INDEX NO. 501554/2014 FILED: KINGS COUNTY CLERK 04/17/2014 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 04/17/2014 ANDREW M. CUOMO GOVERNOR D4RRYL C. TOWNS COMM9$owFRiE0 tmm iia' or.iiiusiu. & OM'4LJITY I11M. MURNG ThYVUb COI?O11ON fltTO1 May 29 2013 Via Rm*It nd fland11eflvpn AOeNCY NV1W N1URK1,7A7U i*ouq FINN(2 AGENCY Naw Y OUSTTh 1*D1HLUHOLNC CJQfl.11QN W 1oR3 MWNTç1P kt flNr AANK MWCX 1O1flh1$NT Andrew McLaugMi n Executive Directpr New York City Rent Guidelines Board 51 Chambers Street, Suite 202 New York, NY 10007 Dear Mr. McLaughiin: C-DOOMMOIN This is in isponsc lo your inquiryof May 2,2013. I, Discuss the enforceability of the 2013 ROB preliminary guideline& • We do not foresee any preblem.t with admliilsiering tht proposed guideines. 2. In 2012, a Tenant Protction Unit was established within 11CR that would "proactively enforce landlord obligations and impose strict penalties for failum to comply with New York's rent laws." Please update the status of this unit. . This que4iwi has been addressed directly by the Tenant Po#ciion huh. 3. What is the total number of cases initiated by the Thnant Protection Unit since it was established in 2012? How many of those cases have resulted Lu an adjustment of the lca1 regulated rent? ' See "2" aba ye. 4. ComplaInts — how many tenant complaints does DHCR handle per year? Is there currently a backlog? Approximately 7423 lemint complaints were filed In fiscal year 2012-2013; compared to the 7,514 tefi ant complaints that were fited In fiscal year 20112012. 92.3 I Unlot lLn.Il SUee, 3anrnco, Nw Tcwk 11433 nyhcr.Qrg S. How many rent stabilized units wcrc registered with the DHCR in 2012? How many in 2011? Of the units registered with I-ICR as stabilized In 2012, how mary oft/rose unft,r were also registered as stabilized in 2011 and 2010? Ta 2012,823,919 units were registered as subject to rent stabilization. In 2011,814,500 unIts were registered as subject to rent stabilizatinit. Tn 2010,803,753 unIts were registered as subject to rent stabilization. The criteria for each year is the received date of3/l which is the end of that particular fiscal year (for example the 2010 Registration year includes data that was received by 31311201 1 and the 2009 Registiation year includes data that was received by 313112010). 6, How many rent stabilized tenants exercised their succession rights in 2012? 28,254 as reported on the annual apartment registration. 7. What was the mean and median rent stabilized rents for wilts in buildIngs that are part of the 421a tax abatcmcnt program in 20127 The average rent stabilized rent in buildings due to 421* tax abatement is $3,798; the median rent is $3,106. S. What was the total number of rent reductions in 2012 and 2013? For the flscal year 201112012 there wore 1,065 rent reduction orders issued. For the fiscal year 2012J2013 there were 1325 rent reduction orders Issued !Uric numbers reflect rent irdueflon ordcEs bsued ton Dccrscd IJu tna.Wkle Scrske (H); l)ecrcased tndh'ldumt Apadmcnt Servis (8) iid fl*i and Water Complalifis (11W). 9. How will t)HCR. be able to enforce whether a bWlding is heated with Oil vs Natural Gas? How will DHCR treat buildings that utilize beth oil and natural gas? Enforcetnont of the guidelines by DIICR occurs in the context of rentovereharge COSC&CItSC processing for overcharge complaints will be further lengthened as owners will have to provIde evidence asto the type of fuel used. 10. Is DHCR planning to issue any Fact Shed, Operational Bul1tin, or other policy statement on how to collect and recalculate the rents of apartments subjact to the minimum dollar increase under RGB Orders 40 and 41? GRIt has no current plans to issue any Fact Shct, Operational Bulletin or other policy statement on how to collect and recalculate the rents of aparlin. ents subject to the minhnum dollar increase under RGII Orders 40 and 41. II. What is DHCR's position on how to collect and recalculate the rents of apartments subject to the minimum dollar increase under RGB Orders 40 and 41? ORA will deal with the issues raised on a cue by case basis. Page 2of 11 12. When will units