545 Warren St. Hous. Dev. Fund Corp. v. New York State Div. of Hous. & Community Renewal

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545 Warren St. Hous. Dev. Fund Corp. v New York State Div. of Hous. & Community Renewal

2026 NY Slip Op 26020 Decided on February 7, 2026 Supreme Court, Kings County Maslow, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Decided on February 7, 2026

Supreme Court, Kings County

545 Warren Street Housing Development Fund Corporation, Plaintiff, against

New York State Division of Housing and Community Renewal, HOUSING TRUST FUND CORPORATION and RUTHANNE

VISNAUSKAS, as Commissioner of the New York State Division of Housing and Community Renewal, Defendants.

Index No. 530007/2025 Anderson Law, New York City (Gregory Byrnes of counsel), for plaintiff. Letitia James, Attorney General, New York City (Michael A. Berg of counsel), for defendants. Aaron D. Maslow, J.

The following numbered papers were used in this special proceeding: NYSCEF Document Nos. 1-

60.

Upon the foregoing papers, having heard oral argument [FN1] , and due deliberation having been had, the within matter is determined as hereinafter set forth.

This matter was commenced as an Article 78 special proceeding to review a government agency determination.

Background

Plaintiff [FN2] owns and operates an eleven-unit cooperative apartment building at 545 Warren Street, Brooklyn, New York 11217 (the "Building"). The Building was developed with $836,128 in interest-free federal loans through the U.S. Department of Housing and Urban Development's HOME Investment Partnerships Program (the "HOME Program"), designed to provide low-income persons with affordable housing they can own or rent. The HOME Program is administered in the State of

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New York by the Housing Trust Fund Corporation ("HTFC") through the State Division of Housing and Community Renewal ("DHCR"). The Defendants herein are DHCR, DHCR Commissioner RuthAnne Visnauskas, in her official capacity, and HTFC.

As a condition of financing under the HOME Program, Plaintiff, by an assignment from its predecessor in interest, dated October 4, 2002, committed to operate the Building as affordable housing in the form of a shareholder-owned cooperative building for a period of 30 years, from 2002 to 2032 (the "Affordability Period"). For the duration of the Affordability Period, ten of the eleven apartments in the Building are reserved for qualified low-income owner-occupants, and are subject to resale restrictions set forth in federal law and regulations.

These limitations and, crucially, their 30-year duration, are set forth in several documents, annexed to the pleadings, whose authenticity was not challenged. These include a Regulatory Agreement executed by Plaintiff's predecessor and HTFC on September 15, 2000; the General Project Description; a Cooperative Offering Plan dated July 3, 2022; and the Proprietary Lease between Plaintiff and each shareholder-tenant ( see NYSCEF Doc Nos. 18, Hair aff, ¶¶ 30-33; 20, Regulatory Agreement and General Project Description; 22, Cooperative Offering Plan; 23, Proprietary Lease).

On September 2, 2025, Plaintiff commenced this Article 78 proceeding, seeking to terminate the Affordability Period with seven years remaining ( see NYSCEF No. 1, verified petition). The petition alleges that under the controlling federal regulation, the Affordability Period was fifteen years, from on or about October 4, 2002 to on or about October 4, 2017 ( see id. ¶¶ 2-3). On that basis, the petition seeks a declaratory judgment that, inter alia , the restrictions ended in 2017, and that Defendants have no authority over the resale of units in the Building ( see id. ¶¶ 28-59). The precipitating incident for Plaintiff seeking relief is that one or more shareholders in Plaintiff wish to sell their shares (in effect, their apartments) on the open market; a shareholder initiated an inquiry concerning this in 2025. Among the reasons is that real property taxes have increased excessively; being able to sell on the open market would enable shareholders to recoup their purchase costs, have sufficient funds to live in a location with lower operating costs, and retain some funds. Defendants cross-move to dismiss the proceeding on the grounds that it is barred by the applicable statute of limitations; the petition does not assert a claim under Article 78 of the CPLR; and Plaintiff has failed to demonstrate that the Affordability Period has expired. The limitations on re-selling the cooperative building shares should remain in effect until 2032, maintain Defendants. Statute of Limitations and Procedural Issues

Defendants argue that since the petition alleges that Defendants improperly asserted regulatory authority over the Building after the alleged termination of the Affordability Period on October 4, 2017, the statute of limitations expired. Article 78 special proceedings are subject to a four-month statute of limitations ( see CPLR 217 [1]). Alternatively, construing the petition as attempting to bring an action for declaratory relief under CPLR 3001, it is still untimely, maintain Defendants, inasmuch as such claims are subject to a six-year statute of limitations ( see CPLR 213 [1]). Defendants also argue that the petition does not assert any cause of action or seek any relief that is authorized by CPLR Article 78. The petition does not allege that Defendants failed to comply with any mandatory statutory duty ( see CPLR 7803 [1]), or acted without or in excess of jurisdiction ( see id. 7803 [2]). The petition does not identify any administrative determination by Defendants, much less allege that such a ruling amounted to a breach of lawful procedure, legal error, or abuse of discretion, as required to plead a claim under CPLR 7803 (3). Neither does the petition allege that Defendants issued a determination after an evidentiary hearing, as required to assert a claim under

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CPLR 7803 (4).

