Submetering Challenged at Claremont Gardens in Ossining

A tenant has filed a petition with the New York PSC seeking to vacate the submetering order for Claremont Gardens, a former Mitchell-Lama housing project in Ossining, N.Y. In September 2006 the PSC issued an order allowing submetering of electricity at Claremont Gardens, granting the petition of a consultant who frequently files petitions on behalf of owners to obtain PSC waivers of the general prohibition against landlord submetering to residential tenants.

The same consultant co-authored a Residential Submetering Manual funded byNYSERDA for owners considering submetering. It suggests owners who submeter electricity can avoid "time-consuming" and "bothersome" requirements of the Home Energy Fair Practices Act by evicting tenants when they fall behind in electricity payments rather than proposing to shut off service. An impending service shutoff triggers numerous HEFPA protections that can prevent actual termination, including the right to a deferred payment plan to repay arrears in affordable installments over time. Also, a threatened utility shutoff may trigger financial assistance through HEAP or public assistance programs. These benefits are not available when a submetering landlord seeks to evict a tenant who falls behind in making the utility payments.

The Claremont Gardens submetering order requires the owner to include in the rental agreement the terms and conditions of submetering. These of the rental agreement become the contract or tariff for utility service. provided by the owner. The PSC Order recites that

"the Applicant certifies that the method of rate calculation, rate cap, complaint procedures, tenant protections, and the enforcement mechanism will be incorporated in plain language in all current and future lease agreements."

The tenant's petition to vacate the submetering order alleges that Claremont Gardens' leases were not modified to comply with the order, and that numerous tenant protections were never implemented. In a pending generic PSC proceeding underway to revise submetering rules, the owner of Claremont Gardens, Starrett Corporation, is asking the PSC to eliminate the current requirement to include terms and conditions for electric service in rental agreements, and to eliminate any limit on what can be charged. See Submetering Landlords Clamor for More PSC Deregulation of Electric Service.

The motion to vacate the Claremont Gardens submetering order alleges it was based on misrepresentation and lack of full disclosure of the nature of the tenancies. The order says "All of the apartments are rent stabilized and are regulated by the New York State Division of Housing and Community Renewal (DHCR) through the Westchester County Department of Planning." The Order further states

The Applicant also indicates that rent reductions to all rent regulated tenants will be calculated in accordance with DHCR regulations.

In fact, there is no "rent stabilization" in Westchester. Localities can adopt a similar system through the Emergency Tenant Protection Act of 1974, but Ossining made the declaration necessary to adopt it. This was a significant misapprehension on the part of the PSC, because allowable rent for rent stabilized apartments is lowered under DHCR rules when electric submetering is adopted, offsetting (at least partially) the new cost being imposed upon tenants. But there was no DHCR rent reduction at Claremont, so tenants simply had to pay more.

The lease has a provision which suggests that if submetering is implemented there will be offsetting changes in rent subsidies. Also, the landlord sent a letter to tenants explaining the introduction of submetering which misstated the economic impact:

This will save all the residents money. Whether we chose submetering or direct
metering, all voucher tenants will receive an energy allowance to offset the expense in accordance with existing HUD regulations.

Some tenants at Claremont Gardens receive housing subsidies from Westchester County through its Section 8 program, but their rent was not reduced, nor were their subsidies changed to offset the new charges when the landlord, enabled by the PSC order, added electricity charges to their monthly bills. The tenant's petition for a stay of submetering alleges that when the Section 8 office was contacted, the Section 8 representative was under the impression utilities were still included in rent and did not know of the submetering order.The lease currently used by Claremont Gardens does not disclose that submetering has already been implemented under PSC order.

Whenever a subsidized unit at Claremont Gardens is vacated, the apartment can be re-rented at an unregulated, higher market rent. Thus, the PSC submetering policy, which adds economic burdens, may be contributing to a loss of affordable housing for lower income households. Numerous low income tenants may have already lost their housing through the eviction process because the Claremont Gardens leases "deem" electric charges to be "rent". The complaining tenant, who had disputed charges for electricity, was served with eviction papers and had to defend in court with an attorney.

Claremont Gardens received a grant of $100,997 from NYSERDA to implement the submetering. These funds are from the PSC-created "System Benefits Charge," a surcharge on utility bills collected from customers and transferred to NYSERDA to spend for its grant programs. See PSC and NYSERDA Spend Millions for Submetering Projects Violating Residential Tenants' Rights.

For further information see PULP's web page on residential submetering.