that were deragniated, but are now subjoc.i lo re-regulation as per the Roberts decision, be reflected in the DHC.R annual rent registration data? Will the Office of Rent Administration (ORA) be able to identify these units? And what is the prcess for owners to re-regulate these units? • Units "re-regulated" bscd on Roberts should be reflected in all registrations ror buildings on a going forward basis given the Court el' Appeals decision in Roberts and the Appdilnte Division hohllng that such deelsion thould be applied retroacth'ely. However, DUCR will not be requiring, nor wilL it be looking to accept amended i-egistrations for earlier periods on that basis for a number 61 reasons; • First, case Law to date has not held the faIlure to register (prior to the Appellate Division decision an rett activity) against owners as an indepeudent basis for overvharges • Second, such amended retroactive fiIins nisy serve to actually inisleid new tenants or tenants hi occupancy Into believing that their U*ners have been complying with any and all suók requirements of the Rent Stablliat1on Law from a much etrfler date than reflected by a going forward reglsteat[on Proposed Changes to the Rent Stb1Iiza1ion Code 13.In codifying exceptions to the four year statute of limitations concerning rent challenges and record.keeping requfrernetus. has DHCR considered how such changes will discourage compithiti owners from buying distmsscdfmisinanagcd buildings? • As noted by these questions, DHCR lies proposed amendments to the Rent Stabilization Code which are presently subject to review through a pblic comment period, which will Include a hearing where the concern reflected by these questions can he raised. In the interim, the Board is referred to 1111CR Regulatory Impact Statement and Regulatory Flexibility Analysis (generated as part of that process aiid is oi DLICRs website) which contabis i}HCR'e assessment of the heneffts and need for these modifications, balanced against these kinds of concerns 14.Owners already fice significant administrative costs in complying with the regulatory system, How will the proposed amcndmcnts (which include but arc not limited to additional notices to incoming teinmts, additional riders to leases, additional proceedings in order to uniend rent regisuations, additional recordkeeping for every apartment improvement perfonned, additional record-keeping for apartments with preferential rents) increase those costs? Will they impact smaller owners in a disproportionate way? See 4 13 above. Page 3 of ii Hotels 15 What is the total number of SROIHatel units registered with the DHCR in 2012? How many of these units ire rent stabilized? How many arc temporarily and permanently exempt? Ilow many are registered as transient? How many as vacant? Rent Stabilized Units Vacant Units Temporary Exempts UnIts i*f Lhce 3202 are Transient Units Pennanent Exempt Units 13,364 2,349 3,991 Total Nwnber of Units 19,757 53 16.\Vhat is the average anti median rent for rent stabilized SRO/Hotel uttts in 2012? The average rent stabilized rent In butlding due to SRO/flotcl Is SZO7Ij the medlait rentis$i,179. 17.When a hotel tenant flies an overcharge complaint 9 does DHCR look at the number of units rented to permanent tenants per the kGB Order and how does bHCFt calculate the numbei' of units reined to permanent stabil1ed tenants? Yes we look at the number of onUs rented to permanent tenants. To properly Implement the hotel guideline, ORA uses registratIon data to calculate the number of units rented to permuanent tenauts Deregulation 18, How many overcharge complaints does DHCLt receive annually from incoming tenants in newly lwa.ry.deregulared apanmeñts? We do receive complaints, but spedlic numbers for those that refer to vacancy and Iilgh-incoine decontrol are not available, us data is not maintained that would pennft such a breakdown1 19. How msxty of the above compainls are found in favor of the tënaxfl and how many are found in favor of the owner? We do not have statistics on this since the complaints are not categorized by type of tenancy. 