NEW YORK CITY LOFT BOARD In the Matter of the Application of

MELISSA MANGANAAN

ORDER

ORDER

Loft Board Order No.: 4596

Docket No.: TR-1221

RE: 473-493 Kent Avenue Brooklyn, New York

IMD No.: 30080

The New York City Loft Board ("Loft Board") accepts the Report and Recommendation of Administrative Law Judge Kara J. Miller dated February 24,2016 ("Report").

BACKGROUND

On March 10,2014, Melissa Manganaan ("Tenant"), occupant of unit 602B ("Unit"), in the building located at 473-493 Kent Avenue, Brooklyn, New York ("Building") , filed an application with the Loft Board. In the application, she sought Article 7-C coverage for her unit and protected occupant status pursuant to § 281 (5) of the Multiple Dwelling Law ("MOL").

The Loft Board transferred the case to the Office of Administrative Trials and Hearings ("OATH"), which assigned the case to Administrative Law Judge Tynia Richard for conferencing and Administrative Law Judge Kara J. Miller for hearing.

In a notice date September 30, 2014, Administrative Law Judge Richard declared Sheila Properties, Inc. ("Owner") in default. In a motion dated October 29,2014, Owner sought to vacate the default. Upon consent, OATH vacated Owner's default. The parties agreed that the Affirmation of David Brody, Esq. and the Affidavit of Ferdinand Brach, both dated October 29, 2014 and submitted in support of the motion to vacate the default, would be deemed Owner's answer.

In a stipulation dated December 14, 2015, Tenant and Owner agreed that the following facts regarding eligibility for Article 7-C coverage were not disputed:

• the Building is an interim multiple dwelling ("IMD") registered pursuant to MOL § 281 (5); • the Unit was occupied for residential purposes for at least twelve (12) consecutive months during

January 1, 2008 through December 31, 2009; • the Unit has one or more windows opening onto a street; • the Unit is not located in a basement or cellar; • the Unit has an entrance directly from a public hallway; • the floor area of the Unit excluding the area of interior partitions is less than 400 square feet; • the floor area of the Unit including the area of interior partitions is 401.468 square feet.

The parties also agreed that, if the Unit qualifies for Article 7-C coverage, Melissa Manganaan is the sole protected occupant of the Unit. Thus, the sole remaining issue in this case is how to calculate the floor area of a unit in coverage determinations.

ANALYSIS

Section 281 (5) requires that an IMD unit be at least 400 square feet in area. Owner and Tenant each submitted their own methodology about how to calculate the floor area in coverage determinations.

Owner argues that the language found in Title 29 of the Rule of the City of New York ("29 RCNY") § 2-01 (1)(3) used for determining floor area of residential units to allocate rent adjustments based on code

compliance costs and MDL § 4(18), which defines "floor space," not "floor area" should be applied in coverage determinations. The language in both of these sections calculates the area as the sum of the clear floor area contained within the partitions or walls. Under this theory, the square footage of a unit would exclude the width of the interior partitions and the width of the exterior walls.

Tenant argues that the definition found in MDL § 26(2)(b) for "Floor area" should be used. This definition includes as floor area "the sum of the gross horizontal areas of all of the several floors of a dwelling ... measured from the exterior faces of exterior walls or from the center line of party walls." MDL § 26(2)(b) (Emphasis added). This language would include the width of the interior partitions and the width of the exterior walls in calculating the floor area of a unit.

Judge Miller found Owner's arguments unpersuasive and determined that MDL § 26(2)(b) presents a clear and common sense definition of floor area. We agree. 1 The formula used to determine floor area for rent adjustment purposes after the legalization process should not be the same as the formula used to determine the floor area for coverage prior to legalization. The space within the interior partitions of a unit are part of the area within a unit. Interior partitions may be removed during the legalization process. Therefore, the entire gross horizontal area of the unit should be used in coverage determinations.

We also agree that the definition of "floor area" found in MDL § 26(2)(b) furthers the remedial purpose of the Loft Law, which calls for ambiguous statutory interpretations to be resolved in favor of coverage. Ass'n of Commercial Prop. Owners, Inc. v. New York City Loft Bd., 505 N.Y.S.2d 110, (1986), affd, 71 N.Y.2d 915, (1988) ("Given the choice of two interpretations of the Loft Law, one restricting coverage and one broadening it, the remedial nature of the legislation forcefully argues for the adoption of the latter course") .

Accordingly, the Loft Board accepts Judge Miller's finding that the calculation of floor area for determining whether a unit meets the eligibility criteria for coverage pursuant to MDL § 281 (5) includes the width of exterior walls and the width of partitions pursuant to MDL § 26(2)(b).

CONCLUSION

The coverage application is granted to the extent that it sought coverage of the Unit pursuant to MDL § 281 (5). Based on the stipulation, Ms. Mangnaan is the protected occupant of the Unit.

