Deregulation Applications Filed in 2019 Properly Dismissed

Landlord applied for high-rent/high-income deregulation of five apartments in its building in May 2019. The DRA dismissed all of these applications in August 2019 because, effective June 14, 2019, HSTPA repealed the RSL provisions that permitted issuance of orders authorizing high-rent/high-income deregulation. Landlord appealed and lost. Landlord argued that the law in effect in early 2019 when it filed its "LD" applications was the applicable law. Landlord also argued that the implementation of HSTPA in eliminating high-income/high-rent deregulation violated the Takings Clause of the U.S. Constitution because landlord didn't receive just compensation for the utilization of its private property for public use. In addition, landlord said that applying HSTPA to these applications amounted to a "regulatory taking."

But the DHCR noted that HSTPA contained no exceptions to the repeal of high-rent/high-income deregulation. In addition, the leases for the apartments involved in these five cases all expired after June 14, 2019, and, prior to that date, RSL Section 26-504.3 still conditioned luxury deregulation on the expiration of an existing lease. There also was no denial of due process based on administrative delay in processing since landlord's applications were filed just over a month before HSTPA was enacted. It also didn't matter that landlord's 2019 applications would have been based on income information from 2017 and 2018. And the application of HSTPA to landlord's 2019 applications wasn't a retroactive application of the law. Finally, while the DHCR had no authority to rule on the constitutionality of the law, there was a strong presumption of constitutionality in the rent laws.

BLDG Management Co., Inc.: DHCR Adm. Rev. Docket Nos. HU410085RO, HU420084RO, HV410038RO, HV410164RO, HV410198RO (12/30/20) [7-pg. doc.]