Matter of Parkview Assets LLC v New York State Div. of Hous. & Community Renewal

[*1] Matter of Parkview Assets LLC v New York State Div. of Hous. & Community Renewal 2010 NY Slip Op 50455(U) [26 Misc 3d 1238(A)] Decided on February 22, 2010 Supreme Court, New York County Scarpulla, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through March 23, 2010; it will not be published in the printed Official Reports.

Decided on February 22, 2010
Supreme Court, New York County

In the Matter of the Application of Parkview Assets LLC, Petitioner,

against

New York State Division of Housing And Community Renewal, Respondent.



102346/09



For Petitioner:

Law Office of Jonathan L. Trestyn, Esq.

98 Cuttermill Road, Suite 444 South

Great Neck, NY 11021

For Respondent:

Gary R. Connor

25 Beaver Street, 7th Floor

New York NY 10004

For Proposed Intervenor Stuart Pittman:

Graubard Miller

405 Lexington Avenue

New York, NY 10174

Saliann Scarpulla, J.

In this Article 78 proceeding, petitioner Parkview Assets LLC (Parkview) seeks to (1) vacate the order of respondent New York State Department of Housing and Community Renewal ("DHCR") issued on January 2, 2009 order as arbitrary and capricious; and (2) remand the matter to DHCR for further investigation.

Stuart Pittman ("Pittman") moves to intervene in this proceeding and, upon intervention, deny the petition.

Parkview owns the building located at 3 East 66th Street in Manhattan. Pittman is the rent stabilized tenant of apartment 5B in that building. On April 25, 2007, Parkview served Pittman with an Income Certification Form for the 2007 filing period. Pittman completed the form, claiming that his income for each of the preceding two years was $175,000 or less. On June 29, 2007, Parkview filed a Petition by Owner for High Income Rent Deregulation for the 2007 filing period with DHCR. Pittman filed an answer to the [*2]petition, which included his federal income tax returns for 2005 and 2006. Parkview then submitted a letter to DHCR on May 29, 2008 indicating that Pittman was a multi-millionaire and providing DHCR with evidence that Pittman owned valuable real estate in both the Hamptons and Manhattan.

On June 30, 2008, the DHCR rent administrator issued an order denying Parkview's Petition for High Income Rent Deregulation, finding that "after consideration of all the evidence in the record and based upon a search of income tax returns on file with the New York State Department of Taxation and Finance (DTF)," Pittman's annual income was not in excess of $175,000 in 2006.

Subsequently, Parkview filed a Petition for Administrative Review ("PAR") seeking reversal of the June 30, 2008 order on the grounds that the rent administrator (1) failed to consider the evidence offered by Parkview proving that Pittman was a multi-millionaire; and (2) failed to provide any factual basis to support its conclusory finding that Pittman's income for the tax year 2006 was not above $175,000.

On January 2, 2009, the DHCR Deputy Commissioner issued an order denying Parkview's PAR on the ground that the rent administrator was not required to conduct its own investigation as to Pittman's income rather, it was only required to rely on the findings reported by the New York Department of Taxation and Finance with regard to Pittman's annual income, which in this case, was reported as under $175,000. The Deputy Commissioner further noted that contrary to Parkview's contention, the administrator's order clearly set forth the factual basis for its findings.

Parkview now commences this Article 78 proceeding, seeking to vacate DHCR's January 2, 2009 order and remand of the matter to DHCR with instructions that DHCR conduct an independent investigation into Pittman's income. Parkview argues that the DHCR Deputy Commissioner's findings in the January 2, 2009 order were arbitrary and capricious and an abuse of discretion. Specifically, Parkview contends that DHCR abused its discretion in failing to consider its evidence showing that Pittman is a multi-millionaire and to simply accept the rent administrator's conclusory finding that Pittman's annual income for the tax year 2006 was not in excess of $175,000.

DHCR answers the petition, arguing that its findings in the January 2, 2009 order were neither arbitrary nor capricious.