The Loft Board directs Owner to amend the Building's registration within thirty (30) days of the mailing date of this Order to reflect that the Unit is an IMD unit and Melissa Manganaan is the protected occupant of the Unit. Payment of the applicable registration fee is also due within thirty (30) days of the mailing date of this Order.

If Owner fails to amend the registration and pay the applicable fees within thirty (30) days of the mailing date of this Order, the Loft Board directs the staff to:

• list the Unit as an IMD with Melissa Manganaan as the protected occupant; and • collect applicable registration fees and late fees.

DATED: November 17,2016

Renaldo Hylton Chairperson

Board Members Concurring: Barowitz, Roche, Delaney, Bolden-Rivera, Schachter, Shelton, Hylton

Board Members Absent: Carver

DATE LOFT BOARD ORDER MAILED: NOV 30 2016

1 We note that MDL § 26(2)(b) is not part of the Loft Law. 2

Matter of Manganaan OATH Index No. 344/J 5 (Feb. 24,2016)

Coverage application where the sole contested issue is whether petitioner's unit meets minimum size requirement under the Loft Law. Petitioner argued that the area should be found by using the length and width of the unit's exterior walls while respondent argued that the area is the sum of the interior room spaces with the width of walls and partitions excluded. Finding that petitioner's measurement method is appropriate in the context of Loft Law coverage, AU recommends the application be granted.

NEW YORK CITY OFFICE OF ADMINISTRA TIVE TRIAIJS AND HEARINGS

In the Matter of MELISSA MANGANAAN

Petitioner

REPORT AND RECOMMENDATION

KARA J. MILLER, Adrninistrative Law Judge

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This case concerns the coverage application of a unit in a registered interim multiple

dwelling ("IMD") located at 475 Kent Avenue, Brooklyn, New York. Petitioner Melissa

Manganaan filed a coverage application with the Loft Board on or around March 10, 2014,

seeking a finding that her unit, 602B ("the unit"), is a covered unit and that she is the protected

occupant of that unit. Mult. Dwell. Law § 281 (5) (Lexis 2015). Respondent Sheila Pi'operties,

Inc. ("the owner") failed to file a timely answer and moved to vacate its default on October 29,

2014. Upon consent, the owner's default was subsequently vacated. Following several

settlement conferences, the parties submitted papers, stipulating to the facts of the case ("Facts")

and presenting the sole disputed legal issue regarding the methodology for calculating the square

footage of the unit.

For the reasons below, petitioner's application for coverage should be granted.

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ANALYSIS

The parties have stipulated that the building at 475 Kent Avenue is an IMD with three or

more units that were registered with the Loft Board and the unit has been residentially occupied

for 12 consecutive months during the window period from January 2008 to December 2009

(Facts «J{«J{ 2-3). 111 addition, the parties agreed that the unit meets all but one of the statutory

requirements for coverage under section 281 (5) of the Multiple Dwelling Law ("MOL"),

including having a window opening to the street, having an entrance from a public hallway, and

is not located in a basement 01' cellar (Facts <j[<J[ 4-6). Finally, the parties agree that if the unit

qualifies for coverage, petitioner is the sole protected occupant of the unit (Facts 9l 11). The

single disputed issue is whether the unit is "at least 400 square feet in area" (Facts 9[ 7).

A determination is dependent upon the meaning of "area" under section 281 (5) of the

MOL. This provision states that to qualify for coverage, a unit must be "at least four hundred

square feet in area." The Loft Law, however, does not specify a methodology for how the square

footage should be calculated. 29 RCNY § 2-08(a)( 4)(iii)(D) (Lexis 2015). Consequently, the

parties point to various provisions of the MOL, Loft Board Rules, and the City Zoning

Resolution to identify the proper method.

Petitioner asserts that the area of the unit should be calculated using the length and width

of the exterior walls. Petitioner's method of calculation results in the unit being 401.47 square

feet and therefore eligible for coverage (Pet. Mem. at 1; Ex. B). In contrast, the owner argues

that the area should exclude the width of interior partition walls and instead be calculated by

adding up the total floor area of the individually divided rooms. The owner's method of

calculating the area results in the unit being either 392.5 square feet or 396.32 square feet,

depending on whether the full length of a partition along the bathroom and bedroom is excluded.

Regardless, under either of the owner's calculations the unit would be ineligibJe for coverage

(Resp. Aff. at Cj[ 12; Ex. A).

