We are concerned here with three separate appeals in article 78 proceedings brought by respective landlords to review determinations of the Office of Rent Control applying an updated schedule of the rental value of electric service now being excluded from maximum rents. The critical issue common to each proceeding is the propriety of the rent commissioner’s action in adopting an updated schedule of rent decreases to be applied in cases where landlords choose to terminate the supply of electrical service for which they are compensated by an enhanced maximum rent and, in lieu thereof, to place their tenants on a direct billing basis with Con Edison. In adopting such updated schedule, the Office of Rent Control delayed the processing on a system-wide basis of all applications for electric exclusion decrease orders while it was concerned with the preparation of the updated schedule of the rental value of electric inclusion. Before analysis of the proceedings, it is well to set forth a chronology and general observations applicable to each.
Rent Administrator’s Interpretation No. 7, revised December 27, 1968 and published January 2, 1969, provides in pertinent part with respect to tenants’ receiving unmetered electric current as a service included in the rent that "[t]he rewiring of a building has been uniformly held to be a major capital improvement and in order to foster such improvements the Administrator deems it appropriate to permit the decrease of such service where the rewiring of the entire structure is contemplated. The landlord shall apply * * * for permission to discontinue such service to the tenants and should set forth the fact that he has entered into a valid contract for the rewiring of the building in accordance with the provisions of Administrator’s Interpretation No. 1 and that he will pay all costs attendant the installation of meters and the transfer of service from the public utility company to the tenants on a metered basis or has previously rewired the building in accordance with Administrator’s Interpretation No. 1. The landlord will also be required to consent to the reduction of the
Matter of Taleff Realty Corp. v Joy
The petitioner landlord on April 3, 1974 filed an application with the Office of Rent Control to discontinue unmeteredunlimited electricity included in the maximum rent of its
In Matter of Parkchester Apts. Co. v Lefkowitz (51 AD2d
Of paramount significance in the case at bar is the fact that petitioner has not been the subject of selective discrimination. The delay was deliberate in the sense that it was pursuant to a system-wide moratorium on the processing of rental decreases based on a switch-over to metered electric service direct to tenants. The moratorium, according to respondent, was in effect while research was being conducted regarding the question of the rental value of the service involved. It is beyond cavil that the updating of the value of electric service is within the spirit of Administrator’s Interpretation No. 7 as revised December 27, 1968. Although that interpretation in contemplating rent reductions in an "amount which will reflect the present rental value of the service previously supplied” by the landlord, directed the reader’s attention to an accompanying schedule of rent decreases, the amounts set forth in such schedule could well be questioned in 1972, 1973 and 1974 when spiraling inflation and an oil embargo dramatically increased electric rates. Parenthetically, if the cost of electricity had dramatically declined during the same period and the rent laws had reflected such decline in diminishing maximum rents in the interim, it may well be assumed that the landlords would have been the first to claim that the prior schedule of decreases was unrealistically high, in comparison to the date when the reasonable rental value of electric service must be ascertained. Even under these assumed circumstances, a landlord might apply for the switch-over to obtain the benefit of no longer paying the electric bill of a tenant who unreasonably consumes electricity. Thus, it was reasonable for the rent commissioner to promulgate a new schedule. In this context, the cause of the delay in processing does not partake of that particularized discrimination or arbitrary nonrational exercise of power productive of injustice and inequity which warrants judicial censure. Of further significance, there was no change in the basic rules promul
Petitioner, recognizing that it does not have a vested interest in Administrator’s Interpretation No. 7 as revised in 1968 so as to entitle it to keep the rule unchanged (I.L.F.Y. Co. v City Rent and Rehabilitation Administration, 11 NY2d 480, 490-491), claims reliance on the pre-existing rent reduction schedule as it existed in 1968. This claim is illusory. In the interim, landlords have received increases in the electric inclusion factor reflected in increased rentals charged to the tenants. Essentially, the revised rent decrease schedule substitutes new rates more commensurate with those increases and in so doing attempts to effect greater equity between the landlords and the tenants where switch-over occurs. Clearly, the rent decrease schedule referred to in the Administrator’s Interpretation No. 7 revised in 1968 was reflective of the present rental value of service previously supplied by the landlord at that time, i.e., 1968. The extraordinary change in economic conditions relative to that service in the intervening years mandates that the schedule be updated to reflect the real present economic rental value of the service being supplied by the landlord prior to the switch-over. This is what the rent commissioner sought to accomplish and the system-wide freeze on the processing of switch-over applications had its genesis in this salutary endeavor.
