[*1]
Matter of De Suze v Linden Plaza Preserv.
2014 NY Slip Op 50298(U) [42 Misc 3d 1231(A)]
Decided on February 10, 2014
Supreme Court, Kings County
Schmidt, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on February 10, 2014
Supreme Court, Kings County


In the Matter of the Application of Mary De Suze (TENANT), LOUISE GRANT (TENANT), and PETRA MONTGOMERY (TENANT), Petitioners,

against

Linden Plaza Preservation and LINDEN PLAZA ASSOCIATES, Respondents.




3588/11

David I. Schmidt, J.

The following papers numbered 1 to 12 read herein:Papers Numbered

Notice of Motion/Order to Show Cause/

Petition/Cross Motion and

Affidavits (Affirmations) Annexed1-2, 3, 4-5, 6-7, 8-9

Opposing Affidavits (Affirmations)

Reply Affidavits (Affirmations)10

Affidavit (Affirmation)11

Other Papers Resp.'s Memos of Law12

Respondents Linden Plaza Preservation, L.P. (Preservation) and Linden Plaza Associates, L.P. (Associates), sued herein as, respectively, Linden Plaza Preservation and Linden Plaza Associates, (collectively, Linden) move (in motion sequence 16), pursuant [*2]to CPLR 3212, for summary judgment dismissing the amended verified petition of pro se petitioners, Mary De Suze (De Suze), Lousie Grant (Grant) and Petra Montgomery (Montgomery). De Suze, Grant and Montgomery (collectively, petitioners) have responded to the motion by jointly filing three cross motions, which seek, respectively, an order (1) excluding Linden's "Post Discovery Depositions and Evidence" (motion sequence 17), (2) denying Linden's seven defenses (motion sequence 18) and (3) denying Linden's summary judgment motion (motion sequence 19). Linden has treated these cross motions as opposition to its motion and served reply papers addressing all the cross motions.

Background Facts and Procedural History


(1)

The Linden Plaza housing complex overall includes four 17-story high-rise buildings,

one 18-story building and 32 town house units located at 671-765 Lincoln Avenue and 750-792 Eldert Lane in Brooklyn. The complex consists of 163 studio units, 584 one-bedroom units, 520 two-bedroom units and 260 three-bedroom units, with associated amenities including a parking garage, laundry facilities and some commercially designated space for retail establishments. Construction of Linden Plaza was completed in or around November, 1971 and occupancy then commenced.

Legal title to Linden Plaza has been in the name of Linden Plaza Housing Co., Inc., (Plaza Housing), a corporation organized and existing under Article II of the New York State Private Housing Finance Law (PHFL), commonly known as the "Mitchell- Lama Law" after its sponsors, Senator MacNeil Mitchell and Assemblyman Alfred Lama. The PHFL was enacted to encourage private development of low and middle-income affordable housing by offering state and municipal assistance to developers through long-term, low-interest, government mortgage loans and real-estate-tax exemptions (see PHFL § 11).

Respondent Associates had held, until April 9, 2008, "beneficial ownership"[FN1] of the housing complex. Associates then assigned their beneficial ownership to co-respondent Preservation.

(2)

Respondent Linden and non-party Plaza Housing, simultaneously with assignment of the beneficial interests, paid off the original mortgage issued in 1972, in the original amount of $51.4 million dollars, held by the New York City Housing Development Corporation (HDC). HDC, an agency created by the Legislature in 1971, finances affordable housing projects in New York, including projects built under the Mitchell-Lama Law. The payoff proceeds came from new notes, mortgages and a regulatory agreement executed by Preservation and Plaza Housing in favor of HDC for $91 million dollars. The surplus proceeds received by Preservation were utilized to make substantial capital improvements to the property with the pre-approval of the New York City Department of Housing, Preservation and Development (HPD). The property's significant deterioration over the 37 years since its original construction necessitated these repairs and capital improvements.

