Matter of 10 W. 65th St. Tenants Assn. v. New York State Div. of Hous. & Community Renewal

Matter of 10 W. 65th St. Tenants Assn. v New York State Div. of Hous. & Community Renewal 2024 NY Slip Op 30005(U) January 2, 2024 Supreme Court, New York County Docket Number: Index No. 154859/2023 Judge: Shahabuddeen Ally Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.

INDEX NO. 154859/2023 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 01/02/2024

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY

PRESENT: HON. SHAHABUDDEEN ABID ALLY PART 16TR Justice ---------------------------------------------------------------------------------X INDEX NO. 154859/2023 In the Matter of the Application of MOTION DATE 9/11/2023 10 WEST 55rH STREET TENANTS ASSOCIATION,

Petitioner, MOTION SEQ. NO. 001

- V-

NEW YORK STATE DIVISION OF HOUSING AND DECISION + ORDER ON COMMUNITY RENEWAL and 10 WEST 55TH STREET LLC, MOTION

Respondents. ---------------------------------------------------------------------------------X

The following e-filed documents, listed by NYSC~F document number (Motion 001) 1-33 were read on this motion to/for ARTICLE 78 (BODY OR OFFICER)

Petitioner brings this Article 78 proceeding seeking to annul the administrative

determination made by respondent the New York State Division of Housing and Community

Renewal ("DHCR") dated March 31, 2023 ("Challenged Order") on the grounds that it was

arbitrary and capricious and lacked a rational basis in fact and law. Respondents oppose. Upon

the above cited papers and for the reasons set forth below, the petition is denied and this

proceeding is dismissed.

Background

Petitioner is an unincorporated, voluntary association of the tenants residing in the rent

stabilized and rent controlled apartments at IO West 65 th Street, New York NY (the "Premises").

Respondent IO West 65 th Street LLC ("Owner") is the owner of the Premises. The apartments

located at the Premises are governed by the Rent Stabilization Law, the Rent Stabilization Code,

154859/2023 10 WEST 65TH STREET TENANTS ASSOCIATION v NEW YORK STATE DIVISION OF Page 1 of 6 HOUSING AND COMMMUNITY RENEWAL et al Motion No. 001

[* 1] 1 of 6

INDEX NO. 154859/2023 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 01/02/2024

and related other City provisions and regulations. Respondent DHCR is the agency charged with

the administration and enforcement of the relevant laws and regulations.

In April 2011, Owner filed an application for a Major Capital Improvement ("MCI")

increase for the installation of a new boiler, security system, intercom, and fencing. Petitioner

opposed the application, contending that the boiler had been installed more than two years prior

to the application and that the intercom did not function. Petitioner also argued that an MCI

application for the intercom was in contravention of a January 30, 20 13 DHCR order

("Modification Order," Petition, exhibit C) that granted Owner permission to change the

intercom system at no cost to the tenants. Finally, petitioner contended that open hazardous

conditions at the Premises and Owner' s allegedly false statements in Department of Buildings

("DOB") filings should preclude the MCI rent increase.

In an order dated February 11 , 2013, DHCR granted the MCI based on the results of a

DHCR inspection, which revealed that the boiler, security system, and intercom were "new."

(MCI Order, Petition, exhibit D, NYSCEF No. 6). The MCI Order included a rent increase of

$8.98 based on the approved costs for the boiler and security and intercom systems but excluded

the costs of the fencing (id.). Petitioner subsequently filed a petition for administrative review

("PAR").

