The following papers, numbered 1-4 were considered on this Article 78:

PAPERSNUMBERED

Notice of Motion/Order to Show Cause, — Affidavits — Exhibits1, 2

Answering Affidavits — Exhibits ________________________________3

Replying Affidavits4

Cross-Motion:[ ] Yes[ X ] No

[*2]Upon the foregoing papers, it is ordered that this motion is decided as indicated below.

PetitionerCheryl Thomas, a mother and primary caretaker of her minor son, seeks an order pursuant to Article 78 of the CPLR vacating the respondent New York City Housing Authority's (NYCHA) determination, issued March 22, 2011, upholding the termination of petitioner's Section 8 subsidy, and remanding the proceeding for imposition of a lesser penalty. Petitioner asserts that the decision was arbitrary and capricious, an abuse of discretion as to the measure of the penalty imposed, contrary to NYCHA's own policies and in violation of lawful procedure.

NYCHA, in opposition, states that the agency's order was rationally based on the administrative record and supported by substantial evidence. Further, NYCHA asserts that it acted lawfully and in accordance with public policy concerns in terminating petitioner's Section 8 subsidy. For the reasons stated below, the petition is granted as provided below.

Petitioner currently resides in the same NYCHA apartment (Subject Premises) for over 15 years ^[FN1], with her minor son. Prior to April 2010, petitioner's primary source of income was Social Security Disability (SSD), which she received because of a psychological disorder, although she held a part-time job with "Goodwill Industries". Currently, she is employed as a clerical associate in the New York City Human Resources Administration since April 2010.

Petitioner receives Section 8 subsidy pursuant to the United States Housing Act of 1937 (Act). Section 8 of the Act authorizes the Secretary of Housing and Urban Development (HUD) "to enter into annual contributions contracts with public housing agencies pursuant to which such agencies may enter into contracts to make assistance payments to owners of existing dwelling units in accordance with this Section." 42 U.S.C. § 1437f(b)(1).

NYCHA is the owner of the Subject Premises and one of the public housing agencies (PHA) charged with the duty and responsibility of administering the Section 8 subsidy pursuant to the Act. NYCHA administers petitioner's Section 8 subsidy. The housing accommodation involved in this Article 78 proceeding, at all relevant times, has been subject to the Act. NYCHA issued an administrative agency decision to terminate petitioner's Section 8 subsidy, which is the subject of this Article 78.

In 2008, NYCHA assessed an overpayment against petitioner based on a failure to report all household income. Petitioner signed a stipulation (Payment Agreement), dated July 17, 2008, to repay the overpayment at a rate of $75 per month until the overpayment amount was repaid. For a number of months, petitioner was able to keep up with the payments. At some point, Petitioner ceased making payments and was subsequently notified by NYCHA that her Section 8 subsidy would be terminated. Petitioner timely requested a fair hearing, which was conducted before hearing officer Joan Pannell of NYCHA. At the hearing, NYCHA alleged that petitioner failed to comply with the terms of the Payment Agreement, while Petitioner testified that she fell behind on the stipulated payments as a result of her bi-polar mental impairment, which was uncontroverted. The hearing officer rendered a decision on March 22, 2011 (Decision), which [*3]determined that petitioner "never communicated to NYCHA that her disability required an accommodation with respect to her payment on the stipulation" and sustained the termination of petitioner's Section 8 subsidy. Decision, p. 3.

The Appellate Division, First Department, has stated that "[t]he forfeiture of public housing accommodations is a drastic penalty because, for many of its residents, it constitutes a tenancy of last resort". In re Perez v Rhea, 87 AD3d 476, 479 (1st Dep't 2011). To that effect, it is consistently held that "[t]ermination of petitioner's tenancy, under the circumstances was so disproportionate to the offense, underpayment of rent, in the light of all the circumstances, as to be shocking to one's sense of fairness". In re Wise v Morales, 85 AD3d 571, 572 (1st Dep't 2011) (internal quotations omitted). See also, Matter of Vazquez v New York City Housing Authority, 57 AD3d 360, 361 (1st Dep't 2008).

Here, NYCHA argues that the Repayment Agreement states that "[i]n the event that any sum agreed to be paid by Cheryl Thomas...shall not be paid within five days from the date the same becomes due hereunder, the entire sum shall immediately become due and proceedings to terminate their subsidy may be commenced and/or a money judgment shall be sought in the Civil Court." Repayment Agreement, ¶ 3 (emphasis omitted). NYCHA further argues that HUD provides for specific grounds for termination of assistance under the Section 8 program, which include "[i]f the family breaches an agreement with the PHA to pay amounts owed to a PHA". 24 C.F.R. § 982.552(c)(vii). NYCHA contends that the procedures for termination set forth in Williams, et al, v New York City Housing Authority, Case No. 81-CV-1801, October 17, 1984 (SDNY) (Ward, J.), were followed and termination was rationally based.