HPD possesses supervisory authority over all Mitchell- Lama housing complexes in New York City and derives such authority from three sources. First, New York City Charter §1802 (6) (d) delegates the power to enforce PHFL article 2 to HPD. Second, PHFL, article 1, § 2 (15) defines HPD as the "supervising agency" under PHFL for New York City. [*3]Finally, PHFL, article 2, § 13 subjects a limited profit housing corporation (LPHC) to the supervising agency's jurisdiction commencing from the LPHC's inception. The remainder of PHFL article 2 delegates powers to the LPHCs subject to the supervising agency's oversight.

Additionally, the United States Department of Housing and Urban Development (HUD) can act as another supervising agency if the LPHC receives a federal subsidy.[FN2] The National Housing Act (12 USC 1701, et seq.) authorizes one such common federal subsidy called the Section 236 mortgage interest reduction payment (IRP) (codified in 12 USC § 1715z-1). This subsidy, which Linden has continually received since its inception, reduced Linden's actual (not contractual) mortgage payments to HDC as HUD would pay part of the charged interest directly to HDC on Linden's behalf. Linden, in exchange for this subsidy, agreed to further rent restrictions benefitting the buildings' residents.[FN3] Linden, its investors and some of its residents utilize other subsidies, such as the Federal Low Income Housing Tax Credit Program (LIHTC) and the Federal Housing Choice Voucher Program (commonly known as the Section 8 program), but no need exists to discuss them since petitioners are neither entitled to nor participate in these programs.

(3)


Preservation sought, as Section 236 permits, to increase residents' rents to operate the project and to address the property's needed repairs and capital improvements.[FN4] Any such rent increase, however, required both HUD and HPD approval as Linden intended to transfer its Section 236 subsidy from the old mortgage to the new primary mortgage.[FN5] Linden complied with the Mitchell-Lama requirements and regulations in July 2007 and submitted [*4]a rent increase application for Preservation's benefit to HPD, with a copy to HUD, for their respective consideration. Tenants, as required by law, were notified of the rent increase request and were provided an opportunity to comment to both supervising agencies concerning Preservation's and Plaza Housing's rental increase request.

HPD approved the request on March 14, 2008 and issued a rent increase order designated as Commissioner's Order No. ML-537, effective June 1, 2008. This order approved a rental increase of $124.92 per month per room, with a maximum monthly increase cap of $150.00 per apartment per year, to be spread over three years. Linden, at the time, anticipated an April 1, 2008 closing date, which would have enabled a June 1, 2008 implementation of the rent increase pursuant to HUD's December 14, 2007 conditional approval letter (see n 3), which required that any rent increase could not be implemented within the first 60 days following the closing. However, once it appeared that closing would be delayed past April 1, 2008, thereby delaying the rent increase beyond the ordered June 1, 2008 date, Linden requested HPD to reissue this order with a later date. HPD granted this reissue request, with some changes, through a March 28, 2008 order of First Deputy Commissioner John Warren (the March 28, 2008 HPD Order). According to Linden, HPD recalculated or converted the $124.92 per room per month rent increase to obtain a new total monthly rent charge based upon the size and type of each Plaza Housing apartment. Copies of this order were distributed to all Plaza Housing residents and tenants on or about April 29, 2008 in compliance with 28 RCNY § 3-10 (e).[FN6]

(4)


The ordered rent increases took effect July 1, 2008. Each tenant was assessed the

full rental increase to the new "base rent"[FN7] on their statement, and a "concession" or credit for any monies due above the maximum-monthly-increase cap of $150.00 appeared on their statement. The concession entirely disappeared on the July 1, 2010 tenant statements as the full HPD-ordered rental increase for each apartment took effect.

