The following papers numbered __ to ___were read on these motions (Seq. No. 001) for ARTICLE 78 noticed on ___and duly submitted as Nos. on the Motion Calendar of ___ Sequence No. Doc. Nos. Notice of Motion — Exhibits and Affidavits Annexed Cross Motion — Exhibits and Affidavits Annexed Answering Affidavit and Exhibits, Memorandum of Law Reply Affidavit ADDITIONAL CASES In the Matter of the Application of v. & S 179 LLC Petitioners v. NYC Department of Housing Preservation and Development, Respondent DECISION and ORDER Motion is decided in accordance with the annexed decision and order. Upon the foregoing papers, the instant motion (001) by petitioners seeking to annul New York City Department of Housing Preservation and Development’s (HPD) determination to include their buildings in the Heat Sensor Program (HSP) is denied. The petition is dismissed in its entirety. This matter comes before the Court on the application of the petitioners by Order to Show Cause in an Article 78 proceeding challenging the HPD decision to include their buildings in the HSP. FACTUAL AND PROCEDURAL BACKGROUND Petitioners own and manage several residential buildings in the Bronx. These properties were included in HPD’s HSP, a program created under Local Law 18 of 2020 and amended by Local Law 70 of 2023 (N.Y.C. Admin. Code §27-2033.1, as amended by L.L. 70/2023, eff. Dec. 8, 2023). The HSP requires landlords of certain buildings to install internet-capable heat sensors to monitor compliance with heating regulations during the cold season (Id. at §27-2033.1[b]). Buildings with a history of heat violations or recurring tenant complaints are selected for inclusion (Id. at §27-2033.1[b][1]). Ten properties owned by Petitioners were selected for the HSP based on their history of tenant complaints and heat violations over the past two heating seasons. Petitioners filed this Article 78 proceeding, contesting HPD’s decision on several grounds. Petitioners argue that HPD’s decision was arbitrary and capricious, that HPD failed to provide adequate notice and a fair opportunity to challenge their inclusion, and that the penalties and financial burdens imposed by the HSP are excessive. They further argue that HPD’s determination violated their due process rights, claiming that the agency’s decision lacked transparency and was unsupported by substantial evidence. The Petitioners argue that the decision by HPD to include their buildings in the HSP was arbitrary and capricious. They contend that the inclusion of their properties does not meet the required criteria, such as enough heat violations, and that the decision was made without a rational basis or substantial evidence to support it. They point to the fact that only five violations were issued across 814 apartments and claim that HPD placed undue weight on tenant complaints that did not result in violations. Petitioners contend that the presence of complaints alone is not sufficient to justify inclusion in the HSP, especially when heat was promptly restored in cases of mechanical failure. The Petitioners claim that HPD failed to follow proper procedures in determining which buildings should be included in the HSP. They argue that HPD’s decision did not provide a clear factual basis for its conclusion, violating State Administrative Procedure Act (SAPA) which requires substantial evidence to justify such determinations. They also argue that HPD did not meet the due process requirements established under the law, because the decision lacked transparency and proper notice. The Petitioners also assert that the penalties and financial burden associated with the HSP, particularly the costs of installing heat sensors and the potential fines for non-compliance, are excessive and unfair. They request a stay of enforcement, claiming that immediate compliance with the program would cause significant financial harm. In opposition HPD argues that the selection of these buildings was lawful and based on repeated heat violations and tenant complaints during the previous two heat seasons. They argue that the program targets buildings with a history of heat issues, and the petitioners’ buildings had violations and complaints over two seasons, qualifying them for the HSP. HPD contends that the decision was made in accordance with Local Law 18 and Local Law 70 and that its actions were neither arbitrary nor capricious but rather a legitimate exercise of its regulatory authority aimed at protecting tenant safety. They further state that Local Law 18 of 2020 and Local Law 70 of 2023 provide HPD with the authority to require buildings with a history of heat violations or complaints to install heat sensors. These laws seek to ensure that tenants in selected buildings receive adequate heat during the winter months. HPD contends that this program is crucial for tenant safety and ensuring adequate heat during the winter months, making it important for these buildings to be monitored closely. HPD asserts that the decision to include petitioners’ buildings in the program is based on a review of tenant complaints and heat violations, as permitted by Local Law 70 of 2023. The exhibits provided by HPD include detailed reports of heat complaints and violations, many of which involved either building-wide or individual unit issues relating to inadequate heat supply. DISCUSSION In an Article 78 proceeding, the court’s standard of review is limited in scope. The courts reviewing administrative decisions do not substitute their own judgment for that of the agency, instead its function is to determine whether the administrative agency’s determination was made in violation of lawful procedure, was arbitrary or capricious, or lacked a rational basis (CPLR 7803[3]; Matter of Pell v. Board of Educ., 34 NY2d 222, 230 [1974]). Lawful