HUD Directs Roll-Back of Submetering at Yonkers Riverview II

Background
Over the past year we have occasionally discussed some of the efforts of the Related Company, manager of the Yonkers Riverview II apartment complex, to convert to landlord submetering of electricity with the support of New York state agencies, the PSC, DHCR and NYSERDA, and the adverse impact upon tenants. See
April 9, 2009:
Yonkers Tenants Ask PSC to Halt Submetering at Riverview Towers,
May 6, 2009:
Submetered Yonkers Tenants Show How PSC Order Allowed Landlord to Shift Electric Bills to Low Income Tenants,
August 14, 2009:
Yonkers Tenants Win Reprieve from Eviction While Fighting Landlord's Electric Bills,
October 14, 2009:
Yonkers Riverview II Tenants Again Ask PSC to Halt Submetering,
November 03, 2009:
Riverview II Tenants Rebut Owner's Opposition to Request to Stay Submetering,
March 12, 2010:
PSC Greenlights Eviction of Tenants for Nonpayment of Electric Bills,
March 22, 2010:
Yonkers Riverview II Tenants Seek Rehearing of PSC Order Continuing Submetering of Electric Heat
May 11, 2010:
Yonkers Riverview II Files Revised Procedures to Evict Tenants for Alleged Nonpayment of Bills for Submetered Electric Service

Noncompliance with HUD Submetering Conversion Regulations
The owner of the premises and the tenants receive federal subsidies from HUD intended to support decent housing that is affordable to low income households. Consequently, the premises are subject to HUD regulations.

The HUD regulations that apply to submetering require notice and tenant participation in the conversion process, and the development of equitable utility allowances or rent reductions that will not disadvantage an energy conservative household. Owners are required to disclose to tenants their applications to HUD for submetering and to include an estimate of future electricity costs in relation to proposed utility allowances.

In contrast, the PSC allowed submetering without notice to the tenants of the proceeding prior to issuance of the order, without assessment of the impact on tenants, including the cost of electric heat in a poorly insulated building, and without disclosing the magnitude of the cost shift to ytenants. Refusing the tenants' request for a stay, the PSC first shunted their petition to its Office of Consumer Services to be handled as an ordinary complaint, and later, after a second petition was filed, still allowed submetering to go forward if a bare majority of tenants could cover the electric costs with utility allowances and public aid through HEAP grants.

In a recent filing, Related claimed that in the past year 54 percent of the tenants could have covered the new electric charges. Even if that were the case, it occurred during a year of milder than normal weather and lower electricity costs, and left 46% facing additional burdens. The PSC greenlighted the owner's use of eviction to enforce claims for unpaid electric bills.

In a February 16, 2010 letter, HUD confirmed its determination that the owner had not complied with the applicable federal regulations relating to submetering. HUD said that

Riverview II must cease charging for electricity and comply anew with all the tenant notification and submetering conversion regulations.

Riverview must comply anew with all of the tenant notice and comments [procedure] described herein prior to charging for submetered utilities.

On March 17, 2010, Riverview II protested the HUD decision disapproving the implementation of submetering without compliance with the agency rules, and asked HUD to waive its regulatory requirements.

On April 7, 2010, the tenants submitted to HUD their papers in opposition to the owner's request for a waiver.

On May 7, 2010, Riverview II filed materials with the PSC indicating its plan to evict tenants who do not pay electric bills. The filing includes a sample notice regarding non payment of electric service charges which states:

Please remit $XX.XX by MM!DD/YY [15 days later] or we will commence summary proceedings in accordance with New York law to enforce our rights and seek a warrant of eviction.

See Yonkers Riverview II Files Revised Procedures to Evict Tenants for Alleged Nonpayment of Bills for Submetered Electric Service.

On May 13, 2010 the New York PSC denied the petition of the Riverview II Tenants' Association for rehearing. That petition had pointed out, in detail, the denial of due process and lack of HUD approval of submetering in accordance with federal regulations. For example, the petition identified a pattern and practice of allowing submetering which affects tenant property interests without providing timely and adequate notice to tenants of the pendency of the proceedings and an opportunity to participate in the proceeding prior to issuance of submetering orders.

In response the owner argued it did not have to notify tenants when it filed the application to submeter that a case was pending to allow the owner to submeter their apartments.

The Commission denied the tenants request for rehearing along with many other items on its consent agenda on May 13 with a voice vote and no discussion. The written order has not been released.

In a May 21, 2010 letter, HUD confirmed that the submetering was illegally implemented and denied the owner's request for waiver of HUD requirements.

HUD directed a roll-back of submetering at the Yonkers Riverview II project due to the failure of the owner to comply with federal regulations which govern a conversion from owner-paid to tenant-paid utility service. HUD stated:

Based on HUD's review, it has been determined that the Department will not approve the waiver [requested by Riverview II] . Please be advised that the owner has been directed to comply with the tenant [participation] and notice requirements prior to charging for sub-metered utilities.

HUD also stated that the approval by the PSC was not sufficient to satisfy the federal requirements:

While HUD recognizes that the owner must obtain any necessary Public Service Commission approvals, HUD would not consider those approvals as meeting the required notice and other requirements set out in HUD's regulations.

To remedy the illegal submetering, at a minimum it will be necessary for all charges for electric service to be reversed and refunded, and for the PSC to vacate its orders allowing submetering at Riverview II.

If the PSC submetering orders for Riverview II are not vacated, or if full refunds to tenants of all charges made under color of the PSC orders are not made forthwith, tenants may seek damages and injunctive relief in federal court due to the violation of the tenants' clearly established constitutional rights to due process of law and the violation of HUD regulations regarding conversion to submetering.