Petitioner Lite View, LLC (the "LLC") brings this proceeding, pursuant to Article 78 of the C.P.L.R., as owner of a residential building located at 218 East 84th Street in Manhattan (the "Building"). The LLC seeks to overturn the April 22, 2010 order and opinion of the Deputy Commissioner of the State of New York Division of Housing and Community Renewal ("DHCR"). That order and opinion granted a petition for administrative review ("PAR") brought by the Building's only tenant at the time, John Burke, and revoked a prior DHCR order granting the LLC's request for permission to install an elevator. [*2]

In May 2009, the LLC filed an "Owner's Application for Modification of Services" (the "Application"), seeking to install an elevator in the Building. The Application set forth that in order to install the elevator, space from five (5) apartments in a vertical line needed to be transferred to the proposed elevator shaft. Four of the five subject units were vacant and deregulated at the time of the Application; the remaining unit is apartment 1D, which is rent-stabilized and occupied by Mr. Burke (the "Apartment"). In order to compensate for the loss of space transferred to the elevator shaft, the LLC proposed reconfiguring the layout of the Apartment and putting on an addition by using space from the rear yard of the premises. The LLC calculated that by adding on the rear yard space, the interior square footage would not change after the renovation, and the Apartment would lose access to only sixty-six (66) square feet of rear yard space. As compensation for the loss of rear yard space, the LLC proposed giving Mr. Burke a ten percent (10%) reduction in his rent. As "added compensation," the LLC proposed that the Apartment would receive new walls, ceilings, and flooring; a new kitchen with new appliances and fixtures; a new bathroom with new fixtures; and new windows. This renovation would also allow the LLC to make a necessary repair to the floor joist under the bathroom floor of the Apartment, which had been the subject of a Department of Buildings violation three months earlier and had not yet been remedied.

Mr. Burke responded to the Application with his objections to the proposed changes to the Apartment. As factors against the proposed changes, Mr. Burke cited, amongst other issues, the long litigious history between himself and the owners of the Building; his age, poor health condition, and the resulting burden of having to relocate during the renovation; the potential loss of sixty-three (63) square feet of his living space; the failure of the Building's owners to make necessary repairs to the Apartment over the years; the Building's code violations that had gone unrepaired; a pattern of harassment from the owners of the Building because Mr. Burke pays less than market rent; and the LLC's failure to explain why the elevator could not be constructed elsewhere. The LLC responded to Mr. Burke's objections, denying a bad history between the LLC and Mr. Burke (as the LLC had only bought the Building recently), generally disputing the factors cited by Mr. Burke, and stating that Mr. Burke would not lose living space, since the kitchen area would remain the same and space would be added to the rear of the Apartment. The LLC also submitted plans and opinions from its architect, David Turner, who stated that the Apartment would have no loss of square footage with the changes. Mr. Turner further stated that the elevator needs to be built in the "D" line of apartments in order to minimize the space lost by the elevator shaft, to comply with handicap access laws, and so that, if the LLC decides to buy the building next door, the elevator will be able to serve both buildings.

A Rent Administrator from DHCR reviewed the Application and the parties' various submissions and concluded that the LLC should be permitted to install the elevator and reconfigure Mr. Burke's apartment, as long as the LLC fulfilled its promises to relocate Mr. Burke to a comparable apartment during the construction period; store Mr. Burke's belongings during said period; reinstall Mr. Burke in the subject apartment at the end of said period; and reduce Mr. Burke's rent by ten percent (10%) per month (all at the LLC's expense). The Rent Administrator's Order is dated September 2, 2009. [*3]

On or about November 5, 2009, Mr. Burke filed a PAR, seeking to challenge and reverse the Rent Administrator's Order. In the PAR, Mr. Burke set forth that he has lived in the Apartment since 1978, that he is on a fixed income, that he is a severely disabled senior citizen who requires the assistance of a home attendant due to his poor health, and that he has been on disability since 1995. He maintained that if he had to move from his home, even temporarily, it would cause him an undue hardship and would be extremely burdensome, due to his advanced age and infirmities. He submitted a letter from a physician setting forth that he suffers from coronary artery disease, anxiety, and depression, and that his increasing stress has caused him to have chest pains, fatigue, generalized weakness, and sleep disturbances. The physician's letter states that "Mr. Burke attributes his recent symptoms to the stressor related to his living conditions at his apartment, including noise and air pollution from the extensive construction being done" in the Building. Mr. Burke also argued that the reconfiguration of space in the Apartment would not adequately compensate him for the loss. First, he would lose back yard space in his exclusive control. Second, the alterations would completely change the shape and character of the Apartment by reducing his kitchen by sixty-three (63) square feet. Mr. Burke further maintained that the building was empty except for him, and so argued that the landlord's claim that the elevator would benefit "all tenants" was disingenuous and made in bad faith.^[FN1]