Pittman moves to intervene in the Article 78 proceeding, arguing that as the rent regulated tenant of the subject apartment, he is an interested party in the proceeding and should have the opportunity to respond to Parkview's petition and challenge Parkview's efforts to deregulate his home.

Discussion

It is well settled that judicial review of an administrative determination pursuant to CPLR Article 78 is limited to a review of the record before DHCR and the question of whether its determination was arbitrary or capricious and has a rational basis in the record. See CPLR §7803(3); Gilman v. NY State Div. of Hous. & Community Renewal, [*3]99 NY2d 144 (2002); Nestor v. New York State Div. of Hous. & Community Renewal, 257 AD2d 395 (1st Dept. 1999). Here, Parkview's argument that DHCR's January 2, 2009 determination was arbitrary and capricious in that it failed to consider evidence submitted by Parkview allegedly showing that Pittman is a multi-millionaire[FN1] and simply accepted the rent administrator's conclusory finding that Pittman's annual income for the tax year 2006 was not in excess of $175,000 is without merit and therefore, the petition is denied.[FN2]

The Rent Stabilization Law provides for deregulation of rent stabilized apartments having monthly rents over $2,000 when the tenant's income exceeds a threshold level of $175,000 per year in each of the two years preceding a landlord's petition for deregulation. See Administrative Code of the City of NY §26-504.3; Giffuni Bros. v. NY State Div. of Hous. & Cmty. Renewal, 293 AD2d 402 (1st Dept. 2002). If a tenant certifies that the tenant's income was below the threshold amount and the owner contests such certification, the owner may ask the DHCR to verify the household income. The Code provides that DHCR shall notify the tenant that it "must provide the division with such information as the division and the department of taxation and finance shall require to verify whether the total annual income exceeds one hundred seventy-five thousand dollars in each such year." The relevant factor in determining whether an apartment qualifies for high income rent deregulation is the income of the qualified occupants as it is reported by DTF. See 9 NYCRR §2531.5.

The statute is clear as to the procedure that the DHCR must follow and DHCR has indisputably done so here. DHCR is not obligated nor required to go beyond the statute to determine the status of a tenant's income. The rent administrator is required to rely on the findings reported by DTF in determining whether the subject apartment qualifies for high income rent deregulation. Here, in its June 30, 2008 order denying Parkview's Petition for High Income Rent Deregulation, the rent administrator clearly indicated that in reaching its determination, it carefully considered the evidence in the record and the DTF finding that Pittman's annual income was not in excess of $175,000 in 2006. There is no merit to Parkview's argument that the rent administrator's determination was conclusory or without factual basis.

Furthermore, while Parkview basically contends that DHCR is required to conduct investigations to independently determine the household income before issuing an order, such requirement is not authorized by law. DHCR does not have the authority or the responsibility to investigate the veracity of a tenant's tax returns. See Nestor v. New York State Div. of Hous. & Community Renewal, 257 AD2d 395 (1st Dept. 1999); London [*4]Terrace Gardens v. NY State Div. of Hous. & Community Renewal, 6 Misc 3d 1020A (Sup. Ct. NY Co., 2005).

In accordance with the foregoing, it is hereby

ORDERED and ADJUDGED that the petition of Parkview Assets LLC to vacate the order of respondent New York State Department of Housing and Community

Renewal issued on January 2, 2009 order and to remand the matter to DHCR for further investigation is denied and the Article 78 proceeding is dismissed; and it is further

ORDERED and ADJUDGED that Stuart Pittman's motion to intervene in the Article 78 proceeding and upon intervention, deny the petition is denied as academic.

This constitutes the decision and order of the Court.

Dated:New York, New York

February 22, 2010

E N T E R:

_____________________________

J.S.C. Footnotes

Footnote 1:Notably, the evidence presented by Parkview to support its claim that Pittman is a multi-millionaire consists mostly of internet printouts which are not compelling.

Footnote 2: Because the petition is denied, Pittman's motion to intervene is academic.