NYC Tenement Museum's Bizarre Tenement Takeover Bid Via NY Transfer News * All the News That Doesn't Fit source - Tenant NYtenants Online/TenantNet 1/6/02 ----------------------------------------------------------------- IN THIS ISSUE ... 1. State seeks building to expand Tenement Museum (Villager) 2. Museum in Bizarre Bid to Wreck Building (Post) 3. Court Foils Rent-Rise Formula (Times) 4. NYT Q&A: Loss of Storage Space/Elevators aren't for Mattresses ----------------------------------------------------------------- STATE SEEKS BUILDING TO EXPAND TENEMENT MUSEUM The Villager, January 03, 2002 by Jennifer Jensen The Lower East Side Tenement Museum is good for New York. That is at least according to the Empire State Economic Development Corporation, which is trying to force the sale of an adjacent building so that the Tenement Museum next door can expand. Empire State is jockeying to take over 99 Orchard St., a turn-of-the-century, mixed-use building, through emminent domain, a process by which a property owner must sell because the government has decided it is in the public's best interest for them to do so. Expanding the already-cramped museum will allow the state to move ahead with three-year-old plans to affiliate the Tenement Museum with two other important symbols of the city's immigrant history: Ellis Island and the Statue of Liberty. The Tenement Museum, located at 79 Orchard St., is dedicated to telling the story of the living conditions of immigrant families living on the Lower East Side. "This project is in the public's interest because it will allow for the expansion of an important cultural museum. It will also allow for a partnership with Ellis Island and the Statue of Liberty," said Michael Mar, a spokesperson for the Empire State Economic Development Corporation. In 1998, the Tenement Museum was officially linked with Ellis Island and "Lady Liberty," but the benefits of such an association - namely joint marketing and financial support from the National Parks Service - were put off because the museum is currently too small to accommodate the influx of tourists from those sites. "We cannot accommodate any portion of the 5 million visitors who go to Ellis Island and the Statue of Liberty every year," said Ruth Abram, president of the Lower East Side Tenement Museum. "We're already turning people away." With 99 Orchard St., the museum would be able to accommodate an additional 200,000 guests a year, Abram said. In addition to the benefit of bringing in tourist dollars to the Lower East Side that would be helped by acquiring the building, Abram said construction at 99 Orchard had undermined the museum's foundation in the past, and that on four different occasions the Department of Buildings enforced a stop-work order on the project. According to a Department of Buildings spokesperson, two stop-work orders were enforced at the site in 2001, but she said there could have been more. She said the owner, 98 Allen Realty, currently has several permits for an ongoing rehabilitation of the five-story building. Congee Village Resturant is located in the building. Abram also said that alterations to the building date back to 1905 and that the structure is probably even older than that. Building plans call for a restaurant on the first floor and 15 apartments on the top four floors. Owners of 99 Orchard St. were surprised to hear about the news, and say they don't want to sell. "I don't know why they're doing that," said Jenny Ngo, a spokesperson for Peter Liang, owner of 98 Allen Realty, the company that owns the building. "They thought the building was empty. It's not. It has a restaurant and 15 apartments. We don't want to sell the building." E.S.D.C. has scheduled a public meeting on the project for Jan. 9, according to Ngo. For time and location, call 803-3100. Abram said the project is out of the Tenement Museum's control until the state acquires the building. "This is a state decision," said Abram. "If that should happen, they [the state] will sell that building to us." If they do end up getting the building, Abrams said the museum would probably re-create tenement apartments inhabited by immigrants on the Lower East Side during the 19th century. In their current space, all of the permanent exhibits are based on actual families who lived in the building at 97 Orchard St., which operated as a tenement from 1863 to 1935. Of the 7,000 families that lived in the building during that time, museum staff and volunteers have documented the lives of about 1,200. Since 99 Orchard St. has been nearly completely gutted and little of the original interior remains, Abrams said any new exhibit would be interpretations based on the history of immigrant communities in the entire neighborhood. "We would be free to interpret families who lived in the neighborhood but not necessarily in that building," she said. ----------------------------------------------------------------- MUSEUM IN BIZARRE BID TO WRECK BUILDING New York Post, January 4, 2002 by John Lehmann A New York museum is trying to kick out the owner and tenants of newly restored apartments on the Lower East Side - so it can spend $2 million in