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8200 REALTY CORPORATION ET AL. v. JOHN V. LINDSAY (08/27/69)

SUPREME COURT OF NEW YORK, SPECIAL TERM, NEW YORK COUNTY 1969.NY.42783 <http://www.versuslaw.com>; 304 N.Y.S.2d 384; 60 Misc. 2d 248 August 27, 1969 8200 REALTY CORPORATION ET AL., PLAINTIFFS,v.JOHN V. LINDSAY, AS MAYOR OF THE CITY OF NEW YORK, ET AL., DEFENDANTS Arthur Richenthal, David Abrams and Irving M. Moss for plaintiffs. J. Lee Rankin, Corporation Counsel (James Nespole, Harry Michelson, Jay A. Kranis and Victor Muskin of counsel), for defendants. Abraham J. Gellinoff, J. Author: Gellinoff


Abraham J. Gellinoff, J.

Author: Gellinoff

 Plaintiffs sue to have declared null and void the Rent Stabilization Law of the City of New York, hereinafter called Title YY (title YY of chapter 51 of the Administrative Code of the City of New York). During the pendency of this action they move to restrain the Mayor and the Administrator of the Housing and Development Administration of the City of New York (New York City Charter, § 1800 et seq.) from acting under or implementing Title YY.

The preamble to this new law states that it is a local law "to amend the administrative code of the city of New York, in relation to stabilization of rents in certain housing accommodations presently exempt from residential rent control by voluntary self-regulation by industry".

The law departs from the standard residential control system presently employed in which a government administration agency enforces the law. Title YY permits the owner of residential property not now controlled to place it either under standard rent control or under a real estate industry self-regulation organization which is permitted, within limits, to allow more and higher rent increases than under standard rent control.

Plaintiffs contend that Title YY provides for the administration of the regulation and control of rents by real estate industry stabilization associations, a rent guidelines board, and a conciliation and appeals board, and that it therefore violates the State enabling act (L. 1962, ch. 21, as amd. [Local Emergency Housing Rent Control Act, § 1 et seq.]).

The State enabling act transferred rent control from the State to the city. In section 1 (subd. 2) of the Act, the State Legislature found that "a serious public emergency continues to exist in the housing of a considerable number of persons"; that rent control is "necessary and designed to protect the public health, safety and general welfare"; that "the transition from regulation to a normal market of free bargaining" was "still the objective of state policy" but "must be administered with due regard for such emergency"; and that "the policy herein expressed should now be administered locally * * * by an agency of the city itself".

Section 1 (subd. 4) of the State enabling act prescribes how such "agency of the city itself" may be established. It provides that the Mayor shall "establish or designate an official, bureau, board, commission or agency of such city * * * to administer the regulation and control of residential rents and evictions within such city". The subdivision announces that it will thereafter in the section refer to the words "official, bureau, board, commission or agency" of the city as the "city housing rent agency". Accordingly, after thus directing the Mayor to establish or designate "an official, bureau, board, commission or agency of such city", the subdivision adds: "unless such city, acting through its local legislative body, shall have enacted * * * a local law or ordinance * * * prescribing a different method of establishing or designating a city housing rent agency"; meaning, unless the local legislative body shall have prescribed a different method of establishing or designating an "official, bureau, board, commission or agency of such city". The subdivision then states that "in such case such agency" -- the official, bureau, board, commission or agency of such city -- "shall be established or designated in accordance with said local law or ordinance".

In subdivision 5 of section 1, the State enabling act then empowers the city "acting through its local legislative body * * * to adopt and amend local laws or ordinances in respect of the establishment or designation of a city housing rent agency".

When the Act says in its "Legislative finding" (§ 1, subd. 2) that "the policy herein expressed should now be administered locally * * * by an agency of the city itself " (italics supplied), it means the policy must be administered by an agency responsible to the city, not to the State. The State enabling act grants the local legislature full power and discretion to determine the form and composition of the instrumentality administering rent control, but such instrumentality must be "an official, bureau, board, commission or agency of such city", established or designated as such by the local legislature.

Acting under the authority of the enabling act, the City of New York passed the New York City Rent and Rehabilitation Law (Local Law No. 20 of 1962, title Y of chapter 51 of the Administrative Code of the City of New York). For convenience this law will hereinafter be referred to as Title Y. Title Y vested the administration and enforcement of its provisions in the City Rent and Rehabilitation Administration, which was designated as the city rent agency. In 1967, by Local Law No. 58 of 1967, the City designated the Housing and Development Administration as the city rent agency to administer and enforce Title Y. Title Y is the law which presently governs rent control of housing accommodations completed before February 1, 1947. Title Y is administered by the duly designated city rent agency, the Housing and Development Administration (title Y, ch. 51, Administrative Code, § Y51-3.0, subd. [b]).

With the foregoing as a background, Title YY -- the law claimed to violate the State enabling act -- may now be considered.

