6/17/97. 16 See Assembly Debate Transcript, 1997 ch. 116, 6/19/97; Senate Debate Transcript, 1997 ch. 116, 6/19/97. 17 Randy Kennedy, “Some Gains Emerge for Landlords in the Fine Print,” NY Times, 6/20/97. The president of the Real Estate Board of New York explained that this provision would only apply in wealthy neighborhoods: “You can't do this in Woodside, New York, because you're not going to get a rent of $2,000. Can you do it on Central Park West? The answer is yes.” Ironically, Woodside is the Queens neighborhood just west of Jackson Heights, where Lucero Rogel’s landlord would soon employ this mechanism to deregulate an apartment renting well below that threshold. 19 “considered in reaching the $2,000 threshold,” Sen. Introducer’s Mem., these lawmakers were unable to draft and pass legislation containing such clear language. Instead, the actual legislation contained language that makes no mention of these increases—and it is precisely the same language that the City Council had stated should be interpreted the opposite way just months before.18 The Court should not rely on this questionable, partisan material “to add language that the Legislature did not see fit to include” in the text itself. Henry Modell & Co v. Minister, Elders & Deacons of Ref. Prot. Dutch Church of the City of NY, 68 N.Y.2d 456, 463 (1986). CONCLUSION For the foregoing reasons, the Appellate Division’s order should be affirmed. Respectfully submitted, Dated: February 5, 2018 Brooklyn, New York _______________________ MAKE THE ROAD NEW YORK Attorneys for Amici Curiae By: Ezra Kautz 301 Grove Street Brooklyn, New York 11237 (718) 418-7690 ext. 1221 ezra.kautz@maketheroadny.org 18 See App. Br. at 9-10 (quoting Report of the Committee on Housing and Buildings). 20 Printing Specifications Statement This computer-generated brief was prepared using a proportionally-spaced typeface. Name of typeface: Times New Roman Point size: 14 (footnotes 12) Line spacing: Double (blockquotes single) The total number of words in this brief, inclusive of point headings and footnotes and exclusive of pages containing the table of contents, table of authorities, corporate disclosure statement, proof of service, and this certificate is 4,844. Dated: February 4, 2018 Brooklyn, New York _______________________ MAKE THE ROAD NEW YORK Attorneys for Amici Curiae Ezra Kautz, Esq., 301 Grove Street Brooklyn, New York 11237 (718) 418-7690 ext. 1221 ezra.kautz@maketheroadny.org