taxpayer money to convert the building into "historic" tenements. The Lower East Side Tenement Museum on Orchard Street has struck a preliminary agreement with the state to condemn the neighboring five-story brick building - even though the owners have just completed a multimillion-dollar refurbishment. The building, at 99 Orchard St., houses 15 apartments, which are fetching $1,650 a month in rent, and an acclaimed Chinese restaurant, Congee Village Restaurant. But under the museum's plan - which is being supported by the Empire State Development Corp. - the museum would acquire the building by eminent domain and use it to expand its facilities and tours showcasing immigrant life in the 1800s. One of the building's owners and residents, Lou Holtzman, 52, whose family has owned the building since 1910, said yesterday he was outraged the state would close down a flourishing business and drive out tenants. "I can't understand how this is for the public good," he said. "You would think the museum would have some appreciation of how immigrants to this country established businesses over decades and added to their communities. "My mother ran a shop in this building from the 1940s to the 1980s - in the days when the Lower East Side wasn't the most popular neighborhood." Holtzman, a recording engineer, co-owns the building with property investor Peter Liang. Holtzman's wife, Mimi Holtzman, said the museum's plan to install four tenement apartments in the building was like a "Disney World creation." "How can you build tenement-style apartments and then say they have historic worth?" she said. In planning documents obtained by The Post, the museum - which often works on immigrant projects with Ellis Island and Statue of Liberty Park - said the apartment building was built as a pair to the building which now houses the museum. The museum planned to spend $1.35 million to acquire the building from its owners and reimburse tenants and another $2.338 million to renovate it, the documents said. The owners believe the building alone is worth more than $3 million. The document said "historic" tenements would be installed as part of the renovation, along with a theater, classrooms and a storage facility. The plan said $2 million was "committed" to the project in a grant from the City Department of Cultural Affairs. ----------------------------------------------------------------- COURT FOILS RENT-RISE FORMULA New York Times, January 6, 2002 by Jay Romano Tens of thousands of tenants in rent- controlled apartments in New York City received good news last month when the state's highest court ruled that landlords may not calculate rent increases in a way that could have amounted, retroactively and going forward, to thousands of dollars per apartment. On Dec. 20, in a case that had been in court since 1997, the state Court of Appeals ruled 5 to 1 that a change in the way rent increases for New York City rent-controlled tenants are calculated — which resulted in lower increases — did not violate a law prohibiting the city from imposing more restrictive rent laws on landlords. "It's hard to calculate exactly how much money was involved here," said Stanley Panesoff, an urban housing specialist at the Community Training Resource Center, a tenant advocacy group in Manhattan. "But it is clear that rent-controlled tenants were facing huge retroactive rent increases and would be paying large rent increases for years into the future." Mr. Panesoff said that if the court had ruled in favor of the property owners, more than 30,000 rent-controlled tenants would have faced retroactive rent increases amounting to thousands of dollars each. In addition, he said, the city itself would have faced retroactive increases for apartments occupied by about 17,000 elderly rent-controlled tenants whose rents are subsidized by the Senior Citizen Rent Increase Exemption Program. "Hundreds of millions of dollars were at stake," Mr. Panesoff said. The decision affects only rent-controlled tenants in New York City. Such households, now numbering about 50,000, are in general those who live in housing built before February 1947 and who have occupied their apartments since before July 1, 1971. Rent-stabilized households, now numbering a little more than one million,are not affected by the ruling. These include tenants who live in buildings of six units or more built between Feb. 1, 1947, and Jan. 1, 1974, as well as tenants who moved into pre-1947 buildings after June 30, 1971, and tenants in buildings with three or more apartments constructed or extensively renovated since 1974 whose owners received special tax benefits. To appreciate the recent decision, Mr. Panesoff said, it is necessary to understand how rent increases are calculated for rent- controlled tenants. When the city in 1970 passed Local Law 30, which governs rent increases for rent- controlled tenants, it devised a formula that would protect tenants from precipitous rent increases while recognizing the property owner's right to earn a return on his investment. "When Local Law 30 was enacted, about 74,000 buildings were audited and a Maximum Base Rent was established for every