City Can Change Maximum Base Rent Formula

Facts: The formula for calculating maximum base rent (MBR) for rent-controlled apartments in New York City gives landlords an 8.5 percent return on capital value, defined as equalized assessed valuation under the Real Property Tax Law (RPTL). The RPTL provides two possible applicable measures of equalized assessed valuation. RPTL Article 12A was formerly used. Under Local Law 73 of 1997, the city later adopted RPTL Article 12, which reduces the MBR in some cases. Landlords sued the city, claiming that the change in the formula violated the Urstadt Law, which bars ''more stringent or restrictive'' rent regulation or control. Courts: Landlords lose. The city's adoption of Article 12 to measure capital value doesn't violate the Urstadt Law. The law contains no definition of ''more stringent or restrictive provisions of regulation or control'' and no clear indication of whether a local law is prohibited solely because it tends to reduce profits for landlords of rent-controlled units. And legislative history indicates that the purpose of the Urstadt Law was to block city attempts to expand the set of buildings subject to rent control or rent stabilization. The goal of Local Law 73 was accuracy in capital valuation. The Urstadt Law doesn't bar city legislation aimed at achieving this goal.

City of New York v. DHCR: NYLJ, 12/21/01, p. 18, col. 1 (NY Ct. App.; Kaye, CJ)