Ninth Ave. Realty LLC v City of New York

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Ninth Ave. Realty LLC v City of New York 2018 NY Slip Op 32578(U) October 10, 2018 Supreme Court, New York County Docket Number: 160182/2016 Judge: Debra A. James Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] NEW YORK COUNTY CLERK 10/10/2018 09:34 AM INDEX NO. 160182/2016 NYSCEF DOC. NO. 139 RECEIVED NYSCEF: 10/10/2018 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. DEBRA A. JAMES PART IAS MOTION 59EFM Justice --------------------------------------------------------------------------------X 160182/2016 INDEX NO. NINTH AVENUE REALTY LLC,137 EAST 29TH & 146 EAST 35TH LLC,217 EAST 82ND STREET LLC, SASHA REALTY LLC,310 EAST 74 LLC,30 WEST 72 REALTY LLC,31 CORNELIA STREET PROPERTIES CORP., 101 PERRY STREET LLC, 190 WAVERLY PLACE LLC, MOTION DATE 07/03/2018 001 MOTION SEQ. NO. Petitioners, -vDECISION and ORDER THE CITY OF NEW YORK, NEW YORK CITY DEPARTMENT OF HOUSING PRESERVATION & DEVELOPMENT, MARIA TORRES-SPRINGER, Respondents. ---------------------------------------------------------------------------------X The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 32, 47, 50, 51, 56, 57,58, 59,60,61,62,63,64,65,66,67,68,69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79,80,81,82,83, 84, 10 7 108 109 113 114, 11 5 12 5 126 12 7 12 8 129 130 131 132 133 134 13 5 I I I I I I I I I I I I I I I ARTICLE 78 (BODY OR OFFICER) were read on th is motion to/for ORDER Upon the foregoing documents, it is ORDERED and ADJUDGED that the petition is GRANTED and the challenged determinations of respondents in these consolidated proceedings are VACATED and ANNULLED and the applications are REMANDED to respondents for proceedings in accordance with this decision. DECISION The petitioner-landlords (petitioners) collectively bring this proceeding challenging respondents' denial of their respective applications for tax benefits following their renovations of residential rental properties. 16018212016 NINTH AVENUE REAL TY LLC vs. CITY OF NEW YORK Motion No. 001 1 of 5 The caption Page 1 of 5 [*FILED: 2] NEW YORK COUNTY CLERK 10/10/2018 09:34 AM INDEX NO. 160182/2016 NYSCEF DOC. NO. 139 RECEIVED NYSCEF: 10/10/2018 reflects that the proceeding brought under Index No.: 160207/2016 was consolidated with this proceeding by Order of this court dated June 16, 2017 issued under that index number. By way of background, the Court has stated that In New York City, multiple dwellings may qualify for tax incentives designed to encourage rehabilitation and improvements (see Administrative Code of City of NY § 11-243 [previously§ J51-2.5]). Specifically, the City's J-51 program, authorized by Real Property Tax Law § 489, allows property owners who complete eligible projects to receive tax exemptions and/or abatements that continue for a period of years. Eligible projects include moderate and gut rehabilitations; major capital improvements (for example, asbestos abatement or boiler replacement); and conversions of lofts and other nonresidential buildings into multiple dwellings (see Administrative Code § 11-243 [b] [2], [3], [8]; 28 RCNY 5-03 [a]). Rental units in buildings receiving these exemptions and/or abatements must be registered with the State Division of Housing and Community Renewal (DHCR), and are generally subject to rent stabilization for at least as long as the J-51 benefits are in force (see 28 RCNY 5-03 [f]). The Department of Housing Preservation and Development (HPD) administers the J-51 program in the City of New York. Roberts v Tishman Speyer Properties, L.P., 13 NY3d 270, 280 (2009). Petitioners undertook "moderate rehabilitations" (mod · rehabs), which the Administrative Code defines as "a scope of work which (a) includes a building-wide replacement of a major component of one of the following systems: ( 1) Elevator, ( 2) Heating, ( 3) Plumbing, ( 4) Wiring, [and/ or] ( 5) Window; and (b) has a certified reasonable cost of not less than twentyf i ve hundred .dollars, exclusive of any certified reasonable cost for ordinary repairs, for each dwelling unit in existence at the commencement of the rehabilitation; except that the department of housing 160182/2016 NINTH AVENUE REAL TY LLC vs. CITY OF NEW YORK Motion No. 001 2 of 5 Page 2 of 5 [*FILED: 3] NEW YORK COUNTY CLERK 10/10/2018 09:34 AM INDEX NO. 160182/2016 NYSCEF DOC. NO. 139 RECEIVED NYSCEF: 10/10/2018 preservation and development may establish a minimum certified reasonable cost to be greater than twentyf i ve hundred dollars per dwelling unit pursuant to subdivision m of this section." Administrative Code § 11-243 (a) (2) (6) .. Rules promulgated by respondent HPD provide that mod rehabs are eligible for J-51 benefits (28 RCNY § 5-03 [a] [6]), except that "for alterations and improvements commenced after June 15, 1993, the actual assessed valuation of such multiple dwelling, including land, does not exceed an average of forty thousand dollars ($40,000) per dwelling unit at the time of commencement of construction of the alterations or improvements." 