ANDREW M. CUOMO Governor DARRYL C. TOWNS Commissioner/CEO June 2, 2015 Via Email Andrew McLaughlin Executive Director New York City Rent Guidelines Board 51 Chambers Street, Suite 202 New York, NY 10007 Dear Mr. McLaughlin: This is in response to your inquiry of May 4, 2015. General 1. Discuss the enforceability of the 2015 RGB preliminary guidelines. DHCR, as required by law, will administer the proposed guidelines if enacted. 2. Complaints – how many tenant complaints does DHCR handle per year? Is there currently a backlog? Approximately 7,864 tenant complaints were filed in fiscal year 2014 - 2015; compared to the 6,748 tenant complaints were filed in fiscal year 2013 - 2014. 3. How many rent stabilized units were registered with the DHCR in 2014? How many in 2013? Of the units registered with DHCR as stabilized in 2014, how many of those units were also registered as stabilized in 2013 and 2012? In 2014, 839,797 units were registered as subject to rent stabilization. In 2013, 832,105 units were registered as subject to rent stabilization. In 2012, 823,919 units were registered as subject to rent stabilization. The criteria for each year is the received date of 3/31 which is the end of that particular fiscal year (for example the 2010 Registration year includes data that was received by 3/31/2011 and the 2009 Registration year includes data that was received by 3/31/2010). Note: New York City only. Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org 4. How many heat complaints were filed in 2010, 2011, 2012, 2013 and 2014? How many rent reductions orders for heat violations are in place today? In 2010 there were 74 filed and 37 were granted. In 2011 there were 66 filed and 13 were granted. In 2012 there were 46 filed and 17 were granted. In 2013 there were 81 filed and 42 were granted. In 2014 there were 116 filed and 47 were granted. 5. How many rent stabilized tenants exercised their succession rights in 2014? 28,599 – as reported on the annual apartment registration. 6. What was the mean and median rent stabilized rents for units in buildings that are part of the 421a tax abatement program in 2014? The average rent stabilized rent in buildings due to 421-a tax abatement is $4,257; the median rent is $3,559. 7. What was the total number of rent reductions in 2014 and 2015? For the fiscal year 2013/2014 there were 1,079 rent reduction orders issued. For the fiscal year 2014/2015 there were 1,033 rent reduction orders issued These numbers reflect rent reduction orders issued for: Decreased Building-Wide Service (B); Decreased Individual Apartment Services (S) and Heat and Water Complaints (HW). 8. Has DHCR issued any directive, operational bulletin, etc., advising Roberts affected owners as to how to calculate rents, register, etc.? DHCR will work some of this information into existing operational bulletins, but as the Board should be aware, DHCR is actively processing Roberts rent setting cases that have been filed with DHCR, using the standards already set in litigation that has taken place in court cases and applying them to the facts specific to each case. 9. How many cooperative conversions have occurred in 2013/14? Not clear as to what data is being requested. If it is Cooperative and Condominium conversions, this question should be referred to the Attorney General’s office. 10. How does DHCR monitor fees landlords charge outside of rent (i.e. air condition fees, washing machine fees?) DHCR deals with these issues in the context of overcharge cases. It has operational bulletins and fact sheets. Although TPU can be asked this directly, it is our understanding that they, as well as ORA’s Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org enforcement unit, have been reviewing complaints about some practices in the context of certain owners and buildings. TPU has one consent decree/settlement requiring a portfolio-wide reformation of practices by an owner which is a matter of public record. Hotels 11. What is the total number of SRO/Hotel units registered with the DHCR in 2014? How many of these units are rent stabilized? How many are temporarily and permanently exempt? How many are registered as transient? How many as vacant? Rent Stabilized Units 12,810 Vacant Units 1,973 Temporary Exempts Units 3,889 *of these 2,632 are Transient Units Permanent Exempt Units Total Number of Units 12. 115 18,787 What is the total number of SRO/Hotel units registered with the DHCR in each of the following years: 2009, 2010, 2011, 2012 and 2013? In 2009 the total number of units registered was 22,250; In 2010 the total number of units registered was 22,587; In 2011 the total number of units registered was 22,254; In 2012 the total number of units registered was 21,473; In 2013 the total number of units registered was 17,792. 13. What is the average and median rent for rent stabilized SRO/Hotel units in 2014? The average rent stabilized rent in buildings due to SRO/Hotel is $2,471; the median rent is $1,316. 