HSTPA Changes Can't Be Applied Retroactively to Appeal of MCI Rent Hikes

Landlord applied for MCI rent hikes based on facade restoration, with related engineering fees and scaffolding. The DRA ruled for landlord in 2012. Tenants appealed and won in part. Tenants then filed an Article 78 court appeal of the DHCR's decision. The case was sent back to the DHCR in 2021 for further consideration of tenants' claims. Tenants argued that the application wasn't filed on time, that there was no contractor's statement verifying that the facade work was necessary, and that the scaffolding costs and some of the engineering costs should've been disallowed. By the time the Article 78 appeal was considered, tenants also argued that the HSTPA should be applied and would revoke the MCI rent hike under the facts of the case. 

Tenants lost. The facts didn't support their claims about the work. And the DHCR rejected tenants' HSTPA argument. The 2020 decision by New York's highest court in Regina Metro. v. DHCR noted that HSTPA provisions shouldn't be construed as creating new rent overcharge liability on pre-HSTPA matters.

Here, the MCI increases were granted in 2012 and the retroactive application of some of the new HSTPA standards would create the collection of more than seven years of now allegedly illegal rents. In Harris v. Israel, the First Department relied in 2021 on the Regina decision, finding that with respect to an owner occupancy claim, new HSTPA standards shouldn't apply to a matter on appeal. The language of HSTPA also doesn't state that it applies on appeal. The only express standards in HSTPA's MCI provisions that affect orders issued before HSTPA are with respect to Rent Stabilization Law Section 26-511.1(a)(8). This extends prospectively the payment schedule of future increases due upon renewal leases for MCI orders issued between 2012 and 2019, where there would still have been payments due in later years for MCI increases at 6 percent. Otherwise, the pre-HSTPA ruling on the MCI increases here remained in effect.

Bell et al.: DHCR Adm. Rev. Docket No. JU410002RP (11/23/21)[4-pg. document]