NEWS AND ISSUES


February 14, 2008

Deborah VanAmerongen, Commissioner
New York State Division of Housing and Community Renewal (DHCR)
38-40 State Street
Hampton Plaza
Albany, NY 12207

Dear Commissioner VanAmerongen:

As the State Senator representing New York's 29th Senate District, I have been working with the tenants of One Bank Street, whose owner accepts New York City J-51 tax abatements, regarding their right to rent stabilization protections as per Sec. 26-504 (c) of the New York State Rent Stabilization Law. As I mentioned when we spoke on the phone, the building owner is currently not recognizing their rights under rent stabilization and many tenants are facing imminent eviction. Further, while these One Bank Street tenants are in immediate danger of losing their homes, the scope of the J-51 tax abatement program suggests that thousands of tenants throughout New York City could potentially find themselves in a similar situation.

As you know, I and New York City Council Speaker Christine Quinn's office arranged a meeting to discuss the matter with representatives of your agency, which is responsible for rent regulated housing and its inherent rights, and the New York City Department of Housing Preservation and Development (HPD), which is responsible for administering the J-51 tax abatement Joining me at the January 18, 2008 meeting were several tenants of One Bank Street and their counsel, representatives from HPD and DHCR, including Deputy Commissioner for Rent Administration Leslie Torres, and representatives of the offices of Council Speaker Quinn, Manhattan Borough President Scott Stringer, Congress Member Jerrold Nadler and New York State Assembly Member Deborah Glick.

The purpose of the meeting was to outline the tenants' rights under the law and how to assert these rights legally so as to avoid further illegal evictions, rent increases, and other actions. The tenants and their counsel argued that the law clearly states that units in buildings that accept J-51 tax abatements are subject to rent stabilization, and therefore the tenants at One Bank Street have the right to renew their leases. The tenants and their counsel requested that DHCR and HPD either intervene directly with their landlord on their behalf, or, if that were not possible, act in some way to postpone their eviction proceedings pending the resolution of two conflicting court rulings regarding the law in question, Roberts Vs. Tishman Speyer, which is under appeal, and Diaz Vs. Metro Team Realty, which is due to be reargued.

As DHCR and HPD explained both at the meeting and afterwards in written determinations, unfortunately, due to these conflicting rulings, the law regarding the stabilization of units in buildings receiving tax abatements like those afforded under the J-51 Program is subject to interpretation. In a February 8, 2008 letter to One Bank Street tenants, Greg Fewer, Director of the Policy Unit at DHCR, cited these conflicting, ongoing cases as evidence of the law's ambiguity and as the reason for the Department's inability to respond favorably to the tenants' request. Further, he noted that Judge Richard Lowe's decision in Roberts Vs. Tishman Speyer, which found that participation in the J-51 program does not cause stabilization in most cases, is actually in agreement with DHCR policy.

In fact, in his decision, Judge Lowe cited an Opinion Letter that DHCR drafted in 1996 which interpreted the law to mean that deregulation is only prohibited from occurring in those buildings where the acceptance of tax abatements is the "sole reason" for the building's stabilized status. His decision read that there is no protection from deregulation in those buildings receiving J-51 tax abatements which were previously subject to rent stabilization. Further, he noted that in December of 2000, DHCR changed the Rent Stabilization Code to read that deregulation is only prohibited in buildings where stabilization occurred "solely by virtue of" the acceptance of tax abatements. Therefore, Judge Lowe was able to base his decision not only on a law that he found ambiguous, but also on independent interpretations of that law made by DHCR and subsequent regulatory changes promulgated by DHCR.

That DHCR, in its reply to the One Bank Street tenants, maintained its interpretation of the law is extremely troubling. This not only sentences the tenants of One Bank Street to likely eviction, but it also has negative reverberations for tenants around New York City because most multiple dwelling buildings in New York City have been subject to rent stabilization at one point or another, including all those built before 1974 and therefore stabilized under the Emergency Tenant Protection Act.

According to a list available for download from the New York City Department of Finance website, 40,517 New York City buildings are currently receiving J-51 tax abatements. This does not include those buildings receiving 421-a tax abatements, which are also affected by this decision. Even if up to half of these buildings were built after 1974, are otherwise subject to rent stabilization, or for some other reason are not impacted by DHCR's policy decision and Judge Lowe's ruling, those determinations still likely affect at least tens of thousands of tenants across New York City.

Thus I urge DHCR to revisit both its decision with regards to aiding the tenants at One Bank Street, as well as its policy concerning which buildings receiving J-51 tax abatements are subject to rent stabilization. I believe it is clear that the legislative intent of the law was to subject all buildings receiving tax abatements under the J-51 and 421-a programs to rent stabilization, regardless of prior stabilization status. The interpretation that Judge Lowe and the DHCR have made of this law renders it almost meaningless, therefore it is highly questionable that the objective of the law is being realized. The financial benefits of the J-51 tax abatement program can be enormous, so it is by no means unreasonable to expect building owners in return to afford tenants the rights of rent stabilization, including the right to renewal leases and an expectation of a reasonable increase in rent.

In order to correct the apparent confusion surrounding the law, I will be introducing legislation to clarify what I believe was its original intent. However, this does not preclude DHCR from reexamining its policy with regards to this issue. I believe it is incumbent upon DHCR to do so given the number of tenants throughout the city that are affected by its policy.

As I have said before, I greatly appreciate DHCR's commitment to openness and adherence to the law under this administration. I understand that you are quite busy addressing the many pressing housing needs across New York State, and I thank you for your work, but I also urge you to swiftly reexamine your agency's involvement with this serious issue.

I appreciate your time and attention to this pressing matter.

Sincerely,


Thomas K. Duane

New York State Senate
29th District


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