Opinion
35375/2018
09-13-2019
NSA 2015 OWNER LLC, Petitioner, v. Tara BROWN, Respondents.
For Respondent: The Legal Aid Society, Attorneys for Respondent, Attn: Jason Hadley, Esq., 1118 Grand Concourse, Room 250, Bronx, NY 10456 For Petitioner: Sontag & Hyman, P.C., 165 Rosyln Road, 1st Floor, Roslyn Heights, NY 11577
For Respondent: The Legal Aid Society, Attorneys for Respondent, Attn: Jason Hadley, Esq., 1118 Grand Concourse, Room 250, Bronx, NY 10456
For Petitioner: Sontag & Hyman, P.C., 165 Rosyln Road, 1st Floor, Roslyn Heights, NY 11577
Bryant Tovar, J.
Recitation, as required by C.P.L.R. § 2219(a), of the papers considered in review of this motion.
Papers Numbered
Notice of Motion and Affidavits Annexed 1-11
Order to Show Cause and Affidavits Annexed
Answering Affidavits 12-16
Replying Affidavits 17-19
Exhibits
Other
After oral argument and upon the foregoing cited papers, the Decision & Order on Petitioner's Motion for Summary Judgment, Respondent's Cross-Motion for Dismissal, and post-judgment opportunity to cure; which are consolidated herein for disposition, is as follows:
BACKGROUND & PROCEDURAL POSTURE
The Petitioner, NSA 2015 Owner LLC ("Petitioner"), commenced this holdover proceeding against Tara Brown ("Respondent") based on alleged violation of a substantial obligation of her tenancy, alleging that the Respondent has failed to certify under the requirements of Low Income Housing Tax Credit ("LIHTC") program relating to 1550 Townsend Avenue, Apt 3C, Bronx NY 10452. Petitioner served a Ten (10) Day Notice to Cure ("Notice to Cure") dated May 21, 2018, which expired on June 14, 2018, and a Seven (7) Day Notice of Termination dated June 15, 2018 ("Notice of Termination"), which expired on July 2, 2018. Both sides are represented by counsel.
The following facts are undisputed. On or about November 1, 1990, Respondent moved into the premises after executing a rent stabilized lease and rider, dated October 18, 1990. (Affidavit of Tara Brown, at paragraph 3). Pursuant to said rider, Respondent was required to provide proof of income at the inception of her tenancy in order to be deemed an "Eligible Tenant" under a Regulatory Agreement ("RA") between the Owner and the City of New York. The rider stated, in pertinent part, that "[o]nce qualified as an Eligible Tenant, Tenant will continue to be deemed an Eligible Tenant regardless of changes in his or her income during the Restrictive Period." (Pet. Exhibit 3).
In 2016, the Petitioner executed a new Regulatory Agreement with the New York State Housing Finance Agency. Under this 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 fifteen years. (Pet. Exhibit 6).
Beginning in or about September of 2017, Petitioner requested that Respondent certify her household income and composition in order for Petitioner to comply with the 2016 RA and applicable federal regulations. (Pet. Exhibit 7). Paragraph 4.4 of the 2016 RA states, "[i]n a separate rider acceptable to the Agency's prior approval, which shall state...(iii) tenants shall provide income certification and any additional recertification[sic] of income as the Agency and the Borrower shall require." The Respondent has never signed a rider pursuant to the 2016 RA.
The Law and Its Application
The issue before this court is whether an existing rent stabilized tenant who was required to certify their income only at the inception of their tenancy must now certify their household income to their landlord on an annual basis because the latter now receives federal low-income housing tax credit.
In OLR, MM, LP v. Bracero (43 Misc 3d 1215[A], 988 NYS2d 524 [Civ Ct Bronx County 2014] ), a holdover proceeding similar to this one, the Hon. Jaya Madhavan eloquently described the federal LIHTC program as follows:
"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 ( 26 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 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. Exhibit 6).
Developers must, however, certify their compliance with program requirements in order to remain eligible to receive tax credits. ( 26 USC § 42 [l]; 26 CFR § 1.42-5 [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 § 1.42-5 [b][2] )."