14. When a hotel tenant files an overcharge complaint, does DHCR look at the number of units rented to permanent tenants per the RGB Order and how does DHCR calculate the number of units rented to permanent stabilized tenants? Yes, where applicable. This requirement is not in every RGB Hotel Order. The onus is on the owner to prove the status of the subject units. A “permanent tenant” is defined in Fact Sheet #42 (Hotels, SROs and Rooming Houses) as an individual or his or her family member residing with such Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org individual, who: (1) has continuously resided in the same building as a principal residence for a period of at least six months; or (2) who requests a lease of six months or more, which the owner must provide within 15 days; or (3) who is in occupancy pursuant to a lease of six months or more even if actual occupancy is less than six months. Deregulation 15. How many overcharge complaints does DHCR receive annually from incoming tenants in newly luxuryderegulated apartments? We do receive complaints, but specific numbers for those that refer to vacancy and high-income decontrol are not available, as data is not maintained that would permit such a breakdown. 16. How many of the above complaints are found in favor of the tenant 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. 17. Has DHCR received many complaints or calls about vacancy and high-income decontrol? How many? Yes, ORA has received complaints and calls about vacancy and high-income decontrol. Staff are trained to address these issues and utilize printed material that is distributed to the public. 3,450 walk-in and telephone inquiries are received each week on all rent regulation topics. Sampling data of Rent Infoline calls indicates that 3% or less of the calls relate to vacancy and high income decontrol. 18. How many rent stabilized units have rents over $2,500? How many over $2,000? In New York City there are 84,599 rent stabilized units have rents over $2500. In New York City there are 147,436 rent stabilized units have rents over $2000. 19. How many rent stabilized units were removed from rent regulation from 2003-present per year? New York City only Total 2003 12672 2004 13317 2005 13917 2006 13574 2007 14107 2008 16921 2009 18,617 2010 16,907 2011 14,175 2012 9,499 2013 7,597 2014 9,013 The criteria for each year is the received date of 3/31 which is the end of that particular fiscal year (for example the 2010 Registration year includes data that was received by 3/31/2011 and the 2009 Registration year includes data that was received by 3/31/2010). Note: New York City only. Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org The Increase on Vacancy Leases 20. According to your data, what is the median 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 signing a vacancy lease? Please provide data by borough. The average percentage increase for New York City is 19%. 2014 Rent registration data is available that quantifies the total number of registrations received indicating vacancy leases by borough. County 21. Total # of Vacancy Average percentage Registrations of change Staten Island 754 15% Queens 14,216 21% New York 23,546 19% Brooklyn 17,287 20% Bronx 16,072 18% What is the citywide turnover rate per year - provide the information for the last 5 years by borough and community district, if possible? See “20” above. The Special Guideline and Fair Market Rent Appeals 22. Fair Market Rent Appeals: caseloads since RRRA of 1997? As of July 1997 there were at least 1,100 FMRA pending. As of May 2015 there are 29 cases pending. Please note that the number Fair Market Rent Appeals (FMRA) pending can be subject to change, as overcharge cases can be converted to FMRA’s and vice versa during processing where warranted. 23. How long does it take DHCR on average to process a Fair Market Rent Appeal? A Fair Market Rent Appeal (FMRA) is a specific type of overcharge complaint. Please see response to question #43. 24. What was the mean and median Maximum Base Rent (MBR) and Maximum Collectable Rent (MCR) for rent controlled apartments in 2014? In 2013? As you are aware most of our rental data comes from annual registrations. Since rent controlled rents are not required to be registered on an annual basis we don’t have this data available. Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org Major Capital Improvements 25. How long does it take DHCR on average to process MCI’s? The majority of cases are decided by the Rent Administrator within 10 months of filing. Some cases may take longer if the issues involved are complex, if there are multiple issues, or if the parties request additional time. 26. How many MCI applications were pending since May 2014? As of May 2014 there were 617. As of May 2015 there were 745. *data as of May 24, 2014 27. What was the total MCI dollar amount applied for by owners in 2014 and 2013, and the total amount actually granted by DHCR/HCR in 2014 and 2013? The total amount applied for by owners in 2013 is $282,170,096. The total amount applied for by owners in 2014 is $140,738,859. The total amount granted or granted in part in 2013 is $185,382,687. The total amount granted or granted in part in 2014 is $112,304,323. 