Petitioners were all charged amounts exceeding the designated base rents for their respective apartments. De Suze and Grant paid the added charge, but not Montgomery, who was consequently evicted from the premises for non-payment of rent. Section 236 as mentioned earlier, permits imposing this "HUD excess charge" (i.e. all rental charges collected on a unit-by-unit basis in excess of the basic rental charges").[FN8] Here, the HUD excess charge that affected petitioner and some tenants upwardly adjusts the rent, according to the terms of the IRP, to the lesser of (1) either the declared fair market rent or (2) 30% of [*5]a tenant's monthly adjusted income[FN9] as disclosed by that tenant on an annual affidavit that HUD requires the tenants to file.[FN10] Filing of this annual, tenant-income affidavit, however, had been suspended for the 2008 and 2009 partial rent increases, but was resumed for the 2010 final rent increase. The HUD excess rent charge collection stands as Linden's obligation in exchange for the interest reduction payments made by HUD under the Section 236 program.[FN11]

(5)


De Suze and Grant commenced this action on February 15, 2011 by filing an Order to Show Cause with a Verified Petition pursuant to CPLR article 4. They requested an order directing respondents (then including HPD) to remove all HUD excess charges from their monthly rent effective July 1, 2010, and recalculate each respective petitioner's rental charges to the base rents approved in the March 28, 2008 HPD Order. Respondents separately cross-moved to dismiss the petition. Justice Leon D. Ruchelsman issued an August 8, 2011 Decision and Order denying Linden's cross motion and granting then respondent HPD's cross motion, which thus resulted in HPD's dismissal from this case. However, the court, in denying Linden's cross motion, specifically found that Linden did not comply with its obligation to provide the tenants notice of the December 14, 2007 HUD rent increase approval letter (see n 8) at least 60 days before the rent increase became effective. Essentially, this finding granted petitioners' order to show cause without so stating or providing for any of the requested relief.

De Suze and Grant sought to renew and reargue the portion of the August 8, 2011 order which dismissed HPD from the case, but Justice Ruchelsman denied their request in a December 6, 2011 Decision and Order. The parties subsequently appeared for a June 14, 2012 preliminary conference and a September 27, 2012 compliance conference.

Justice Ruchelsman subsequently issued a December 4, 2012 Decision and Order granting Montgomery the right to intervene in this action as an additional petitioner but limiting her claims to Linden's alleged notice deficiencies and any subsequent rental increases. Montgomery moved the court, several months later, to be restored to her tenancy [*6]after her eviction, but Justice Ruchelsman denied her application in an April 25, 2013 Decision and Order.

Petitioners were permitted, by an April 19, 2013 short form order from Justice Ruchelsman, to file and serve an amended verified petition, and respondents were granted a time frame to move for summary judgment.

Discussion


(1)

Summary judgment is a drastic remedy and should be granted only when it is clear that no triable issues of fact exist (see Alvarez v Prospect Hospital, 68 NY2d 320 [1986]). The moving party bears the burden of prima facie showing its entitlement to summary judgment as a matter of law by presenting evidence in admissible form demonstrating the absence of any material facts (see Giuffrida v Citibank Corp., 100 NY2d 72 [2003]). A failure to make that showing requires denying the motion, regardless of the adequacy of the opposing papers (see Ayotte v Gervasio, 81 NY2d 1062 [1993]). If a prima facie showing has been made, then the burden shifts to the opposing party to produce evidentiary proof sufficient to establish the existence of material issues of fact (see Alvarez, 68 NY2d at 324).

Evidence presented by the non-moving party "must be viewed in the light most favorable to the non-moving party" (see Vega v Restani Constr. Corp., 18 NY3d 499, 503 [2012] [internal quotation marks and citation omitted]). Denial thus occurs "where the facts are in dispute, where conflicting inferences may be drawn from the evidence, or where there are issues of credibility" (Benetatos v Comerford, 78 AD3d 750, 752 [2010] [internal quotation marks and citations omitted] see also Peerless Ins. Co. v Allied Bldg. Prods. Corp., 15 AD3d 373, 374 [2005] [denial of summary judgment required upon developing "any doubt as to the existence of a triable issue, or where the material issue of fact is arguable"] [internal quotation marks and citations omitted]). Occasionally, persuasive evidence from a non-moving party may warrant granting that non-moving party summary judgment (see N & S Supply v Simmons, 305 AD2d 648 [2003] CPLR 3212 [b]).

