HSTPA Lawfully Reduced the Amount of Permissible MCI Rent Hikes While Landlord's Application Pending

LVT Number: #32382

Landlord applied for MCI rent hikes on March 29, 2019, based on exterior building restoration work. The DRA ruled for landlord. However, because the HSTPA amended the rent stabilization and rent control laws effective June 14, 2019, while landlord's application was pending, the rent increases granted were less than those that would've applied at rates in effect at the time landlord filed its application.

Landlord applied for MCI rent hikes on March 29, 2019, based on exterior building restoration work. The DRA ruled for landlord. However, because the HSTPA amended the rent stabilization and rent control laws effective June 14, 2019, while landlord's application was pending, the rent increases granted were less than those that would've applied at rates in effect at the time landlord filed its application. The HSTPA amendments extended the applicable amortization period, and reduced the amount of the collectible MCI rent increase from 6 percent to 2 percent of the rents collected at the time the application was filed. 

Landlord appealed and lost. Landlord argued that application of the HSTPA changes was improper. But the MCI provision amendments under HSTPA took effect "immediately." There was no unconstitutional retroactive effect. Landlord didn't possess a legal right to an MCI rent increase pending DHCR approval, didn't bear any increase in liability for past conduct as a result of the HSTPA's MCI amendments, and had no new duties imposed on it with respect to transactions already completed. A federal court had noted in 2021 the difference between the rent overcharge and MCI provisions in the HSTPA amendments. With regard to MCI increase changes, the court noted that since the MCI amendments affected only "the propriety of prospective relief," there was "no potentially problematic retroactive effect." The DHCR also found that there was, in general, a strong presumption of constitutionality of the rent laws as enacted by the NY State Legislature, and that courts had thus far upheld the constitutionality of the amended rent laws.

See also BSF 288-295 Maple Holding LLC: DHCR Adm. Rev. Docket No. JO230037RO (12/2/22)[3-pg. document] for a similar ruling on the issue raised here.

 

570 Fort Washington Inc.: DHCR Adm. Rev. Docket No. JN430007RO (12/2/22)[3-pg. document]