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Beechwood Gardens Tenants' Ass'n v. Department of Housing

Supreme Court of Connecticut

April 10, 1990


Argued Jan. 30, 1990.

Page 990

James J. Perito, with whom was Michael Susman, New Haven, for appellants (defendants Beechwood Gardens Ltd. Partnership, et al.).

Frank Cochran, New Haven, for appellees (plaintiffs).


[214 Conn. 506] SHEA, Associate Justice.

In this appeal from a declaratory ruling of the department of housing (DOH) approving the legality of a rent increase for a moderate rental housing project located in New Haven, the trial court held the increase invalid for failure to comply with the requirements of § 8-79a-15 of the Regulations of Connecticut State Agencies. [1] The appeal from the DOH ruling had been taken to the Superior Court by the plaintiffs, Beechwood Gardens Tenants' Association and seven tenants [214 Conn. 507] of the apartment complex affected by the increase. The defendants, Beechwood Gardens Limited Partnership and the individuals who comprise that partnership, Thomas Johnson and Wendell Harp, have appealed from the judgment sustaining the appeal, [2] claiming that the trial court erred in applying § 8-79a-15 to a rent increase that had been approved by DOH Before the defendants had made their investment in the property. We find error and remand the case with direction to dismiss the appeal.

The subordinate facts are not presently disputed. Beginning in late 1983, the defendants

Page 991

Johnson and Harp submitted applications to DOH with respect to a privately owned apartment complex of eighty-two units in New Haven for the purpose of converting it into a moderate rental housing complex pursuant to General Statutes §§ 8-69 through 8-74. The final application, submitted on September 19, 1984, proposed renovation of all apartment units for energy conservation and, for eighteen units, to provide access to the handicapped. The estimated completion date for the improvements was February 1, 1986, and the projected rent upon completion of the renovations was $465 per month for each apartment.

On December 1, 1984, the individual defendants formed the defendant partnership, which was to purchase the apartment complex, known as Beechwood Gardens, and complete the project. On the same date the partnership submitted its "project financing plan and development budget" to DOH pursuant to General Statutes § 8-74. Attached to this document were two "project management" plans estimating annual income and expenses. The first estimate of yearly rental income of $326,400, was based upon a monthly rent of $425 [214 Conn. 508] for each of sixty-four units. This monthly rent, according to testimony at the DOH hearing, would be established while the planned renovations were being completed, it being contemplated that eighteen of the eighty-two apartments would not be occupied during this period. The second estimate of yearly rental income was $457,560, based upon a monthly rental of $465 for each of eighty-two units. According to the testimony at the hearing, this monthly rent was intended to be implemented upon substantial completion of the project. The documents submitted to DOH were approved on December 21, 1984.

After obtaining this approval, the partnership purchased the Beechwood Gardens apartment complex and, on April 9, 1986, substantially completed the proposed renovations. By a letter dated March 24, 1987, DOH permitted implementation of the $465 monthly rental upon execution of some additional documents. After these were submitted to DOH, the partnership notified all tenants of Beechwood Gardens that the monthly rent would be increased to $465, effective August 1, 1987.

The plaintiffs filed a request with DOH for a declaratory ruling invalidating the rent increase. After a hearing, DOH on February 10, 1988, issued a final decision in favor of the defendants, in which it was found that "during the development stage of this project, a rent of $465 per month had been approved by [DOH] to be implemented upon the final completion of the project." The plaintiffs appealed from this decision seeking its reversal and other relief.

The trial court accepted the factual finding of the DOH hearing officer [3] with respect to approval by DOH [214 Conn. 509] of the $465 monthly rent upon completion of the "development stage" of the project. The court concluded, nevertheless, that compliance with § 8-79a-15 of the regulations was mandated for implementation of the increase in rent from $425 to $465, even though DOH had previously approved the $465 rental charge to be effective upon completion of the project. Judgment was rendered sustaining the appeal.

The defendants have appealed from the judgment, claiming essentially that § 8-79a-15 is inapplicable to a rental increase that was endorsed by DOH as part of its approval of the entire project Before the defendants had made their investment in it. The plaintiffs, presumably as an alternate ground upon which to sustain the judgment, [4] have attacked the finding of the

Page 992

hearing officer concerning prior DOH approval of the $465 rental charge, maintaining that it is unsupported by the evidence, despite the ...

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