By Eileen O’Toole, Esq., Contributing Editor
Owners of buildings subject to rent control and rent stabilization laws continue to wait, at this writing, for the DHCR’s issuance of amended Rent Stabilization Code and related rent control regulations following hearings on proposed regulatory changes held in November 2022. The anticipated amendments are intended to conform the regulations to HSTPA’s 2019 changes to rent stabilization and rent control laws within and outside New York City.
Meanwhile, questions concerning major capital improvement (MCI) rent increases were addressed in recent court and DHCR rulings. In Stuyvesant Town-Peter Cooper Village Tenants Association v. DHCR [LVT #32410], the court ruled for tenants, who had appealed the DHCR’s approval of MCI rent increases for pointing and waterproofing work done to conform with Local Law 11’s façade inspection and safety program. Applicable law and code provisions require MCI work to be depreciable under the Internal Revenue Code. Tenants argued, and the court agreed, that the DHCR had not considered whether the work in question was depreciable before granting the rent hikes. Moreover, the court found that the facts here weighed against a finding that the work was depreciable. The court sent the case back to the DHCR for reconsideration of the MCI increases granted for this multi-unit building complex.
The DHCR recently issued rulings on a number of landlord appeals of Rent Administrator orders dismissing MCI applications filed before HSTPA was enacted on June 14, 2019. By the time the RA orders were issued in these cases, the fact that 35 or less percent of the apartments in these buildings were rent regulated automatically disqualified a grant of MCI increases under HSTPA amendments to the MCI rules. A number of owners with applications pending when HSTPA took effect cried foul. But, in Matter of BRG Windsor Park LLC [LVT #32381] and other decisions, the DHCR noted that “rent regulation does not confer vested rights” or any guarantee of future rent increases.
In 351 Canal St. LLC v. DHCR [LVT #32403], a landlord challenged an agency ruling that denied its application to withdraw a building from the rental market in order to convert the premises to business use. Landlord argued in an Article 78 court proceeding that the Rent Stabilization Code required the DHCR to conduct a hearing in such cases. While the DHCR argued that a hearing could be held at the DHCR’s discretion but wasn’t required, the court disagreed, based on the language of the applicable code provision. The case was sent back to the DHCR to hold a hearing on landlord’s application.
Also this month, Local Law 18 of 2022, concerning registration of short-term rentals with the Mayor’s Office of Special Enforcement (OSE), took effect [LVT #32405]. The law requires short-term rental hosts to register with OSE, and booking service platforms such as Airbnb will be prohibited from processing transactions for unregistered short-term rentals. OSE states that enforcement of the registration requirements won’t begin until July 2023. The law also requires OSE to deny registration requests where owners notify OSE that short-term rentals are not permitted in their buildings.