(2)

Pro se petitioners' amended verified petition challenges rent overcharges assessed since July 1, 2010 along two distinct theories. Petitioners first allege, in essence, that Linden and Plaza Housing no longer participate in the Mitchell-Lama housing program and have become privatized, pursuant to PHFL §35 (2), by the voluntary dissolution and payoff of the original mortgage. Hence, petitioners' claim that New York's Rent Stabilization Laws now apply to the housing complex and that the New York State Division of Housing and Community Renewal (DHCR) now supervises the housing complex. Linden, as well as former respondent HPD, steadfastly deny this claim.

Alternatively, petitioners allege, as the court previously found, that Linden failed to provide 60-day notice of the December 14, 2007 HUD approval letter setting forth both the Section 236 basic rents and fair market rents governing Plaza Housing tenants. Consequently, petitioners contend that Linden is barred, until proper service of that letter, from collecting any HUD excess rent above the basic rents set forth in the March 28, 2008 HPD Order. Linden has conceded improper service of this approval letter, but urges the propriety of the HUD excess rents charged by claiming adherence to the HPD order and HUD regulations.

(3)
[*7]

Petitioners' allegations that Linden and Plaza Housing no longer qualify as Mitchell-Lama program participants lack merit. Petitioners' reliance solely on the language of PHFL § 35 (2) ignores the entire statutory and regulatory schemes that the Legislature and HPD created. PHFL § 35 (2) states that "[a] company aided by a loan made after May first, nineteen hundred fifty-nine, may be voluntarily dissolved, without the consent of the commissioner or of the [supervising agency], as the case may be, not less than twenty years after the occupancy date upon payment in full of the remaining balance of principal and interest due and unpaid upon the mortgage or mortgages and of any and all expenses incurred in effecting such voluntary dissolution" (2550 Olinville Avenue, Inc., et al v Paul Crotty, et al, 149 Misc 2d 806, 811 [Sup Ct, NY County 1991] [internal quotation marks omitted], affd 185 AD2d 200 [1992], lv dismissed 81 NY2d 772 [1993]). However, petitioners read this section in a vacuum and ignore companion statutory and regulatory obligations, discussed infra, designed to alert shareholders and the general public about a corporation's desire to "privatize" or leave the Mitchell-Lama program (see, e.g., Johnson v New York State Urban Dev. Corp., 25 Misc 3d 252, 255 (Sup Ct, NY County 2009).A basic tenent of statutory construction requires reading statutes together and any interpretation of a statute that renders a provision of that statute meaningless violates that tenent (see McKinney's Cons Laws of NY, Book 1, Statutes §§ 230, 231; see e.g. In the Matter of Nora Lucas, et al v Board of Appeals of Village of Mamaroneck, et al., 109 AD3d

925 [2013]). Petitioners' isolated reading of PHFL § 35 (2) would render PHFL § 23-c (2)[FN12] meaningless within the statutory scheme by barring Mitchell-Lama housing projects from refinancing existing mortgages. Furthermore, petitioners' interpretation could have the unintended consequence of discharging LPHCs from the Mitchell-Lama program on an involuntarily and/or unknowing basis thereby causing violations of the Martin Act[FN13] (General Business Law [GBL] art 23-A) which "regulates the offer and sale of securities within or from New York . . . and is aimed at detecting, preventing and stopping fraudulent securities practices" (East Midtown Plaza Hous. Co., Inc. v Cuomo, 20 NY3d 161, 169 [2012] [internal [*8]quotation marks and citation omitted]).

