Court Opinion

ID: 5933348
Source: CourtListenerOpinion
Date Created: 2022-01-13 05:16:39.901728+00
Date Added: 2024-06-11T08:46:54.218461
License: Public Domain

Ross, J.
(dissenting). I would affirm the order and judgment (one paper), entered December 12, 1990, of the motion court, dismissing the petition (149 Misc 2d 66).
Pursuant to General Municipal Law former § 72-m, and title I of the Housing Act of 1949 (63 US Stat 413), as amended, in April 1962, the New York City Housing and Redevelopment Board (HRB) proposed a final urban renewal plan for an Urban Project, designated as the West Side Urban Renewal Area, located in a 20-block neighborhood, bounded by West 97th Street, Central Park West, West 87th Street and Amsterdam Avenue, Borough of Manhattan, New York County. Thereafter, as a result of a number of public hearings, attended by, among others, "representatives of City-wide and neighborhood community organizations, political clubs, tenant groups, City, State and Federal Legislators and residents of the area, the [Urban Renewal] Plan was approved by the City Planning Commission on May 29, 1962 * * * [and] the Board of Estimate on June 26, 1962” (see, Appendix on Appeal).
*152It is evident that the concept of the urban renewal plan was to produce an urban neighborhood, with a healthy mixture of persons of widely disparate incomes and ethnic backgrounds. Therefore, "[t]he new housing to be developed on sites previously occupied by substandard buildings was to provide the community with 7,800 new apartments as follows: 800 low-income public housing units, 4,200 middle income units, 15% of which were to be made available at rents comparable to public housing, and 2,800 market rate, privately financed units” (see, Appendix on Appeal). In order to achieve that objective, "the Land-Use provisions of the Plan provided a parcel by parcel distribution of housing by specific income categories” (see, Appendix on Appeal). More than 50% of the 38 parcels, or 20, were reserved for "tax-abated housing at moderate rentals or carrying charges” (see, Appendix on Appeal). One such parcel is Parcel No. 16, where Columbus Park Apartments (Apartments), a City-regulated, middle-income, cooperative housing development, is located on the West Side of Columbus Avenue, between 93rd and 94th Streets, New York County.
Columbus Park Corp. (Columbus) is a limited-profit housing company, organized pursuant to article II of the Private Housing Finance Law, popularly known as the Mitchell-Lama Law, for the purpose of undertaking the development of Parcel No. 16, "on a non-profit basis” (see, Appendix on Appeal).
According to New York State Senator MacNeil Mitchell, who sponsored the legislation, resulting in the Private Housing Finance Law, the principal purpose is to provide governmental assistance, in various forms, such as mortgage loans, aid in land assembly or site acquisition, or tax abatement for a limited period, to solve "the shortage of moderate income housing for families whose earnings exceed the traditional public housing level * * * Today, a number of influences have combined to make entry into the middle income field by private enterprise difficult without some form of public aid” (see, Mitchell, Foreword to McKinney’s Cons Laws of NY, Book 41, Private Housing Finance Law at VII, [1962 ed]).
It is undisputed that the City of New York (City) sold Parcel No. 16 to Columbus, at a small fraction of its market value, so that Columbus would be able to develop that site for limited-profit middle-income housing. Columbus financed the purchase of Parcel No. 16, as a result of the Board of Estimate’s (BOE) approval, on March 19, 1964, after a public hearing, of a 50-*153year, low-interest City-aided mortgage loan of $3,294,000 or 90% of the actual cost of the Apartments, whichever was less (see, Private Housing Finance Law § 23 [1]), and for a 50% exemption of the real property from local and municipal taxes (see, Private Housing Finance Law § 33 [1]) for up to 30 years.
When Columbus was developing Parcel No. 16 into the Apartments, Columbus was made up of "a group of citizens living on the upper west side concerned with the critical need for additional moderately priced housing accommodation * * * The maximum average rentals to be charged in [the Apartments] will not exceed $27.50 per rental room per month (excluding utilities), and the equity capital requirements will not exceed $600 per rental room” (see, Appendix on Appeal).