20, Has DFICR received many complaints or calls about vacancy and high-income decontrol? How many? Yes, ORA has received eomp With and calls about vacancy and high-income dtcontrol. Staff are trained to address these Issues and utilize printed material that is distributed to the public. 3450 walk-In and telephone inquiries are received each Page 4 of 11 week on all rent regulation topics, Sau*pihtg dal* of Rent Infoline calls indicates that 3% or less of the calls relate to vacancy and high income decontrol. The Increase on Vacancy Leases 21. According to yotu data, what is the medlsn percentage increase taken by owners upon vacancy? In other words, what is the difference between what the previous tenant actually paid and what the new tenant is actually paying when sigiing a vacancy lease? Please provide data by borough The average percentage hicroase ror New York City Is 20%. 2012 Rent registration data is available that quantifies the total number of aigisiralions received Indicating vacancy leases by borough County Totd # of Vacancy Registrations RIchmond Queens NewVork Kings Bronx 789 14,396 21,922 17,604 16,155 Average percentage of change 21% 21% 21% 18% 22. What is the citywide turnover rate per year- provide the information for the last 5 years by bomugh and community d1ttict, if possible? See "IV' above. The Special Gukiethie and Fair Market Rent Appeals 23, Fair Market Rent Appeals: caseloads since R1(R.A of 1997? As of July 1997 there were at least 1,100 FMRA pending, As of May2013 there arc no eases pending. 24. How long does It take D}ICR on average to process a Fair Market Rent Appeal? This question is currently not applicable because are no FMRA cases pending. Page 9of it 25.WhiL was the mean and mdian Maximum ESSC Rent (MBR) and Maximum Reni(M)fbrtconrolled apaEtiients iü2Q12? in 201 1? Collectable As you are aware most of our rental datk comes front annual registrMions. Since ivbt controlled rents are not required to be registered u*i an annual basis we do&t have this data itvailable. Major Capital Imrovemént . . 26.I-tow long does it ftkc DHCR on avcragç to prcees MCM • The maJority of cases are decided by the Rent Administrator withtn 10 months of filing. Some cases may f.ke longer If the kae InvoWed are complex, f there are multiple issues, or If the parties teuest additional time. 27 How many MCI applications were pendIng snee May 2012? • As of May 2012 there were 904. As of May 2013 thCre,wer..8Oø. 19, Whatas the total MCI dollar amount applied forIby owners in 2012 ancI20 1and the total amount actually granted by D14CM1C1. in 2011 and 2012? • The total amount applied for by. owners In 2011 is $23,748,776 • Th. total *mom.t applied for by owners hi 2012 Is $160,015,593 • The total amount granted or granted in part In 2011. ts 3153,284,754. • Thi total amoUnt granted or granted in pait n 2012 l's $tZO,45$,727. 29 How many MCI ipphcations were processed in 20I1 During this tuneperiod can you delennhme the percentage of these applications ganled, where they are located inthe City by borough and the amount of money these mercases represent by borough? For those not granted what are some f the reasons why they were not approved? • There were 902 cases processed in 101i Approximately 83% orRa were granted or granted in part. Expenditures totaling $ 120455,721 were approved in these cases. For those MCI rent increase applicalons that were deified, the mast common reasons for the dvniI were the ownersi lmlIure to provide adequate documentation or the installation did not qna bfy as a major capital Imprvernent. . Page 6 of 11 30, Pleose provide aggregate MCI increase amounis ciamed in the past 5 years by bomugh and conunwlity district.. The total amount of MCI increase amounts claimed in the past S years is $899,1 11469. 31. Are these any plans to add other typcs of building improvements to the MCi approved list? Au MCI rent increase is authorized by Section 2522,4 of the Rent Stb11izadon Code and are warranted when the buprovements are buildlng.wide; depreciable under the Internal RevenUe Code 1 other than for ordinary repairs; required for the operation, prese!VntiOn and maintenance of the structure; mid replace an item whose useful tife has e*plred. As the regulations contemplate tb&t the "ipproved list" Is not comprehensive DHCR occasionally receives applications from owners for reid Inereses based upon work performed on their buildings These applications are reviewed on a case by case basis. 