Recitation, as required by CPLR § 2219(a):

Notice of Motion, Affirmation and Affidavit ........................................1

Cross—Motion, Affirmation and Affidavit..............................................2

Reply Affirmation...................................................................................3

MADHAVAN, J.

At issue in this holdover proceeding is whether an existing rent stabilized tenant must certify her household income to her landlord because the latter now receives federal low—income housing tax credits (LIHTC). More specifically, the question presented is whether the income certification requirements imposed by the LIHTC program conflict with Rent Stabilization Code (RSC) § 2522.5[g] which requires landlords to offer renewal leases to their tenants on the same terms and conditions as their expiring leases.

The facts are undisputed. Respondent signed a rent stabilized lease for the apartment on August 1, 1985, which was last renewed on March 27, 2006 (Bracero Affd., ¶ 4). On November 24, 2010, petitioner assumed ownership of the building through a referee's deed (Pet. Exh. E). [*2]Petitioner simultaneously executed a regulatory agreement (RA) with the NYC Department of Housing Preservation and Development (HPD) (Pet. Exh. D). Under the RA, petitioner would receive federal low—income tax credits in exchange for, inter alia, restricting occupancy of the project to low—income families for reduced rents for the next 50 years (id., p. 3). Beginning in or about December 2010, petitioner requested that respondent certify her household income and composition to petitioner to allow it to comply with the RA and applicable federal regulations (Davis Affd., ¶ 4, Bracero Affd., ¶ 6). Respondent however refused to do so (id.). Petitioner then served a Notice to Cure upon respondent on August 18, 2011, followed by a Notice of Termination on October 7, 2011 (Pet. Exh. B). Petitioner now seeks possession of the premises on the ground that respondent violated a substantial obligation of her tenancy by failing to complete the certification forms.

Respondent answered the petition alleging that "the court lacks subject matter jurisdiction ...and/or the petition fails to state a cause of action because the notice to cure was not served pursuant to the lease," and "because the termination notice was not served pursuant to the lease and/or the Rent Stabilization Code" (Ans., ¶¶ 2; and 4). Respondent also claims that "the court lacks jurisdiction...and/or the petition fails to state a cause of action in that [she] has not violated [a substantial obligation of her tenancy]" (id., ¶ 6). Respondent moves for summary judgment dismissing the petition upon these defenses. Petitioner, in turn, cross—moves for summary judgment awarding it possession of the apartment.

As there are no triable issues of fact, this case is ripe for summary judgment (CPLR § 3212[b] Alvarez v. Prospect Hospital, 68 NY2d 320, 324 [1986]). Respondent has not made "a prima facie showing of entitlement to judgment as a matter of law" on her claim of lack of subject matter jurisdiction (Winograd v. New York Univ. Med. Center, 64 NY2d 851, 853 [1985]). "The failure of a petitioner to comply with a statutory notice requirement, where applicable, represents merely the failure to comply with a condition precedent to suit and cannot properly be said to affect the court's jurisdiction" (170 West 85th Street Tenants Ass'n v. Cruz, 173 AD2d 338, 339 [1st Dept 1991]). The court therefore turns to the parties' respective applications for summary judgment on whether petitioner has established a cause of action.

A review of the LIHTC program provides guidance. In 1986, Congress enacted Section 42 of the Internal Revenue Code (Act) to provide the private market with an incentive to invest in affordable rental housing (26 USC § 42 et seq.). Developers of qualified projects are eligible to receive federal housing tax credits through a state allocation agency or sub—allocation agency, such as HPD (26 USC § 42[h]). The administering agency will disburse tax credits to a qualified developer consistent with the agency's federally approved Qualified Allocation Plan (QAP) (26 USC § 42[m][1][A]). Among other things, the QAP must give priority to projects that serve the lowest income tenants and are structured to remain affordable for the longest period of time (42 USC § 42[m][1][B][ii]). Thus, a "qualified project" is one in which developers commit to set aside units pursuant to a 20-50 or 40-60 test; that is, at least 20 percent of the units must be rent restricted and occupied by households with incomes at or below 50 percent of the area median income (AMI) or at least 40 percent of the units must be rent restricted and occupied by households with incomes at or below 60 percent of AMI (26 USC § 42[g][1][A] - [B]). Developers must further agree to operate under these rent and occupancy restrictions for at least [*3]30 years (26 USC § 42[h][6][D] 26 USC § 42[i]).

To allow developers to meet these requirements, they are permitted to syndicate their tax credits to private investors who receive a dollar—for—dollar credit against their federal tax liability each year over a period of 10 years (26 USC § 42[b][1][B]). The investors in exchange finance the project, thus reducing the developer's debt. The reduced debt then allows the developer to offer lower, more affordable rents to qualifying tenants. Maximum unit rents for eligible tenants are set at 30% of either 50% or 60% of AMI (26 USC § 42[g][2]) and are contained in a RA between the developer and the allocation agency (Pet. Exh. D).

Developers must however certify their compliance with program requirements in order to remain eligible to receive tax credits (26 USC § 42[l] 26 CFR § 1.42[c]). Non—compliant developers also face recapture of their tax credits (26 USC § 42[j]). Among other things, developers must keep records of the annual income certification of each low—income tenant per unit and documentation to support each low—income tenant's income certification (26 CFR § 1.42—5[b][1][vi] - [vii] see also 21 NYCRR § 2188.7[f][4]-[5] [10] - [11]). Developers must maintain these records for at least six years (26 CFR § 1.4—5[b][2]).