In opposition to the PAR, the LLC argued that Mr. Burke had failed to present any basis for modifying or revoking the Rent Administrator's Order and generally disputed Mr. Burke's assertions in the PAR. In particular, the LLC contended that Mr. Burke made no showing that he is in ill health. The physician's statement simply confirmed that the existing conditions of the Apartment were causing Mr. Burke stress, but said nothing about whether Mr. Burke could handle being temporarily relocated while the proposed work occurred, and said nothing about how Mr. Burke would "certainly benefit" from a newly renovated dwelling. The LLC contended that the rear yard space it proposed to add to the Apartment was never part of the Apartment and that Mr. Burke never had exclusive access to it. So, the LLC contended, it was the ability to use the yard, and not the size of the yard, that constituted the service that the LLC sought permission to modify. The LLC contended that Mr. Burke was not losing space, so the nature and character of the Apartment would not be changed, and that the size of the proposed kitchen was unchanged from the current kitchen in the Apartment.

Mr. Burke submitted a reply to the LLC's opposition to the PAR. In particular, Mr. Burke complained that the LLC had failed to provide proof that it had an option to purchase the building next door. He further asserted that the construction already taking place in the Building had negatively impacted his health and safety and the enjoyment of his dwelling. Also, the LLC had refused to provide him with a key to his mailbox. Apparently, there was also intervening litigation between Mr. Burke and the LLC, including a non-payment proceeding instituted by the LLC and an HP proceeding to obtain repairs instituted by Mr. Burke. The LLC further disputed Mr. Burke's statements in a follow-up reply letter to DHCR. [*4]

By final order issued April 22, 2010 (the "Final Order"), the Deputy Commissioner of DHCR granted the PAR, revoked the Rent Administrator's Order, and denied the Application to install the elevator and reconfigure the Apartment. The Deputy Commissioner stated that she relied on Sections 2520.6(r)(1) (requirements for maintaining dwelling space) and 2522.4(e) (grounds for modification or substitution of required services and dwelling space) of the Rent Stabilization Code in arriving at her determination. See 9 N.Y.C.R.R. §§ 2520.6 and 2522.4. The Deputy Commissioner set forth that her review of the record showed that the LLC planned to take sixty-two (62) square feet of the existing 339.27 square feet of the Apartment, or eighteen percent (18%) of the dwelling space, located in the bath and kitchen area, and to transfer that space to an elevator shaft. The diagrams indicated that the kitchen size would be reduced from 9'5" by 8'7" to approximately 6'6" by 6'6". In return, the LLC proposed to renovate the Apartment with a new bathroom and kitchenette, extend the other end of the Apartment by taking space from the rear yard, and reduce the rent by ten percent (10%).

The Final Order noted that the Building does not legally require an elevator.^[FN2] The Deputy Commissioner indicated that in cases where the improvement is not legally required, the impact of the improvement on the tenant must be weighed. The Final Order set forth that the LLC's proposal would result in a "significant reconfiguration" of the Apartment, and the impact of such a change would "materially reduce the use and enjoyment of the [A]partment by [Mr. Burke] in contravention of the Rent Laws." The Deputy Commissioner likened this situation to the case of In re Greenberg v. Higgens, 167 AD2d 216 (1st Dep't 1990), in which the landlord sought to build an elevator shaft in a portion of a studio apartment by taking away the kitchenette area and part of the living room and substituting dwelling space with an extension of the apartment into part of another apartment. In Greenberg, the First Department found that altering the living space in this manner would have "completely altered the shape and character of the apartment." Id. at 217. The Deputy Commissioner found, "therefore, that the proposed construction of the elevator and alteration of the [A]partment is not consistent with the Rent Laws and that the Rent Administrator's [O]rder should be revoked."

