RGB Can Set Alternative Guideline Increases for Low-Rent Apartments

March 31, 2011

LVT Number: #23283

Facts: Rent-stabilized tenants sued the New York City Rent Guidelines Board (RGB) to revoke part of Rent Guidelines Board Order (RGBO) No. 40, which set guideline increases for leases renewed between Oct. 1, 2008, and Sept. 30, 2009. RGBO 40 set maximum renewal rates at the greater of 4.5 percent or $45 for one-year leases, and the greater of 8.5 percent or $85 for two-year leases. The minimum dollar increase alternative affected only those tenants paying less than $1,000 per month and resulted in a higher percentage rent increase for them.

Facts: Rent-stabilized tenants sued the New York City Rent Guidelines Board (RGB) to revoke part of Rent Guidelines Board Order (RGBO) No. 40, which set guideline increases for leases renewed between Oct. 1, 2008, and Sept. 30, 2009. RGBO 40 set maximum renewal rates at the greater of 4.5 percent or $45 for one-year leases, and the greater of 8.5 percent or $85 for two-year leases. The minimum dollar increase alternative affected only those tenants paying less than $1,000 per month and resulted in a higher percentage rent increase for them. For some tenants paying $600 or $700 per month, the rent increase was 11 or 12 percent. Tenants argued that RGBO 40 unfairly penalized long-term rent-stabilized tenants who paid lower rents by effectively doubling the percentage rent increase chargeable under RGBO 40. The New York City Council joined the case as a friend of the court and agreed with tenants that the RGB had overstepped its authority under the Rent Stabilization Law. The court and interim appeals court ruled for tenants, and the RGB appealed.

Court: The RGB wins. New York's highest court found that the RGB had the authority to make a distinction between low-rent apartments in which there had been no recent vacancy and other apartments. This permitted larger percentage rent increases for low-rent apartments. And Rent Stabilization Law provisions governing rent increases after apartments became vacant didn't bar the RGB from permitting larger percentage rent increases for low-rent apartments with no recent vacancies.

Casado v. Markus: 2011 NY Slip Op 02072, NYLJ, 3/25/11, p. 28, col. 3 (Ct. App.; Smith, PJ, Lippman, Graffeo, Read, Pigott, JJ, Ciparick, J [dissenting])

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