Hardship Rent Increases Denied

Landlord applied to the DHCR for hardship rent increases for rent-controlled apartments. The DHCR ruled against landlord. Landlord appealed. The court sent the case back for further consideration and said that the DHCR could consider Real Property Tax Law (RPTL) Article 12 and a prior unrelated appellate court ruling in deciding the case. The DRA ruled for landlord. Tenants appealed, arguing that the DRA incorrectly used an equalization rate from RPTL Article 12A instead of RPTL Article 12 to determine the buildings' return on capital value. Tenants also claimed that the DRA didn't consider the income from the entire building as directed in the prior appellate court case. The DHCR ruled for tenants. To allow a hardship increase when the net annual return from the building is less than 8.5 percent of capital value, the use of Article 12 is a more accurate means to determine capital value, and makes the definition of capital value for hardship consistent with the MBR definition. Comparing the total building income to total expenses yielded a net return that was greater than 8.5 percent of capital value. So landlord wasn't eligible for a hardship increase.

405 W 23rd St. et al: DHCR Adm. Rev. Docket No. XL430004RP (2/10/11) [7-pg. doc.]