March 2004
More Bad News on the Mitchell-Lama Front, by Jenny Laurie

A recent court decision supporting the landlord of a former Mitchell-Lama on the West Side of Manhattan could force hundreds of tenants to pay astronomical rent increases-and might have disastrous implications for thousands of other tenants who thought they were protected by rent stabilization when their buildings left the program. While tenants living in Mitchell-Lamas constructed after 1974 knew they were not covered by rent stabilization, this new decision threatens the housing tenure of tenants in older buildings, who thought they were safe after buy-outs.

“In the long range, this could be devastating for tenants in all the other buildings in this situation”, says Billy Gribben, one of the lawyers who represented the tenants in the case.

The decision, issued unanimously by the state Appellate Division in late February, allows KSLM-Columbus Apartments, owner of the Westgate complex on West 96th and 97th streets between Columbus and Amsterdam avenues, to raise rents in the three buildings beyond the regular guidelines under rent stabilization – how high has not yet been determined. The Appellate Division overturned a lower-court ruling that supported the state Division of Housing and Community Renewal’s position that the landlord was not entitled to any special increases.

The landlord applied to raise rents in the three buildings to an amount comparable to market rents in the neighborhood when he took the complex out of the Mitchell-Lama program six years ago. The DHCR refused, instead setting the rents at the same level that the tenants had been paying, with future increases limited by rent stabilization. The landlord appealed the agency’s decision.

The tenants, who intervened in the case, and the DHCR had argued that the building, built in 1968 and currently housing 460 families, was subject to the city’s 1969 Rent Stabilization Law. KSLM-Columbus then applied for a special rent increase, arguing that it was permitted to get one under the later New York State law, the 1974 Emergency Tenant Protection Act, which allows rents to be raised based on “unique and peculiar circumstances.” This provision would allow the owner to raise rents to “comparable rents,” which KSLM interprets as rents in the neighborhood for deregulated apartments – rents five to seven times the rents now paid by tenants.

Asked what might happen next, one of the lawyers from Himmelstein McConnell Gribben & Joseph LLP who represented the tenants, said that they were considering the options, and that “the issues have not been fully resolved.” For one, the DHCR has to determine what the word “comparable” applies to – unregulated apartments in the area, or similar rent stabilized apartments. If appealed, the case would go to the Court of Appeals, the state’s highest court, and would be argued by the state attorney general’s office.

McConnell and Serge Joseph, another lawyer on the case, urge other tenants citywide to pressure the attorney general’s office to support an appeal, as the decision will affect other buildings that were formerly in the Mitchell-Lama program and are now covered by rent stabilization.

McConnell pointed out that the landlord’s argument that the DHCR’s decision caused him economic disadvantage rings false, because the landlord chose to go into the Mitchell-Lama program, and then voluntarily decided to leave it. “No one compelled the landlord to leave the program. This is like a man killing his parents and then asking the court for leniency because of his disadvantaged state as an orphan.”

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