langdale

MEMORANDUM

SUPREME COURT : QUEENS COUNTY
CIVIL TERM IAS PART 3

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X BY: Justice John A. Milano

In the Matter of the Application of                             :
LANGDALE OWNERS CORP.,                            :                             Index No. 3779/98
                                                                                :
                           Petitioner,                                      :                            Motion Date: January 11, 2000
                                                                                :
For a Judgment Pursuant to                                       :                             Motion Cal. No.: 3
Article 78 of the Civil Practice                                   :
Laws and Rules                                                        :
                                                                               :
                - against -                                                 :
                                                                               :

NEW YORK STATE DIVISION OF HOUSING :
AND COMMUNITY RENEWAL, :
:
Respondent. :

X
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In this Article 78 proceeding, petitioner Langdale Owners Corp. seeks a judgment annulling the decision and order of respondent New York State Division of Housing and Community Renewal (hereinafter "DHCR") dated December 22, 1997, which upheld an order of the Rent Administrator, denying the owner's application for permission to demolish all existing garages for the rent-stabilized tenants and replace them with open-air parking spaces.

On February 16, 1996, Langdale Owners Corp., the owner of a housing complex known as Langdale Gardens, New Hyde Park, New York, filed an application for permission to substitute individual parking garage spaces to approximately 90 rent-stabilized tenants with individual parking spaces in an open parking lot. The owner asserted that the condition of the seven detached parking garage buildings which housed approximately 100 parking stalls presented a hazardous condition, requiring demolition. The owner also asserted that the cost of the replacement of the garages would be prohibitive. The owner submitted a letter from an engineer whom it had hired which recommended that the garages be demolished and be replaced with asphalt parking spaces. A number of tenants filed answers in April 1996, objecting to the owner's application. The tenants referred to a prior engineer's report which recommended the repair or replacement of the garages rather than demolition. The tenants also cited a portion of the Fifteenth Amendment to the Cooperative Offering Plan for Langdale Gardens, dated October 27, 1994, which stated that "110 garages at the property were damaged as a result of winter storms and other damage. The Apartment Corporation has received insurance proceeds of $111,000 and has received preliminary estimates indicating that the insurance proceeds will be sufficient to complete the repairs." Paragraph 10 of the Sixteenth Amendment to the Cooperative Offering Plan, dated May 16, 1995, referred to an architect's report dated March 20, 1995 and amended May 5, 1995, which set forth what repairs were required for the garage structures.

On July 24, 1996, the owner sent a letter to the DHCR stating that the Fire Department had inspected the premises, and threatened to place violations on the garage structures. On July 25, 1996 and November 12, 1996, the DHCR sent notices to the owner requesting evidence of the engineering report regarding the rehabilitation of the garages and their condition; the Fire Department report or any document regarding possible violations; plans for security of an open garage; a diagram of the existing garage and a proposal/diagram of the new garage; and the total number of spaces, including spaces for rent-stabilized tenants. The owner, in a response dated November 15, 1996, submitted an engineering report based on a September 24, 1996 inspection, which recommended the complete removal and demolition of the garages due to their dilapidated condition, and stated that there were no Fire Department reports or documents; that there was an open parking lot in existence, and no particular security precautions were necessary, although a surrounding fence would be considered if the DHCR required it. The owner also submitted a diagram of the typical garage, as it existed, and photographs of the garages. There was no diagram of the parking lot. The owner stated there were 121 garages, and 90 were rented to rent-stabilized tenants.

On December 6, 1996, the Rent Administrator issued a decision and order denying the owner's application. The Rent Administrator found that "[r]eplacing 7 detached garage buildings which house approximately 100 individual garage stalls designed for one automobile each with an open parking lot is a decrease in services. The evidence submitted to the file does not substantiate that the condition of the current garages are beyond repair." The Rent Administrator also noted that the offering plan indicated that the owner had received insurance proceeds of $111,000 which should be sufficient to complete repairs to the garage structures.

The owner filed a petition for administrative review ("PAR") on January 10, 1997, asserting that the evidence submitted, especially the architect's report and photographs, established that the garages were substantially damaged and deteriorated; that they constituted an imminent hazard and required demolition, and that the cost of replacement would be prohibitive. It was asserted that the amount received from the insurance proceeds was less than the replacement cost of one garage. The owner, thus, asserted that the Rent Administrator's finding that the replacement of the garages with an open parking lot was a decrease in service, was arbitrary and capricious. Numerous tenants filed answers to the PAR, urging that the Rent Administrator's order be upheld. The owner filed a supplement to the PAR on September 9, 1997, asserting that the garages were never included in the monthly rent; that the tenants would not pay for the open parking lot; that this should not have been deemed a reduction in essential services; and that the owner should be entitled to demolish the dangerous garages without reducing the rent to the tenants. On September 29, 1997, the owner submitted a follow-up letter from the engineer who inspected the garages in September 1996, and confirmed his prior findings. The owner also asserted that the amendment to the offering plan regarding the insurance proceeds, was filed by the sponsor's successor and not the cooperative corporation. On October 8, 1997, the owner submitted copies of peremptory vacate orders issued by the Queens Borough Commissioner, ordering that the garages remain vacant, as the garages were in imminent danger of collapse, and there was an imminent danger to the safety and life of the occupants.