Procedure Petitioners argue that HPD’s decision violated the SAPA in that they did not provide the required substantial evidence to justify such determinations. As HPD is a municipal agency under the control of the City of New York, it is not subject to SAPA. Instead, HPD operates under the rules and regulations of New York City, and the local laws that govern its functions. New York courts held that SAPA applies only to state agencies. Municipal agencies, such as HPD, are not subject to SAPA’s requirements (see Tefft v. Hutchinson, 93 AD3d 1332, 1333 [4th Dept. 2012] [holding that SAPA does not apply to a local housing authority]; Matter of 1777 Penfield Rd. Corp. v. Morrison-Vega, 116 AD2d 1035, 1037 [4th Dept. 1986] [confirming that SAPA governs state agencies and excludes local entities such as the City of Rochester's Bureau of Property Conservation]). As a municipal agency under the City of New York’s jurisdiction, HPD’s actions are not subject to SAPA’s procedural requirements. In their reply, Petitioners contend that if not SAPA, then surely the City Administrative Procedure Act (CAPA) would apply, citing to New York City, N.Y., Charter §1046. The statute outlines the procedures for adjudications conducted by city agencies. This section is applicable when an agency is authorized to conduct formal adjudications, ensuring that processes such as hearings, notice, evidence presentation, and other adjudicative protections are provided. However, in the context of the HSP, the placement of buildings into the program is based on objective criteria related to heat violations and complaints, not on a discretionary adjudicatory process requiring a hearing. Therefore, while §1046 governs formal adjudicatory processes, it would not apply to the initial selection and enforcement mechanisms used by HPD for the HSP, since these actions are administrative and regulatory in nature, not adjudicative. Building owners would engage through administrative processes as per HPD’s procedures rather than through formal hearings subject to the rules of §1046. Due Process and Notice Petitioners argue that HPD failed to provide them with adequate notice and an opportunity to challenge their inclusion in the program, violating their due process rights. Courts have established that due process is satisfied as long as an agency provides both notice and an opportunity to be heard, either through written submissions or through an Article 78 proceeding (see Thornton v. New York City Dept. of Educ., 167 AD3d 444, 445-46 [1st Dept. 2018]; Casino Towing Service, Inc. v. New York City Dept. of Consumer and Worker Protection, 205 AD3d 410, 411 [1st Dept. 2022]). New York courts have consistently recognized that an Article 78 proceeding satisfies due process as it provides a meaningful opportunity to challenge administrative decisions, even when a formal evidentiary hearing is not available. In Tully Const. Co., Inc. v. Hevesi, the court held that the availability of an Article 78 proceeding for judicial review, including the opportunity to make written submissions, constituted a sufficient due process safeguard (Tully Const. Co., Inc. v. Hevesi, 214 AD2d 465, 466 [1st Dept. 1995] [finding that written submissions and judicial review in an Article 78 proceeding provided adequate due process]). Here, the Article 78 proceeding itself provides petitioners with a constitutionally sufficient mechanism to challenge HPD’s determination. The letter from HPD, dated July 2024, clearly informed Petitioners of their buildings’ inclusion in the HSP, the responsibilities they must fulfill, and the penalties for non-compliance. While the letter did not provide for a pre-inclusion contestation process, the availability of judicial review through this proceeding fulfills the necessary due process requirements (see Thornton, 167 AD3d at 445-46; Tully Const. Co., Inc. v. Hevesi, 214 AD2d 465). Arbitrary and Capricious An action is arbitrary and capricious if it is made without sound reasoning or in disregard of the facts (Matter of Pell., 34 NY2d at231). However, if the agency’s determination is supported by a rational basis, it must be upheld, even if the court would have reached a different conclusion. The court’s role in such proceedings is not to substitute its judgment for that of the agency but rather to ensure that the decision is based on reason and facts (see Matter of Ferrelli, 226 AD3d 504, 505 [1st Dept. 2024] [holding that the agency's decision to deny religious exemptions was rationally based on the petitioners' failure to submit sufficient evidence]). Under CPLR 7803(3), in determining whether HPD’s decision had a rational basis, the Court must evaluate whether there was a legitimate connection between the agency’s decision and its governmental objectives. HPD’s decision to include the Petitioners’ buildings in the HSP is clearly linked to a legitimate government objective — ensuring adequate heat for tenants during the winter months, particularly in buildings with a history of heat complaints and violations. Public health and safety in housing are central goals of HPD’s mandate, as outlined in Local Law 18 of 2020 and Local Law 70 of 2023, which empower HPD to target buildings with recurring heat issues (N.Y.C. Admin. Code §27-2033.1, as amended by L.L. 70/2023, eff. Dec. 8, 2023). HPD’s reliance on tenant complaints and heat violations provides a rational basis for its decision. Petitioners argue that the number of formal violations (five violations in 814 apartments) is insufficient to monitor their buildings. However, Local Law 18 of 2020 and Local Law 70 of 2023 explicitly permit HPD to rely on both heat violations and tenant complaints when selecting buildings for the program (see N.Y.C. Admin. Code §27-2033.1(b)(1), as amended by L.L. 