IS "SECTION 8" FOREVER?
Last week, in Rosario v. Diagonal Realty, LLC, our state's highest court issued an important decision impacting all landlords and tenants who participate in the "Section 8" Program.
For over three decades, Sonia Rosario has lived in a New York City rent-stabilized apartment and, for a good chunk of that time, has received benefits from the Tenant Based Assistance: Housing Choice Voucher Program, commonly known as “Section 8.”
In February 2003, Rosario’s landlord, Diagonal Realty, LLC, informed her that it would no longer accept Section 8 payments. When Rosario did not tender the full rent herself, Diagonal commenced a non-payment proceeding in the New York County Civil Court.
Rosario then brought suit in New York County Supreme Court seeking a declaration that Diagonal could not “opt out” of the Section 8 Program. The Supreme Court agreed and granted summary judgment in Rosario’s favor; an outcome which was affirmed by the Appellate Division, First Department, and the New York State Court of Appeals.
New York’s Rent Stabilization Code is a regulatory scheme that affords tenants an array of protections. One such protection is that landlords are required to provide renewal leases to these tenants "on the same terms and conditions as the expired lease, except where the owner can demonstrate that the change is necessary in order to comply with a specific requirement of law ....”
The state’s highest court concluded that the acceptance of payments made by the Section 8 Program is a “term and condition” of the parties' lease. Thus, a landlord who has accepted Section 8 payments on behalf of a rent-stabilized tenant may not later refuse to do so.
Diagonal argued that it was not required to continue accepting Section 8 payments due to a change in federal regulations allowing landlords to terminate participation in the program “without cause” upon the expiration of the lease. This new regulation, Diagonal contended, preempted the state’s Rent Stabilization Code.
The Court of Appeals rejected that interpretation and was of the opinion that Congress intended to allow state protections to remain in place when federal protections for Section 8 tenants were repealed.
Thus, while “free-market” Section 8 tenancies may end upon the expiration of a lease term, rent-regulated Section 8 participants remain "untouchable."
For a copy of the Court of Appeals's decision, please use this link: Rosario v. Diagonal Realty, LLC
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What is left unsaid in this and similar cases is the underlying disingenuousness of the owners who came up with the theory of "opting out" of accepting Section 8 subsidies for Rent Stabilized tenants. While hiding behind technical arguments concerning statutory construction, "endless leases" and other mumbo jumbo. the proponents of the theory really had a purely economic agenda.
These owners accepted the subsidies at a time when they were more than happy to have the government subsidize rents that were above the market rate, as well as guarantee payment every month.
The Section 8 recipients generally could not afford the unsubsidized rents for their apartments. If the Rent Stabilized owner, therefore, were allowed to avoid the requirements of the Rent Stabilization law and no longer accept the Section 8 subsidy, the tenant would be effectively evicted from that apartment. The owner could then proceed to increase the rent for vacancy, improvements, etc., collect more money and potentially deregulate the unit.
The tenant, forced to relocate, generally had to move in to a more expensive apartment. Section 8 would have to pay its portion of a higher rent (the split is 70% Section 8 and 30% tenant) and the taxpayers would get stuck paying the increased subsidy amounts.
Additionally, as the Rosario Court noted, many, if not most, of these buildings also receive J-51 tax abatements that prohibit discrimination against Section 8 recipients.
Thus, these owners tried to stick it to the taxpayers in several ways:
1. Avidly accepted rent subsidies to support rents that were above market rates during down markets giving them an unfair competitive advantage over owners who did not accept Section 8 subsidies.
2. When the apartments became more valuable than the subsidized payments, they attempted to stick the government, who had kept them out of foreclosure for years, with the cost of having to process and relocate all of the Section 8 tenants who would have been forced out of their Rent Stabilized apartments as a result of their "opting out."
3. There is only a finite amount of federal money allocated for Section 8 subsidies each year. As more Rent Stabilized tenants would be forced out of their apartments, fewer subsidies would be available for distribution to homeless families, relocated witnesses and victims of domestic violence because Section 8 would be paying higher net rents.
4. The "opt out" owners, having rid their buildings of Section 8 tenants, would continue receiving J 51 tax abatements they were no longer entitled to, depriving the City of revenue.
This extralegal rapaciousness at the public expense is pretty transparent. Courts in this state have a tendency to frown on such behavior and curb it. Thus, the proponents of the "opt out" theory have been properly bitten on the ass.
Posted by: Gines Pasamonte | July 11, 2007 7:27 PM
OUCH!
Posted by: Lucas A. Ferrara | July 11, 2007 11:53 PM
But entertaining nonetheless.
Posted by: Gines Pasamonte | July 12, 2007 1:20 PM
Certamente!
Avanti!
Posted by: Lucas A. Ferrara | July 12, 2007 1:39 PM
THE FURTIVE USE OF THE RSC TO EVICT SECTION 8 TENANTS
By using the culture of loathing the poor tenant, the hpd, dhcr, nycha,hud , the media and others willfully hide the easiest way to evict an elderly section 8 tenant. Indeed, these government - media persons are usually slum lords or friends of such lords. Accordingly, they hide the legal requirement of disputing any outrageous or improper lease-renewal offer right away (by registered mail, return receipt). The 60-day window for rent stabilized section 8 tenants is almost never properly explained. This is how they target elderly veterans for unending courtroom ordeals, and then evict them.
Posted by: Frederick Alexander Jones | February 13, 2009 11:59 PM
Fred,
Get thee to a tit bar -- and fast. Reading 17 month old blog comments at midnight on Friday is not good for the mind or body.
CHB
Posted by: Cide Hamete Benegeli | February 17, 2009 11:48 AM