Rosario v. Diagonal Realty, LLC

9 Misc. 3d 681
CourtNew York Supreme Court
DecidedJuly 1, 2005
StatusPublished
Cited by7 cases

This text of 9 Misc. 3d 681 (Rosario v. Diagonal Realty, LLC) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rosario v. Diagonal Realty, LLC, 9 Misc. 3d 681 (N.Y. Super. Ct. 2005).

Opinion

OPINION OF THE COURT

Joan A. Madden, J.

In these three consolidated actions for declaratory and injunctive relief, seven rent-stabilized tenants are seeking to resolve the identical issue as to whether their landlords are authorized to decline continued participation in the federal section 8 rent subsidy program.1

Plaintiffs move for summary judgment seeking a declaration that the defendant landlords are obligated to continue accepting their section 8 rent subsidies. Plaintiffs contend that under [683]*683New York State’s rent stabilization laws they are entitled to renewal leases with section 8 subsidies, as the section 8 rent subsidy constitutes a material term and condition of their expired rent-stabilized leases. Plaintiffs further argue that under New York City’s J-51 tax law, the defendant landlords who are receiving J-51 tax benefits are prohibited from discriminating against section 8 recipients, and are, therefore, required to accept plaintiffs’ section 8 rent subsidies. In opposition, the defendant landlords argue that the amendment to the federal section 8 statute, which eliminated the so-called “endless lease” requirement, permits them to “opt out” of the section 8 program, and any provisions to the contrary in New York State’s Rent Stabilization Code and New York City’s J-51 law are preempted by the federal section 8 statute.

As discussed below, these issues have been resolved by a number of trial level courts in New York City and Westchester County, with a split in the opinions as to whether a landlord has the right to opt out of the section 8 program. To date, no appellate court has addressed and reconciled the conflict.2 I. Factual Background

The facts essential to the determination of this issue are undisputed. Plaintiffs are seven individual tenants who all reside in rent-stabilized apartments and all receive section 8 rent subsidies. Some have had section 8 subsidies since the inception of their tenancies, while others became eligible for the subsidies sometime thereafter. The five defendants are the plaintiffs’ landlords, and four of the five landlords are receiving tax abatements under New York City’s J-51 tax abatement program.3 The defendant landlords have all notified the plaintiff tenants and the New York City Housing Authority (NYCHA) [684]*684that they no longer wish to participate in the section 8 program, and will not be accepting the rent subsidy payments administered by the NYCHA. In notifying the tenants, the landlords gave them an opportunity to remain in their apartments and offered them rent-stabilized leases; however, the tenants would be responsible for paying the full stabilized rent amount without the section 8 subsidy. It is not disputed that none of the plaintiff tenants can afford their apartments without the section 8 subsidy.

In each instance, the NYCHA sent the landlord a letter stating its “legal position” that, under New York State law, landlords are not entitled “to opt out of the Section 8 program.” The NYCHA also sent a letter to the tenants explaining that “[w]e understand that your landlord has recently informed you that he or she has decided not to renew the Section 8 contract with the NYCHA for your apartment ... It is the position of the NYCHA that your landlord is not legally entitled to do that.” On July 22, 2003, the NYCHA’s Director of Leased Housing Department, Gregory A. Kern, issued a memorandum (LHD No. 03-26), addressing the legal issues arising from the attempts by landlords to opt out of section 8 for rent-stabilized tenants. Expressing the NYCHA’s disagreement with certain recent decisions from courts in Westchester County and from the Division of Housing and Community Renewal (DHCR), which found that a landlord is entitled to opt out of section 8, the memorandum explains that the NYCHA has “always taken the position that Section 8 subsidy constitutes an essential condition” of a rent-stabilized lease, and, therefore, the landlord cannot offer the tenant a renewal term without also renewing the section 8 subsidy. The memorandum states that the NYCHA

“discovered that several of our Section 8 landlords are attempting to implement those court and DHCR opinions . . . [and] are offering some Section 8 tenants renewal terms without Section 8 subsidy and declining to renew the corresponding HAP [Housing Assistance Payment] Contracts with NYCHA. Some landlord organizations are also promoting the view among our landlords that they can do this if they wish.”

The memorandum continues:

“Upon advi[c]e from the NYCHA Law Department, I am announcing here NYCHA’s position that Section 8 landlords in New York City are not entitled to [685]*685follow the DHCR and Westchester court opinion[s]. We believe those opinions were wrongly decided, whereas the earlier opinions by State courts in New York City were correct . . . [S]taff shall continue to enforce our standing policy, and all inquiring landlords shall be advised, that our landlords of occupied rent stabilized apartments must offer a continuation of Section 8 subsidy as a condition of renewals with their tenants. We shall abide by this policy unless and until ordered to do otherwise by a State court with jurisdiction in New York City.”

II. Section 8 Federal Rent Subsidy Program

Before examining the issues presented for determination, some background as to purpose and procedures of the section 8 program is instructive. In 1974, Congress amended federal housing law to create what is commonly known as the section 8 housing assistance program, with the intention of aiding “low-income families in obtaining a decent place to live, by subsidizing private landlords who would rent to low-income tenants.” (Cisneros v Alpine Ridge Group, 508 US 10, 12 [1993] [internal quotation marks and citation omitted], quoting 42 USC § 1437f [a].)

“Under the program, tenants make rental payments based on their income and ability to pay; the Department of Housing and Urban Development (HUD) then makes ‘assistance payments’ to the private landlords in an amount calculated to make up the difference between the tenant’s contribution and a ‘contract rent’ agreed upon by the landlord and HUD.” (Id.)

Section 8 authorizes the Secretary of HUD to enter into annual contribution contracts with local public housing authorities, which in this instance is the NYCHA, so that they may make assistance payments to owners of existing buildings.

When the NYCHA deems a tenant eligible for section 8 assistance, the NYCHA issues a voucher, and the tenant must then locate an apartment and a landlord “willing to lease the unit under the [section 8] program.” (24 CFR 982.302 [a], [b].) Upon locating an apartment, the tenant executes a lease with the landlord, which includes “the HUD-prescribed tenancy addendum.” (24 CFR 982.305 [b] [1] [ii].) Generally, the tenant is responsible for paying no more than 30% of his or her household income toward the monthly rent. (42 USC § 1437f [o] [2] [A].) At the same time, the landlord enters into a separate HAP [686]*686contract with the NYCHA, by which the NYCHA agrees to pay the landlord a subsidy equal to the balance of the fair market rent.

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Bluebook (online)
9 Misc. 3d 681, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rosario-v-diagonal-realty-llc-nysupct-2005.