On March 09, 2010 a
Letter,Correspondence
was filed
involving a dispute between
Kuplesky, Harold, Individually And On Behalf Of Starrett City Preservation Llc, Derivatively,
Rudman, Harvey, Individually And On Behalf Of Starrett City Preservation Llc, Derivatively,
and
Carol Gram Deane,
Dd Shopping Center Llc,
Dd Spring Creek Llc,
Disque D. Deane,
Salt Kettle Llc,
Sk Shopping Center Llc,
Sk Spring Creek Llc,
Spring Creek Plaza Llc,
Starrett City Preservation Llc,
St. Gervais Llc,
for Commercial Division
in the District Court of New York County.
Preview
WARNER PARTNERS, P.C.
ATTORNEYS AT LAW
950 THIRD AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE
(212) 593-8000
TELECOPIER
(212) 593-9058
April 11, 2014
Electronically Filed
Hon. Shirley Werner Kornreich
Justice
Supreme Court, New York County
60 Centre Street
New York, New York 10007
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Re: Rudman et ano. v. Deane et al.; Index No. 650159/10
Dear Justice Kornreich:
We write in response to plaintiffs’ unauthorized letter, dated April 8, 2014, which is a
frivolous attempt to create a disputed issue where none exists.
Plaintiffs take issue with our statement that “it was impossible for Mitchell-Lama project
owners [like SCA] to take out the increased equity value of their property” by a refinancing
without new legislation. Warner Letter (Apr. 4, 2014) at 1-2. They now claim for the first time
that the critical need for amending legislation (as was passed by the New York State legislature
in the summer of 2009) is “disputed.”
However, Starrett City’s need for the new legislation in order to accomplish the
December 2009 refinancing is made clear by the statute itself. It is therefore not subject to
dispute that the refinancing in December 2009 was made possible and economically feasible by
the July 2009 legislative amendment, a matter not addressed by the 2008 MOU, which concerned
only a sale.
The amendment (PHFL §22-b) provides in relevant part that, “/n/otwithstanding any
provision of this article to the contrary, the commissioner may for a period of one year from the
effective date of this act approve a loan and encumbrance in excess of the actual project cost of a
state-aided project comprising more than five thousand rental units,” provided the project’s
owners agreed to, inter alia, “remain subject to [Mitchell-Lama] for a period of no less than an
additional thirty years from issuance of the loan and encumbrance.” (emphasis added).
Mitchell-Lama’s “contrary” provision which required the enactment of PHFL §22-b to
enable Starrett City’s refinancing in December 2009 is PHFL §21. That Section provides in
relevant part that “[t]he shares, bonds or notes, income debentures and mortgages covering any
project shall not exceed the actual project cost” [of the housing project] (emphasis added). In
other words, Mitchell-Lama project owners — which includes SCA — were prohibited from taking
out the increased equity value of their property through a refinancing, just as we wrote in our
April 4 submission.|
"WARNER PARTNERS, P.C. Hon. Shirley Werner Kornreich
April 11, 2014
Page 2
Plaintiffs concede that PHFL §22-b was enacted to “remov[e] this restriction with respect
to Starrett City.” Veit April 4 Letter at 2.’ Starrett City’s owners only obtained that critical
concession upon their agreement that the project would remain in the affordable housing
program for an additional 30 more years, 10 years more than the commitment contemplated for a
new owner under the MOU if Starrett City were sold
The critical importance of the amending legislation is confirmed by its legislative history.
Thus, the Sponsors’ Memorandum in support of the July 2009 amendment recognizes that
“PHFL Section 21 provides that no housing company property may be encumbered by a debt in
excess of project cost,” and confirms that “[t]his bill [the new legislation] would enable the
owner of a State-aided rental housing development comprising more than 5,000 rental dwelling
units, with DHCR approval, to access its appreciated equity while continuing to own and operate
the Property, without necessarily undergoing a comprehensive redevelopment plan” (emphasis
added).
