Court Upholds Kingston's Adoption of ETPA But Vacates RGB's Retroactive Rent Reductions

A group of owners of buildings now subject to rent stabilization under the City of Kingston’s August 2022 adoption of the ETPA filed a challenge to the city’s actions, arguing that the vacancy study upon which the ETPA adoption was based is flawed. While the Ulster County Court initially granted the owners' request for injunctions against the city, the local Rent Guidelines Board, and the DHCR to prevent enforcement of recent RGB orders that would have reduced current rents and to stay processing of fair market rent appeals or leasing complaints while the owners’ case was pending, the court ultimately ruled for landlords only in part.  The court upheld Kingston's adoption of the ETPA as reasonable, finding that the city's vacancy survey was conducted in good faith, used a proper methodology, and was based on a common sense analysis of available data. 

However, the court agreed with landlords' challenge to the orders of Kingston's Rent Guidelines Board on Nov. 9, 2022, which held that any rent increase above 16 percent of the rent a tenant was charged on Jan. 1, 2019, constitutes a rent overcharge and that, upon renewal, landlords must decrease all rents by 15 percent. The RGB's rulings violated ETPA Section 6, which provided that, after the local effective date of adopting the ETPA, an owner may not charge or collect any rent in excess of the legal regulated rent (LRR). The ETPA defines the initial LRR as the rent reserved in the last effective lease or other rental agreement, which may be adjusted in response to a tenant's fair market rent appeal. Nothing in the ETPA authorized the RGB to make a blanket determination that all subject units were subject to a maximum rent increase retroactive to Jan. 1, 2019, and an immediate 15 percent rent reduction. And nothing in the ETPA authorized the RGB to impose a rent reduction rollback date of Jan. 1, 2019. The court vacated the RGB's order and directed it to establish guidelines for the maximum rate of rent adjustments consistent with the court's order. [Download PDF of the decision here.]

Hudson Valley Property Owners Association Inc. v. The City of Kingston New York: Index No. EF2022-2130 (Sup. Ct. Ulster; 2/10/23; Gandin, J)[8-pg. document]