On December 22, 1997, the Deputy Commissioner issued a decision and order denying the owner's PAR. The Deputy Commissioner found that the owner had "not presented information sufficient to establish that rehabilitation of the garages or replacement of the garage structures, if demolition is necessary, is cost prohibitive or that the proposed parking lot is an adequate substitute for the service currently provided. The evidence before the Administrator was insufficient and conflicting and, thus, the Administrator properly determined that the owner had not sustained the burden of proving eligibility for the relief requested. The Commissioner notes, however, that the existence of any hazardous condition warrants all necessary safety precautions and repairs, or if required, the demolition of any hazardous garages. If latter course is undertaken, temporary parking areas should be instituted and the garages restored as soon as possible."

Petitioner, thereafter, timely commenced the within Article 78 proceeding. The parties stipulated to a long series of adjournments until the matter was fully submitted to the court. In October 1998, the subject garages were demolished. This court, in an order dated December 23, 1999, granted the Langdale Tenants' Association's motion to intervene.

Petitioner now seeks a judgment vacating the decision and order of December 22, 1997, on the grounds that the DHCR failed to carefully review the allegations in the PAR, and, therefore, its determination was arbitrary and capricious, an abuse of discretion and a denial of due process.

Respondent DHCR, in opposition, asserts that its decision and order of December 22, 1997, was neither arbitrary nor capricious, nor erroneous or contrary to law, and, therefore, should be affirmed.

Langdale Tenants' Association asserts that the DHCR's decision and order should be affirmed. It is asserted that the DHCR's order had a rational basis, as the owner neglected to repair the garage buildings, although it had the funds to do so, and that the demolition of the garages resulted in a reduction in services.

It is well settled that the court's power to review an administrative action is limited to whether the determination was warranted in the record, has a reasonable basis in law and is neither arbitrary nor capricious. (Colton v Berman, 21 NY2d 322; Matter of 36-08 Queens Realty v New York State Div. of Hous. and Community Renewal, 222 AD2d 440.)

It is well settled that "it is for the [DHCR] to determine what is a required service and whether that service has been maintained." (Matter of Sherman v Commissioner, New York State Div. of Hous. and Community Renewal, 210 AD2d 487, quoting Matter of Rubin v Eimicke, 150 AD2d 697, 698; see also, Matter of Korein v Conciliation and Appeals Bd. of the City of New York, 57 NY2d 938; Fresh Meadows Assoc. v New York City Conciliation and Appeals Bd., 42 NY2d 925, affg 55 AD2d 559, affg 82 Misc 2d 1003; Matter of Oriental Blvd. Co. v New York City Conciliation and Appeals Bd., 92 AD2d 770, affd 60 NY2d 633.) Furthermore, section 2520.6(r)(3) of the Rent Stabilization Code defines required services as including ancillary services, among which garage facilities are expressly enumerated.

In Netherland Operating Corp. v Eimicke (71 NY2d 802) the Court of Appeals held that a parking space is a required service under the Rent Stabilization Law, and subject to the limitations of the Code in circumstances where there is common ownership of the rent stabilized building and a parking garage. (See also, Lyndonville Properties v NYS Div. of Hous. and Community Renewal, NYLJ, Supreme Court [February 23, 2000, Figueroa, J.].)

The provisions of 9 NYCRR 2522.4(d) and (e) permit an owner to file an application to decrease required services, provided that such a decrease would not be inconsistent with the provisions of the Rent Stabilization Law and Code. It is undisputed that the garages in question were required services. The owner, therefore, was required to establish the necessity of decreasing the garage services. The court finds the Commissioner, upon a review of the evidence presented by the owner and the tenants, properly found that the owner had failed to establish that the garage could not be rehabilitated or replaced if demolished, that it was cost prohibitive to do so and that the proposed parking lot would be an adequate substitute for the garages. Petitioner's claim that the Commissioner failed to carefully consider the evidence presented at the administrative level is without merit. The evidence presented to the DHCR was clearly contradictory; the owner failed to establish the actual cost of repair or replacement of the garages and only supplied an unsubstantiated estimate; and failed to establish that an open parking lot would provide the tenants with an adequate level of services. Rather, the owner rejected any recommendations that the garages be repaired and insisted that it be permitted to demolish the garages and replace them with a parking lot.

Petitioner was given ample opportunity to present its evidence to the agency, and, therefore, its due process claims are without merit. Contrary to the owner's claims, the amount of opposition presented by the tenants at the administrative level was not insignificant and did not amount to their consent to the owner's proposals.

The court further finds that as the Commissioner made a final determination on the PAR, the Rent Administrator's order is not subject to judicial review. Finally, the fact that the garages were, in fact, demolished, pursuant to orders of other agencies, does not relieve petitioner of his obligations under the Rent Stabilization Law and Code. The court, therefore, finds that the Commissioner's order was neither arbitrary nor capricious, nor an abuse of discretion, and that it was supported by the evidence in the record and the law, and, therefore, is affirmed.

Accordingly, petitioner's request to vacate the decision and order of December 22, 1997 is denied, and the petition is dismissed.

Settle judgment.

Dated: April 5, 2000

___________________________
Justice John A. Milano