Amount of Increase Requested Excessive

Landlord of a building subsidized by the New York State Private Housing Finance Law (PHFL) applied to the HPD for a 60 percent rent increase. Landlord claimed that the increase was needed to provide enough income to meet all reasonable expenses as well as the 6 percent return provided by law. HPD denied landlord's application in part, granting an 11 percent annual increase for two years. Landlord appealed, and the court sent the case back to HPD for further fact-finding. After reviewing the evidence, HPD upheld its original finding, and landlord appealed again. This time the court ruled for landlord, ordering the rent increase to cover landlord's actual operating expenses. HPD appealed the court order. The appeals court reinstated the original HPD determination. HPD had conducted two analyses of the rent increase landlord requested. Both times, HPD found that landlord's request for maintenance, management costs, and legal costs was excessive, compared with similar housing developments. HPD had also consulted an independent agency, which reached the same conclusion. So HPD had a rational basis for its rulings, and the lower court exceeded its discretion in second-guessing the agency's findings.

Ross-Rodney Housing Corp. v. Michetti: NYLJ, p. 25, col. 5 (6/30/94) (App. Div. 1 Dept.; Sullivan, JP, Rosenberger, Ellerin, Asch, Nardelli, JJ)