Petitioner admits that she fell behind in her payments pursuant to the Payment Agreement. However, petitioner argues that the sole reason for her failure to abide by the Payment Agreement was her bi-polar mental impairment. Petitioner further argues that, prior to her subsidy being terminated she contacted NYCHA, spoke with a Section 8 Housing Assistant, and was advised not to send in any further payments unless she had the entire amount of missed payments. Additionally, Petitioner alleges that the hearing officer failed to take into account the mitigating circumstances. Petitioner contends that termination of her Section 8 subsidy will likely result in the loss of her apartment.

The record is replete with instances in which petitioner states that her mental impairment impeded her from making the requisite payments and that she had the sums to become current [*4]under the Payment Agreement:

Q: Now, did that mental impairment interfere with your ability to make the installment payments under the Stipulation?

A: Yes, it did.

Q: How did they interfere with your ability to make these payments?

A: I was — most of the time I just couldn't get out of bed and then I wasn't getting enough money. I didn't have enough income coming in to effectively make that payment and eat at the same time and take care of my son.

[Transcript, p. 22 , l. 6-16].

Q: Do you recognize these money orders?

A: Yes.

Q: Now, when did you send these in to the Housing Authority?

A: I mailed the money orders in February.

Q: February of what year?

A: 2010.

Q: Now, to the best of your recollection, would these amounts have caught you up under the agreement?

A: Yes.

[Transcript, p. 24, l. 3-12].

Q: Now, do you have the sums right now to bring yourself current under the Stipulation?

A: Yes.

Q: And that sum totals $2,175.00. You have that in your possession?

A: Yes.

[Transcript, p. 27, l. 22-p. 28, l. 2].

It is uncontested that petitioner suffers from a disability and is the caretaker of her minor son whom resides with her in the Subject Premises. Petitioner submitted documentation indicating that the Social Security Administration recognized the problems petitioner had in managing her financial affairs and as a result appointed a representative payee to receive petitioner's SSD payments. Petitioner further testified that, prior to the issuance of the T3 notice of termination of her Section 8 subsidy, she had contacted a Section 8 Housing Assistant, Ms. Irina Kliger, sometime in December 2008 to explain why she would not be able to keep up with the stipulation payments. Petitioner offered uncontroverted testimony at her fair hearing that Ms. Kliger advised petitioner not to send in any further stipulation payments unless she had the entire amount of missed payments that had accrued. In February 2010 petitioner remitted the sum of $1,050.00 representing all outstanding stipulated payments. Said payment was returned to petitioner with a letter indicating that the payment was being returned because her file had been forwarded to the New York City Housing Authority Collection attorney.

It is further uncontested that petitioner has the available funds to bring herself current under the Payment Agreement. The procedures relied on by NYCHA permit, but do not require termination of petitioner's Section 8 subsidy. "[E]ven if one classifies petitioner's offense as an intentional misrepresentation, evicting a tenant and her family may nonetheless constitute an [*5]unjustifiable penalty in light of the mitigating circumstances." In re Perez v Rhea, 87 AD3d 476, 479 (1st Dep't 2011) (Appellate Division held that Perez, a single mother of three children, would likely become homeless, and that the termination of her NYCHA tenancy was shocking to one's sense of fairness, thereby vacating the penalty of termination, even though Perez had consistently underreported her income and there was no claimed mental impairment as to her). Similarly, petitioner and her minor son will likely become homeless if her Section 8 subsidy is terminated. Considering the circumstances, petitioner, a long-time tenant with a mental impairment, should be provided with a penalty more proportionate to the offense, particularly given that it was undisputed that petitioner has a mental impairment which affects her financial capabilities. As in Perez, such termination "would have severe consequences not only for petitioner but for the [child] she supports". Id. at 480. Similarly, "the penalty of termination of petitioner's housing subsidy...[is] shockingly disproportionate to the offense [of failure to report income]. ...Petitioner has...no record of any prior offenses, and the record suggests that termination of the subsidy will likely lead to homelessness for petitioner and her [minor] son." Matter of Gray v Donovan, 58 AD3d 488, 488 (1st Dep't 2009) (internal citations omitted). See also, Matter of Davis v NYC Dep't. of Housing Preservation and Development, 58 AD3d 418, 419 (1st Dep't 2009), Matter of Williams v Donovan, 60 AD3d 594, 595 (1st Dep't 2009). As the decision to terminate petitioner's Section 8 subsidy was disproportionate to the offense and shocking to one's sense of fairness, the petition is granted to the extent that the Decision is vacated and remanded to the agency for imposition of a lesser penalty.

Accordingly, it is

ORDERED that the petition is granted to the extent that the hearing decision, dated May 22, 2011, terminating petitioner's Section 8 subsidy, is vacated; and it is further

ORDERED that this application is remanded to the New York City Housing Authority for imposition of a lesser penalty in accordance with this decision; and it is further

ORDERED that within 30 days of entry of this order petitioner shall serve a copy upon respondent New York City Housing Authority with notice of entry.

Dated:

DORIS LING-COHAN, J.S.C.

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