Petitioner moves for summary judgment on the grounds that Respondent has failed to submit the income certification documents in compliance with paragraph 11A of the lease, which states, in pertinent part, "the Tenant will obey and comply with all present and future city, state and federal law and regulations which affect the Building or the Apartment." (Pet. Exhibit 3). Specifically, Petitioner asserts Respondent is required to comply with 26 USC § 42 and 26 CFR § 1.42-5.
Pursuant to CPLR § 3212, a moving party may be entitled to summary judgment upon making a prima facie showing of entitlement to judgment as a matter of law. ( Davern v. City of New York , 287 AD2d 679 [2d Dept 2001] ). Once the movant has established a prima facie case for entitlement to summary judgment, the burden shifts to the opponent to prove the existence of a triable issue of fact. ( Adam v. Cutner & Rathkopf , 238 AD2d 234 [1st Dept 1997], citing Zuckerman v. City of New York , 49 NY2d 557 [1980] ). It is incumbent upon a party who opposes a motion for summary judgment to assemble, lay bare, and reveal his proofs in order to show that the allegations in the answer are real and are capable of being established at trial. ( Spearmon v. Times Sq. Stores Corp. , 96 AD2d 552 [2d Dept 1983] ). The court must accept as true the non-moving party's recounting of the facts and must draw all reasonable inferences in favor of the non-moving party. ( Warney v. Haddad , 237 AD2d 123 [1st Dept 1997] ; Assaf v. Ropog Cab Corp. , 153 AD2d 520 [1st Dept 1989] ) If there is a genuine issue of material fact, summary judgment must be denied. ( Smalls v. AJI Indus., Inc. , 10 NY3d 733 [2008] ; citing Alvarez v. Prospect Hosp. , 68 NY2d 320 [1986].)
Legal Analysis
In opposition, Respondent asserts there is no specific language in any document executed by both parties requiring Respondent to submit annual income information in order to maintain her tenancy. Respondent states that Petitioner's reliance on paragraph 11(A) of the original lease is unfounded. Respondent argues this paragraph is unenforceable as too vague and lacking in specificity. In support, Respondent cites Baumeitster v. Caseri (32 Misc 2d 654, 228 NYS2d 339 [App Term, 1st Dept 1961] ), for the proposition that Petitioner cannot maintain holdover proceeding based on a termination of the lease if there is no conditional limitation in lease allowing for early termination. More specifically, the Respondent argues, "[a]bsent a condition to maintain a [housing] subsidy in the lease, petitioner cannot maintain a holdover proceeding based on respondent's failure to maintain said subsidy." ( Grand Concourse E. HDFC v. DeJesus , 61 Misc 3d 403, 405, 2018 NY Slip Op 28260 [Civ Ct, Bronx County 2018] ; see Hatim Group LLC v. Johnson, 36 Misc 3d 147[A], 2012 NY Slip Op 51631[U] [App Term 2d Dept, 2d 11th & 13th Jud Dists.], citing Perotta v. W. Reginal Off-Track Betting Corp. , 98 AD2d 1[4th Dept 1983] ). In Grand Concourse , the landlord sought to terminate the tenancy on the basis that tenant breached his lease by failing to return his annual recertification package to the Department of Housing Preservation and Development ("HPD") resulting in the loss of tenant's Section 8 subsidy. The court emphasized that the tenant's participation in the HPD Section 8 program was voluntary. Accordingly, the court found, the tenant's election to no longer receive the benefit of a subsidy could not be a basis to terminate his tenancy.
The right of a tenant to elect participation in a LIHTC program is astutely explored in OLR ECW, L.P v. Soto (42158/15 NYLJ 1202750743743 [Civ. Ct, Bronx County 2016] ). In Soto the petitioner brought a holdover proceeding against the respondent based upon an alleged violation of a substantial obligation of the lease, alleging respondent failed to certify their income pursuant to a LIHTC program. In Soto , the court found respondent's failure to submit financial information pursuant to a regulatory agreement could not be the basis to terminate the respondent's tenancy. As in Grand Concourse , the Soto court emphasized tenant's right to choose to participate in a subsidy program. Soto found that respondent had the right to decline participation in LIHTC program and the benefits that correspond without repercussion. The findings in Soto were also based on the petitioner's failure to evidence what sanctions it would incur as a result of respondent's election not to participate.
