HPD Didn't Follow Its Own Rent Increase Regulations

Facts: Landlord, a Mitchell-Lama limited profit housing development, applied to HPD in 1993 for permission to increase the maximum average monthly rent per room for three consecutive years, to impose and collect income surcharges, and to increase vacancy rents. Landlord claimed the rent increases were necessary to fund major structural repairs needed at the building complex. HPD ruled for landlord. Tenants appealed, claiming that HPD didn't follow its own regulations governing procedure for reviewing and approving a rent increase application. Tenants also objected to HPD's imposition of income surcharges for the first time in 20 years without advance notice, setting vacancy rents at 90 percent of market rents, approving rent increases without considering the actual revenue generated by income surcharges and vacancy increases, and approving the use of a reserve fund for repairs. Court: Tenants win. HPD regulations required an independent review by its Assistant Commissioner of the hearing officer's findings. But, in this case, the hearing officer was promoted during the course of the hearings to be Assistant Commissioner. So HPD allowed the same person to function in both capacities. The hearing officer made no findings and recommendations before her promotion, at which point she couldn't conduct a meaningful or independent review. HPD also improperly approved income surcharges after only a passing reference to them at the hearing and without giving tenants the chance to oppose those increases. The court revoked HPD's ruling and sent the case back for further proceedings.

Waterside Tenants Assn. v. Waterside Redevelopment Co.: NYLJ, p. 23, col. 3 (8/22/97) (Sup. Ct. NY; Gans, J)