Petitioner refers to article 3 of the MDL for guidance, which defines "floor area" as "the

sum of the gross horizontal areas of all of the several floors of a dwelling or dwellings and

accessory structures on a lot measured from the exterior faces of exterior walls or from the

cen.ter lin.e of party walls . .. " Mult. Dwell. Law § 26(2)(b) (emphasis added). This provision

excludes cellar space, elevator bulkheads, and other physical elements from the calculation of

area but does not mention interior walls or partitions. [d. Similarly, petitioner notes that the

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appropriate methodology is also reflected in the New York City Zoning Resolution, which

defines "floor area" as "the sum of the gross areas of the several floors of a building or buildings,

measured from the exterior faces of exterior walls or from the center lines of walls separating

two buildings." Zon. Res. § 12-10 (emphasis added) . Petitioner aptly notes that this section of

the Zoning Resolution contains a number of exclusions, none of which involve the space

occupied by interior partitions.

In contrast, the owner asserts that the Loft Board Rules define the floor area of a

residential unit differently, describing it as the "sum of the clear area of the floor contained

within the partitions or walls enclosing any room, space, foyer, hall or passageways of each of

the residential units" but not "common areas, public halls, public vestibules, public rooms or

other public parts of the building." 29 RCNY § 2-01(1) (emphasis added). This rule, respondent

argues, would allow the floor area to be calculated by excluding the width of the interior

partitions in the unit.

This section of the Loft Board Rules, however, relates to legalization, not coverage, of an

!MD. It is well established that issues around legalization cannot be used by owners to avoid

Loft Law coverage. See, e.g, Matter of Doris, OATH Inq.ex Nos. 2542/14 & 2543/14 at 2 (July

10, 2015) ("the issue of coverage under the Loft Law is separate from issues of legalization");

Matter of Gurkin, OATH Index No. 489/12 at 21 (Dec. 14, 2012), adopted, Loft Rd. Order No.

4186 (Oct. 17, 2013) ("legalization issues are not to be used by owners to avoid Loft Law

coverage"). Accordingly, because this case concerns coverage of the unit, not legalization, the

definition of floor area from the Loft Board legalization rules should not be applied here.

Beyond this important distinction between legalization and coverage provisions, the

language in the rule cited by the owner does not conclusively define floor area as the interior

space excluding walls or partitions. The definition states that the floor area of a residential unit

is the "clear area of the floor contained within the partitions or walls enclosing any ... space."

29 RCNY § 2-01(1). This language could reasonably be interpreted to include exterior walls

enclosing the entirety of the unit. See, e.g., Golfv. NYS Dep't of Soc. Servs., 91 N.Y.2d 656,658

(1998) (holding that where a statute is ambiguous, a reasonable interpretation of the statute may

be permissible). Moreover, the exceptions to floor area in this rule exclude common areas,

public halls, vestibules, public rooms, and other public parts of the building, but notably, do not

exclude walls or partitions. 29 RCNY § 2-01(1). It is reasonable to assume that walls and

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partitions were intentionally left out of the exceptions. See People v. Anonymous, 43 A.D.3d

806, 807 (1 st Dep't 2007) ("The failure of the Legislature to include a matter within a particular

statute is an indication that its exclusion was intended.") (citations omitted).

The owner' s secondary definition of "floor space" from the introductory provisions of the

MOL is similarly unpersuasive. The definition is embedded within the description of what

constitutes a "living room" and specifically sets ant that floor space "shall mean the clear area of

the floor contained within the partitions or walls enclosing any room, space, foyer, hall or

passageways of any dwelling." Mult. Dwell. Law § 4(18) (emphasis added). This definition,

however, docs not apply to the floor area of a unit as a whole but rather how to define an interior

space like a living room. Because the definition specifically addresses the rooms inside of a

space, it naturally refers to the area within the walls or partitions. Read in context, this definition

does not make sense in determining a unit's overall floor area.

By comparison, section 26(2)(b) of the MDL presents a clear and common sense

definition of the floor area of a unit as a whole, "measured from the exterior faces of exterior

walls or from the center line of party walls." This definition again does not exclude walls or

partitions. Id. This provision makes sense when applicd overall to a unit because it is drawn

from a section of the Loft Law regarding light and air matters. The definition is bolstered by

section 12-10 of the Zoning Resolution.

Finally, it is important to note that the remedial purpose of the Loft Law requires that

ambiguous statutory interpretations be resolved in favor of coverage. Ass 'n of Commercial

Property Owners, Inc. v. NYC Loft Bd., 118 A.D.2d 312, 318 (1st Dep'l 1986), aff'd, 71 N.Y.2d

915 (1988) ("Given the choice of two interpretations of the Loft Law, one restricting coverage

and one broadening it, the remedial nature of the legislation forcefully argues for the adoption of

the latter course."); Gurkin, OATH 489/12 at 21 (upholding an interpretation of the Loft Law

"consistent with the general intent of the Loft Law to be liberally construed in favor of

coverage") (citations omitted). Petitioner's reasonable definition of floor area, when applied

here, would allow the unit to be eligible for coverage. This definition appears to be the most

appropriate under the circumstances. In sum, applying the petitioner's definition and reviewing

the stipulated facts of this case, the unit meets the statutory requirements and petitioner's

coverage application should be granted.