In an order dated October 2, 2020 ("2020 PAR Order"), the Deputy Commissioner

affirmed the MCI Order, finding: (1) that the Rent Administrator properly relied on the

certificate to operate issued for the boiler in determining the completion date; (2) that the open

violation did not justify delay of the MCI increase; (3) that the Modification Order did not

preclude the MCI rent increase for the intercom; (4) that claims relating to Owner's DOB filings

were outside DHCR's purview; (4) that petitioner's claim that the Owner created additional

154859/2023 10 WEST 55TH STREET TENANTS ASSOCIATION v NEW YORK STATE DIVISION OF Page 2 of 6 HOUSING AND COMMMUNITY RENEWAL et al Motion No. 001

[* 2] 2 of 6

INDEX NO. 154859/2023 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 01/02/2024

apartments and additional rooms at the Premises was unsubstantiated; and (5) that the Rent

Administrator adequately set forth all findings (Petition, exhibit E, NYSCEF No. 7). Thereafter,

petitioner commenced an Article 78 proceeding on January 1, 2020 (Index No. 160407/2020),

which resolved in a stipulation to remit for further consideration and issuance of a new order and

determination (Answer, exhibit D, NYSCEF No. 26).

After the remit, the Deputy Commissioner issued an order dated March 31, 2023

("Challenged Order"), which partially modified the 2020 PAR Order (Petition, exhibit A,

NYSCEF No. 3). Specifically, the Deputy Commissioner found that that petitioner demonstrated

that the completion date of the boiler work was more than two years prior to Owner's MCI

application, and therefore any rent increase for that work should be disallowed pursuant to 9

NYCRR 2522.4(a)(8) and 2202.4(c)(4)(vi) (id.). The Deputy Commissioner further found that

the hazardous violation which existed at the time of the MCI application was not corrected until

February 5, 2019 and altered the effective date of the MCI rent increase accordingly (id.). The

Challenged Order left intact all other conclusions in the 2020 PAR Order (id.).

Discussion

In the context of an Article 78 proceeding, the court's function is to evaluate whether,

upon the facts before an administrative agency, that agency 's determination had a rational basis

in the record or was arbitrary and capricious (CPLR § 7803 [3]; see, e.g. Matter ofPell v Board

ofEduc. of Union Free School Dist. No. 1 of Towns ofScarsdale & Mamaroneck, Westchester

County, 34 NY2d 222 [1974]; Maller of E. G. A. Assoc. v New York State Div. ofHous. &

Community Renewal, 232 AD2d 302 [l st Dept 1996]). The administrative determination will

only be found arbitrary and capricious if it is " without sound basis in reason, and in disregard of .

. . the facts" (see Matter ofCentury Operating Corp. v Popolizio, 60 NY2d 483,488 [1983],

154859/2023 10 WEST 55TH STREET TENANTS ASSOCIATION v NEW YORK STATE DIVISION OF Page 3 of 6 HOUSING AND COMMMUNITY RENEWAL et al Motion No. 001

[* 3] 3 of 6

INDEX NO. 154859/2023 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 01/02/2024

citing Matter ofPell, supra at 231 ). A reviewing court may not substitute its own judgment for

that of the agency making the determination (see Partnership 92 LP v New York State Div. of

Hous. & Community Renewal, 46 AD3d 425 [ I st Dept 2007]). If the administrative

determination has a rational basis, there can be no judicial interference (Matter ofPell, supra at

231 -232).

As the agency charged with administration of the Rent Stabilization Law, DHCR "has

broad discretion in evaluating pertinent factual data and determining the inferences to draw from

it" (Hawthorne Gardens, LLC v New York State Div. of Haus. & Community Renewal, 4 AD3d

135 [1 st Dept 2004]). As such, DHCR is entitled to deference as to issues of credibility and the

weight of evidence (Matter of Ansonia Residents Assn. v New York State Div. of Hous. &

Community Renewal, 75 NY2d 206, 213 [1989); see Jane St. Co. v New York Stale Div. ofHaus.

& Community Renewal, 165 AD2d 758 [1st Dept 1990)). On review of the parties ' submissions,

the Court finds that petitioner has not demonstrated that the Challenged Order lacked a rational

basis in the record or was arbitrary and capricious.