Respondent argues that the provisions of the LIHTC program do not preempt RSC § 2522.5[g] which requires petitioner to offer a renewal lease "on the same terms and conditions" as her expiring lease; that is, without the certification requirement. While federal law prevails over a conflicting state law (US Constitution, Article VI, cl. 2), federal statutes are not generally deemed to preempt state law unless it is "the clear and manifest purpose of Congress" (Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 [1947] see also Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 541 [2001]). The congressional purpose may be manifested either explicitly in the federal statute or implicitly in the federal scheme. Neither is present here. The LIHTC program specifically vests state and local agencies with discretion to establish a selection criteria for allocation of tax credits in its QAP "appropriate to local conditions" (26 USC § 42[m][1][B][i]). The Act further prohibits administering agencies from allocating tax credits unless it notifies "the chief executive officer (or the equivalent) of the local jurisdiction within which the building is located of such project and provides such individual a reasonable opportunity to comment on the project" (26 USC§ 42[m][1][A][ii]). Thus, the LIHTC program does not occupy the legislative field in conflict over existing state or local law.

The LIHTC program and RSC are easily harmonized to require both petitioner to issue a renewal lease to respondent and respondent to certify her income to petitioner. RSC § 2522.5[g] provides, in pertinent part, that a renewal lease offered to a tenant:

...shall be on the same terms and conditions as the expired lease, except where the owner can demonstrate that the change is necessary in order to comply with a specific requirement of law or regulation applicable to the building or to leases for housing accommodations subject to the RSL, or with the approval of DHCR. Nothing herein may limit the inclusion of authorized clauses otherwise permitted by this Code or by order of the DHCR not contained in the expiring lease (emphasis added).

Respondent however misapprehends these certification requirements and the LIHTC program generally. She contends that the LIHTC certification requirements are applicable only to low—income tenants occupying tax—credit units. Therefore, respondent argues, petitioner is under no regulatory obligation to demand income certification from her as she is an existing rent stabilized tenant. Under this circular reasoning, petitioner can only demand income certifications from low-income tenants whose income status can only be confirmed through an income certification. To the extent that respondent attempts to distinguish between new low—income tenants and existing rent stabilized tenants, neither the Act nor its implementing regulations draw any such distinction.

Respondent's interpretation of the LIHTC regulations is also hostile to the Act's core requirement that participant landlords like petitioner must set aside a fixed percentage of all units in a given project to low—income households.^[FN1] To allow existing rent stabilized tenants to refuse to certify their income to LIHTC landlords, as respondent urges, would cripple petitioner's ability to allocate units—and tax credits—in the manner required by federal law and the RA. Absent an income certification from all tenants, petitioner would have no reliable means of determining whether 20 percent of its units were leased to households with incomes at or below 50 percent of the HUD determined AMI or 40 percent of its units were leased to households with incomes at or below 60 percent of the HUD determined AMI. Instead, petitioner would have to rely entirely upon vacancies and ensuing new leaseholds to attempt to meet its federally mandated tax credit allocations. Respondent's construction of the LIHTC regulations and RSC would therefore directly undermine the Act's stated mission of serving the lowest income families in an assisted project (42 USC § 42[m][1][B][ii]).

Nor do income certifications under the LIHTC program operate to divest respondent of any rights under the RSC; to the contrary, they afford respondent the ability to gain greater [*5]protections than offered by the RSC. Tax credits benefit rent stabilized tenants who are income—eligible by allowing them to pay potentially less than rent stabilized rents but never having to pay in excess of those rents. As such, tax credits are fully compatible with the remedial aims of the RSL and RSC to preserve the affordable housing stock in New York City (Manocherian v. Lenox Hill Hospital, 84 NY2d 385, 389 [1994]). Under respondent's theory however, existing rent stabilized tenants are categorically ineligible to receive the benefits of the LIHTC program, for only new leaseholds are required to certify their income and be eligible for tax credits. Oddly, respondent's construction of the Act and RSC affords new rent stabilized tenants of assisted projects with greater rights than existing tenants; that is, the ability to pay rents lower than may be charged under the RSC.

As respondent's claims are unavailing, the court must now decide whether petitioner is entitled to summary judgment on its claim. Respondent's admitted refusal to submit LIHTC certification documents to petitioner is a violation of a substantial obligation of her tenancy (2 Macon St. Assoc., LP v. Sealy, 2011 NY Slip Op 021213, *2 [App Term 2d & 11th Jud Dists], [failure to provide LIHTC certification per lease rider upheld as lease violation]). As respondent failed to timely cure her default after having been served with a notice to cure, petitioner was lawfully entitled to terminate her tenancy under RSC § 2524.3[a] and now obtain a judgment of possession (id., citing Pinnacle Bronx W., LLC v. Jennings, 29 Misc 3d 61, 62 - 63 [App Term 1st Dept 2010]).

Accordingly, respondent's motion is denied. Petitioner's cross—motion is granted. The Clerk shall enter a judgment of possession in favor of petitioner. Issuance of the warrant of eviction is stayed ten days from the date of this Order to permit respondent to complete all certifications required by the LIHTC program. This constitutes the Decision/Order of the court.

Dated:April 10, 2014

Bronx, NY

___________________________________________

Hon. Jaya K. Madhavan