Landlord Showed No Good Cause to Require DHCR's Late Acceptance of Proof of Violation Clearance

Landlord applied to the DHCR for MCI rent hikes. The DRA ruled against landlord in 2011 due to outstanding Class C violations, one of which involved lead-based paint in a tenant's apartment. Landlord appealed, claiming that it was in the process of removing the C violations and shouldn't be penalized. While its PAR was pending, landlord submitted proof that the C violations had been cleared from HPD's website. The DHCR then ruled for landlord and granted the MCI rent increases.

Tenants filed an Article 78 court appeal, arguing that it was improper for the DHCR to have granted the MCI based on new evidence submitted for the first time with landlord's PAR. The court ruled for tenants. Landlord then appealed further, and the Appellate Division sent the case back to the DHCR. The appeals court found that the DHCR could consider new evidence submitted on appeal in instances where such proof could not reasonably have been offered or included in the proceeding before the DRA. The court directed the DHCR to consider whether good cause existed to remand the case to the DRA for further consideration of the MCI application.

The DHCR ruled against landlord, finding there was no good cause to reopen the case and consider landlord's new evidence. The C violations involved here had been removed from HPD's website long after the 2011 DRA order was issued. Landlord had been on notice of the violations since July 2006, almost three years before  filing its MCI application in 2009, and was on notice that an MCI rent increase couldn't be granted if there were Class C violations on record. Tenants had submitted to the DRA an HPD printout dated July 28, 2009, which noted the two Class C violations in HPD's database. Landlord advised the DRA that it was attempting to gain access to a tenant's apartment to clear the lead-paint violation. But then landlord submitted no further information for nearly a year, and failed to respond to further notices from the DRA. The first proof from landlord that the violation had been removed from the HPD website was submitted in January 2013 while landlord's PAR was pending. 

Menachem: DHCR Adm. Rev. Docket No. IS430004RP (8/2/23)[4-pg. document]