Plaintiffs’ current concocted challenge to the necessity for the amending legislation is the
product of willful blindness to the relevant Mitchell-Lama restrictions on project indebtedness.
In their April 4 letter, plaintiffs ignored PHFL §21 entirely, citing instead PHFL §§22 and 22-a
as the source of the relevant restriction on project indebtedness. But those provisions are
irrelevant to the statutory prohibition preventing Starrett City, prior to July 2009, from
effectuating an equity take out refinancing, as it was able to do in December 2009.
For example, PHFL §22-a was enacted in 2008 to create an exception to PHFL §21’s
project indebtedness restriction by authorizing DHCR to approve a loan in excess of actual
project cost for a project undergoing a “comprehensive redevelopment plan,” provided that the
amount of the loan in excess of actual project cost “represents costs of capital improvements,
redevelopment or acquisition by a new owner.” PHFL §22-a did not authorize DHCR to
approve the sort of loan that Starrett City’s owners obtained as part of the December 2009
refinancing. PHFL §22 also is irrelevant, since it does not create an exception to PHFL §21, but
instead imposes additional restrictions on state loans made to a “mutual company, urban rental
company or [certain] non-profit compan[ies]” — none of which apply to SCI, a limited-profit
housing company, or to SCA.
In addition to the dispositive refutation provided by the statutory language and legislative
history cited above, plaintiffs’ claim that the importance of the amending legislation is a
| Plaintiffs’ suggestion that our April 4 letter’s discussion of the 2009 amendment was not
responsive to the Court’s order is contradicted by plaintiffs’ own April 4 letter, which also
addresses the July 2009 amending legislation. See Veit April 4 Letter at p. 2 (“In July 2009,
Private Housing Finance Law §22-b was enacted effectively removing [Mitchell-Lama’s
prohibition on debt in excess of project cost] with respect to Starrett City”).
> The Sponsors’ Memorandum is available at http://open.nysenate.gov/legislation/bill/S5413-
2009.|
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WARNER PARTNERS, P.C. Hon. Shirley Werner Kornreich
April 11, 2014
Page 3
“disputed issue” is also contradicted by the papers they submitted in opposition to defendants’
motion for summary judgment. There they never disputed the necessity of the §22-b legislation
to accomplish the December 2009 refinancing. See Plaintiffs’ Memorandum of Law in
Opposition and the accompanying Veit Affirmation.
Finally, the assertion by plaintiffs’ counsel in their April 4 letter that “DHCR has
demonstrated flexibility in interpreting,” the provisions of PHFL is wholly unsubstantiated and
meaningless. Moreover, if that assertion is intended to suggest that the amending Mitchell-Lama
legislation was unnecessary, it is also contradicted by the sworn testimony of plaintiff Kuplesky,
who acknowledged at his deposition that it was also DHCR’s view that an amendment to
Mitchell-Lama was required to permit an equity takeout refinancing.’ Plaintiffs’ disavowal of
Kuplesky’s sworn testimony cannot create a genuine disputed issue. See, e.g., Lupinsky v.
Windham Construction Corp., 293 A.D.2d 317 (1st Dept 2002) (“If a plaintiff's self-serving
affidavit, submitted in an attempt to retract a previous admission, is insufficient to avoid
summary judgment, the affidavit of counsel is even less compelling”).
This letter has been necessitated by plaintiffs’ last minute about face disputing what is
plainly indisputable and highly relevant to the resolution of defendants’ summary judgment
motion. Accordingly, we ask the Court to disregard plaintiffs’ April 4 and April 8 submissions,
since our April 4 letter provides the accurate explanations Your Honor requested without
extraneous argument.
Respectfully,
NEWMAN & GREENBERG LLP WARNER PARTNERS, P.C.
Attorneysfor Carol Gram Deane Attorneys for All Defendants (except
} Carol Gram Deane and Spring Creek Plaza LLC)
7 — 3 (nw
Kenneth E. Warner
FOLEY & LARDNER LLP
Attorneys for Spring Creek Plaza LLC
Peter N. Wang, Esq.
