OLR ECW, L.P. v De Abreu

[*1] OLR ECW, L.P. v De Abreu 2018 NY Slip Op 50365(U) Decided on March 19, 2018 Civil Court Of The City Of New York, Bronx County Lutwak, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 19, 2018
Civil Court of the City of New York, Bronx County

OLR ECW, L.P., Petitioner-Landlord,

against

Gloria De Abreu, Respondent "JOHN DOE" and "JANE DOE", Respondents-Undertenants.



22366/2016



Attorney for Petitioner:

Jason M. Simensky, Esq.

885 Second Avenue, 16th Floor

New York, New York 10017

(646) 374-0100

Attorneys for Respondent Carmen Pineiro:

Leneer Hutchinson, Esq.

Safety Net Project

Urban Justice Center

123 William Street, 16th floor

New York, New York 10038

(646) 602-5642
Diane E. Lutwak, J.

Recitation, as required by CPLR Rule 2219(a), of the papers considered in the review of Respondent's motion for discovery and Petitioner's cross-motion for summary judgment:

Papers/Numbered

Notice of Motion and Supporting Affirmation & Affidavit 1

Notice of Cross-Motion and Supporting Affirmation, Affidavit & Exhibits A-S 2

Affirmation and Exhibits A-C in Opposition to Cross-Motion 3

Supplemental Affidavit in Opposition to Discovery 4

Upon the foregoing papers, the Decision & Order on Respondent's Motion for [*2]Discovery and Petitioner's Cross-Motion for Summary Judgment, which are consolidated herein for disposition, is as follows:

BACKGROUND & PROCEDURAL HISTORY

Petitioner commenced this holdover eviction proceeding alleging that Respondents had failed to recertify their income as required by Section 42 of the Low-Income Housing Tax Credit ("LIHTC") Program and in violation of a low-income housing lease rider to their lease. The proceeding is predicated upon a Notice to Cure dated January 28, 2016 and a Notice of Termination dated March 10, 2016. It is undisputed that Respondent Gloria De Abreu[FN1] , a Rent Stabilized tenant, did not comply with Petitioner's request that she complete the LIHTC Program recertification process in 2015 and subsequent years to the present. Petitioner asserts that Respondent's failure to recertify constitutes a violation of a substantial obligation of her tenancy warranting her eviction under Section 2524.3(a) of the Rent Stabilization Code.

The Notice of Petition and Petition are dated April 5, 2016 and the case was calendared initially for April 27, 2016. After two adjournments, Respondent appeared by counsel who served and filed a motion for discovery, returnable June 24, 2016, seeking production of a copy of Respondent's original lease. Thereafter, following numerous additional adjournments for various reasons and other delays in the progress of this proceeding[FN2] , Petitioner filed a cross-motion for summary judgment returnable February 21, 2018 seeking a judgment of possession and issuance of a warrant of eviction against Respondent. Petitioner argues that it has established its prima facie case, that it is undisputed that Respondent failed to recertify her income, that such recertification is required as a matter of law and that Petitioner is accordingly entitled to summary judgment. Petitioner supports its motion with an affirmation of its attorney, affidavit of its agent and copies of various documents including the Notice of Petition and Petition and predicate no tices; its deed to the premises dated November 24, 2010; a Regulatory Agreement among Petitioner ("the Borrower"), "OLR ECW Housing Development Fund Company" ("the HDFC") and the New York City Housing Development Corporation ("HDC"), also dated November 24, 2010; the building's multiple dwelling registration statement; a fully executed Rent Stabilized Lease for the two-year term of April 1, 2011 through March 31, 2013 with a monthly rent of $1000; a State of New York Division of Housing and Community Renewal ("DHCR") 2017 Registration Rent Roll Report Effective April 1 2017, reflecting, inter alia, the registration of Respondent's apartment as Rent Stabilized, with a legal regulated rent of $1161.14 and an "Actual Rent Paid" of $1000; a fully executed "Residential Lease for Low Income Housing Tax Credit Properties" for the two-year term of April 1, 2011 through March 31, 2013 with a monthly rent of $1000; an "Addendum to Apartment Lease — Section 42" and a "Residential Lease Rider," both signed by Respondent on October 5, 2012; another identical "Residential Lease Rider" signed by Respondent on December 1, 2014; three Tax Credit Program Recertification Notices, dated August 1, 2015, September 4, 2015 and October 1, 2015; an HDC Tenant Income Certification form signed by Respondent on October 1, 2012; [*3]Employment Verification Forms signed by Respondent on May 5, 2011; and miscellaneous other income and household composition related forms signed by Respondent and dated in October 2012.