As a quid pro quo for receiving the generous financing package approved by the BOE, Columbus had to limit its profit (see, Private Housing Finance Law § 28 [1]), and subject itself to HRB regulation of the purchase price and carrying charges of each apartment (see, Private Housing Finance Law § 31 [1] [a]). For example, HRB regulations only permitted persons to qualify for co-op ownership in Apartments, whose incomes did not exceed specified levels, and limited the amount of profit tenant shareholders could make on the resale of their units, and therefore the benefit of a low co-op purchase price, provided by the governmental assistance, discussed supra, would be passed on to successor occupants.
After a review of the record, it is clear that, in order to induce the City to sell Parcel No. 16 and to extend financial assistance to develop said Parcel, Columbus agreed to several covenants. The land disposition agreement (LDA), dated March 19, 1964, incorporating the urban renewal plan and a project plan summary, and the deed, dated July 29, 1965, both executed by Columbus and the City, contain the subject covenants. Those covenants preclude Columbus, as well as its successors and assigns, for a period of 40 years, without the consent of the City Planning Commission and the BOE, from using the land herein for any purpose other than limited-profit, middle-income, subsidized, government regulated housing (see, LDA § 505 [a], [b], [c], and Deed, j[ 5 [a], [b], [c], found in the Appendix on Appeal).
Private Housing Finance Law § 35 (2) permits a limited-profit housing company, such as Columbus, after the passage of 20 years from the date of occupancy, which in Columbus’ case was 1967, to voluntarily dissolve, without the consent of *154any supervising agency, "upon the payment in full of the remaining balance of principal and interest due and unpaid upon the mortgage or mortgages”.
Relying on the statutory provision, supra, in March 1989, Columbus filed a notice of intent to dissolve with the Department of Housing Preservation and Development of the City of New York (HPD), which, as the successor to the HRB, administers the limited-profit middle-income housing program. At the time of that filing, Apartments had been occupied for more than 20 years, and Columbus desired to prepay its mortgage indebtedness, so that it could dissolve, in order that Apartments, instead of being operated as government regulated middle-income housing, would thereafter be operated, by a newly created private cooperative housing corporation, as market rate housing.
Although, initially, representatives of HPD expressed the belief that Columbus’ dissolution application appeared to be in order, further review by those representatives made it clear that Columbus’ proposed conduct might be violative of the intent of the 1962 urban renewal plan, discussed supra, to provide affordable middle-income housing.
By letter to Columbus, dated April 30, 1990, an Assistant Commissioner of HPD stated, in pertinent part, that the City would not issue a letter of no objection to Columbus’ application to dissolve, since:
"HPD has reviewed, among other things, the Land Disposition Agreement with the City and the Deed from the City for the above mentioned project [Apartments]. We have concluded that the Urban Renewal Plan and the Plan and Project approved for the Mitchell-Lama housing company, both of which are incorporated in the Deed and Land Disposition Agreement and made effective for a forty (40) year period, preclude the conversion of the above mentioned project from a middle income, subsidized cooperative to a market rate, unsubsidized cooperative until the expiration of the aforementioned forty (40) year period.
"A modification of the terms of the Plan and Project and the Urban Renewal Plan would require approval by the Board of Estimate or the City Council after the dissolution of the Board and could be subject to the Uniform Land Use Review Process contained in section 167-c of the City Charter”.
In response, in May 1990, Columbus (petitioner) instituted a proceeding, pursuant to CPLR article 78, against the HPD and *155the City to annul the determination of HPD and to compel HPD to issue a letter of no objection.
Following the joinder of issue, the IAS court dismissed the petition.
When construing contracts, "due consideration must be given to the purpose of the parties in making the contract * * * A fair and reasonable interpretation, consistent with that purpose, must guide the courts in enforcing the agreement” (Matter of Cromwell Towers Redevelopment Co. v City of Yonkers, 41 NY2d 1, 6 [1976]).