Jonathan H. Friedman, Esq.
ce: All Counsel of Record (via e-filing)
3 See Deposition of Harold Kuplesky (Mar. 22, 2012) at 125 (“Q. And why is it that you needed
a change in the Mitchell-Lama law [to permit an equity take-out]? A. Well, that was a position
taken by the Division of Housing . . .”)
Preview
WARNER PARTNERS, P.C. ATTORNEYS AT LAW 950 THIRD AVENUE NEW YORK, NEW YORK 10022 TELEPHONE (212) 593-8000 TELECOPIER (212) 593-9058 April 11, 2014 Electronically Filed Hon. Shirley Werner Kornreich Justice Supreme Court, New York County 60 Centre Street New York, New York 10007 | | | | Re: Rudman et ano. v. Deane et al.; Index No. 650159/10 Dear Justice Kornreich: We write in response to plaintiffs’ unauthorized letter, dated April 8, 2014, which is a frivolous attempt to create a disputed issue where none exists. Plaintiffs take issue with our statement that “it was impossible for Mitchell-Lama project owners [like SCA] to take out the increased equity value of their property” by a refinancing without new legislation. Warner Letter (Apr. 4, 2014) at 1-2. They now claim for the first time that the critical need for amending legislation (as was passed by the New York State legislature in the summer of 2009) is “disputed.” However, Starrett City’s need for the new legislation in order to accomplish the December 2009 refinancing is made clear by the statute itself. It is therefore not subject to dispute that the refinancing in December 2009 was made possible and economically feasible by the July 2009 legislative amendment, a matter not addressed by the 2008 MOU, which concerned only a sale. The amendment (PHFL §22-b) provides in relevant part that, “/n/otwithstanding any provision of this article to the contrary, the commissioner may for a period of one year from the effective date of this act approve a loan and encumbrance in excess of the actual project cost of a state-aided project comprising more than five thousand rental units,” provided the project’s owners agreed to, inter alia, “remain subject to [Mitchell-Lama] for a period of no less than an additional thirty years from issuance of the loan and encumbrance.” (emphasis added). Mitchell-Lama’s “contrary” provision which required the enactment of PHFL §22-b to enable Starrett City’s refinancing in December 2009 is PHFL §21. That Section provides in relevant part that “[t]he shares, bonds or notes, income debentures and mortgages covering any project shall not exceed the actual project cost” [of the housing project] (emphasis added). In other words, Mitchell-Lama project owners — which includes SCA — were prohibited from taking out the increased equity value of their property through a refinancing, just as we wrote in our April 4 submission.| "WARNER PARTNERS, P.C. Hon. Shirley Werner Kornreich April 11, 2014 Page 2 Plaintiffs concede that PHFL §22-b was enacted to “remov[e] this restriction with respect to Starrett City.” Veit April 4 Letter at 2.’ Starrett City’s owners only obtained that critical concession upon their agreement that the project would remain in the affordable housing program for an additional 30 more years, 10 years more than the commitment contemplated for a new owner under the MOU if Starrett City were sold The critical importance of the amending legislation is confirmed by its legislative history. Thus, the Sponsors’ Memorandum in support of the July 2009 amendment recognizes that “PHFL Section 21 provides that no housing company property may be encumbered by a debt in excess of project cost,” and confirms that “[t]his bill [the new legislation] would enable the owner of a State-aided rental housing development comprising more than 5,000 rental dwelling units, with DHCR approval, to access its appreciated equity while continuing to own and operate the Property, without necessarily undergoing a comprehensive redevelopment plan” (emphasis added). Plaintiffs’ current concocted challenge to the necessity for the amending legislation is the product of willful blindness to the relevant Mitchell-Lama restrictions on project indebtedness. In their April 4 letter, plaintiffs ignored PHFL §21 