Appeals Court Upholds DHCR Explanatory Addenda Applying Post-HSTPA Repeal of Luxury Deregulation

LVT Number: #32073

In separate DHCR proceedings, landlord applied for high-rent/high-income deregulation of three rent-stabilized apartments. In each case, the DRA issued an order of deregulation, which explained that the units each remained subject to rent stabilization until the expiration date of the renewal lease in effect on the date the deregulation order was issued.

In separate DHCR proceedings, landlord applied for high-rent/high-income deregulation of three rent-stabilized apartments. In each case, the DRA issued an order of deregulation, which explained that the units each remained subject to rent stabilization until the expiration date of the renewal lease in effect on the date the deregulation order was issued. Shortly after June 14, 2019, the DRA issued "explanatory addenda" in connection with each of the deregulation orders to advise landlord that, since luxury deregulation had now been repealed, the three apartments would no longer be subject to deregulation.

Landlord appealed and lost before the DHCR, then filed an Article 78 court appeal. The court ruled against landlord, who filed a further appeal that was denied. The DHCR's "explanatory addenda," and its PAR decisions that denied landlord's challenges to the addenda, were not arbitrary and capricious or affected by an error of law. As landlord admitted, under pre-HSTPA law, an apartment's deregulated status officially occurred at the expiration of the lease in effect at the time the deregulation order was issued. For the three apartments in question, the DRA's deregulation orders were issued prior to enactment of HSTPA on June 14, 2019. But the leases in effect when the deregulation orders were issued didn't expire, respectively, until June 30, 2019; July 31, 2019; and June 30, 2020. By the time those leases expired, high-rent/high-income deregulation had been repealed by HSTPA and was no longer available to deregulate the apartments.

Matter of 160 E. 84th St. Assoc. LLC v. DHCR: App. No. 16036-16037, 2022 NY Slip Op 03466 (App. Div. 1 Dept.; 5/31/22; Webber, JP, Kern, Oing, Scarpulla, Pitt, JJ)