rent-controlled apartment," Mr. Panesoff said. The M.B.R., as it is called, was based on factors that included the gross rental income of the building, operating expenses and the owner's return on his investment — an amount established at 8.5 percent of the market value of the property. Because the initial Maximum Base Rent for most apartments was considerably higher than the rent being charged, Mr. Panesoff said, Local Law 30 capped the amount a tenant's rent could be raised to 7.5 percent a year. The resulting figure — that is, the rent being paid plus any allowable increase — is known as the Maximum Collectible Rent, or M.C.R. Over the years, Mr. Panesoff said, the Maximum Collectible Rent figures eventually caught up with the Maximum Base Rent figures, which are themselves adjusted annually. As a result, the increase that a landlord may charge a rent-controlled tenant is usually the lesser of either 7.5 percent — the cap set by Local Law 30 — or the difference between the current rent and the new Maximum Base Rent allowed after the owner's allowable rate of return on investment is taken into consideration. And because the return on investment is based on the market value of the property, Mr. Panesoff said, that value can significantly affect the Maximum Base Rent. That set the stage for the case just decided by the Court of Appeals. Stephen Dobkin, a Manhattan lawyer who represented the tenants, explained that in 1981, the Legislature changed the way that the market value of a property relates to its assessed value. Generally speaking, Mr. Dobkin said, the assessed value of a property is less than the market value. The amount by which the assessed value must be multiplied to obtain the market value is known as the equalization ratio. So, if a property with an assessed value of $100,000 has a market value of $200,000, the equalization ratio is 2. Before 1981, Mr. Dobkin said, a single averaged ratio was used for all properties in the city. In 1981, however, the State Legislature passed a law that divided New York City properties into four classes for assessing property taxes, with each class having its own equalization ratio. But officials continued to use the single- class ratio when calculating Maximum Base Rent. It became apparent, Mr. Dobkin said, that the single-class ratio was producing erroneous market values. The Court of Appeals decision, for example, pointed out that in 2000, Class 1 properties — which include one-, two- and three-family homes — were assessed at about 8 percent of market value. The majority of buildings subject to rent control, on the other hand, were assessed at 45 percent of market value. In other words, Mr. Dobkin said, when an averaged equalization ratio was used to calculate a single-family house's market value from its assessed value, it would likely produce a calculated market value that was lower than the actual value. Conversely, when the single ratio was applied to a large apartment building, it would often produce a calculated market value that was higher than the actual value. In 1986, the Division of Housing and Community Renewal, the state agency that administers the rent laws, adopted the four-class ratio formula. The ultimate result, Mr. Dobkin said, was that the market values of large rental properties often ended up being lower — but more accurate — than they would have been using the single ratio formula. This resulted in a lower figure for the landlord's return on investment which, in turn, resulted in a lower Maximum Base Rent. At the time, however, the change had little practical effect because most Maximum Collectible Rents had not yet caught up with the Maximum Base Rents and most landlords continued to receive the 7.5 percent increase allowed by law. By 1997, however, the change started to have an impact and, as a result, the landlords successfully challenged the D.H.C.R.'s decision in court by contending that Local Law 30 required the single-class formula to be used to determine market value. Immediately thereafter, the city enacted Local Law 73 to amend the rent laws to require the use of the four-class system. And that, Mr. Dobkin said, had an enormous effect on the rent increases to which the landlords would be entitled. Under the single-class system the landlords wanted to use, for example, the Maximum Base Rents for the 1996-1997 cycle would have increased by about 32 percent. In other words, the landlords would have been able to increase rents by the maximum 7.5 percent every year for at least four years and probably more. But using the four-class system, the Maximum Base Rents, which are adjusted every two years, increased by only 3 percent for 1996-1997, 3.8 percent for 1998-1999, and 4.3 percent for 2000-2001. In 1997, property owners filed another lawsuit contending that by passing Local Law 73, the city violated a state statute known as the Urstadt Law, named after Charles J. Urstadt, a former commissioner of the D.H.C.R., which prohibits the adoption of any local law that makes the rent laws more stringent or restrictive. That is the argument rejected by the Court of Appeals. Jeffrey Metz, a Manhattan lawyer who represented the