Petitioner's attorney explains in his Affirmation in Support that under its Regulatory Agreement with the HDC, and through the LIHTC Program, Petitioner receives federal tax credits in exchange for restricting occupancy of the building to low-income families, at reduced rents, for a period of at least 50 years. As a developer of a project participating in the LIHTC Program, Petitioner must certify its compliance with program requirements to remain eligible to receive the tax credits, including keeping "records of the annual income certification of each low-income tenant per unit and documentation to support each low-income tenant's income certification." Affirmation in Support at ¶ 34.

Petitioner's agent asserts that Respondent "completed an initial certification to be part of" the LIHTC Program, and then "signed various leases and addendums stating they would comply with the provisions of the LIHTC program," but then, despite Petitioner sending three reminder notices, a notice to cure and a notice of termination, failed to complete her recertifications for 2015, 2016 and 2017. Affidavit in Support at ¶¶ 4-6. Petitioner argues that Respondent's failure to recertify her income puts Petitioner at risk of losing the tax credits it is entitled to under the LIHTC Program. Affirmation in Support at ¶ 31. Petitioner "may incur serious financial losses", Affidavit in Support at ¶ 7, if Respondent does not comply with the LIHTC Program requirements, which "may discourage Petitioner from making new investments in affordable housing developments associated with the LIHTC program," id. at ¶ 8.

Petitioner acknowledges that one of the requirements of the Rent Stabilization Code is for landlords to offer renewal leases to tenants "on the same terms and conditions as the expired lease," RSC § 2522.5(g), but points out that an exception within that 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 ". Petitioner cites to OLR, MM, LP v Bracero (43 Misc 3d 1215[A], 988 NYS2d 524 [Civ Ct Bx Co 2014]), and argues that Bracero is controlling herein and warrants the granting of summary judgment to Petitioner.

As for Respondent's motion for discovery, Petitioner's agent asserts that Petitioner became the landlord of the premises on October 24, 2010 and does not have in its possession any leases that pre-date the one dated April 1, 2011.

In opposition to Petitioner's motion for summary judgment, Respondent's attorney argues that summary judgment should be denied as the regulatory agreement does not apply to existing tenants, such as Respondent, who do not seek reduced rents under the LIHTC Program. Respondent's attorney asserts that Petitioner failed to prove that Respondent seeks such a reduced rent under the LIHTC Program, Affirmation in Opposition at ¶ 21, that Respondent "is not seeking a reduced rent based upon her income," id. at ¶ 31, and that there are issues of fact and law as to "whether or not Respondent is mandated to sign LIHTC" recertification forms, id. at ¶ 22.

Respondent's attorney cites to an unreported decision in OLR ECW, LP v Soto (L & T Index # 42158/15, NYLJ 1202750743743 [Civ Ct Bx Co, decided Jan 16, 2016]), and describes that decision as holding that, "only if a low-income tenant, including a rent stabilized tenant, seeks a reduced rent pursuant to the LIHTC program, then the low income tenant must provide information verifying their income and assets in order to initially obtain a reduced rent and, subsequently, to continue receiving a reduced rent under the LIHTC program." Affirmation in [*4]Opposition at ¶ 26. Respondent's attorney distinguishes Judge Madhavan's decision in Bracero by stating that the Petitioner here, unlike in that case, "has not demonstrated that it will suffer any sanction as a result of respondent's failure to provide the information sought." Id. at ¶ 32. Respondent's attorney asserts that because Respondent already receives a housing subsidy through the New York City Family Eviction Prevention Subsidy ("FEPS") program she "would likely not be looking for an additional subsidy," and "could have been concerned that claiming LIHTC benefits could arguably jeopardize her present subsidy." Id. at ¶ 33.

