RSA, along with other real estate industry representatives, met with DHCR Commissioner Deborah VanAmerongen, Deputy Commissioner Leslie Torres and other senior DHCR staff as part of an ongoing series of meetings between the agency and property owner organizations. RSA was represented by Executive Vice-President Jack Freund, General Counsel Mitch Posilkin and Deputy Counsel Robin Bernstein.
A wide range of topics was discussed at the meeting and they are summarized, briefly, as follows:
Luxury Decontrol/Overcharges/4-Year Rule: RSA became aware of instances in which DHCR granted overcharge awards in cases where owners deregulated an apartment more than four years prior to the filing of an overcharge complaint, based upon the assumption that a deregulated apartment was regulated. Although the law prohibits DHCR from reviewing the rental history more than four years prior to the date of the filing of the overcharge complaint, the appellate courts are clear that DHCR is allowed to look back more than four years to determine whether the apartment is, in fact, regulated or deregulated. However, DHCR has determined, where owners did not file exit registrations for those deregulated units and where the rent being charged is less than $2000, that units which the owner considered unregulated were regulated as of the date of the overcharge complaint and imposed overcharge awards.
DHCR strongly recommended that, to remove any doubt as to the regulatory status of an apartment, owners MUST file an exit registration. While the absence of an exit registration will not, according to DHCR, automatically result in the agency finding that the apartment is regulated, the filing of a contemporaneous exit registration is likely to be determinative of the issue.
DHCR did agree to review the procedures and instructions relating to exit registrations and to review for accuracy any explanatory material that RSA or the other organizations prepare for property owners. RSA urged DHCR not to rely solely on exit registrations and proposed that DHCR set forth its policy on this subject to provide clarity for all affected property owners.
This issue takes on particular importance in light of the December 3rd decision issued by State Supreme Court Justice Nicholas Figueroa in 450-452 East 81st Street, LLC v. DHCR and Sanford. The Court found that the rental history did not establish that the legal rent was above $2000 and that the owner’s “registration statement does not indicate that the apartment was subject to high rent deregulation and does not reveal the last rent.” Given DHCR’s position on this issue and the decision by Justice Figueroa, owners would be well-advised to file timely exit registrations for their deregulated units and maintain meticulous records to substantiate the deregulation. The owner in this case was represented by the law firm of Sidrane & Schwartz-Sidrane.
Luxury Decontrol/J-51 Buildings: RSA had been advised that DHCR had placed “on hold” high income decontrol applications for tenants in buildings receiving J-51 benefits, because of litigation challenging luxury decontrol in J-51 buildings that is currently at the Appellate Division. At the meeting, DHCR indicated that it had decided to process these applications while the case is pending in the courts.
Demolition: DHCR indicated that it is still reviewing the comments that were submitted to the agency regarding the proposed regulations which were published for comment on June 25th. The agency also indicated that 38 demolition applications are pending and that, since June, DHCR has denied 10 applications primarily on the ground that plans had not been provided by the applicants.
Electronic Key Installations: RSA had been advised that DHCR was requiring owners to submit application for modifications of services when owners were replacing conventional front door key/locks with electronic key/lock installations. RSA urged DHCR to re-visit this issue and re-consider the necessity for applications in these situations. Given the administrative burdens arising from these applications and the several months needed to process these applications to conclusion, all relating to the installation of devices which DHCR once described “a mere utilization of technological advances in providing required services,” RSA argued that DHCR should consider these installations a mere substitution of an existing service and eliminate any application requirement.
Washing Machine Surcharges: RSA raised with DHCR the fact that the agency, in violation of Operational Bulletin 2005-1, was issuing administrative decisions prohibiting owners from imposing washing machine surcharges prospectively when the owners had failed to challenge the machines previously. DHCR indicated that it would review the issue but stated that owners must seek to charge for washing machines within a “reasonable time.” RSA pointed out that neither the Bulletin nor any provision of law or regulation contain any requirement that such a claim for a surcharge be made within a “reasonable time” after the owner becomes aware of the appliance. Further, tenants in these situations are always protected against retroactive surcharges. DHCR also indicated that they would be issuing a new rate schedule for washing machine surcharges in the near future.
Electric Conversion: In September, DHCR issued Update Number 1 to Operational Bulletin 2003-1, relating to the conversion to direct metering or submetering, adding a requirement that owners provide a special notice to tenants informing them of the estimated electric usage that they should expect upon conversion. RSA advised DHCR that the new requirement would result in inaccurate notices to tenants and DHCR agreed to modify the notices accordingly.
DHCR also agreed to review the $5 air conditioner surcharge, which has not been increased since its adoption in the mid-1980’s. Lastly, DHCR stated that it is in the process of modifying owner restoration forms and the rent history print-out, and that it will make the hardship application forms available on-line once again.
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