7P.-I I .. NEW YORK STATE ANDREW M. CUOMO Homes & Community Renewal GOVERNOR DARRYL C. TOWNS CoMMIssIoNJCEO NEW YORK STATE DIVISION OF HOUSING & COMMUNITY RENEWAL HOUSING TRUST FUND CORPORATION STATE OF NEW YORK MORTGAGE AGENCY NEW YORK STATE HOUSING FINANCE AGENCY NEW YORK STATE AFFORDABLE HOUSING CORPORATION STATE OF NEW YORK MUNICIPAL BOND BANK AGENCY TOBACCO SEULEMENT FINANCING CORPORATION May 30, 2012 Via Email and Hand Delivery 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 April 27, 2012. 1. Discuss the enforceability of the 2012 RGB preliminary guidelines. We do not foresee any problems with administering the proposed guidelines. 2. In recent years there has been discussion between RGB members as to whether to include certain provisos in the RGB guidelines. For each of the following, please advise if the proviso is viable for DHCR to administer and enforce: • No renewal lease increases for buildings that contain immediately hazardous conditions until such time that HPD can verify through its own inspection that the landlord is properly maintaining the building. • A proviso that prohibits renewal lease increases for rent stabilized units if they have not been registered with the DHCR. • A proviso that does not permit renewal lease increases for buildings with a substantial percentage of deregulated units. • Our system provides for the disallowance of lease increases based upon service reductions and non-registration. • Where an overcharge complaint is filed, an apartment's registration status is addressed. • The law allows for deregulation when the facts warrant. 92-31 Union Hall Street, Jamaica, New York 11433 nyshcr.org Is 3. In Governor Cuomo's State of the State address he announced the creation of a Tenant Protection Unit within HCR that would "proactively enforce landlord obligations and impose strict penalties for failure to comply with New York's rent laws." Please update the status of this unit. The Tenant Protection Unit is a separate unit within HCR - that works with its colleagues at the Office of Rent Administration. It has been allocated a staff of 25 including Deputy Commissioner Richard White as its unit head. It is a new unit that is still under formation, as such its final staffing, policies and procedures are all under review. 4. Complaints - how many tenant complaints does DHCR handle per year? Is there currently a backlog? Approximately 7,514 tenant complaints were filed in fiscal year 2011-2012; compared to the 7,163 tenant complaints that were filed in fiscal year 20 10-2011. 5. How many rent stabilized units were registered with the DHCR in 2011? Flow many in 2010? Of the units registered with HCR as stabilized in 2011, how many of those units were also registered as stabilized in 2010 and 2009? In 2011, 814,500 units were registered as subject to rent stabilization. In 2010, 803,753 units were registered as subject to rent stabilization. In 2009, 808,643 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). 6. How many rent stabilized tenants exercised their succession rights in 2011? 1,469 - as reported on the annual apartment registration. 7. What was the mean and median rent stabilized rents for units in buildings that are part of the 421a tax abatement program in 2011? The average rent stabilized rent in buildings due to 421-a tax abatement is $3,850; the median rent is $3,236. 8. What was the mean and median rent reported by owners who filed Initial Rent Registration Forms for 2011? The average rent reported by owners who filed Initial Rent Registration Forms for 2011 is $2,606 and the median rent is $1,818. 9. What was the total number of rent reductions in 2011 and 2012? For the fiscal year 2010/2011 there were 1,192 rent reduction orders issued. For the fiscal year 2011/2012 there were 1,065 rent reduction orders issued. Page 2 of 10 These numbers reflect rent reduction orders issued for: Decreased Building-Wide Service (B); Decreased Individual Apartment Services (S) and Heat and Water Complaints (HW). How will DHCR be able to enforce whether a building is heated with Oil vs. Natural Gas? 10. How will DHCR treat buildings that utilize both oil and natural gas? Enforcement of the guidelines by DHCR occurs in the context of rent overcharge cases. Case processing for overcharge complaints will be further lengthened as owners will have to provide evidence as to the type of fuel used. 11. Is DHCR planning to issue any Fact Sheet, Operational Bulletin, or other policy statement on how to collect and recalculate the rents of apartments subject to the minimum dollar increase under RGB Orders 40 and 4 1 ? ORA has no current plans to issue any Fact Sheet, Operational Bulletin or other policy statement on how to collect and recalculate the rents of apartments subject to the minimum dollar increase under RGB Orders 40 and 41. 12. 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 case by case basis. 13. What is DHCR's position on the rents that can be legally charged for apartments that had been deregulated in buildings receiving J-51 tax benefits prior to the Court of Appeals holding in Roberts v. Tishman Speyer Properties, L.P.? This matter is being litigated in the New York State Supreme Court and DHCR is closely monitoring this matter. Hotels 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, we look at the number of units rented to permanent tenants. To properly implement the hotel guideline, ORA uses registration data to calculate the number of units rented to permanent tenants. Deregulation How many overcharge complaints does DHCR receive annually from incoming tenants in 15. newly luxury-deregulated 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. Page 3 of 10 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. The Increase on Vacancy Leases 18. 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 20%. 2011 Rent registration data is available that quantifies the total number of registrations received indicating vacancy leases by borough. County Total # of Vacancy Registrations Richmond Queens New York Kings Bronx 667 13,867 20,722 17,113 15,097 Average percentage of change 21% 22% 20% 19% 19% 19. What is the citywide turnover rate per year - provide the information for the last 5 years by borough and community district, if possible? See "18" above. The Special Guideline and Fair Market Rent Appeals 20. Fair Market Rent Appeals: caseloads since RRRA of 1997? As of July 1997 there were at least 1,100 FMIRA pending. As of May 2012 there is one case pending. Page 4 of 10 21. How long does it take DHCR on average to process a Fair Market Rent Appeal? This question is currently not applicable because only one FMRA case pending. 