entirely, citing instead PHFL §§22 and 22-a as the source of the relevant restriction on project indebtedness. But those provisions are irrelevant to the statutory prohibition preventing Starrett City, prior to July 2009, from effectuating an equity take out refinancing, as it was able to do in December 2009. For example, PHFL §22-a was enacted in 2008 to create an exception to PHFL §21’s project indebtedness restriction by authorizing DHCR to approve a loan in excess of actual project cost for a project undergoing a “comprehensive redevelopment plan,” provided that the amount of the loan in excess of actual project cost “represents costs of capital improvements, redevelopment or acquisition by a new owner.” PHFL §22-a did not authorize DHCR to approve the sort of loan that Starrett City’s owners obtained as part of the December 2009 refinancing. PHFL §22 also is irrelevant, since it does not create an exception to PHFL §21, but instead imposes additional restrictions on state loans made to a “mutual company, urban rental company or [certain] non-profit compan[ies]” — none of which apply to SCI, a limited-profit housing company, or to SCA. In addition to the dispositive refutation provided by the statutory language and legislative history cited above, plaintiffs’ claim that the importance of the amending legislation is a | Plaintiffs’ suggestion that our April 4 letter’s discussion of the 2009 amendment was not responsive to the Court’s order is contradicted by plaintiffs’ own April 4 letter, which also addresses the July 2009 amending legislation. See Veit April 4 Letter at p. 2 (“In July 2009, Private Housing Finance Law §22-b was enacted effectively removing [Mitchell-Lama’s prohibition on debt in excess of project cost] with respect to Starrett City”). > The Sponsors’ Memorandum is available at http://open.nysenate.gov/legislation/bill/S5413- 2009.| | | | WARNER PARTNERS, P.C. Hon. Shirley Werner Kornreich April 11, 2014 Page 3 “disputed issue” is also contradicted by the papers they submitted in opposition to defendants’ motion for summary judgment. There they never disputed the necessity of the §22-b legislation to accomplish the December 2009 refinancing. See Plaintiffs’ Memorandum of Law in Opposition and the accompanying Veit Affirmation. Finally, the assertion by plaintiffs’ counsel in their April 4 letter that “DHCR has demonstrated flexibility in interpreting,” the provisions of PHFL is wholly unsubstantiated and meaningless. Moreover, if that assertion is intended to suggest that the amending Mitchell-Lama legislation was unnecessary, it is also contradicted by the sworn testimony of plaintiff Kuplesky, who acknowledged at his deposition that it was also DHCR’s view that an amendment to Mitchell-Lama was required to permit an equity takeout refinancing.’ Plaintiffs’ disavowal of Kuplesky’s sworn testimony cannot create a genuine disputed issue. See, e.g., Lupinsky v. Windham Construction Corp., 293 A.D.2d 317 (1st Dept 2002) (“If a plaintiff's self-serving affidavit, submitted in an attempt to retract a previous admission, is insufficient to avoid summary judgment, the affidavit of counsel is even less compelling”). This letter has been necessitated by plaintiffs’ last minute about face disputing what is plainly indisputable and highly relevant to the resolution of defendants’ summary judgment motion. Accordingly, we ask the Court to disregard plaintiffs’ April 4 and April 8 submissions, since our April 4 letter provides the accurate explanations Your Honor requested without extraneous argument. Respectfully, NEWMAN & GREENBERG LLP WARNER PARTNERS, P.C. Attorneysfor Carol Gram Deane Attorneys for All Defendants (except } Carol Gram Deane and Spring Creek Plaza LLC) 7 — 3 (nw Kenneth E. Warner FOLEY & LARDNER LLP Attorneys for Spring Creek Plaza LLC Peter N. Wang, Esq. Jonathan H. Friedman, Esq. ce: All Counsel of Record (via e-filing) 3 See Deposition of Harold Kuplesky (Mar. 22, 2012) at 125 (“Q. And why is it that you needed a change in the Mitchell-Lama law [to permit an equity take-out]? A. Well, that was a position taken by the Division of Housing . . .”)