IAI Rent Increases Reinstated on Appeal of Overcharge Ruling Proved Lawful Vacancy Deregulation

The DHCR's Tenant Protection Unit (TPU) filed a rent overcharge complaint on tenant's behalf prior to enactment of HSTPA amendments to the rent stabilization base date. The DRA ruled for tenant and directed landlord to refund $59,986, including triple damages. Landlord appealed and in early 2020, the DHCR sent the case back to the DRA to apply the new base date imposed by HSTPA. But, after New York's highest court ruled in 2020 that such retroactive application of HSTPA amendments was improper, the DHCR considered landlord's PAR on the merits. The DHCR ruled against landlord, who then filed an Article 78 court appeal. The court sent the case back to the DHCR for a new ruling based on its finding that the DHCR didn't properly provide landlord with notice of its proceeding to reconsider a prior order or notice that landlord's PAR had been reopened. This denied landlord due process of law. 

On remand, landlord argued that it was entitled to additional IAI rent increases disallowed by the DRA. The DHCR agreed and ruled for landlord. The DHCR now found that landlord's claimed costs of insulation of walls and ceilings were incurred as part of IAIs done in 2014 and weren't part of prior IAIs done in 2011. While the DHCR again disallowed some of landlord's claimed IAI costs, the addition of some costs increased the lawful rent increase. This yielded an initial legal rent of $2,560 chargeable to tenant, exceeding the $2,500 vacancy deregulation threshold in effect at the time. So, the apartment was no longer subject to DHCR jurisdiction and tenant's overcharge complaint was dismissed. 

373 South 4th Street, LLC: DHCR Adm. Rev. Docket No. KU210005RP (12/7/22)[4-pg. document]