Such an interpretation would also render meaningless and defeat the purposes of a set of sections of the New York Codes, Rules and Regulations concerning voluntary dissolution of LPHCs, namely: sections about the stated purpose (9 NYCRR 1750.1), applicability (9 NYCRR 1750.2), required notices (9 NYCRR 1750.3; 9 NYCRR 1750.4) and shareholder/ tenant input (9 NYCRR 1750.5). Further, such an isolated reading would nullify the mortgage payments section (9 NYCRR 1750.6), which requires satisfactory completion of 9 NYCRR 1750.3 through 9 NYCRR 1750.5, before a LPHC can seek to prepay its mortgage pursuant to PHFL § 35 (2). Neither Linden nor Plaza Housing have undertaken any of these required regulatory acts and thus neither entity has "voluntarily" dissolved or privatized pursuant to PHFL § 35 (2).

(4a)

Petitioners next urge that Linden is barred from collecting any HUD excess rent above the basic rents set forth in the March 28, 2008 HPD Order. The court agrees that Linden cannot collect any such HUD excess rent but for a different reason than petitioners assert.

Petitioners, as stated above, contend that respondents are barred from seeking the HUD excess rent charges for failure to have given 60-day notice of the underlying December 14, 2007 HUD approval letter, and in view of Linden's purported dissolution and withdrawal from the Mitchell-Lama housing program. However, part of petitioners' argument already fails since Linden, as just shown, never left the Mitchell-Lama program.

(4b)

HPD, as the supervising agency under both the PHFL and Section 236, issued rent approval orders based on Linden's submissions. Here, two such orders resulted. The first was the March 14, 2008 Order of then HPD Commissioner, now HUD Secretary, Shaun Donovan, which, as previously discussed and as defendants concede, did not take effect as it was never served upon Plaza Housing tenants. The second order, the March 28, 2008 HPD Order, was served upon the tenants and Linden claims this order remains in effect.

However, it seems that Linden has mistakenly used then HPD Commissioner Donovan's March 14, 2008 order, not the March 28, 2008 HPD Order to calculate rents from July 1, 2010 forward. Specifically, the (A) (3) portion of then Commissioner Donovan's order states that "beginning June 1, 2010 each tenant shall pay the lesser of 30% of his or her income toward rent or the amount directed in (A) above." The use of the word "lesser" in then HPD Commissioner Donovan's order — as opposed to the word "greater" used in the IRP and Section 236 regulations — can only be reconciled if the referenced part (A) rent increase of $124.92 per room per month relates to an increase of the fair market rent and not the base rent as previously approved in the December 14, 2007 HUD letter (see n 8).

The March 28, 2008 HPD Order, however, states at (A) (4) that "[b]eginning July 1, 2010, a Category 2 Tenant shall pay toward monthly rent the amount directed in (A) above, unless on July 1, 2010 a Category 2 Tenant is receiving the benefit of a Section 8 rent subsidy, in which case, such Category 2 Tenant shall pay toward monthly rent the amount required under the Section 8 program."

The (A) (2) portion of the March 28, 2008 HPD Order defines a "Category 2 Tenant" as a tenant who, as of the date of the order, is paying less than 30% of that tenant's monthly income towards the rent or is not eligible for a Section 8 rent subsidy for reasons other than income. It appears all three petitioners, in March 2010, were paying less than 30% of their monthly income towards the rent and therefore qualified as Category 2 tenants.

However, petitioners were not receiving a Section 8 rent subsidy benefit and under the plain language of the order, should be paying the "amount directed in (A) above." The [*9]"A" portion of the March 2008 HPD Order presents a list of rents by apartment type and are identical to the HUD "base rents" per corresponding apartment type set forth in the December 14, 2007 conditional approval letter, rather than the rents sought to be collected by Linden pursuant to then HPD Commissioner Donovan's March 14, 2008 Order.[FN14] Nowhere in the March 28, 2008 HPD Order is there authorization for Linden to collect the HUD excess rent charge from income affidavit tenants if such base rent is less than 30% of the tenant's monthly income, up to the approved fair market rent. Consequently, Linden and Plaza Housing cannot collect these HUD excess charges above the base rent set forth in the December 14, 2007 HUD approval letter until such time as authorized by HUD and HPD.