The judgment of the Supreme Court, New York County (Gellinoff, J.), entered September 2, 1976, should be reversed
Matter of Seven Park Assoc. v Joy
In May of 1971, Park Hill Apts. Corp. as landlord filed an application with the Office of Rent Control to discontinue unmetered-unlimited electricity included in the maximum rent of its tenants at No. 7 Park Avenue, New York, New York. This application was granted by orders of the district rent director issued March 27, 1972, permitting the switchover and providing for decreases in the maximum rents according to the formula set forth in Administrator’s Interpretation No. 7 (revised Dec. 27, 1968) effective as of the date the decrease in service occurs. The tenants filed a protest seeking administrative review of these orders which culminated in an order of the city rent commissioner issued on May 1, 1973, denying the tenants’ protest. In his opinion denying the protest, the rent commissioner declared in pertinent part: "The record disclosed that the subject premises was adequately rewired in 1966 in accordance with the requirements of Administrator’s Interpretation No. 1. As a result thereof orders (2 AC 151145) were issued on March 24, 1966 increasing the maximum rents of controlled apartments in the subject building. It is the policy of this Office to encourage the preservation of the City’s existing housing supply. The rewiring of a building has been uniformly held to be a major capital improvement. In order to foster such improvements it has been deemed appropriate to permit the change from rent inclusion of electricity to direct payment by tenants to a utility where the rewiring of the entire structure is either contemplated or has been completed in accordance with the provisions of Administrator’s Interpretation No. 1. This policy, which has been in effect for approximately a decade, is reflected in Administrator’s Interpretation No. 7 (revised December 27, 1968). Said interpretation contains a Rent Decrease Schedule to be applied where permission is granted to eliminate the service of electrical inclusion * * * Based upon the entire evidence of record the Commissioner finds that the District Rent Director properly granted the landlord’s application for permission to eliminate the service of electrical inclusion; that the decreases in maximum rents allowed were properly computed in accordance with the Rent Decrease Schedule contained in Administrator’s Interpretation No. 7;
As a consequence, the landlord, Park Hill, completed the switch-over by the installation of individual meters accompanied by the rent reductions prescribed in the orders of March 27, 1972 and the direct billing to tenants by the Consolidated Edison Company as of July 1, 1973. The tenants then commenced an article 78 proceeding seeking judicial review of the determination of the district rent director as affirmed on protest. The landlord was not named as a party to such proceeding. While the proceeding was pending, the Arab oil embargo occurred. The proceeding terminated in an order of Special Term entered December 6, 1973, remanding the matter to the respondent city rent commissioner for further consideration, which order was based on the consent to such remission given by the petitioners (tenants) and the respondent. On December 7, 1973, the beneficial interest in the real property at issue was sold under a pre-existing contract to the petitioner herein, Seven Park Associates. Seven Park, as part of the transaction, apparently reimbursed Park Hill some $35,000 for switch-over cost (the installation of individual meters). Finally, on September 9, 1975, some 22 months after the remand, the city rent commissioner issued an order further remanding the tenants’ protest to the district rent director with a direction to calculate and order decreases in rent under the revised rent decrease schedule promulgated under the new Interpretation No. 7 revised on March 21, 1975. Petitioner instituted the instant article 78 proceeding to obtain judicial review and the setting aside of the September, 1975 protest determination of the respondent. Respondent moved to dismiss the petition on the ground that the protest order was not a final order.
Initially, it is noted that the September, 1975 protest order contains ministerial directions to the district director to calculate the rental decreases in accordance with the revised rent decrease schedule as applied to each particular tenant "which rent decreases shall be effective as of the date of the actual change-over from rent inclusion to direct electric service * * * to the various tenants”. In effect, the respondent applied the new March, 1975 revised rent decrease schedule retroactively to the March, 1972 orders of the district rent director. As such, the order is clearly final and the petition was appropriately entertained. The detailed chronology enunciated above
Accordingly, the judgment of the Supreme Court, New York County (Gellinoff, J.), entered on June 9, 1976, annulling the administrative order of September 9, 1975 and denying on the merits the respondent’s cross motion to dismiss the proceeding as premature and granting the petition in all respects should be affirmed, without costs and disbursements.
Matter of Amsterdam-Manhattan Assoc, v Joy
On April 1, 1973, the landlord contracted to rewire its property at No. 175 West 73rd Street, New York, New York and on January 9, 1974, filed an application with the district
In light of the general observations set forth herein and the extended analysis of the issues in Matter of Taleff Realty Corp. v Joy delineated above, it is concluded that the administrative determination must be sustained. The absence of selective discrimination in the nonprocessing stage while the 1968 rent decrease schedule was being revised and the propriety of
The judgment of the Supreme Court, New York County (Gellinoff, J.), entered June 9, 1976, should be reversed on the law, without costs and disbursements; the application should be denied and the petition dismissed.
Murphy, J. P., Birns, Capozzoli and Lane, JJ., concur.
Judgment, Supreme Court, New York County, in the first-entitled proceeding entered on September 2, 1976, unanimously reversed, on the law, without costs and without disbursements, the judgment vacated, the application denied and the petition dismissed.
Judgment, Supreme Court, New York County, in the second-entitled proceeding entered on June 9, 1976, unanimously affirmed, without costs and without disbursements.
Judgment, Supreme Court, New York County, in the third-entitled proceeding entered on June 9, 1976, unanimously reversed, on the law, without costs and without disbursements, the judgment vacated, the application denied and the petition dismissed.