landlords, said: "Our position was that by adopting Local Law 73, and changing the equalization ratio that has to be used to calculate the Maximum Base Rent, the city made the rent laws more stringent. At the end of the day, the Court of Appeals decided that that was not the case." ----------------------------------------------------------------- Q&A New York Times, January 6, 2002 Loss of Storage Space [Q] I am a rent-controlled tenant in a building with 48 apartments. Ever since I first occupied my apartment more than 30 years ago, I and other tenants have had the use of storage space in the basement. The landlord has now notified us that we must vacate the storage space. This represents the elimination of a service I have enjoyed since moving into the building. Can the landlord do this without giving a rent reduction or other compensation? . . . G.F., Manhattan. [A] Colleen F. McGuire, a Manhattan lawyer who represents tenants, said that on Dec. 20, 2000, the Division of Housing and Community Renewal, the state agency charged with administering the rent laws, adopted amendments to the regulations governing rent-controlled and rent-stabilized tenants. One of the amendments, Ms. McGuire said, included a roster of conditions the agency considers "de minimis." "The removal or reduction of storage space is now considered to be a de minimis condition unless the storage space service was provided for in a rider to a lease," she said, adding that the loss of a de minimis service would not result in the landlord being required to reduce the rent or provide other compensation. Ms. McGuire added, however, that the agency's characterization of the loss of storage space as de minimis is not necessarily set in stone but could be subject to interpretation or modification by the agency itself or the courts. "There may be circumstances where a condition, although included in the D.H.C.R.'s roster, will nevertheless be found to constitute a decrease in a required service," she said. "So I would advise these tenants to file a decrease-in-services complaint with the D.H.C.R. and vigorously protest the elimination of the storage." The tenants should emphasize that the service has been provided for at least three decades, that it is important to the tenants who use it, that it will be quite expensive for the tenants to find replacement storage space outside the building and that, as a result, the termination of the use of the space will constitute a real and severe hardship for the tenants. "In other words," she said, "the tenants should file a complaint that demonstrates that the service is not de minimis, but is important and integral to the tenancy." Taking a Mattress Up in the Elevator [Q] I own and live in an apartment in Rego Park, Queens. A few days ago, late in the evening, I took in a twin- size mattress to accommodate an unexpected overnight guest. Two days later I was shocked when I got a letter from the management company saying that I had violated the "moving rule" and was being fined $500. I know that the rule is that moving must be done between 9 a.m. and 5 p.m., Monday through Friday, but that is for tenants who are moving in or out of their apartments. I have been living here and just took an item in. Is this a violation? . . . Hardy Zhang, Rego Park, N.Y. A Marc Luxemburg, a Manhattan co-op lawyer, said that without knowing the details of the moving rule, it is impossible to determine whether the letter writer violated it. However, he said, co-op and condominium boards generally have the power to establish rules and regulations pertaining to the use of common areas and common elements — like elevators — in the building. "Rules governing moving usually apply to any use of the common areas for moving bulky items, not just to moving the entire contents of an apartment," Mr. Luxemburg said. At the same time, he said, fines imposed for violating the rules should bear some relationship to the amount of damage the move might cause. "A fine of $500 for moving a mattress may be out of proportion to the potential damage the building might suffer," he said, adding that the letter writer might want to contest the amount of the fine by writing a letter to the managing agent or the board explaining the circumstances. If the board insists on the $500 fine, Mr. Luxemburg said, the letter writer would then have no recourse but to resolve the matter in the courts. ----------------------------------------------------------------------- The Tenant Network(tm) for Residential Tenants TenantNet(tm): http://tenant.net email: tenant@tenant.net Information from TenantNet is from experienced non-attorney tenant activists and is not considered legal advice. _______________________________________________ NYtenants-Online mailing list http://www.tenant.net/mailman/listinfo/nytenants-online ================================================================= NY Transfer News Collective * A Service of Blythe Systems Since 1985 - Information for the Rest of Us 339 Lafayette St., New York, NY 10012 http://www.blythe.org e-mail: nyt@blythe.org ================================================================= nytnyc-01.07.02-13:26:21-21858