The case at bar is distinguished from Soto and Grand Concourse in that the Respondent in the instant proceeding has already elected to participate in an income-based housing program. Respondent entered the subject premises under the auspice of a Regulatory Agreement and willingly offered income information to receive the benefit of low-income housing. Respondent argues that she is entitled to continued receipt of this benefit through December 31, 2019, pursuant to the original lease rider. However, without further action, Respondent would continue to receive this benefit beyond said date. It would be also impossible for Petitioner to determine Respondent's continued eligibility without income verification. The only method for Respondent to extricate herself from the program is to submit an income affidavit which certifies that she is over income pursuant to the terms of the initial RA.
In Bracero , analogous to the case at bar, the court found summary judgment in favor of petitioner where the respondent failed to certify the household income and petitioner received low income housing tax credits. ( 43 Misc 3d 1215[A], 988 NYS2d 524 [Civ Ct, Bronx County 2014] ). The respondent in Bracero did not elect to participate in the LIHTC program, nonetheless, the court held that "income certification under the LIHTC program does not operate to divest respondent of any rights under the Rent Stabilization Code (RSC); to the contrary, they afford Respondent the ability to gain greater 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 the New York City." (citing Manocherian v. Lenox Hill Hospital , 84 NY2d 385, 389 [1994] ).
The respondent in Bracero occupied the subject premises prior to the petitioner entering into the LIHTC regulatory agreement. The respondent never signed lease riders or written instruments requiring the submission of income certification and household composition.
Similarly, in OLD ECW, L.P., v. De Abreu (59 Misc 3d 1204[A], 2018 NY Slip Op 50365[U] [Civ Ct, Bronx County 2018] ), the court ruled in favor of the Petitioner where the rent stabilized tenant of building subject to LIHTC program refused to recertify her household income and size. In De Abreu , the court noted that one of the requirements of the Rent Stabilization Code is for the landlord to offer renewal leases "on the same terms and conditions as the expired lease," pursuant to RSC § 2522.5(g), but that an exception within the same provision exists 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."
In the case at bar, the requirement that Respondent submit an annual certification of income and household composition is necessary for Respondent and the subject building to maintain the benefit of the LIHTC program. Absent income certification from all tenants, Petitioner would have no reliable means of determining what percentage of its units were leased to households with incomes in compliance with the RA. Respondent's argument that submission of income certification should be limited to the inception of the tenancy is unavailing. The change in requirements, i.e. annual income certifications, was anticipated in paragraph 11(a) of the original lease and is thus enforceable.
Sufficiency of the Notices
Appellate authority provides that the standard by which to determine sufficiency of a predicate notice is whether the notice is reasonable in light of the attendant circumstances. ( Oxford Towers Co., LLC v. Leites , 31 AD3d 144, 144 [1st Dept 2007] ; Hughes v. Lenox Hill Hospital , 226 AD2d 4, 17 [1st Dept 1996] lv denied 90 NY2d 829 [1997] ). Namely, the notice must be sufficiently particular so that it does not mislead, confuse the tenant, or hinder the tenant in preparing a defense to the proceeding. ( Oxford Towers Co., LLC v. Leites , 31 AD3d at 145 ).
A notice to terminate a rent stabilized tenancy "shall state the ground ... upon which the owner relies for ... eviction of the tenant," and must "state ... the facts necessary to establish the existence of such ground." ( Rent Stabilization Code [9 NYCRR] § 2524.2 [b] ). Notices that do not allow a tenant to prepare a defense because they are broad, conclusory, and/or unparticularized have been considered inadequate by the courts. ( Berkeley Assoc. Co. v. Camlakides , 173 AD2d 193 [1st Dept 1991] ).
On a motion to dismiss pursuant to CPLR § 3211(a)(7) for failure to state a cause of action, the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true and determine only whether the facts as alleged fit within any cognizable legal theory. ( Leon v. Martinez , 84 NY2d 83, 87 [1994] ; Guggenheimer v. Ginzburg 43 NY2d 268, 275, 401 NYS2d 182, 185 [1977] ["[T]he sole criterion is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail"] ).