28. How many MCI applications were processed in 2014? During this time period can you determine the percentage of these applications granted, where they are located in the City by borough and the amount of money these increases represent by borough? For those not granted what are some of the reasons why they were not approved? There were 770 cases processed in 2014. Approximately 89% of these cases were granted or granted in part. Expenditures totaling $112,304,323 were approved in these cases. For those MCI rent increase applications that were denied, the most common reasons for the denial were the owners' failure to provide adequate documentation or the installation did not qualify as a major capital improvement. Expenditures totaling $28,434,536 were denied in these cases. 29. Please provide aggregate MCI increase amounts claimed in the past 5 years by borough and community district. The total amount of MCI increase amounts claimed in the past 5 years is $1,027,445,050. Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org 30. Are there any plans to add other types of building improvements to the MCI approved list? An MCI rent increase is authorized by Section 2522.4 of the Rent Stabilization Code and are warranted when the improvements are building-wide; depreciable under the Internal Revenue Code, other than for ordinary repairs; required for the operation, preservation and maintenance of the structure; and replace an item whose useful life has expired. As the regulations contemplate that the “approved list” is not comprehensive DHCR occasionally receives applications from owners for rent increases based upon work performed on their buildings. These applications are reviewed on a case by case basis. 31. How many tenants had MCI’s in effect each year 2008-present? We do not have that information at this time. 32. What is the total number of MCI applications filed in 2013, 2014, and 2015 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 heating system MCI’s are based on fuel oil conversions, in order to comply with local law. 33. How much in rent increases per apartment has HCR allowed in MCI’s in 2013/2014? The average MCI rent increases per room for 2014 was $10.77 The average MCI rent increases per room for 2013 was $8.71 34. Are professional fees eligible for MCI/IAI increases? Certain “professional” fees are eligible for compensation depending on the nature of the profession and the nature of the improvement. Preferential Rents 35. Discuss preferential rents – how many are there, where are preferential rents usually charged and how much, in general are preferential rents? A preferential rent is a rent charged that is less than the legal regulated rent. Approximately 28% of all registrations filed in 2014 indicated a preferential rent. Total New York City 2014 Registration indicating apartments with preferential: 238,573 Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org BRONX 51,186 BROOKLYN 58,806 NEW YORK 69,851 QUEENS 55,862 RICHMOND 2,868 The agency also prohibits the use of any other lease clause that conditions the payment of a discounted rent based upon the performance of an act by the tenant, such as the tenant’s payment of the rent electronically. The owner’s collection of higher rents based upon these clauses could be challenged by the tenant in a rent overcharge complaint with DHCR or can be reviewed by a court of competent jurisdiction. DHCR can also direct the removal of this type of clause from a lease, if the tenant files a lease complaint. 36. Of all units registered in 2014, how many units have preferential or ‘actual’ rents that differ from the legal registered rent? See "35" above. 37. The renewal of the Rent Stabilization Law in 2003 allowed owners to charge the legal registered rent upon renewal for those tenants who had been charged a preferential rent. How many units have gone from a preferential rent to the legal registered rent upon renewal since June 2003? Conversely, how many preferential rents since June 2003 are still preferential? A minimum of 11,310 when you compare 2013 and 2014 rent registration data. Harassment 38. Harassment: caseloads since RRRA of 1997 per annum? As of July 1997 there were 558 harassment cases. As of May 2015 there were 362 harassment cases. *data as of May 24, 2015 39. How long does it take DHCR on average to process a harassment case? A conference is held within thirty to sixty days after a complaint has been docketed. Following the conference, the case may remain open for several months while the unit monitors the case to insure that all issues have been resolved. Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org Processing harassment complaints often involves discrete stages, including mediation, investigation and formal hearing. Where the dispute between an owner and tenant is resolved early during the mediation or investigation stage, processing time is short. However, where an investigation has developed facts tending to show that an owner has engaged in a course of conduct intended to drive a tenant from a building, ORA ’s Enforcement Unit will seek the imposition of substantial civil penalties against such owner, and this may require an extensive administrative hearing. 40. How many tenants filed harassment complaints in 2014? For the fiscal year 2014/2015 there were 207 Harassment complaints filed. 