Applying this legal authority to the contractual documents, including the covenants, before this court, the fair and reasonable interpretation of them, consistent with the parties’ course of conduct and purpose, indicates that the petitioner unequivocally committed itself to maintain Apartments, for 40 years, not simply for residential use, but rather for use as middle-income housing "at moderate rentals or carrying charges”, in exchange for the City granting petitioner substantial financial assistance.
Further, by the knowing and intentional act of executing the LDA and deed, containing the covenants, the petitioner waived its statutory right to dissolve as a limited housing company after 20 years. It is long-established law that a party may waive a statutory right (Selzer v Baker, 295 NY 145, 149 [1946]; Matter of City of New York v New York State Dept. of Envtl. Conservation, 89 AD2d 274, 276 [1982]; 57 NY Jur 2d Estoppel, Ratification, and Waiver, §§ 78, 79).
The majority opinion states: "Nor is it as if petitioner received any specific benefit or consideration in exchange for relinquishing its right to withdraw from the program after 20 years” (see, majority opn, at 149). This completely ignores the fact that the petitioner received the title to the site at a small fraction of the market value and with a very generous financial package, including a low interest City-aided loan in excess of $3,000,000 and a 50% exemption of the real property from local and municipal taxes.
Further, the majority’s adoption of petitioner’s contention that the sole purpose for the 40-year term was to ensure repayment of the mortgage (see, majority opn, at 150), is not supported by the facts herein, and is refuted by the petitioner’s own argument that they had a right to "buy out” of the Mitchell-Lama program after 20 years, which would require petitioner to satisfy the mortgage at that time.
*156Examination of petitioner’s noneviction offering plan of voluntary dissolution and conversion clearly indicates that privatization and conversion to market rate value of the apartments, while retaining their "residential” character, will soon alter their "moderate rental” nature, will result in altering the income housing balance established for the 20-block West Side urban renewal plan, and destroy the sought after social objective of a healthy mixture of persons of widely disparate incomes and ethnic backgrounds.
It would be unfair and inappropriate to permit the huge profits to be gained by the plaintiffs for what was always planned and intended as a project for middle-income housing. To permit apartments which were purchased for approximately $600 per room to now be sold at an appraised value of up to $405,000 would make a mockery of the plan to have a well-integrated community, and eventually only people with high incomes could reside in the project.
Petitioner claims that, due to respondents’ delay of more than a year before rejecting its application, which delay gave the petitioner the impression that respondents would not object, it expended thousands of dollars in furthering its objective to dissolve, and convert to market rate housing, and therefore respondents should be estopped from enforcing the covenants. There is no merit to that contention, since respondents acted in a governmental capacity to protect the middle-income housing concept of the West Side urban renewal area, and "[generally, estoppel may not be invoked against a municipal agency to prevent it from discharging its statutory duties * * * and the factual setting presented on this appeal does not warrant an exception to this doctrine” (Scruggs-Leftwich v Rivercross Tenants’ Corp., 70 NY2d 849, 852 [1987]).
The judicial review provided by CPLR article 78 is a limited one, in view of the fact a court must confirm an administrative determination, when the administrator does not act in excess of his or her jurisdiction, or in violation of lawful procedure, or in abuse of his or her discretion, or arbitrarily (see, CPLR 7803 [3]; Matter of Pell v Board of Educ., 34 NY2d 222, 230-232 [1974]).
Accordingly, based upon the record, discussed supra, I find that, since the determination of respondent HPD is rational, the order and judgment (one paper) of the motion court should be affirmed.
*157Sullivan, J. P., and Smith, J., concur with Wallach, J.; Ellerin and Ross, JJ., dissent in an opinion by Ross, J.
Order and judgment (one paper), Supreme Court, New York County, entered on December 12, 1990, reversed, on the law, without costs, and the petition granted.