Deregulation Order Ineffective Due to Lease in Effect Post-HSTPA

Landlord applied in 2016 for high-rent/high-income deregulation of tenant's rent-stabilized apartment. On March 1, 2019, the DRA ruled for landlord and issued an order of deregulation based on tenant's admission in her Income Certification Form (ICF) that her annual household income was over $200,000 in both 2014 and 2015. In September 2019, the DRA issued a supplemental Explanatory Order stating that since tenant's renewal lease, in effect on the date the deregulation order was issued expired on Jan. 31, 2020, the apartment remained subject to rent stabilization. This was due to Rent Stabilization Law amendments under HSTPA, which abolished high-rent/high-income apartment deregulation after June 14, 2019.

Landlord appealed the Explanatory Order and lost. Landlord argued that the DHCR delayed processing its deregulation application. But tenant filed a rent overcharge complaint and claimed improper deregulation after landlord filed its deregulation application. The DRA ruled against tenant in 2017. Tenant then filed a PAR, which the DHCR denied in October 2018. The DRA then resumed processing of the deregulation application. It was reasonable for the DRA to wait for the final administrative ruling on tenant's overcharge complaint before deciding the deregulation application. And the DRA issued the deregulation order before HSTPA was enacted and couldn't have anticipated its impact on the order. In addition, since tenant's PAR of the deregulation order was pending when HSTPA was enacted, the lease rider cancelling tenant's renewal lease then in effect 60 days after the deregulation order was issued was conditioned on issuance of a DHCR order dismissing or denying tenant's PAR. The DHCR noted that it didn't have the authority to decide landlord's other arguments that the EA was unconstitutional, although there was a strong presumption that the law conformed with the Constitution.

Meyer/200 West 58th Street LLC: DHCR Adm. Rev. Docket Nos. HV10259RO, HP41002RT (9/18/20) [7-pg. doc.]