41. How many findings of harassment have occurred since 2004? Many of the harassment cases that we have prosecuted have been settled with the owner agreeing to do certain work and pay a fine. Overcharge complaints 42. Overcharge complaints: caseloads since RRRA of 1997 per annum? As of July 1997 there were 8,878 overcharge cases. As of May 2015 there were 2,578 overcharge cases. *data as of May 24, 2015 43. How long does it take DHCR on average to process overcharge complaints? Most overcharge cases are decided in approximately 6 to 9 months, which the agency is constantly trying to improve. The amount of time to resolve a case is dependent on the facts and issues pertinent to that case. In other words, not all overcharge cases are created equal. For example, an overcharge case involving simply a late fee will move quicker to resolution than a case involving an unresolved pre-base date service complaint, an MCI rent increase, and a lease renewal complaint component. It cannot be overstated that if DHCR were to place an emphasis on speed (over other factors) in processing cases, the agency runs the risk of violating due process requirements, thus sacrificing the ability to issue quality determinations that can survive scrutiny by the courts; negatively impacting on the public’s ability to rely on DHCR’s decisions. DHCR’s function here is quasi-judicial and each overcharge complaint involves two adversarial interests, who are oftentimes each represented by counsel. Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org 44. What are the number of applications of Rent Reduction Based Upon Decreased Service – Individual Apartment (S) and Rent Reduction Based Upon Decreased Building-Wide Service (B) cases pending? As of May 2015 there were 405 Rent Reduction Based Upon Decreased Building-Wide Service (B) cases pending. As of May 2015 there were 1,473 Rent Reduction Based Upon Decreased Service – Individual Apartment (S) cases pending. *data as of May 24, 2015 45. How many overcharge applications per annum were pending prior to July 1997 and how many after? See "42" above 46. How many tenants filed for rent reduction orders in 2014? For the fiscal year 2014/2015 there were 3,446 rent reduction applications filed. Please note the Building-Wide service complaints have multiple tenants involve in each case. These numbers reflect rent reduction applications filed for: Decreased Building-Wide Service (B); Decreased Individual Apartment Services (S) and Heat and Water Complaints (HW). 47. How often does DHCR award treble damages in overcharge complaints? Although the Rent Stabilization Law places the burden on the owner to establish that the overcharge was not willful, the determination as to whether treble damages or the lesser penalty of interest is to be awarded in a particular matter is always driven by the specific facts of the case. There were 146 cases awarded treble damages the last fiscal year. 48. How many orders are now in effect for rent reductions? We do not have that information at this time. 49. How many tenants filed for heat and hot water complaints in 2014? How many orders are in effect now for heat and hot water violations? For the fiscal year 2014/2015 there were 116 heat and hot water complaints filed and there were 47 granted. Individual Apartment Improvements 50. When landlords submit increase requests due to 1/40th and 1/60 th increases, how many of these per year does DHCR receive and are the improvements submitted validated? Are these submissions under oath or under penalty of perjury? Owners do not submit increase requests pursuant to 1/40th or 1/60th increases; more commonly known as Individual Apartment Improvements. ORA does review both such increases in the context of tenant initiated complaints and complaints initiated on its own independent investigations usually done through TPU. The TPU response provides more information on the process. Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org 51. What was the percentage of apartments with Individual Apartment Improvements (IAI) in 2014? Can you breakdown the number of units per borough that registered an IAI in 2014? Of the rent registrations filed for apartments during 2014, 13,591 indicated that improvements had been made to the apartment. 52. BRONX 2,838 BROOKLYN 4,111 MANHATTAN 3,037 QUEENS 3,340 RICHMOND 265 TOTAL NYC 13,591 How many tenants had a 1/40 increase in each year 2008-present? We do not have that information at this time. 53. Has DHCR conducted an audit of 1/40th increases? Of those challenged by tenants, and investigated by DHCR, what has been the median amount of decrease? See "50" above. Non-Rent Fees 54. How many tenants have additional fess on their rent bill? This could include air conditioner surcharges, washing machine surcharge, etc. We do not have that information at this time. 55. Provide a list of all the HCR regulated non-rent fees and the information with the allowable amounts for each non-rent fees. Give detailed descriptions of HCR’s regulation on these fees. Please review the attached Operational Bulletins No. 2005-1 - Supplement No. 2 (Surcharges for Tenant-installed Washing Machines, Dryers and Dishwashers – Implementing), and No. 84-4 (29th Annual Update of Section B of Supplement to No. 1, Operational Bulletin 84-4 (Air Conditioners)). 56. Provide the history of when HCR started to allow landlords to collect non-rent fees and give detailed information of the data/basis that HCR has to set the non-rent fees amounts. For historical context on air conditioners, please see the attached Supplement No. 1 to Operational Bulletin 84-4 (MCI). For surcharges on tenant installed appliances, Operational Bulletin 2005-1. 