Respondent's attorney also argues that enforcement of the LIHTC lease rider violates the "same terms and conditions" provision of the Rent Stabilization Code, RSC § 2522.5(g)(1) and that the rider is void under RSC § 2520.13 because it "subverts a protection afforded by the rent stabilization scheme." Affirmation in Opposition at ¶ 14.

LOW-INCOME HOUSING TAX CREDIT PROGRAM

In OLR, MM, LP v Bracero (43 Misc 3d 1215[A], 988 NYS2d 524 [Civ Ct Bx Co 2014]), a holdover proceeding, like this one, based upon the Rent Stabilized tenant's failure to certify their income and household composition for purposes of the LIHTC Program, the Hon. Jaya Madhavan framed the issue as follows:

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.

After examining the purpose and program requirements of the LIHTC Program, Judge Madhavan granted the landlord's motion for summary judgment, holding that, "[t]he 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." Bracero, supra.

Judge Madhavan provided the following description of the federal Low-Income Housing Tax Credit Program:

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 [*5]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 § 1.42-5[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]).

The regulatory agreement Petitioner signed with HDC covers the building where Respondent lives at 1744 Clay Avenue in the Bronx, as well as two other buildings, which collectively comprise a LIHTC project in which Petitioner "intends to rent 100% of the units in the Project including upon vacancy the Over Income Units to Low Income Tenants". The only exceptions are for apartments occupied by superintendents, certain students and any in-place "Over Income Tenants". The regulatory agreement requires Petitioner to "comply with all procedures of HDC and the Tax Credit Law [Sections 42 and 142 of the Internal Revenue Code]" concerning the initial and ongoing qualification of Low Income Tenants, including annual certifications of household income and size, "to determine whether each tenant currently residing in a Low Income Unit continues to qualify as a Low Income Tenant."

DISCUSSION

The proponent of a summary judgment motion under CPLR R 3212 must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form to demonstrate the absence of any material issues of fact. Winegrad v New York Univ Med Center (64 NY2d 851, 476 NE2d 642, 487 NYS2d 316 [1985]); Zuckerman v New York (49 NY2d 557, 404 NE2d 718, 427 NYS2d 595 [1980]). Once this showing has been made, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action; mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient. Alvarez v Prospect Hospital (68 NY2d 320, 324, 501 NE2d 572, 508 NYS2d 923, 925-926 [1986]); Zuckerman v New York (49 NY2d at 562, 427 NYS2d at 598). In opposing a motion for summary judgment, the nonmoving party "must assemble and lay bare its affirmative proof to demonstrate that genuine issues of fact exist" and "the issue must be shown to be real, not feigned since a sham or frivolous issue will not preclude summary relief." Kornfeld v NRX Technologies, Inc (93 AD2d 772, 461 NYS2d 342 [1st Dept 1983], aff'd 62 NY2d 686, 465 NE2d 30, 476 NYS2d 523 [1984]). Mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient. Fried v Bower & Gardner (46 NY2d 765, 767, 386 NE2d 258, 413 NYS2d 650 [1978]); Alvord & Swift v Stewart M Muller Constr Co (46 NY2d 276, 281, 385 NE2d 1238, 1241, 413 NYS2d 309, 312 [1978]). A motion for summary judgment should be granted where "[n]othing but conclusory [*6]assertion is offered" in opposition. Friends of Animals, Inc v Associated Fur Mfrs (46 NY2d 1065, 390 NE2d 298, 416 NYS2d 790 [1979]).

