The Williams: Single Room Occupancy Housing Rights in New York City

The City of New York experienced a massive influx of unmarried immigrants prior to World War II. For many of these men and women, hotel-style accommodations were more convenient and affordable than rental apartments. Such units generally did not include kitchens, but some included bathrooms. Many City newcomers preferred the old-world comforts of a communal kitchen.

For many New Yorkers without the physical or socio-economic resources necessary to maintain their own homes, single-room occupancy accommodations (SROs) became preferred housing options. Over the years, SRO units have been found in hotels, apartment buildings and even private homes. Today, SRO units are becoming increasingly difficult to identify and, thus, preserve as a viable form of affordable housing.

The rights of SRO tenants are better defined than is the category of individuals entitled to assert them. No single body of law has been formally cultivated for purposes of governing SRO housing. The web of laws and code sections applicable to SROs has become increasingly difficult to penetrate and apply. Consequently, SRO housing is in danger of vanishing despite historically strong and often well-founded support.  The current controversy surrounding The Williams, a 15-story senior residence on the Upper West Side of Manhattan, is a case in point.

Single-Room Occupancy

In 1943, rent control was administered in New York City pursuant to federal enabling legislation occasioned by anticipated wartime housing shortages. With passage of the Emergency Price Control Act, City rents were frozen at their March 1943 levels but, by 1947, the Federal Housing and Rent Act removed federal price controls, thereby leaving partial rent regulatory authority to individual localities. Hotels, however, were excluded from the Federal Housing and Rent Act’s definition of “controlled housing accommodations,” though the City had previously regulated hotels pursuant to the Emergency Price Control Act. In excluding hotels from the federal statute leaving partial rent-regulatory authority to the City, the Federal Housing and Rent Act thus suggested that the federal government did not intend to perpetuate local rent regulation of hotel-style accommodations. This presented a problem unique to New York City–thousands could be left homeless if apartment-hotels were deemed de-controlled, thereby entitling their owners to immediately raise rents to market levels.

Eviction proceedings began to clog the City’s Municipal Courts. The State Legislature was not in session, having failed to anticipate the practical consequences of federal price control removal. It thus fell to the City to provide remedies for long-term hotel tenants who were at risk of eviction. The City Council passed Local Law 54 of 1947, which created the Temporary City Housing Rent Commission. The Council charged the Commission with protecting permanent guests of hotels purportedly de-controlled by passage of the Federal Housing and Rent Act. Local Law 54 decreed that “the Commission shall, by regulation or order, make such adjustments in such maximum rents as may be necessary to correct inequities or to further carry out the policies declared [by the legislature].”

Over subsequent years, authority over rent-regulated housing was further formalized as it oscillated between New York City and State. During the 1960s and 1970s, the City’s low-income housing stock diminished due to property abandonment, gentrification and reduced federal construction funding. SRO housing became all the more vital as employment opportunities for the poorest New Yorkers diminished. At the same time, state and federal urban renewal initiatives were incentivizing condemnation and demolition of SRO units, in addition to their conversion into market-rate apartments.

Between 1955 and 1992, as a result of the State’s decision to close its psychiatric hospitals, New York’s in-patient psychiatric hospital population fell to 13,000 from a high of nearly 90,000. SRO housing was disappearing just as thousands of mentally ill patients without resources necessary to secure and maintain housing were being discharged from City psychiatric hospitals. Affordable housing was at a premium when the State Rent Stabilization Law was passed in 1969 in order to offset onerous but effective City Rent Control Laws. All post-1947 construction was thus exempted from City Rent Control and made subject to State Rent Stabilization.

In 1973, Mayor John V. Lindsay established the Mayor’s Office of SRO Housing with the goal of stemming the rising tide of SRO conversions and strengthening tenant protection laws. In 1979, the Coalition for the Homeless filed a class action lawsuit on behalf of homeless men, arguing that a right to shelter existed under the New York State Constitution. The Callahan v. Carey consent decree of 1981, entered into by the Koch Administration, established this legal right to shelter for the City’s homeless and precipitated the proliferation of homeless shelters.

As the safety net of homeless shelters widened, SRO tenant protections were strengthened by the passage of Local Law 19 of 1983, which created the enduring framework by which SRO renovation, demolition and conversion would be governed. Local Law 19 requires owners to establish that they have not harassed vulnerable SRO tenants for a period of three years prior to proposing conversion of their units to more profitable uses. Notwithstanding the passage of Local Law 19, SRO units continued to disappear through the 1980s, a pattern that has held: in 2013, the City issued 129 Certificates of No Harassment to owners seeking to legally convert their SRO units.