Accordingly, it is

ORDERED that respondents' summary judgment motion (motion sequence 16) is granted only to the extent that any claims by petitioners that Plaza Housing is no longer in the Mitchell-Lama program are dismissed with prejudice, and denied in all other respects; and it is further

ORDERED that petitioners De Suze and Grant's joint cross motions to exclude Linden's "Post Discovery Depositions and Evidence" and to deny Linden's seven defenses (motion sequences 17 and 18) are each denied; and it is further

ORDERED that petitioners De Suze and Grant's joint cross motion (motion sequence 19) to deny Linden's summary judgment is granted only to the extent that Linden's summary judgment motion has been denied, and petitioners De Suze and Grant are each concomitantly granted summary judgment, pursuant to CPLR 3212 (b), to the extent that (1) they are entitled to a refund of any rent overcharges paid from July 1, 2010 above the base rents approved by HUD and set forth in the March 28, 2008 HPD Order, and (2) that Linden is barred from collecting more than the base rents from petitioners De Suze and Grant until such time as an amended HPD order is issued and served upon such petitioners; and it is further

ORDERED that petitioner Montgomery's cross motions to exclude Linden's "Post Discovery Depositions and Evidence" and to deny Linden's seven defenses (motion sequences 17 and 18) are each denied; and it is further

ORDERED that petitioner Montgomery's cross motion (motion sequence 19) to deny Linden's summary judgment motion is granted only to the extent that Linden's summary judgment motion has been denied, and petitioner Montgomery is concomitantly granted summary judgment, pursuant to CPLR 3212 (b), to the extent that she is entitled to a credit against any post-eviction deficiency judgment obtained by Linden for any rent overcharges assessed above the authorized base rent from July 1, 2010 to the date of her eviction.

This constitutes the decision, order and judgment of the court.

E N T E R, [*10]

J. S. C.

Footnotes


Footnote 1: Beneficial ownership is enjoyment of the title owner's interest in the profits, benefits or contractual advantages of ownership without having legal title to the property.

Footnote 2: HUD, pursuant to 12 USC § 1715z-1(p), designated HPD as the federal "regulatory monitoring Agency" for Linden and Plaza Housing (see HUD's rent increase approval letter, dated December 14, 2007, p 2, annexed as Exhibit G to the June 27, 2013 affirmation of Alan C. Sullivan, Esq.).

Footnote 3: Indeed, a Section 236 housing complex in setting rent must satisfy the statutory requirements of 12 USC § 1751z-1 (f) (1) (A) (I) that "[f]or each dwelling unit there shall be established, with the approval of the Secretary, a basic rental charge and a fair market rental charge." The statute further provides in this regard, at 12 USC § 1751z-1 (f) (1) (B) (I), that "[t]he rental charge for each dwelling unit shall be at the basic rental charge or such greater amount not exceeding the fair market rental charge . . . as represents 30 percent of the tenant's adjusted income . . ."

Footnote 4: See 12 USC § 1715z-1 (f) (1) (A) (ii) (I) and (iii) (I) ("[t]he basic rental charge shall be — (I) the amount needed to operate the project . . . the fair market rental charge shall be — (I) the amount needed to operate the project . . .") as well as 12 USC 1715z-1 (f) (5) (a) (". . . to induce advances by owners for capital improvements . . . to benefit projects assisted under this section, in establishing basic rental charges and fair market rental charges under paragraph (1) the Secretary may include an amount that would permit a return of such advances with interest to the owner out of project income . . ."

Footnote 5: Such a transfer, called a "decoupling," constitutes a separate transaction that also occurred in April, 2008.

