DHCR Reasonably Relied on Landlord's Lower Commercial Space Allocation

Landlord applied to the DHCR for rent increases based on major capital improvements (MCIs) based on the installation of new boilers and burners. The tenants' association objected and, among other things, disputed landlord's commercial allocations of the proposed rent increases. The DRA ruled for landlord. Tenants appealed, and the DHCR denied their PAR. Tenants then filed an Article 78 court appeal and argued that DHCR's decision was arbitrary and unreasonable.

The court ruled against tenants. Landlord had claimed that there was only 5,577 square feet of commercial space in the building that benefitted from the MCI. Tenants pointed that in some prior cases landlord had claimed there was 10,000 square feet of commercial space affected. In this case, the DHCR had relied on prior rulings for the same building made since 2005 when the DHCR began using its current commercial allocation method. And landlord explained its prior error in allocating commercial square footage, later corrected.  The court found that the DHCR didn't fail to adhere to prior precedent on the issue of the building's commercial space square footage. And the DHCR's reliance on its own prior rulings since 2005 had a rational basis. 

Partman v. DHCR: Index No. 154633/2019, 2020 NY Slip Op 31342(U)(Sup. Ct. NY; 5/12/20; Perry, J)