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RSA tries to join NYC repair suit.

The Rent Stabilization Association filed a motion for permission to intervene in a Bronx Housing Court case.

A temporary restraining order has already been issued against Housing Preservation and Development (HPD) to keep it from collecting $50,000 in emergency repair liens from the owners. The New York City corporation Counsel received an adjournment until June 19 to respond to the motion.

Rent Stabilization Association (RSA) President John J. Gilbert III said they are seeking to declare the program, as administered by HPD, as unconstitutional and unenforceable. RSA is asking the court to declare that HPD violates owners' rights and permanently enjoin HPD from making repairs without first giving owners notice and the opportunity to make the repair.

"We have thousands of owners who have sent us documentation demonstrating the inequity of the ERP (Emergency Repair Program) as administered by HPD," Gilbert said, adding that almost every building has an example of an injustice of one fashion or another. "It ranges from being charged $35 for a service call that nobody knows what it's for to $60,000 to $70,000 against owners for these liens that have built up," he said.

The Emergency Repair Program, in most cases, responds to tenant complaints made directly to the city. Owners are then billed by the city.

Martin Heistein, RSA counsel, said many of the issues raised by the owner's counsel were similar to complaints made by every owner in the city. "The issues are systemic and really city-wide," said.

These include:

* Owners were billed for workmen who were never sent out to the building

* Owners were billed for service calls though no work was done by the emergency repair crews or the crews could not get access to the affected apartment through no fault of the owner

* Owners received bills and had no idea of what the bill was for

* Owners were billed by HPD for service call by emergency repair crew where the owner had already made the repair

* Owners properly made repairs that were removed by the city

* The city charged owners astronomical rates for work its repair crews made

* Where owners receive rent from the Department of Social Services, an emergency repair lien was deducted from the DSS check without the owner being notified by DSS or having an opportunity to contest the lien

Sometimes the tenants themselves would notify the owner they were not paying the rent because the DSS had turned it over to HPD. It was this last set of circumstances that opened the door for this latest RSA action.

Gene Reisman, a partner with Novick Edelstein Lubell Reisman Wasserman & Leventhal P.C., whose clients were involved in the initial action, said the city was seeking to recoup the amount of the ERP liens from tenants' rents who were receiving public assistance. The liens totaled $50,000 and as Reisman put it, enough is enough.

"We were attacking the propriety of the liens," he said.

These are marginal buildings, Reisman explained, and the owner must use the money to maintain the building. To take the rent puts the owner in a bad position, he added.

Reisman said they have requested tha HPD provide them with proof of the propriety of all of these bills. "To date they can only substantiate $1,200," Reisman said, "and there is no expectation from my end that they'll be able to provide the rest."

Gilbert said: "The city's getting ripped off and they're sending property owners the bill. Our complaint here is that there is not enough accountability within the existing programs and contractors are ripping off the city and it has to stop."

Initial plaintiffs are: 1146 Ogden Avenue Corp.; 1360 Plimpton Avenue Corp.; 136 West 170 Street Corp.; and 1201 University Avenue.

Reisman feels he was able to obtain the TRO from Judge Douglas McKeon simply because of the equities of the issues. He contacted the RSA since he thought "things" could be expedited for everyone else if the RSA could join in the action.

Scott E. Mollen, a partner in Graubard Mollen Horowitz Pomeranz & Shapiro, lead counsel for the RSA's intervening lawsuit, said the RSA has been receiving complaints from owners from all over the city about these very same improprieties.

The kinds of problems raised by the individual owners, in the view of the RSA, are really illustrative of a widespread pattern of abuse," he said.

We have not structured this as a class action," Mollen explained. "We want a declaratory judgment that the program violates the New York City code, and as administered by HPD, is unconstitutional."

Heistein said the suit was filed on behalf of the RSA members but other owners would benefit if the action is decided in their favor. One thing the suit does not do, he explained, is get any money back for individual owners.

"The first step would get into the case and have a judge declare the program unconstitutional and that the statute violates owners' rights," he said. Once that occurs it opens up other issues."

Since every individual owner may have a case against HPD, it would make sense for the court to hear and act on one case for all owners, he said. "We don't want to clog the courts either," Heistein added.

Mollen said the HPD program is a violation of due process as owners do not receive notice that a complaint has been made regarding a violation at their premises, nor do they receive an opportunity to remedy the violation.

HPD already publicly acknowledged that there have been problems with the system, Mollen said. "We would hope that HPD would rapidly and constructively respond by implementing corrective measures."

Gilbert said HPD is attempting to respond but it is unclear that any of its proposals will be put in place. There is also a time lag, he noted, because some work was done months ago by HPD and is first coming to the owners' attention.

Heistein said RSA is attempting to intervene to enjoin HPD from pursuing this program and force the agency to revamp its procedures. "We have every confidence that we will be able to intervene," Heistein added.
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Title Annotation:Rent Stabilization Association; New York City, New York, New York
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:May 13, 1992
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