Plaintiff argues that there is no statute-of-limitations impediment to determining the underlying issue in dispute because challenged determination was issued in 2025 through correspondence. Plaintiffs also argue that CPLR Article 78 is the proper mechanism for bringing the matter to the Court for adjudication because Defendants are acting in excess of jurisdiction and their determination was arbitrary and capricious ( see CPLR 7803 [2], [3]). This matter was commenced via an order to show cause seeking the following relief:

(a) [G]ranting a judgment declaring that Petitioner 545 Warren Street Housing Development Fund Corporation and its shareholders may sell and assign cooperative apartments in the building located at 545 Warren Street, Brooklyn, New York 11217 (the "Building") without the review or approval of Respondents;

(b) Granting a judgment declaring that the Building, Petitioner, and its shareholders are no longer subject to any resale restrictions under the federal HOME Program or the Regulatory Agreement;

(c) Granting a judgment declaring that the affordability restrictions applicable to the Building under the Regulatory Agreement have expired;

(d) Granting a judgment declaring that Petitioner may amend its Proprietary Lease to remove any requirement for the Housing Trust Fund Corporation's approval or adherence to its procedures without the consent of Respondents;

(e) Granting a judgment declaring that Respondents have no right to review, approve, or reject any sales of cooperative apartments in the Building; and

(f) [F]ashioning such other and further relief as the Court may deem just, proper and equitable" (NYSCEF Doc No. 13, order to show cause, at 2).

The Court finds that the dispute congealed in 2025 when the issue of re-selling an apartment arose. It was in 2025 that any cause of action accrued. However, the dispute is not in the nature of a government determination. It involves the construction of the documents which created the subsidized housing development corporation. In other words, it is a dispute which calls for a declaratory judgment. This is not an Article 78 matter.

"If a court has obtained jurisdiction over the parties, a civil judicial proceeding shall not be dismissed solely because it is not brought in the proper form, but the court shall make [*2] whatever order is required for its proper prosecution" (CPLR 103 [c]). The Court deems this proceeding to be an action for declaratory judgment. The order to show cause and petition are deemed to constitute a summons and complaint. Also, Plaintiff's petition and supporting papers are deemed to constitute a motion for summary judgment in its favor. Defendants' affirmation in opposition and in support of their cross-motion is deemed to constitute Defendants' answer. Also, Defendants' papers are deemed to constitute a cross-motion for summary judgment dismissing the complaint. [FN3] ( See Matter of State of New York (Essex Prop. Mgt., LLC) , 152 AD3d 1169 [4th Dept 2017]; Hodges v Beattie , 68 AD3d 1597 [3d Dept 2009]; Fragoso v Romano , 268 AD2d 457 [2d Dept 2000].) Discussion of Underlying Dispute

Plaintiff's claims rest entirely on the contention that under the applicable U.S. Department of Housing and Urban Development regulation, the Building's Affordability Period expired after fifteen years. But that assertion contradicts the plain language of the regulation:

(4) Periods of affordability. The HOME-assisted housing must meet the affordability

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requirements for not less than the applicable period specified in the following table, beginning after execution of the instrument that requires the recapture of the HOME investment or recordation of the resale restrictions for sale to the next homebuyer. Execution of the instrument that requires the recapture of the HOME investment or recordation of the resale restrictions for sale to the next homebuyer may only occur after the housing meets the participating jurisdiction's property standards in accordance with § 92.251(c)(3) and the property title is transferred to the homebuyer. The per unit amount of HOME funds and the period of affordability that they trigger are described more fully in paragraphs (a)(5)(i) (resale) and (ii) (recapture) of this section. The period of affordability is based on the total amount of HOME funds invested in the housing.

Table 1 to Paragraph (a)(4)

Homeownership assistance HOME amount per-unit Minimum period of

affordability in years

Under $25,000 5 $25,000 to $50,000 10 Over $50,000 15

(5) Resale and recapture. The participating jurisdiction must establish the resale or recapture requirements that comply with the standards of this section and set forth the requirements in its consolidated plan. HUD must determine that they are appropriate and must specifically approve them in writing.

(i) Resale. Resale requirements must ensure, if the housing does not continue to be the principal residence of the family for the duration of the period of affordability, that the housing is made available for subsequent purchase only to a buyer whose family qualifies as a low-income family and will use the property as the family's principal residence. The resale requirement must also ensure that the price at resale provides the HOME-assisted homeowner a fair return on investment (including the homeowner's investment and any improvements) and ensure the housing will remain affordable to a reasonable range of low- income homebuyers. The resale price is the fair return on investment added to the original sales price of the property, subject to market conditions. The participating jurisdiction must specifically define "fair return on investment" and "affordability to a reasonable range of low-income homebuyers," and specifically address how it will make the housing affordable to a low-income homebuyer in the event that the resale price necessary to provide a fair return is not affordable to the subsequent homebuyer. The period of affordability is based on the total amount of HOME funds invested in the housing.

(A) Permissible methods of determining fair return and the resale price include but are not limited to the following:

(1) Itemized formula. To determine fair return on investment and resale price, the participating jurisdiction may use an itemized formula to add or subtract common, clearly defined factors that increase or decrease the value of a homeowner's investment in the property over the term of ownership. This formula must include the value of capital improvements and the sum of the downpayment and all principal payments by the homeowner on the loan secured by the property. The formula may depreciate the value of the capital improvements and may take into consideration any reduction in value due to property damage or delayed or deferred maintenance of the property condition. The fair return on a homeowner's investment under this formula is calculated by taking the sum of the defined factors for the homeowner's investment in the property over the term of ownership and multiplying this amount by a clearly defined, publicly accessible index or standard. (NYSCEF Doc No. 1, petition ¶ 18, quoting 24 CFR § 92.254 [a].) Based on the amount of HOME funds received per unit, the table referenced in the regulation sets the " Minimum period of affordability" for the Building as 15 years ( id. [emphasis added]). Thus, the clear language of the controlling federal regulation requires recipients of HOME subsidies to maintain its affordability and resale restrictions for "not less than" a "minimum" of fifteen years. That is confirmed by the history of the applicable regulations. "The HOME Program was enacted in 1990.

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