32, Wbat Is the ioaI number of MCI applications filed in 2011, 2012, nnd 2013 for work related to converting heating systems to cleaner fuels? How many of such applications did DHCR. grant? • DHCR does not keep statistics as to whether healing system MCI'S are based on fuel oil, conversions In order to comply With local law. 33. What type of work Is eligible fbr a rent Increase under R.SC 2522,4(a)(2XlIi)(A) - that Is an item or cquipmcnt that a stale or municipal agency has dctennhicd needs to be replaced as part of a gcrvcnlmcnt housing initiative? For campl; would work performcd pursuant to Local Law ii (building facades), Local Law 87 (energy relro..comn,issioning of base building systems), or moving away from #6 and #4 oIl, qual4 wider that provision? • The Rent Stabilizallon Code mandates that am owner maintain "required services" which Includes itot only the services provkicd on the date the accommodation became subject to Rent Stabilization, but any additional services required thereafter by applicable law.. The creation of a statutory standard for the maintenance of avh services by city law does not make, using an example from the qucsthm required maintenance under Local law 11 (te prevent failing masonry) a new requirement. Accordingly, each instance of owner compliance with Local Law 11 does not provide the owner with the opportunily for more rent under 2522.4(a)(iii) as an "increase In services or Improyeakents naeessaiy in order to comply with specific requirenients of law"4 The Rent Stabilization Code already provides for the entire exterior poiiittng work necessary for a building, as a building-wide improvement subject to an additional increase as a compensable MCI rent increasc Such an MCI has a usefi1 life of iS years (longer for other work suck as parapet brick work or resurfacing exterior walls, Other brick or façade work that an owner may find necessary in an Page Tofu intervening period before its u,sefiil life expires based on the owner's per*o die review under Local Law is m*intenance of au existing service.. Perentia! Rents 34. Discuss preferential rents - how many are ther; where are preferential rents usually charged and how much, in general are preferential rents? A preferential rent is a rent eharged that is less than the legal regulated rent Approxhnateir 26% of all registrations filed in 2012 indicated a preferential rent. Tote! New York City 2012 RegIstration tndle*tlng apartments with pefen1iak 221,346 Bronx:. flroOklyn Manhattan: Qñeens: Riebmornl: 4441 56,124 66,351 51,564 21896 'dmft ot ofMr 14 0 2013 35.Of all units registered in 2012 how many units have preferential or 'actual' rents that differ from the legal registered rent? See "34" above. 36.The renewal of the Rett Stabilization Law in 2003 allowed owneus to chage.Ithe legal rcgistered rent iqon rcnc'uul for those tenants who had been charged a p cfCrcntial renL How many units have gone front a preferential rent to the legal registered rent upon refleWal since June 20037 Conversely, how many preferential rents since June 2003 are still preferential? A nilnimum of 12,091 when you conpare 2011 and 2012 rent reglstr2tlon data. Harassnactit 37. Harssmcnt: easCloads since RRRA àí 1997 per annum? As of 3uly 1997 there were 558 harassment cases. As of May 2013 there were 291, *datR AS c1My I9 ZUIJ Page 8 of 11 38, How long does it take DHCR on 8vcrage Lo proecss a harassment case? A conference is held within thIñy to sixty days after * complaint has been docketed. Following the conference, the ease may remain open for several months while the unit nioidtors the case to insure that all issues have been resolved. Processing harassment complainti often involves discrete stages, including mediation, investigation and formal hearing. Where the dlsute betweefl an owner and tenant