70/2023). The administrative record shows that tenant complaints were numerous over two heating seasons. These complaints are indicative of potential recurring issues, even if they do not always result in formal violations. HPD used these complaints as a reasonable basis for inclusion in the program. The agency’s goal is to proactively monitor buildings that may pose a risk of inadequate heating during the winter months, and tenant complaints serve as a rational indicator of such risks. Moreover, HPD’s process for selecting these 50 buildings for the HSP was strictly defined and executed in accordance with the steps set forth in the N.Y.C. Admin. Code §27-2033.1 and 28 RCNY §56-02 (see NYSCEF DOC. NO. 23, pgs. 9-11). Accordingly, HPD’s determination to include the Petitioners’ buildings in the HSP was neither arbitrary nor capricious. The agency’s decision is rationally connected to its goal of protecting tenants during the winter months. Deference to Agency Expertise In reviewing an administrative determination, courts must give significant deference to the agency’s interpretation of the laws and regulations within its jurisdiction, particularly when the agency is acting within its area of expertise (Franklin Street Realty Corp. v. NYC Envtl. Control Bd., 164 AD3d 19, 24 [1st Dept. 2018] [noting that deference is warranted when the agency's decision is rationally based and grounded in its expertise]). HPD derives its authority from several key laws that empower it to enforce housing regulations, ensure building safety, and administer programs aimed at improving housing conditions. Chief among these is the New York City Housing Maintenance Code, which sets forth the minimum standards for building maintenance and tenant protections (N.Y.C. Admin. Code §27-2001 et seq.). This code grants HPD broad enforcement powers to ensure compliance with safety regulations, including the authority to inspect buildings, issue violations, and mandate repairs (N.Y.C. Admin. Code §27-2004). As an expert agency, HPD’s specialization is evident through its extensive regulatory authority and enforcement powers granted by these laws. The agency is tasked with the technical interpretation of housing codes and regulations, assessing building safety, and ensuring compliance with standards designed to protect tenants. Courts give deference to HPD’s expertise because of its specialized knowledge in housing enforcement, its experience in managing complex housing programs, and its ability to interpret and apply these regulations in a manner consistent with public safety and health objectives (see Franklin Street Realty Corp. v. NYC Envtl. Control Bd., at 24). This deference acknowledges HPD’s authority and expertise in administering housing policies and programs aimed at protecting residents. Here, HPD’s decision to include the petitioners’ buildings in the HSP was made pursuant to Local Law 18 of 2020 and Local Law 70 of 2023, which empower HPD to select buildings based on tenant complaints and documented heat violations. (N.Y.C. Admin. Code §27-2033.1, as amended by L.L. 70/2023, eff. Dec. 8, 2023). The court will defer to an agency’s rational determinations when they are consistent with the agency’s statutory mandate (Matter of Rent Stabilization Assn. of NYC, Inc. v. NYC Rent Guidelines Bd., 37 AD3d 374, 375 [1st Dept. 2007] [upholding rent guidelines based on rational statutory interpretation]). HPD’s reliance on tenant complaints in accordance with the law was a reasonable exercise of its discretion. Accordingly, HPD’s determination was supported by a rational basis and is entitled to deference. The decision to include the petitioners’ buildings in the HSP was neither arbitrary nor capricious, and the court will not substitute its judgment for that of the agency (Matter of Pell, 34 NY2d at 230). Penalties and Financial Burden Petitioners argue that the penalties and financial burdens imposed by the HSP, particularly the costs of installing and maintaining heat sensors, are excessive. However, regulatory costs, like those imposed here, are constitutionally permissible if they are reasonably related to a legitimate governmental interest. In Street Vendor Project v. City of New York, 43 AD3d 345 [1st Dept. 2007], the court upheld regulatory fines and fees if they were not arbitrary or excessive in relation to their intended purpose. Similarly, in Walton v. New York State Dept. of Correctional Services, 13 NY3d 475, 484 [2009], the Court of Appeals held that financial burdens imposed by regulatory measures are permissible when they serve a legitimate governmental function and are reasonably related to the governmental interest being pursued. In the present case, the costs imposed are directly tied to ensuring that tenants receive adequate heat during the winter months, a legitimate and important public safety concern. Petitioners have failed to show that these costs are disproportionate or unrelated to the regulatory goal. CONCLUSION HPD’s determination to include Petitioners’ buildings in the Heat Sensor Program was based on tenant complaints and documented heat violations. The decision was neither arbitrary nor capricious, and Petitioners have not demonstrated that HPD violated their due process rights, SAPA, or imposed penalties beyond what is legally permissible. Accordingly, it is hereby ORDERED that the petition is denied in its entirety; and it is further ORDERED that the petition is dismissed, and petitioners shall meet full compliance with the Heat Sensor Program on or before January 15, 2025. This is the decision and order of the Court. 1. CHECK ONE X CASE DISPOSED IN ITS ENTIRETY CASE STILL ACTIVE 2. MOTION IS GRANTED X DENIED GRANTED IN PART OTHER 4. CHECK IF APPROPRIATE SETTLE ORDER SUBMIT ORDER Dated: November 15, 2024