Petitioner has met its burden of proof as moving party. As to the material facts, it has produced copies of all documents needed to establish its prima facie case.[FN3] Further, it is undisputed that Petiti oner is subject to a regulatory agreement under which, inter alia, HDC agreed to provide a portion of the financing for Petitioner's acquisition and rehabilitation of the subject premises and Petitioner agreed that 100% of the apartments will be rented to low income tenants (as defined in the agreement) in exchange for federal tax credits, 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.

It is also undisputed that Respondent signed a Low-Income Housing Credit Lease, Lease Addendum and Lease Rider, all of which include provisions requiring Respondent to recertify her income and household size on an annual basis and to provide verification documentation. These documents confirm Petitioner's determination that Respondent is an "Eligible Tenant" whose income is within the low-income housing guidelines and Respondent's acknowledgement that she applied and was found eligible for low-income tenant status and agreed to complete annual income certification forms as required by the LIHTC Program. The Lease at ¶ 5(A) states that Respondent's apartment is designated as a "tax credit" apartment, and requires Respondent to recertify her income and household composition annually. Similarly, the Lease Addendum states that the premises are to be operated in accordance with the requirements of the LIHTC Program under Section 42 of the Internal Revenue Code and includes an "Income Certification" provision that states, "[f]ailure to provide accurate and timely income certification will constitute a breach of this Lease." The HDC Lease Rider states that a requirement of HDC's financing of the low-income housing project is that certain units, including Respondent's — "the unit governed by this lease", HDC Lease Rider at ¶ (i) - must participate in "an affordable housing program" for a period of time during which certain rules and restrictions apply, at the end of which, "in-place residents of units participating in the Program will benefit from certain continuing protections." It is undisputed that Respondent refused to recertify her income and other information about her household in 2015 and subsequent years.

Turning to the question of whether Petitioner is entitled to judgment as a matter of law, Respondent's admitted refusal to submit LIHTC Program recertification documents to Petitioner is a violation of a substantial obligation of her tenancy and is not in conflict with the Rent Stabilization Code's "same terms and conditions" provision. Bracero, supra, citing 2 Macon St Assoc, LP v Sealy (32 Misc 3d 52, 929 NYS2d 3535 [App Term 2nd Dep't 2011]).

As Petitioner has met its initial burden of showing that it is entitled to possession of the [*7]premises, the burden shifts to Respondent to produce evidentiary proof in admissible form sufficient to demonstrate the existence of a triable issue of fact. Haroust Corp v Yuen Chung Chin (155 AD2d 317, 547 NYS2d 289, 290 [1st Dep't 1989]).

Respondent has failed to meet her burden as nonmoving party. Respondent relies solely on the affirmation of her attorney, has not submitted her own affidavit and does not deny that she completed the initial income certification forms for the LIHTC Program or that the signatures on the LIHTC Lease, Section 42 Lease Addendum and HDC Lease Riders are hers. Rather, her attorney asserts that Petitioner failed to prove that Respondent "seeks a reduced rent pursuant to the LIHTC program, not merely that she allegedly signed paperwork demonstrating that she income qualifies for such program." Affirmation in Opposition at ¶ 21. Respondent's attorney asserts that it is Respondent's "right to choose not to participate" in the LIHTC Program, id. at ¶ 31, and speculates that Respondent "would likely not be looking for an additional subsidy" as she already receives a rent subsidy through the City's FEPS program[FN4] and "could have been concerned that claiming LIHTC benefits could arguably jeopardize her present subsidy." Id. at ¶ 33. An attorney's affirmation which is not based on personal knowledge and contains "mere conclusions, expressions of hope or unsubstantiated allegations or assertions" is insufficient to defeat a motion for summary judgment. Zuckerman v New York, supra (49 NY2d at 562, 404 NE2d at 720, 427 NYS2d at 598). Respondent has not demonstrated that she falls into one of the three exceptions — for superintendents, certain students and over-income in-place tenants - to the building's commitment to a 100% occupancy rate by low-income tenants. No material issues of fact have been raised as to whether Respondent applied for and was determined by Petitioner to be eligible for a "Low Income Tenant" designation residing in a "Low Income Unit" at the subject premises.

