Moderate Income Program Tenant Under HFA Regulatory Agreement Wasn't Rent Stabilized

Tenant complained of rent overcharge based on claimed illegal fees and surcharges. She moved into the unit in 2015, paid monthly rent of $1,108, and claimed she belonged to the Moderate Income Program. Landlord claimed that the building was exempt from rent stabilization. The DRA ruled for tenant, finding that the apartment was rent stabilized under an HFA regulatory agreement but that tenant's apartment had been properly deregulated due to high-rent vacancy prior to the base date. So, when tenant filed her complaint, the unit was no longer rent stabilized.

Tenant appealed and lost. The DHCR pointed out that the DRA's order misstated the apartment status and that the unit was not subject to rent stabilization. Prior landlord and HFA signed a regulatory agreement in 1987, along with a rental program agreement whereby 20 percent of completed units in the building were to be occupied by low- or moderate-income families. Under the regulatory agreement, initial rents were determined based on 30 percent of a tenant's annual income and owners were permitted to register with the DHCR a market rent and the difference between that market rent and what the tenant actually paid was considered a subsidy. The regulatory agreement also stated that 10 percent yearly rent increases would continue for three years after expiration of the program and that, upon termination of the rental program, there would be no further restrictions on the rents. So, tenant's apartment was regulated based on the contractual rent in the regulatory and rent program agreements, but was never subject to rent stabilization. There was no provision under the regulatory agreement or rent program agreement that the regulation of the rents would pass to DHCR control at any point. And, while landlord received 421-a tax benefits at one point, these had expired before tenant moved into the building. 

Hair: DHCR Adm. Rev. Docket No. KX410033RT (3/9/23)[4-pg. document]