22. What was the mean and median Maximum Base Rent (MBR) and Maximum Collectable Rent (MCR) for rent controlled apartments in 2010? In 2009? 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. Major Capital Improvements 23. 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. 24. How many MCI applications were pending since May 2011? As of May 2011 there were 1,155. As of May 2012 there were 904. *data as of May 20, 2012 25. What was the total MCI dollar amount applied for by owners in 2011 and 2010, and the total amount actually granted by DHCR!HCR in 2010 and 2011? • The total amount applied for by owners in 2010 is $197,771,725. • The total amount applied for by owners in 2011 is $238,748,776. • The total amount granted or granted in part in 2010 is $139,112,623. • The total amount granted or granted in part in 2011 is $153,284,754. 26. How many MCI applications were processed in 2011? 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 1,069 cases processed in 2011. Approximately 80% of these cases were granted or granted in part. Expenditures totaling $153,284,754 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. Pages of 10 27. 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 $875,341,234. 28. 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 base upon work performed on their buildings. These applications are reviewed on a case by case basis. Preferential Rents 29. 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 20% of all registrations filed in 2011 indicated a preferential rent. Total New York City 2011 Registration indicating apartments with preferential: 203,408 Bronx: 42,537 Brooklyn: 50,406 Manhattan: 60,278 Queens: 47,669 Richmond: 2,518 *datfl as of May 16, 2012 30. Of all units registered in 2011, how many units have preferential or 'actual' rents that differ from the legal registered rent? See 1129" above. 31. 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? A minimum of 11,547 when you compare 2010 and 2011 rent registration data. Page 6 of 10 Harassment 32.Harassment: caseloads since RRRA of 1997 per annum? • As of July 1997 there were 558 harassment cases. • As of July 2000 there were 344. • As of July 2001 there were 310. • As of July 2002 there were 310. As of July 2003 there were 375. • As of July 2004 there were 302. • As of May 2005 there were 265. • As of May 2006 there were 268. • As of May 2007 there were 263. • As of May 2008 there were 344. • As of May 2009 there were 287. As of May 2010 there were 341. As of May 2011 there were 335. As of May 2012 there were 315. *data as of May 20,2012 33.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. 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 a lengthy administrative hearing. Page 7 of 10 Overcharge complaints 34. Overcharge complaints: caseloads since RRRA of 1997 per annum? • As of July 1997 there were 8,878 overcharge cases. • As of July 2000 there were 3,265. • As of July 2001 there were 1,216. • As of July 2002 there were 894. • As of July 2003 there were 824. • As of July 2004 there were 767. As of May 2005 there were 848. • As of May 2006 there were 607. • As of May 2007 there were 867. • As of May 2008 there were 1,038. • As of May 2009 there were 1,815. • As of May 2010 there were 2,074. • As of May 2011 there were 2,521. • As of May 2012 there were 3,035. *data as of May 21, 2012 35. How long does it take DHCR on average to process overcharge complaints? • Most cases are decided in approximately 8 to 9 months at the Rent Administrator and 5 months at the PAR level and we are constantly trying to improve that time. Notwithstanding, some cases have taken longer due to the issues involved, complexity, and the recent impact of high profile court case. 36. 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 2012 there were 157 Rent Reduction Based Upon Decreased Building-Wide Service (B) cases pending. • As of May 2012 there were 708 Rent Reduction Based Upon Decreased Service - Individual Apartment (S) cases pending. *dath as of May 20, 2012 Page 8 oflO 37. How many overcharge applications per annum were pending prior to July 1997 and how many after? • See 11 34" above. 38. 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. Individual Apartment Improvements 39. When landlords submit increase requests due to 1140th and 1160th 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? • The law does not require owners to apply for a 1/40 rent increase. • However, where a tenant files a rent challenge, owners are required to substantiate improvements by submitting contracts, canceled checks, itemized bills, and invoices in the context of the administrative proceeding. • All submissions to DHCR provide that while they need not be sworn to, false statements may subject the individual making the statement to the penalties provided by law. • DHCR inspectors, where appropriate, verify claims of individual apartment improvements. 40. What was the percentage of apartments with Individual Apartment Improvements (IAI) in 2011? Can you breakdown the number of units per borough that registered an L41 in 2010? • Of the rent registrations filed for apartments during the period April 1, 2011 through March 31, 2012, 19,475 indicated that improvements had been made to the apartment. 41. 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? • DHCR does not audit 1/40 1h increases. They are subject to verification if a tenant files a rent overcharge complaint. Owner Hardship Applications 42. How many Hardship applications were filed this past year? • There were 3 applications filed in 2011. Page 9 of 10 43. 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. 44. How many Hardship applications have been granted in 2011 and 2012? None of the applications were found to qualify for a hardship increase. 45. How many Hardship applications are currently pending and how long have they been pending? There are currently 7 applications pending. If you have any questions and br comments, please let me know. Sincerely, Woody Pascal Deputy Commissioner WP: mb Page 10 of 10