Nor has Respondent's attorney asserted any manner in which Respondent "is obliged to forgo their rights as a Rent Stabilized tenant" or how her rights as a Rent Stabilized tenant are "subverted" by the LIHTC Program's annual income recertification process. She already, apparently, participates in an annual income recertification process for the City's FEPS rent subsidy program, Affirmation in Opposition at ¶ 33, and the Rent Stabilization Law and Code also include provisions under which tenants may be required to certify their income to their landlords. Rent Stabilization Law § 26-504.3; Rent Stabilization Code Part 2531 ("Procedures for High Income Rent Decontrol").

As a Low Income Tenant residing in a Low Income Unit, Respondent was required to recertify her income and household size on an annual basis and her failure to do so constitutes a violation of a substantial obligation of her tenancy.[FN5] As in Bracero[FN6] , supra, Respondent's failure [*8]to timely cure her default after having been served with a Notice to Cure entitles Petitioner to terminate her tenancy under RSC § 2524.3(a) and now obtain a judgment of possession.

CONCLUSION

Petitioner's cross-motion for summary judgment is granted, Respondent's motion for discovery is denied as moot and the Clerk shall enter a judgment of possession in favor of Petitioner. However, pursuant to Section 754(4) of the Real Property Actions and Proceedings Law, issuance of the warrant of eviction is stayed fifteen days (ten days plus five for mailing) from the date of this Order to permit Respondent to substantially complete all recertifications required to date by the LIHTC Program. This constitutes the Decision and Order of the court, copies of which will be mailed to the parties' attorneys if not picked up in the courthouse today. Top of Form

_________________________

Diane E. Lutwak, HCJ

Dated: Bronx, New York

March 19, 2018 Footnotes

Footnote 1: While the Petition also names a "John Doe" and "Jane Doe" as respondents, no one other than Ms. De Abreu has appeared in the proceeding; accordingly, references herein to "Respondent" refer to Gloria De Abreu.

Footnote 2: Among other things, Petitioner had a change of legal counsel, effective September 19, 2017.

Footnote 3: While Petitioner did not attach a copy of Respondent's Answer to its summary judgment motion as required by CPLR R 3212(b), based on a review of the contents of the court file it appears that Respondent has not yet served and filed an Answer, even though she is represented by counsel and this case has now been pending for two years. Accordingly, the court deems a general denial to have been asserted. Prince George Assoc LP v Mais (44 Misc 3d 1202[A]), 997 NYS2d 100 [Civ Ct NY Co 2014]); 1872 Monroe Ave Assoc v Cogle (40 Misc 3d 1208[A], 977 NYS2d 668 [Civ Ct Bx Co 2013]); Vermeer Owners, Inc v Messer (24 Misc 3d 1233[A], 901 NYS2d 903 [Civ Ct NY Co 2009]).

Footnote 4: The court cannot help but note the short-sighted presumption underlying this concern, given that government-funded rent subsidy programs are of limited availability and subject to elimination when funding expires. See, e.g., Zheng v City of New York (19 NY3d 556, 973 NE2d 711, 950 NYS2d 301 [2012])(affirming dismissal of lawsuit challenging the City's discontinuation of the "Advantage New York" rent subsidy program).

Footnote 5: In making this ruling, the Court does not address the question of whether any other provisions of the LIHTC Addendum and Rider to Respondent's lease conflicts or is in harmony with the Rent Stabilization Law and Code such as to constitute a permissible or impermissible change to the terms and conditions of Respondent's original Rent Stabilized lease.

Footnote 6: To the extent Respondent's argument relies on an unreported decision, OLR ECW, LP v Soto (L & T Index # 42158/15, NYLJ 1202750743743 [Civ Ct Bx Co, decided Jan 16, 2016]), which purportedly addresses the same issue as Bracero with the opposite result, it cannot be considered as Respondent's attorney has not provided a copy of it as required by the Part K Rules and the Court has not been able to locate it on the NYLJ, Lexis, Westlaw and New York State Law Reporting Bureau websites.