5-06 (d) (4) (i) (B). However, the Rules also provide that "the limitations set forth in this paragraph (4) • • (C) 28 RCNY § shall not apply to . alterations or improvements under§ 5-03(a) (6)" § 5-06 [d] [4] [ii] (28 RCNY [CJ) that is, mod rehabs. In justifying their denial of petitioners' applications, respondent HPD argues that Administrative Code § 11-243 (d) (b) (ii) mirrors the actual assessed valuation (AAV) (8) limitation on J-51 benefits for mod rehabs set forth in 28 RCNY § 5-06 (d) (4) (i) (B), without providing any parallel exemption from that requirement as set forth in 28 RCNY § 5-06 (d) (4) (ii) (C). Although not an argument specifically made on their initial application, the petitioners in their reply briefs argue that • 160182/2016 NINTH AVENUE REAL TY LLC vs. CITY OF NEW YORK Motion No. 001 3 of 5 Page 3of5 [*FILED: 4] NEW YORK COUNTY CLERK 10/10/2018 09:34 AM INDEX NO. 160182/2016 NYSCEF DOC. NO. 139 RECEIVED NYSCEF: 10/10/2018 respondents have misapplied the governing section of the Administrative Code based upon its specific statutory language. The court notes that "the function of a reply affidavit is to address arguments made in opposition to the position taken by the movant and not to permit the movant to introduce new arguments in support of the motion. Hosp., 182 AD2d 560, 562 Ritt by Ritt v Lenox Hill (1 5 t Dept 1992). Nevertheless, as the petitioners' argument about the respondents' failure to consider the application of Administrative Code § 11-243 (d) (8) (a) (ii) is similar to the argument originally made in the petitioning brief concerning the application of RPTL 4 8 9 ( 11) (a) ( 2) , and as the court at request of the respondents afforded the respondents the opportunity to submit a sur-reply thereto and considered the same, the court shall consider the statutory-based objections of the petitioners. As stated by the petitioners, Administrative Code § 11-243 (d) (8) (a) (ii) states in pertinent part that the AAV restriction in Administrative Code § 11-243 (d) (8) (b) (ii) does not apply to "alterations or improvements under paragraph five of subdivision b of this section" i.e. "alterations or improvements constituting a moderate rehabilitation." This statutory language is dispositive in this proceeding as the Administrative Code expltcitly states, as argued by the petitioners, that the AAV restriction is inapplicable to their 16018212016 NINTH AVENUE REAL TY LLC vs. CITY OF NEW YORK Motion No. 001 4 of 5 Page 4 of 5 [*FILED: 5] NEW YORK COUNTY CLERK 10/10/2018 09:34 AM INDEX NO. 160182/2016 NYSCEF DOC. NO. 139 RECEIVED NYSCEF: 10/10/2018 applications and therefore the HPD's determinations were affected by an error of law and must be annulled. CPLR 7803 (3); Guglielmone v Bd. of Educ. of Sayville Union Free School Dist., 253 AD2d 880, 881 (2d Dept 1998). As the statutory text of the Administrative Code is clear, there is no need to resort to legislative history or administrative guidance as extensively urged in the briefs by both parties. "Where the statute is clear and unambiguous on its face, the legislation must be interpreted as it exists. Absent ambiguity the courts may not resort to rules of construction to broaden the scope and application of a statute. It is fundamental that a court, in interpreting a statute, should attempt to effectuate the intent of the Legislature, and where the statutory language is clear and unambiguous, the court should construe it so as to give effect to the plain meaning of the words used." Doctors Council v New York City Employees' Retirement Sys., 71 NY2d 669, 674-75 (1988) (citations omitted). Here, Administrative Code § 11-243 (d) (8) (a) (ii) clearly states that the AAV limitation does not apply to mod rehabs and therefore respondent's determinations must be reversed and reconsidered. 10/10/2018 DATE CHECK ONE: X X APPLICATION: CASE DISPOSED GRANTED D NON-FINAL DISPOSITION t----4 GRANTED IN PART DENIED t----4 SETTLE ORDER SUBMIT ORDER t----4 CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN 160182/2016 NINTH AVENUE REAL TY LLC vs. CITY OF NEW YORK Motion No. 001 5 of 5 FIDUCIARY APPOINTMENT D D OTHER REFERENCE Page 5 of 5

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