Footnote 6: That rule, entitled "Implementation of rent or carrying charge increase," pertinently provides that : "The housing company or managing agent shall notify the tenants of such increase by ordinary mail or distribution under each apartment door at least fifteen (15) days in advance thereof or thirty (30) days in advance in the case of a development assisted by a Federal [Section] 236 contract, and by posting a copy of the order granting said increase in a conspicuous public place on the lobby floor of each building affected . . ."

Footnote 7: Unfortunately, the March 28, 2008 HPD Order does not differentiate between the approved "base rents" and "fair market" value rents. However, that does not make the HPD Order invalid, as petitioners urge, since HUD's December 14, 2007 rent increase approval letter — a prerequisite to HPD's approval — separately identifies the proposed "Base" and "Fair Market" rents to be charged.

Footnote 8: See 12 USC § 1715z-1 (g) (1).

Footnote 9: The "Agreement [between Linden and HUD] for Interest Reduction Payments" (IRP), annexed to the June 27, 2013 affirmation of Alan C. Sullivan, Esq., as Exhibit F, explains at p 8, in § 5 (c), that a Section 236 rent charge "for each subsidized unit plus utility allowance, which includes all utilities except telephone, will be equal to 30% of the tenant's adjusted annual income or the basic rental, whichever is greater, but in no event is the rental charge to exceed the fair market rental." In essence, any rental charge determined by the tenant's income that exceeds the basic rent up to the fair market rent constitutes a Section 236 rent charge.

Footnote 10: Income affidavit tenants, such as petitioners and those similarly situated, must submit accurate income affidavits annually (IRP Agreement, at pp 10-11 in §§ 5 [g] and [h] and see 12 USC § 1715z-1 [e] [1]) and pay up to 30% of their monthly adjusted income towards declared rent, up to the fair market rent cap for each lease period (see n 10). Linden then must (1) calculate the HUD excess charge based on the submitted affidavits in determining the proper rent to be charged and (2) disclose that rental charge to HUD for calculation and determination of the annual IRP (IRP Agreement, at pp 10-11 in § 5 [h]). It appears that Linden, in accordance with the IRP and Section 236, based petitioners' July 1, 2010 rental charges on their respective incomes provided in petitioners' required and submitted income affidavits

Footnote 11: See 12 USC § 1715z-1 (g) (1); IRP Agreement, at p 11 in § 5 [i].

Footnote 12: PHFL § 23-c (2) states as follows: "Notwithstanding the provisions of this article or the provisions of any law, general or specific, a company that enters into a restrictive agreement on or after the effective date of a chapter of the laws of 2004 which added this subdivision, may, with the approval of such supervising agency:

(a) substitute a new mortgage approved by the supervising agency for any existing mortgage;

(b) extend or modify any existing mortgage in such manner and for such term as shall be determined by the supervising agency;

(c) subordinate any existing mortgage in any manner approved by the supervising agency to the lien of any mortgage held by a lender that is authorized to participate in loans pursuant to section twenty-three-b of this article; and

(d) borrow funds and secure repayment thereof by note and mortgage or in any other manner approved by the supervising agency."

Footnote 13: General Business Law (GBL) art 23-A empowers New York's Attorney General to investigate and prosecute "any deception, misrepresentation, concealment, suppression, fraud, false pretense or false promise" in connection with the "the advertisement, investment advice, purchase or sale within this state of any commodity dealt in on any exchange within the United States of America or the delivery of which is contemplated by transfer of negotiable documents of title" (GBL § 352 [1]).

Footnote 14: The court is bolstered in this finding by the September 20, 2010 notice of Linden's management company (RY Management) to the tenants, which erroneously claimed that the minimum an income affidavit tenant can be charged for rent is the fair market rent (FMR) and the maximum as 150% of the FMR. As stated, the minimum an income affidavit tenant can pay for rent is the base rent set forth in the December 14, 2007 HUD approval letter and the March 28, 2008 HPD Order, and the maximum is the FMR. Indeed, if an income affidavit tenant was charged 150% of the FMR, as stated by RY, "rent gouging" could be claimed.