HSTPA Now Bars MCI Rent Hikes If 35 Percent or Fewer Apartments in Building Are Rent Regulated

Landlord applied for MCI rent hikes based on installation of windows and an intercom system. The DRA ruled against landlord because the Housing Stability and Tenant Protection Act of 2019 (HSTPA) amended the rent stabilization and rent control laws, and now prohibited MCI increases for buildings where 35 percent or fewer of its apartments were rent stabilized or rent controlled.

Landlord appealed and lost. Landlord pointed out that the building was eligible for MCI rent increases when landlord filed its MCI application on May 7, 2019. HSTPA didn't take effect until June 14, 2019. The DHCR noted that the HSTPA's MCI increase prohibition in question took effect "immediately" when that law was passed. Landlord also argued that the DHCR improperly delayed the processing of its MCI application. But courts have ruled previously that "rent regulatioin does not confer vested rights." No guarantee of receiving a future rent increase is conferred on a building owner simply because an improvement that may or may not qualify as an MCI has been undertaken. And landlord didn't show that the DRA engaged in any unnecessary or unduly lengthy processing of its application. Courts have ruled that administrative delay won't defeat the agency "absent a showing that the delay was willful or a result of negligence." 

The DHCR also denied landlord's claim that applying the HSTPA provisions in question had an unconstitutional retroactive effect. Pointing to prior court decisions, the DHCR held that the "propriety of prospective relief" had no potentially problematic retroactive effect. At the time it filed its MCI application, landlord didn't possess a legal right to an MCI rent increase, bore no increase in liability for past conduct as a result of the change in the law, and had no new duties imposed on it with respect to transactions already completed. The HSTPA provision barring MCI rent increases where 35 percent or fewer of a building's apartments were rent regulated wasn't unjustly retroactive and was properly applied to an MCI application pending on the date the HSTPA took effect.

The DHCR issued a number of decisions similar to its ruling in this case in late 2022, including Westchester Tenants Associates LP, DHCR Adm. Rev. Docket No. HW910035RO (12/9/22), a case involving a building in Mt. Vernon, outside NYC.  See also DHCR Adm. Rev. Docket Nos. HX430054RO, HX430017RO, IM410010RO, HX410016RO, IM410021RO, HW410025RO, HU410029RO, HV110003RO, HW430020RO, HW430032RO, and HW430023RO, below.

BRG Windsor Park LLC: DHCR Adm. Rev. Dckt. No. RX110045RO (11/30/22)[4-pg. document]