In February of 1987, Mayor Edward I. Koch issued Executive Order No. 110, establishing the Mayor’s Office for Homeless and Single-Room Occupancy Housing Services.  Shortly thereafter, Mayor Koch imposed a moratorium on demolition and conversion of SRO buildings. Mayor Koch’s moratorium, however, was overturned in 1989 by the New York Court of Appeals, which declared it unconstitutional.  Mayor Koch also instituted an SRO Support Subsidy Program in 1988, which provided financial support for not-for-profit organizations renovating hundreds of City SRO buildings that would otherwise have been condemned or converted.

Mayor Koch’s efforts to preserve SROs paved the way for a 1992 agreement between the City and the State of New York in which Governor Mario N. Cuomo and Mayor David I. Dinkins committed to providing over 5,000 new units of SRO housing for the mentally ill. The Cuomo-Dinkins agreement reflected a shift in favor of SRO housing and away from shelters. By the end of 2012, New York State boasted at least 45,000 SRO units. Today, based on the most recent U.S. Census data, this number is closer to 30,000. The vast majority of the State’s affordable SRO units are located within the City.

Rights of SRO Tenants and Owners

The rights of SRO tenants and their landlords arise from three distinct sources: the State Rent Stabilization Law, the City Rent Control Law, and Local Law 19 of 1983.

State Rent Stabilization Law

The State Rent Stabilization Law covers any apartment-hotel or rooming house that contains six or more units and which was constructed on or before July 1, 1969, excluding pre-1947 construction that remains rent-controlled. A “permanent tenant” of such a building is protected by rent stabilization and may remain in occupancy so long as the tenant timely pays the legal rent. Under rent stabilization, a permanent tenant is an individual who: (1) has continuously resided in the same building as a principal residence for a period of at least six months; or (2) who requests a lease of six months or more, which the owner must provide within 15 days; or (3) who is in occupancy pursuant to a lease of six months or more even if actual occupancy is less than six months.In April of 2013, the Appellate Division First Department ruled that a rent-stabilized SRO tenant may remain in occupancy regardless of whether the tenant has ever been provided with a lease. In October of 2014, the Court of Appeals will hear oral arguments on appeal. The decision will have potentially broad application in clarifying not only the rights of rent-stabilized tenants, but also the rights of SRO tenants under the State Rent Stabilization Law and pre-existing City Rent Control Laws.

City Rent Control Law

With the passage of the Federal Housing and Rent Act in 1947, new construction was exempted from federal rent control, which expired in earnest in 1951. The State was then administering rent control, but in light of the City’s consistently demonstrated interest in managing its uniquely local housing emergencies, the State transferred rent regulatory authority to the City in 1962. After the State Rent Stabilization Law took effect in 1969, previously de-controlled and de-stabilized units were re-regulated under the Emergency Tenant Protection Act of 1974. While rent regulation administration was returned to the State in 1983, the City’s local laws regarding rent control were left largely intact. Nevertheless, while some two million rent-controlled apartments were spread throughout the City in the early 1950’s, under 40,000 remain due to various high-income and vacancy de-control measures undertaken over the years.

Local Law 19 of 1983

Independent of the State Rent Stabilization Law or the City Rent Control Law, Local Law 19 of 1983 prohibits an owner from harassing a permanent SRO tenant through a course of conduct designed to compel the tenant to vacate the housing accommodation. The protection of Local Law 19 of 1983 is especially relevant to non-stabilized SRO tenants, who are not entitled to assert the rights of stabilized SRO tenants covered by the State Rent Stabilization Law.

Under Local Law 19 of 1983, an owner seeking to convert an SRO unit into a single-family home or free-market rental unit must engage tenants and relevant City agencies. An owner might offer to upgrade his tenants’ units at no cost. In exchange, the owner might expect these tenants to support his application for a Certificate of No Harassment to the Department of Housing Preservation and Development. Once an application for certification of no harassment is submitted, the Department of Housing and Community Renewal conducts an exhaustive investigation into the owner’s prior interactions with and treatment of tenants.

An application for a Certificate of No Harassment may not be withdrawn after the agency has issued a reasonable cause determination, indicating that harassment occurred during the 36-month inquiry period. Under these circumstances, the owner would be subject to the rebuttable presumption that any harassment during the inquiry period was “committed by and on behalf of” him, thus warranting “denial of the Certificate of No Harassment application…irrespective of the current owner’s fault.” If the Department of Housing and Community Renewal accepts the application and issues a Certificate of No Harassment, the Department of Buildings may then approve the owner’s conversion plan and issue an amended Certificate of Occupancy.

