Appeals Court Upholds DHCR Explanatory Addenda Concerning Pre-HSTPA Deregulation Orders

Landlord filed for high-rent/high-income deregulation of three rent-stabilized apartments. Prior to June 14, 2019, when the HSTPA prospectively discontinued luxury deregulation of rent-regulated apartments, the DHCR ruled for landlord in all three cases. In September 2019, the DRA issued explanatory addenda concerning the effect of the HSTPA on the deregulation orders involved here, as well as other deregulation orders issued in other cases. Landlord appealed these addenda and lost before the DHCR. Landlord then filed an Article 78 court appeal of the DHCR's final orders and the addenda, and lost. Landlord then appealed to the Appellate Division.

The appeals court ruled against landlord. The DHCR's explanatory addenda and orders denying landlord's PARs were not arbitrary or capricious or affected by an error of law. The DHCR's September 2019 addenda explaining the effect of HSTPA Part D on the deregulation orders didn't improperly give retroactive effect to the statute. Part D repealed certain rent deregulation provisions of the Rent Stabilization Law (RSL) effective June 14, 2019. Later in June 2019, Part D was amended to state that "any unit that was lawfully deregulated prior to June 14, 2019 shall remain deregulated." That exception didn't apply to the cases here in which the three subject leases expired on June 30, 2019, which was after the effective date of the HSTPA. The DHCR's deregulation orders, issued in January, February, and April 2019, stated prospectively that the subject apartments would become deregulated "upon the expiration of the existing leases." The DHCR's addenda explained that the effect of HSTPA Part D was to prohibit the deregulation of units with leases expiring after June 14, 2019. That is, they simply noted the prospective effect of the June 14, 2019, statute on subsequently expiring leases. So, the HSTPA amendments to the RSL affected only the propriety of prospective relief and had no potentially problematic retroactive effect. 

Matter of 160 East 84th St. Assoc. LLC v. DHCR: Index Nos. 15757/20, 153995/20, 153999/20, App No. 15380-15381-15382, 2022 NY Slip Op 01229 (App. Div. 1 Dept.; 2/24/22; Webber, JP, Kern, Moulton, Gonzalez, Mendez, JJ)