The Respondent argues the Notice to Cure is vague and equivocal. This argument is unavailing, as the notice clearly states the requirement to submit income certification documents and provides pertinent information regarding the submission of these documents. The Notice of Termination incorporates the Notice to Cure by reference. The instant Notice sufficiently sets forth the grounds for termination of the tenancy and case-specific facts necessary to establish the existence of such grounds and, therefore, meets the requirements of Rent Stabilization Code § 2524.2(b).
Summary Judgment
Summary judgment is a drastic remedy that should be granted only if no triable issues of fact exist and the movant is entitled to judgment as a matter of law. ( Alvarez v. Prospect Hosp. , 68 NY2d 320, 324 [1986] ; Andre v. Pomeroy , 35 NY2d 361, 364 [1974] ). The party moving for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law and tender sufficient evidence in admissible form demonstrating the absence of material issues of fact. ( Winegrad v. New York Univ. Med. Ctr. , 64 N Y 2d 851, 853 [1985] ; CPLR § 3212 [b] ). The failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers. ( Smalls v. AJI Indus., Inc. , 10 NY3d 733, 735 [2008] ). Once a prima facie showing has been made, however, "the burden shifts to the nonmoving party to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact that require a trial for resolution." ( Giuffrida v. Citibank Corp. , 100 NY2d 72, 81 [2003] ; see also Zuckerman v. City of New York , 49 NY2d 557, 562 [1980] ; CPLR § 3212 [b] ).
When deciding a summary judgment motion, the court's role is solely to determine if any triable issues exist, not to determine the merits of any such issues. ( Sillman v. Twentieth Century-Fox Film Corp. , 3 NY2d 395, 404 [1957] ). The court must view the evidence in the light most favorable to the nonmoving party and give the nonmoving party the benefit of all reasonable inferences that can be drawn from the evidence. ( Negri v. Stop & Shop, Inc. , 65 NY2d 625, 626 [1985] ). If there is any doubt as to the existence of a triable issue, summary judgment should be denied. ( Rotuba Extruders, Inc. v. Ceppos , 46 NY2d 223, 231 [1978] ).
The Petitioner has met its initial burden that it is entitled to a judgment of possession. As to the material facts, it has produced copies of all documents needed to establish its prima facie case. It is undisputed that Petitioner's ownership of the subject building is subject to a Regulatory Agreement under which, inter alia , Petitioner received a portion of the financing for their rehabilitation of the subject premises and agreed that 100% of the apartments will be rented to low income tenants, with certain exceptions including over income in-place tenants, and agreed to comply with all applicable provisions of federal, state and local law and regulations, in exchange for federal tax credits.
It is further undisputed that Respondent commenced her tenancy at the subject premises designated to provide low income housing pursuant to a Regulatory Agreement. Currently, Respondent has not opted out of the benefits of the LIHTC program, nor could she, pursuant to the initial Regulatory Agreement, without submission of the very income certification information Petitioner seeks for the income certification pursuant to the 2016 RA. Currently, there exists no mechanism by which tenants may opt out of the benefit of an LIHTC program without providing additional income information. While such a mechanism would be beneficial, such issue is beyond this court to decide.
In the instant proceeding, as in Bracero, supra , Respondent has admittedly refused to submit LIHTC certification documents to Petitioner in violation of a substantial obligation of her tenancy. Respondent has failed to timely cure her default after having been served a Notice to Cure. Accordingly, Petitioner was lawfully entitled to terminate the tenancy pursuant to RSC§ 2524.3(a). and is therefore entitled to summary judgment and a judgment of possession.
Conclusion
It is so ordered that Petitioner's motion for summary judgment is granted and respectively Respondent's motion to dismiss is denied. The court need not reach other relief sought in Respondent's motion. The clerk shall enter a judgment in favor of the Petitioner. Pursuant to Section 753(4) of the Real Property Actions and Proceedings Law, issuance of the warrant of eviction is stayed thirty days from the date of this Order to permit Respondent to substantially complete all recertification required by the LIHTC Program. This constitutes the Decision and Order of the court.