Landlord applied for MCI rent hikes based on building improvements. The DRA ruled against landlord. Landlord appealed and won. At the same time, the DHCR reapportioned tenants’ rent increases.
Previously, the DHCR divided the cost of the MCI between commercial tenants and residential tenants based on the amount of the rent roll for each. Tenants’ individual rent increases were based on the portion of the MCI costs allocated to residential tenants. While landlord’s PAR was pending, the Rent Stabilization Code and rent control regulations were changed so that tenants’ portion of the MCI was now based on square footage, not the rent roll. As a result, tenants’ MCI rent increases were higher. Another change in the rules while landlord’s PAR was pending was that an MCI application now had to be filed within two years after the work was completed. But the DHCR didn’t apply this rule to landlord’s case. Tenants appealed, claiming that the DHCR’s decision was arbitrary and unreasonable.
The court and appeals court ruled against tenants. The application of the new rule on apportioning costs didn’t create an undue hardship for tenants. But applying the other rule concerning the time limit for filing would create an undue hardship for landlord. The DHCR’s decision was reasonable.
Storch v. DHCR: NYLJ, 11/10/08, p. 26, col. 1 (App. Div. 1 Dept.; Gonzalez, JP, McGuire, Moskowitz, DeGrasse, Freedman, JJ)