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1. Petitioner established that the appropriate definition of floor area is "the SLlm of the gross horizontal areas of all of the several floors of a dwelling or dwellings and accessory structures on a lot measured from the exterior faces of exterior walls or from the center line of party walls" as sel forth in section 26(2)(b) of the MDL.

2. Pursuant to this methodology, the parties have stipulated that the floor area of unit 602B is 401.47 square feet.

3. The parties have stipulated that unit 602B otherwise meets all of the other qualifications for coverage under the Loft Law.

4. The parties have further stipulated that if petitioner's unit meets the qualifications for coverage, petitioner is the sole protected occupant of the unit.

RECOMMEI\TJ)ATION

Based on the foregoing conclusions, I recommend that the Loft Board grant petitioner's

application for coverage.

February 24, 2016

SUBMITTED TO:

RICK D. CHANDLER, P.E. Commissioner

APPEARANCES:

DA VID E. FRAZER, ESQ. Attorney for the Petitioner

BORAH, GOLDSTEIN, ALTSCHULER, NAHINS & GOIDEL Attorneys for the Respondent BY: DAVID BRODY, ESQ.

111716

Application of Manganaan, TR-1221, 473-493 Kent Avenue

Opinion of Chuck DeLaney

As the tenant representative on the Loft Board, I voted in favor of adopting this order. I think the

reasoning behind the recommendation of the Administrative Law Judge is correct and the additional

point that the Loft Law was intended to be remedial legislation is also on point.

The larger implication of th is decision is how silly, spiteful, and unnecessary many of the exclusionary

provisions of the 2010 Law Law extension are. They are contrary to the remedial purpose of the

legislation and also bad for public policy. This case is a perfect example.

Quick background : the 2010 Loft Law was composed of the initial bill and then a chapter amendment

that was passed prior to then-Governor Paterson signing the initial legislation. Paterson had indicated

that he would not sign it without amendments that were being sought by the administration of Mayor

Bloomberg. It is the chapter amendment that contains a set of poorly thought out exclusions. Rather

than being issues to be addressed during legalization, these exclusions were designed to eliminate units

from coverage if they lacked windows, were below a certain size (550 square feet initially in the chapter

amendment), were located in a basement, etc. These exclusions were not based on any studies or

public policy concerns. They were a quick and poorly devised attempt to prevent units that should be

brought into compliance from being covered by the Loft Law.

The minimum size requirement is a perfect example of the spiteful nature of these chapter

amendments. Another initiative ofthe Bloomberg administration was championing the creation of

micro apartments, such as the building at 335 East 27th Street that opened about a year ago, featuring

units that range in size from 260 to 360 square feet. In other words, small units are good, even

innovative, unless they happen to be in a building that might be covered by the Loft Law.

As we see in this costly litigation, the landlord is pitted against the tenant fighting over trivial differences

whether the unit is a tiny fraction larger or smaller than 400 square feet. This is time and money that

could be much better spent bringing this unit and the other units in this building up to code compliance

standards.

These exclusionary provisions cost tenants their homes. But in addition to being contrary to the

remedial intent of the Loft Law, they are bad public policy from the standpoint that units that are

excluded from coverage are likely to remain residential, only without the supervision and oversight

provided by the Loft Law.

The Loft Board should work with the state legislature to eliminate, or drastically reduce, these

provisions.

NOTICE

A party aggrieved by a determination of the Loft Board may file an application for reconsideration of the determination. Under 29 RCNY § 1-07(b) , an aggrieved party must serve the reconsideration application on the affected parties to the prior proceeding. Service of the application shall be completed in accordance with 29 RCNY § 1-06. The aggrieved party must then file the application at the Loft Board's office along with proof of service and the required application fee. Under section 1-07(b), "(t)o be considered timely, a complete reconsideration application must be received by the Loft Board within 30 calendar days after the mailing date of the determination sought to be reconsidered ."

Pursuant to 29 RCNY §1-07(d):

A Loft Board determination pursuant to section 1-06 if these rules shall be the final agency determination for the purpose of judicial review, unless a timely application for reconsideration of the determination has been filed. In such case, (i) if the Loft Board modifies or revokes the underlying order, such revocation or modification shall be deemed the final agency determination from which judicial review may be sought; (ii) if the Loft Board denies the reconsideration application, the underlying order shall be deemed the final agency determination; and (iii) if the Loft Board decided the reconsideration application by remanding the matter to the hearing officer for further proceeding, neither the underlying order nor the remand order shall constitute a final agency determination, and no judicial review may be sought until such time as the Loft Board issues a final agency determination following the remand.