is resolved early during the niediaflon or Investigation stage, processing lime Is short. flowever, where an invesfigation has developed facts lending to show that an owner has engaged in a course of conduct intended to th+e a tenant from a building, ORA 'a Enforcement Unit will seek the linpositknt of subst*nthd civil penalties against suck owner, and this may require a lengthy adminIstrative hearing. Overcharge complaints 39. Overcharge complaints: caseloads thnce RRRA of 1997 per annum? As of July 1997 there were 8870 overcharge cases. As of May 2013 there were 3,078. fMsy 19 2013 40, How long does it thkc DHCR an average to process overcharge complaints? Most eases are decided in approxImately 8 to 9 months at the Rent Administrator and 5 mouths at the PAR level and we are constantly trying to improve that time. Notwithstanding, some eases have taken longer due to the issues Involved, complexity, and the recent Impact of high profile court case. 41, What axe the number of applications of Rem Reduction Based Upon Decreased ServiceIndividual Apartment(S) and Rent Redtictton Based I.Jl,on Decreased i3uilding-Wtdc Service (B) casCa pending? As of May2013 there were 243 Rent Reduction Based upon Decreased Building-Wide Service (B) cases pending As of May 2013 there were 535Rnt Reduction Based Upon Decreased Service Individual Apartment (8) cases pending, - dats as of May 19 2013 42. How many overcharge applications per wmum were pending prior to July 1997 and how marty after? See "39' above. Page 9 of 11 43. how of1cn does DHCR. award treble damagvs in cwcrchaTgc cDip3ainis? Aitbougb the Rent Stabil atkrn Lw V,latpA the burden on.the Owncrto *ablIsb' that the overcharge was not wittful p the determination as to whether treble damages or the tcsaer penalty of interest is to be awarded in a particular matter is always drnen by the specific facts of the case. h3dividualA#attWt6tlmpróvemtnt 44 When là sObinit due to 1140U and:.1I60 i rCase. hwm'yof these per year does DHCR receive and arc the improvements submitted validated? Are thsa submissions under oath or imder penalty of perjury? • The law does not require owners to apply for a 1/40 end 1160 rent mcrease. • However, where a tenant flies a rent chalteng; owners are required to substantiate improvements by submitting contracts, canceled cheeks, itenuzixi bills, and Invoices hi the context of Ike admhnstratwe proceeding • MI submIssions to DHCR provhe that while they need not be sworn to, false statentenla may subleet cha indMdual making the statement to the penalties provided by law. •. • . . . DHCnspetOr*, where itppropriate, vóiifr cl* us of individual apartment mprovemeirn. 45 What was the percentage of aparlinents with Individual Apartment Improvements ([Al) in 20 12? Can )'sw breakdown the irnnther of wiki per borough that registered ast L4!in 20117 • We were unable obtain this data. We wift forward to you under separate cover. dii 11406 Increases? Of those chaliengód by t4nants, atd rnvesugated by DHCP., whet has been the median amount of decrease? ORA does not audit 140 and 1/tO" Increases. They are subject to verification If a tenant ifica * rent o'veicherge coniplahil. Owner ffardsbip Applications ... . . . 47 Flow many Hardship applications were filed this past year? There were 0 ppiiCatioti5 tiled in 2012 4. What is the average line ii takes to process a H ,hi application? There Is no t'average tinic" for processing a hnrdship applicalion. Generally these cases are filed and there are tax Page 10. of 11 certiorari proceedings pending or filed and they can take many years to r*soIve. Since the tax is an demeni of ckuIating expenses we have to wait for the court procecdlngi to be completed prior to Issuing an order, 49 How many Hardship appIcations have been grancd in 2012 and 2013? None of the applications were found to qualify for a bard5hlp increase. 501 How many Hardship npp1iotions are currcnlly pending and how long have they been pcndn? There are currentty 5 applications pending. If you have a1y questions and for coinments please let me know. Sincerci L/, Woody Deputy Commissioner WP tub Page 11 of 11