Independence of Local Law 19 of 1983 from Rent Regulation

A recent example of application of these laws and regulations to SROs was the conversion of a Salvation Army–owned apartment-hotel building on Gramercy Park. In 2006, the Salvation Army served eviction notices upon tenants living at the Parkside Evangeline, a rent-stabilized SRO at 18 Gramercy Park South. When the tenants requested new leases, the Salvation Army refused. The tenants sued, invoking their rights under the State Rent Stabilization Law. The Salvation Army responded by claiming a charitable exemption from the State Rent Stabilization Law. The Salvation Army prevailed in 2007, thereby entitling it to evict SRO tenants who would otherwise have been protected by rent stabilization.

In 2007, the Salvation Army contracted with Zeckendorf Development to sell the building, but did not close until 2010, by which time the Salvation Army had successfully obtained a Certificate of No Harassment despite documented instances of harassment prior to 2007. Local Law 19 of 1983, however, inquires only into a landlord’s conduct for the three years prior to submission of his Certificate of No Harassment application. In the case of 18 Gramercy Park South, the Salvation Army and Zeckendorf Development waited out this three-year inquiry period, thereby avoiding the possibility of a denied Certificate of No Harassment application.

720 West End Avenue

A current dispute over a building constructed in 1927 raises issues as to operation of both the City Rent Control Law and Local Law 19 of 1983.

On June 16, 2014, the Salvation Army announced that it planned to sell The Williams Memorial Senior Residence, a 15-story building located at 720 West End Avenue and 95th Street, to Brack Capital Real Estate, a private developer, for $108 million. For over 45 years, the Salvation Army has owned and operated The Williams as a hotel-style senior residence. A tenant of The Williams is billed monthly at market-level rates, in return for which he or she is entitled to a single room, meals served in a communal dining room, housekeeping services and other hotel-style conveniences. The monthly rent for a single room today can run as high as $4,495.

In support of its decision to sell the building, the Salvation Army claims that maintenance of The Williams has become cost-prohibitive. It has offered its residents rooms at a new facility the Salvation Army plans to build on 125th Street and Third Avenue. Residents not willing to leave 720 West End Avenue claim that they have a legal right to remain in occupancy. Their claim is backed by a coalition of elected City officials that also includes the Godard SRO Law Project, whose representatives are involved in closed-door negotiations with the Salvation Army.

The Salvation Army argues that The Williams is not an SRO and that, even if it were, it is exempt from the State Rent Stabilization Law because, like 18 Gramercy Park South, it is a “building operated exclusively for charitable purposes on a nonprofit basis.” In the 18 Gramercy Park South case, however, tenants had leases and paid just $1,000-$1,200 per month for their rooms. Moreover, those tenants conceded applicability of the State Rent Stabilization Law, instead arguing that the Salvation Army’s charitable exemption was morally ill-founded.

The current dispute at 720 West End Avenue has its roots in a much earlier one, which transpired prior to the Salvation Army’s ownership. In 1947, 720 West End Avenue was the Hotel Marcy, owned by Bing & Bing. Because the manner in which federal rent control had ceased had suggested de-control of apartment-hotel buildings, Bing & Bing sought to increase its permanent tenants’ rents by some 40 percent. The tenants sued and the Appellate Division First Department asked the New York Court of Appeals whether apartment-hotels had, in fact, been de-controlled by virtue of their omission from the Federal Housing and Rent Act of 1947. The Court of Appeals answered in the negative, which meant that the Hotel Marcy remained under rent control. Subsequent decisions handed down by lower courtsconfirmed that City apartment-hotels had not been de-controlled.

The Salvation Army entered the picture when, in 1963, the organization received a $2 million grant from the estate of Mrs. Lyndon Perkins Williams, earmarked for the care of aging women. In 1964, the Salvation Army opened the Williams Memorial Residence For the Aging at Booth Memorial Hospital in Queens and, in 1969, it opened a second facility of the same name at 720 West End Avenue. The take-over was a major event; Mayor Lindsay presided over dedication of the new Salvation Army residence, which was globally billed as a “jet age” development in senior housing. Consistent with this use, all certificates of occupancy filed with the Department of Buildings between 1927 and 1975 designate 720 West End Avenue as a “Class A multiple dwelling, apartment-hotel.” These filings are consistent with the occupancy of permanent SRO tenants protected by the City Rent Control Law and Local Law 19 of 1983.

The Hotel Marcy litigation suggests that the building now called The Williams Memorial Senior Residence was never de-controlled. If the Salvation Army is unable to show de-control of 720 West End Avenue, its senior residents are protected by rent control, not rent stabilization. And even if the Salvation Army is able to show de-control, Local Law 19 of 1983 should still function as supplemental protection in requiring that a Certificate of No Harassment be issued before The Williams can be legally converted from an SRO into a luxury condominium.

 

By: Alex Talel (Alex, New York Law School, Class of 2015, is a summer intern at the Center for New York City Law)