In the petition, the LLC asserts that the Deputy Commissioner's findings that there would be a "significant reconfiguration" of the Apartment and that the impact of the changes would "materially reduce" Mr. Burke's use and enjoyment of the Apartment are factually incorrect and belied by the record. The LLC argues that the square footages of the current unit and the proposed unit are virtually the same, and the layout of the Apartment would be similar. When one looks into the Apartment from the front door, the bathroom is on the right, the foyer and kitchen area are straight ahead, and the living area is to the left in both designs. The only change, the LLC maintains, is that in the proposed design, a separate kitchen area is set off from the foyer by a dropped arch (whereas in the current layout, the kitchen area is along a 9'5" wall between the bathroom and the living area). The dropped arch will have no impact on Mr. Burke's use of the Apartment, the function of the Apartment, or the size of the Apartment. The LLC contends that the Deputy [*5]Commissioner erred when it found that the kitchen would be reduced from 9'5" by 8'7", or approximately eighty-one (81) square feet, to approximately 6'6" by 6'6", or approximately forty-two (42) square feet. The measurement of eighty-one (81) square feet takes into account both the kitchen and the foyer in the current layout, while the measurement of forty-two (42) square feet takes into account only the kitchen area of the proposed layout. The LLC argues that the combined space of the kitchen and the foyer areas of the proposed layout is 7' by 11'9, or approximately eighty-two (82) square feet. So, the LLC maintains, the combined square footage for the kitchen and foyer is the same in both designs. The LLC argues that the Deputy Commissioner's mistaken belief that the kitchen would be smaller was the sole basis for denying the Application. The LLC further argues that DHCR failed to consider the significant benefits that Mr. Burke would receive from a complete renovation of the Apartment.

The LLC also claims that it was never apprised of the problems with the size of the proposed kitchen area. The LLC believed that Mr. Burke's complaint was that the shape and character of the unit would be different, but that the proposed size of the kitchen was not a problem. The LLC would have liked the opportunity to present its interpretation of the design changes to the DHCR before the Deputy Commissioner rendered her decision, but claims it was deprived of this opportunity because DHCR never advised it of its problem with the kitchen size. The LLC contends that DHCR's failure to allow the LLC to be heard on the issue of the kitchen size makes the Final Decision arbitrary and capricious. Accordingly, the LLC asks this court to reverse, annul, and set aside the Final Order, and reinstate the Rent Administrator's Order.

In opposition, DHCR argues that the Deputy Commissioner's determination in the Final Order was not arbitrary, capricious, erroneous, or contrary to the law, was in accordance with the Rent Stabilization Law and Code, and is entitled to judicial affirmance. Determinations to grant or deny an application for permission to decrease dwelling space or essential services are made on a case-by-case basis, taking into consideration all relevant factors, including the amount of space the owner wants to remove and the effect of the loss of the dwelling space on the tenant's use of the apartment. DHCR argues that the Deputy Commissioner rationally determined that it would not be consistent with the rent laws to permit the LLC to "remove 18 percent of the area in an occupied rent regulated apartment in order to install an elevator shaft that, without dispute, is not required by law in the subject building — which never before had an elevator." DHCR maintains that the proposed changes would reduce the size of the Apartment from the current approximately 340 square feet to 277 square feet. The planned reduction in living space would completely alter the shape and character of the Apartment. The alterations—the significant and material reduction in the size of the Apartment, the reduction of the kitchen to essentially a six foot square, and the physical removal of the tenant and his possessions from the Apartment for an undetermined period of time—would severely disrupt the use and enjoyment of the Apartment by Mr. Burke, in contravention of the rent laws.

DHCR maintains that it is the LLC's burden to show that the proposed alterations to the Apartment would be consistent with the rent laws, which it failed to do. The proposed alterations do not comport with the rent laws in that the shape and character of the Apartment would be [*6]completely altered; removal of a substantial portion of a leasehold is "tantamount to eviction or non-renewal" of a tenant's lease; and the rear yard space is a required service, reduction or removal of which is inconsistent with the rent code. After the Deputy Commissioner rationally determined that the proposed alterations were not consistent with the rent laws, DHCR was required to deny the Application. Respondent argues that there is no merit to the LLC's claim that it was denied the opportunity to be heard in the administrative proceeding. DHCR points to the record as demonstrating that both the LLC and Mr. Burke provided submissions and supplemental submissions. The LLC's claim that DHCR never advised the LLC that there was an issue as to whether the Apartment was being "significantly reconfigured" is "patently absurd" in light of the Application to decrease the living space of the Apartment by eighteen percent (18%).

In reply, the LLC claims that DHCR failed to address the ultimate issues in its answer and opposition papers and that DHCR failed to refute the arguments made in the petition. The LLC points out that DHCR misrepresents that the size of the Apartment would be decreased by eighteen percent (18%), when the plans and diagrams of the proposed renovations show that the current space is 339.27 square feet, and the proposed space (with the added space to the rear of the Apartment and some from unit 1C next door) is 339.57 square feet, thus leaving the interior size of the Apartment virtually unchanged. Moreover, Mr. Burke would be compensated by a ten percent (10%) reduction in rent for his diminished use of the rear yard, and he would also have access to a public roof deck on the building.

