DHCR Dismisses 2019 Deregulation Application After HSTPA Enacted

Landlord applied for high-rent/high-income deregulation of  tenant's rent-stabilized apartment in May 2019. The DRA dismissed the applications in August 2019 based on provisions of HSTPA that repealed deregulation of rent-stabilized and rent-controlled apartments effective June 14, 2019.

Landlord appealed and lost. Landlord argued that the DHCR retroactively applied HSTPA to improperly dismiss its 2019 filing period "LD" application, and that this was an unconstitutional taking and denial of due process. Landlord argued that, in the alternative, the DHCR should hold its PAR without decision until a final ruling had been issued in response to a court challenge to HSTPA.

The DHCR noted that HSTPA took effect immediately on June 14, 2019, and clarified that units that had been lawfully deregulated prior to the law's effective date remained deregulated. But no deregulation orders had been issued for tenant's unit as of HSTPA's effective date, when the law changed to bar the DHCR from ruling to deregulate any apartments.  Also, as of June 14, 2019, tenant's current renewal lease had not yet expired. Prior to HSTPA, Rent Stabilization Law (RSL) Section 26-504.3 conditioned high-rent/high-income deregulation on the expiration of an existing lease. That condition existed when landlord filed its 2019 cycle application, and several courts had issued decisions interpreting HSTPA as the DHCR did on this point.

Landlord's constitutional claims also failed. There was no "delay" causing a denial in due process since landlord's LD application was filed just a month before HSTPA took effect. New York's highest court also had noted in the 2020 Regina case that HSTPA Part "D" was "entirely forward-looking" and not retroactive. The DHCR also pointed out that a recent federal court decision in CHIP v. City of New York dismissed landlord's constitutional takings claims against HSTPA. No party has a vested right to any remedy under the RSL and no vested right in the continuation of a particular provision of the law or any DHCR policy or procedure. And no court had placed any stay on the DHCR's processing of LD applications pending any possible appeals of dismissed constitutional challenges. 

Editor's note: This decision is one of many similar decisions by the DHCR that dismissed LD applications filed in 2019.

Tenth Street Holdings LLC: DHCR Adm. Rev. Docket No. HV410100RO (4/12/21) [7-pg. doc.]