57. What is HCR taking in consideration to increase these non-rent related fees amounts over the years? Provide a history and data of the non-rent fees increments over the years---Washing Machine fee currently is $20.76 a month from $13.62 a couple of years ago. How are these considerations different from the costs/expenses that we at the Rent Guidelines Board need to consider to decide on the % of yearly rent increase? Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org Operational Bulletin 2005-1 Issued March 24, 2005 Operational Bulletin 2005-1 Supplement 1 Issued July 14, 2009 Operational Bulletin 2005-1 Supplement 2 Issued January 29, 2014 Appliance Washing Machine Electrical Exclusion or Inclusion Buildings Exclusion Inclusion New York City (Rent Stabilized or Controlled) $13.62 $14.92 Dryer Exclusion Inclusion $0.00 $10.89 Dishwasher Exclusion Inclusion $3.77 $5.50 Washing Machine Exclusion Inclusion $16.82 $18.60 Dryer Exclusion Inclusion $0.00 $15.00 Dishwasher Exclusion Inclusion $4.74 $7.12 Gas Powered Dryers Exclusion Inclusion $0.00 $8.68 Washing Machine Exclusion Inclusion $20.76 $22.23 Dryer Exclusion Inclusion $0.00 $12.29 Dishwasher Exclusion Inclusion $5.17 $7.12 Gas Powered Dryers Exclusion Inclusion $0.00 $8.88 Attached are copies of Operational Bulletin 2005-1 and supplements that indicate the source of the data. 58. Are there HCR fact sheets about these no-rent fees regulations? Yes. HCR has a fact sheet and an annual update to an Operational Bulletin on Air Conditioner surcharges. HCR also has an update to an Operational Bulletin on surcharges for Dishwashing Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org machines, Washing Machines and Dryers. 59. How many tenants have filed fees related overcharge complaints? And what has been their outcomes? We are unable to compile data with regard to the specificity or types of overcharge complaints. 60. How long it takes to process a complaint? What is HCR doing to educate tenants on their rights? Processing time for a case is dependent upon the type of case, the complexity of the fact pattern and the need to acquire additional information/evidence. Variance from case to case prevents us from providing a response with a standard time frame. 61. Are landlords in their yearly rent registration notifying HCR that they are charging non-rent fees, how many tenants have additional fees on their rent bills? The rent registration system gives owners the opportunity to check fields pertaining to appliance surcharges and other charges. DHCR has no assurance that owners are entering this data accurately and has no data available on non- rent fees actually imposed on rent bills. 62. How is HCR making sure landlords are not violating HCR non-rent fees regulations? HCR’s printed material on lawful air conditioner charges and appliance surcharges is made available to the public on our website and at our offices. HCR processes complaints of rent overcharge, where non-rent fees are the basis of the complaint and issues orders that direct the elimination of unlawful charges and direct refunds to tenants. Owner Hardship Applications 63. How many Hardship applications were filed this past year? There were 2 applications filed in 2014. 64. What is the average time it takes to process a Hardship application? There is no "average time" for processing a hardship application. Generally these cases are filed and there are tax certiorari proceedings pending or filed and they can take many years to resolve. Since the tax is an element of calculating expenses we have to wait for the court proceedings to be completed prior to issuing an order. 65. How many Hardship applications have been granted in 2014 and 2015? None was found to qualify for a hardship increase. 66. How many Hardship applications are currently pending and how long have they been pending? There are currently 4 applications pending. Office of Rent Administration (ORA) Response to Tenant Protection Unit (TPU) Decisions 67. How frequently has a matter been not resolved at TPU then resulted in a proceeding at ORA? 153 cases have been referred for processing to the Office of Rent Administration. Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org 68. How often has ORA differed from TPU in its findings? ORA will always differ from TPU. TPU thru its investigation will examine the validity of IAIs. ORA does a four year review of the record. The same substantive rules are applied by ORA and TPU. A decision in any particular case is dependent on the facts and issues pertinent to that case. ORA conducts its own review of the facts and issues in any matter referred to it by TPU when calculating a legal rent and a possible overcharge award. 69. Does the DHCR impose treble damages based upon a TPU determination of overcharge? ORA will review the evidence, and where treble damages are warranted by the facts of the proceeding and ORA’s applicable practices (see Policy Statement 89-2), then they will be assessed. If you have any questions and /or comments, please let me know. Sincerely, Woody Pascal Deputy Commissioner WP: mb Gertz Plaza, 92-31 Union Hall St., Jamaica NY 11433 │www.nyshcr.org