Title YY was passed by the New York City Council on April 24, 1969 (Local Laws, 1969, No. 16 of City of New York), receiving 35 affirmative votes and 1 negative vote. It was approved by the Mayor on May 6, 1969. It takes effect immediately and expires on April 1, 1974 "unless rent control shall sooner terminate as provided in subdivision three of section one" of the State enabling act.

Under Title YY, the City Council establishes a rent guidelines board whose members are all appointed for a fixed term by the Mayor. The rent guidelines board is empowered to "establish a guideline for rent increases upon renewal leases or new tenancy to dwelling units covered by this law". In general, the maximum rental increases which Title YY permits the guideline to establish is not more than 10% for two-year leases and 15% for three-year leases over the rental charged on May 1, 1968. The rent guidelines board is empowered to prescribe other levels of fair increase under certain specified limitations, which "shall be filed with the City Clerk and published in the City Record".

Commencing July 1, 1970, and annually thereafter, the rent guidelines board is required to review the guidelines to determine if revisions are necessary after considering various factors set forth in Title YY affecting the real estate market (§ YY51-5.0). The members of the rent guidelines board are to be compensated at a fixed rate per day. Who is to compensate them is not stated. They are, however, to "be provided staff assistance by the housing and development administration" (§ YY51-5.0, subd. c) and "All agencies of the city of New York shall make available to the rent guidelines board information requested by it for purposes consistent with its responsibilities under this law" (§ YY51-5.0, subd. d, par. [3]).

Title YY also provides that a real estate industry stabilization association may be formed having as members no less than 40% of the dwelling units covered by the law. Such association "may register with the housing and development administration under the terms and for the purposes herein provided by filing with such administration copies of its articles of incorporation or association, copies of its rules, and such other information as the administration may require within sixty days of the effective date of this law."

To entitle it to registration with the Housing and Development Administration, the association must establish an appeals and conciliation board, the members of which are to be appointed for a fixed term by the Mayor with the approval of the City Council to act upon tenants' complaints and requests for increases by landlords based on hardship (§ YY51-6.0, subd. b, par. [3]).

Also, before an association may be registered, it must "adopt a code for stabilization of rents covering related terms and conditions of occupancy", and the code must be approved by the Housing and Development Administration (§ YY51-6.0, subd. b, par. [2]).

The Housing and Development Administration is mandated not to accept for registration any association unless it appears that "the association is of such character that it will be able to carry out the purposes of this law" and that its members are "required to agree in writing to comply with the code and to abide by orders of the conciliation and appeals board" (§ YY51-6.0, subd. b, pars. [4], [5]). Title YY specifically spells out in detail what the code must provide before the Housing and Development Administration may approve it.

For example, the code must "provide for a cash refund or credit to be applied against future rent, in the amount of the excess, if any, of rent paid since" January 1, 1969 over the permitted level of fair increases. It must specifically provide "that if a member fails to comply with any level of fair rent increase established under this law or any order of the conciliation and appeals board or is found by the conciliation and appeals board to have harassed a tenant to obtain vacancy of his housing accommodation, he shall not be a member in good standing of the association".

It must also provide "for the imposition of dues upon the association's members solely for the purpose of defraying the reasonable expenses of administration and authorizing the equitable allocation of dues among the association's members." (§ YY51-6.0, subd. b, pars. [10], [12].)

Furthermore, the "housing and development administration may, after notice and opportunity for hearing, suspend the registration of an association if it finds that the articles, code, rules or other conduct thereof do not conform to the requirements of this law and any such suspension shall remain in effect until such administration issues an order determining that such articles, rules, code or other conduct have been modified to conform with such requirements." (§ YY51-6.0, subd. d.)

In addition, the Housing and Development Administration is given power under the law "to promulgate such rules and regulations as it may deem necessary for the effective implementation of this law" (§ YY 51-4.0, subd. c).

In the July 16, 1969 issue of the New York City Record, the Housing and Development Administration published a notice setting forth that "The Real Estate Industry Stabilization Association of New York City, Inc." had filed with the Housing and Development Administration the papers and documents required by Title YY, together with a copy of the code, that the Association had been accepted for registration, and that its code, a copy of which was also published, had been approved. The Housing and Development Administration also published a copy of its proposed Rules and Regulations containing the following: "Section 3. Failure of Owners to Join Association, Suspension and Expulsion. Within ten days after a determination by either a conciliation and appeals board or an association that an owner is not a member in good standing, such board or association, as the case may be, shall transmit a copy of such determination to the administrator. Upon receipt of such a determination or upon a finding by the administrator that the owner of a dwelling unit subject to the rent stabilization law has not joined an association, the administrator shall cause the City rent agency, upon notice to the owner, to establish and register the lawful maximum rent for such dwelling unit pursuant to the provisions of Title Y of Chapter 51 of the Administrative Code based upon the rent charged ...


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