DHCR and Courts Uphold HSTPA Ban on MCI Increases Where 35% or Fewer Units Are Regulated

Landlord applied to the DHCR for MCI rent hikes based on installation of a new roof, iron fences, and railings. The DRA ruled against landlord because 35 percent or fewer of the building's apartments were subject to rent regulation. Landlord appealed and lost. Landlord had filed its MCI application in May 2019, prior to the June 14, 2019, enactment of HSTPA. That law amended various aspects of the rent laws and included a mandate to "immediately" prohibit MCI rent increases for buildings with 35 percent or fewer rent-regulated units. The law clearly applied to MCI applications pending on HSTPA's effective date and, at that time, only 5 percent of the building's apartments were rent regulated. Contrary to landlord's argument, the HSTPA prohibition applied here wasn't retroactive. Landlord's MCI application was still pending when HSTPA amendments took effect and, at that time, landlord had no legal right to an MCI rent increase. The DHCR pointed out that a court had reached the same conclusion in the recent unrelated case of Richmond Hill 108 LLC v. DHCR, Index No. 728474/2021 (Sup. Ct. Queens Co. 2022). A federal court also made a similar ruling in 2021.

EGA Holdings, LLC: DHCR Adm. Rev. Docket No. IO410027RO (11/15/22)[3-pg. document]