Petitioner's first contention is that the Owner created additional apartments and therefore

additional rooms at the Premises. Both the 2020 PAR Order and the Challenged Order found that

the evidence presented by petitioner was insufficient to establish that the apartments have been

altered, and nothing in the record before the Court indicates that the DHCR' s conclusions are

"without sound basis in reason and in disregard of ... the facts" (see Matter of Century

Operating Corp. v Popolizio, 60 NY2d 483 , 488 [1983], citing Matter of Pell, supra at 23 I).

Accordingly, this Court may not disturb the agency's assessment of the evidence before it (see

Matter ofAnsonia Residents Assn. v New York State Div. ofHous. & Community Renewal, 75

NY2d 206, 213 [ 1989)).

154859/2023 10 WEST 65™ STREET TENANTS ASSOCIATION v NEW YORK STA TE DIVISION OF Page 4 of 6 HOUSING AND COMMMUNITY RENEWAL et al Motion No. 001

[* 4] 4 of 6

INDEX NO. 154859/2023 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 01/02/2024

Second, petitioner argues that Owner should be precluded from seeking an MCI rent

increase based on the intercom installation by the prior Modification Order. 9 NYCRR 2522.4(f)

provides that an owner may apply to modify or substitute required services at no change to legal

rent on the grounds that such modification is consented to, is required for the operation of the

building in accordance with the law, or is not inconsistent with the RSL or the New York City

Administrative Code. Pursuant to this provision, no such modification or substitution may take

place prior to receiving approval for such by DHCR (id.). However, nothing in the provision nor

in any authority provided by petitioner precludes an owner from subsequently seeking an MCI

rent increase for such modification or substitution so long as the work otherwise satisfies the

requirements for an MCI.

To the extent that petitioner contends that DHCR erroneously found that the installation

of the security and intercom systems meet MCI requirements, the Court again defers to the

credibility and factual determinations made by DHCR as set fo11h in the Challenged Order, as

nothing in the record before the Court demonstrates that the conclusions therein had no rational

basis in fact or law, particularly where the security and intercom systems concededly monitored

all entrances and exits to the Premises and therefore were to be utilized by all residents.

Petitioner' s final argument that the MCI rent increases should be precluded based upon

allegedly false statements made in DOB filings in unavailing, as petitioner' s recourse regarding

such allegations lies with that agency. This Court cannot find that DHCR's determination that it

lacked jurisdiction to make findings on the propriety of filings made with another agency was

arbitrary and capricious or lacked rational basis.

154859/2023 10 WEST 65TH STREET TENANTS ASSOCIATION v NEW YORK STATE DIVISION OF Page 5 of 6 HOUSING AND COMMMUNITY RENEWAL et al Motion No. 001

[* 5] 5 of 6

INDEX NO. 154859/2023 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 01/02/2024

Conclusion

Based on the foregoing, the Court finds that petitioner has not met its burden to show that

the Challenged Order was arbitrary and capricious nor that it lacked a rational basis in fact or

law. Accordingly, it is hereby:

ORDERED and ADJUDGED that the petition is denied and this proceeding is

dismissed; and it is further

ORDERED that respondents shall serve a copy of this order upon petitioner and upon

the Clerk of the General Clerk's Office with notice of entry within twenty days thereof; and it is

further

ORDERED that such service upon the Clerk shall be made in accordance with the

procedures set forth in the Protocol on Courthouse and county Clerk Procedures for

Electronically Filed Cases (accessible at the "E-Filing" page on the court' s website at the address

www.nycourts.gov/supctmanh); and it is further

ORDERED that any requested relief not expressly addressed herein has been considered

and is denied.

This constitutes the decision and order of the Court.

01/02/2024 DATE SHAH

~ CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION

GRANTED 0 DENIED GRANTED IN PART □ OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER

CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE

154859/2023 10 WEST 65TH STREET TENANTS ASSOCIATION v NEW YORK STATE DIVISION OF Page 6 of 6 HOUSING AND COMMMUNITY RENEWAL et al Motion No. 001

[* 6] 6 of 6