In an Article 78 proceeding, the court's review of an administrative action is limited to a determination of whether that administrative decision was made in violation of lawful procedures, whether it is arbitrary or capricious, or whether it was affected by an error of law. In re Pell v. Board of Educ., 34 NY2d 222, 231 (1974). "The arbitrary or capricious test chiefly relates to whether a particular action should have been taken or is justified * * * and whether the administrative action is without foundation in fact.' Arbitrary action is without sound basis in reason and is generally taken without regard to the facts." Id. (internal citation omitted).

DHCR may grant an application to decrease space or services if such decrease is consistent with the Rent Stabilization Law and Code. 9 N.Y.C.R.R. § 2522.4(d). The Rent Stabilization Law and Code require that every landlord maintain the same dwelling space and essential services that were in existence on April 20, 1962, until the unit becomes vacant or an application to decrease the space or services is granted. See 9 N.Y.C.R.R. §§ 2201.2, 2202.21, and 2520.6(r). "DHCR is empowered by the Rent Stabilization Law . . . and the Rent Stabilization Code . . . to determine what constitutes a required service, and whether curtailment of such service is an evasion of stabilized rents." In re Car Barn Flats Residents' Ass'n v. New York State Div. of Housing & Comm. Renewal, 184 Misc 2d 826, 832 (Sup. Ct. NY Co. 2000). DHCR's "interpretation of its own regulations is entitled to deference if that interpretation is not irrational or unreasonable. Put another way, the courts will not disturb [DHCR's] determination unless it lacks any rational basis." In re IG Second Gen. Partners, L.P. v. New York State Div. of Housing & Comm. Renewal, 10 NY3d 474, 481 (2008) (internal quotations and citations omitted). [*7]

DHCR made several misstatements of fact in its arguments in support of upholding the Final Order. First, the Apartment would not be reduced in size from 340 to 277 square feet; rather, the interior square footage is virtually unchanged between the two floor plans. Second, DHCR's statement that the rear yard space is a required service, reduction or removal of which is inconsistent with the rent code, is a misstatement because the Deputy Commissioner never determined that the tenant had exclusive use of the rear yard. Third, there does appear to have been a miscalculation in determining the difference in kitchen sizes. DHCR calculated the kitchen in the current layout of the Apartment as 9'5" by 8'7", or approximately eighty-one (81) square feet. It is clear from the floor plans that the actual kitchen area is only along one wall in the current layout, and that the space contained within the eighty-one (81) square feet includes the entryway to the Apartment, space in front of the closet, and space in front of the bathroom (hereinafter collectively referred to as the "foyer"). The Deputy Commissioner's finding that kitchen in the proposed layout was only 6'6" by 6'6" failed to take into consideration the "foyer" in the proposed design, which appears from the diagram to be about 6'6" by 5'3". Together, the kitchen/foyer space in the proposed design is about seventy-six (76) square feet, or just five (5) square feet smaller than the current kitchen and foyer area. By itself, the kitchen area in the proposed design is arguably larger than the kitchen area in the current design, which occupies only one wall and appears to be about thirty-eight (38) square feet as opposed to the approximately forty-two (42) square feet of kitchen space in the proposed design.

Regardless, the court finds that the Deputy Commissioner's determination had at least some rational basis and must be upheld. Contrary to the LLC's argument, the court does not find that the Deputy Commissioner's belief that the kitchen would be smaller was the sole basis for denying the Application. The Final Order sets forth a number of factors that were considered in arriving at the determination, including the rent code and laws; the particularities of the current layout of the Apartment and the proposed layout of the Apartment; the LLC's proposal to renovate the entire Apartment, extend the back of the Apartment, and reduce Mr. Burke's rent; and the fact that the building has never had nor legally requires an elevator. In weighing the factors, the Deputy Commissioner determined that proposed changes would result in a significant reconfiguration of the Apartment in violation of the rent laws protecting dwelling space and services. DHCR's determination is based on its evaluation of the specific facts of this situation and its expertise in evaluating such facts, is supported by the record, and is therefore entitled to deference and shall not be disturbed. Accordingly, it is hereby

ADJUDGED that the petition is denied and the proceeding is dismissed.

Dated: January, 2011

JOAN B. LOBIS, J.S.C.