Aspenly Co. v. N.Y. State Div. of Hous. & Cmty. Renewal, 45 E. 89th St. Tenants Grp.

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2024 NY Slip Op 30204(U)

ASPENLY CO., LLC, Petitioner, v. NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, 45 EAST 89TH STREET TENANTS GROUP, Respondent.

Index No. 150543/2023, Motion Seq. No. 001

Supreme Court, New York County

January 17, 2024

Unpublished Opinion

MOTION DATE 1-17-24

DECISION, ORDER and JUDGMENT

HON NANCY M. BANNON Justice The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 9, 10, 15, 16, 17, 18,19, 20, 21,22, 23, 24 25, 26, 27, 28, 30, 31,33, 36, 38, 39, 40, 41,42, 43, 45, 50 51,52 were read on this motion to/for ARTICLE 78 (BODY OR OFFICER)_.

In this CPLR article 78 proceeding, the petitioner, owner of residential property at 45 East 89^th Street in Manhattan, challenges a Final Determination of the Deputy Commission of the respondent Division of Housing and Community Renewal (DHCR), dated November 21, 2022, which denied the petitioners' Petition for Administrative Review (PAR) of an order of the Rent Administrator. The Rent Administrator denied the petitioner's then pending application for Major Capital Improvement (MCI) increases upon the passage by the New York State Legislature of the Housing Stability and Tenant Protection Act of 2019 (HSTPA). L 2019, ch 36, on June 14, 2019. The Deputy Commissioner found "'no error of law or fact in the Administrator's denial of the MCI application" and that the "record supports the Administrator's conclusion that the owner's building contained 35% or fewer rent-regulated units". The Deputy Commissioner further found that "the MCI amendments contained in Part K of the HSTPA -including the new provision that MCI rent increases are prohibited for buildings with 35% or fewer rent-regulated units - were not unjustly retroactive and were properly applied to the owner's pending MCI application during the proceeding below." The Deputy Commissioner further found that "the petitioner has not shown that the Administrator's delay in processing the application was willful or the result of negligence" and noted that the petitioner's own 18-month delay in filing the application after the improvements were made contributed to the delay.

The petitioner maintains that the retroactive application of the MCI provision of the HSTPA, including the 35% rule, was unlawful and unconstitutional, and seeks from this court an order annulling that determination and remanding the matter back to the DHCR with instructions to grant the application "without applying the MCI provisions of HSTPA." Respondent DHCR cross-moves to dismiss the petition pursuant to CPLR 7804(f). By an order dated October 16, 2023, the court granted a motion by non-party 45 East 89^th Street Tenants Group to intervene and was added as a respondent (MOT SEQ 002).

In moving to dismiss the petition, the DHCR relies upon the recent decision in which the Appellate Division, First Department, had occasion to address the same issue presented by the instant petition, and ruled against that petitioner. In 4040 BA LLC v New York State Div, of Hous, and Community Renewal, 221 A.D.3d 440 (1^st Dept. 2023), which also concerned Part K of the HSTPA and an owner's application for a rent increase based on major capital improvements (MCI), the First Department held the DHCR properly denied an application pending at the time of the enactment of HSTPA, stating that:

"In this case, the application of the Part K (MCI) amendments did not expand the scope of petitioner's liability based on prior conduct, or impair other rights petitioner possessed in the past... When the HSTPA was enacted, petitioner had no vested right in a future MCI rent increase, or in the more beneficial pre-HSTPA law or regulations (see Matter of IG Second Generation Partners L.P, v New York State Div, of Hous, and Community Renewal, 10 N.Y.3d 474 [2008]; 300 Wadsworth LLC v New York State Div, of Hous, and Community Renewal, 210 A.D.3d 454 [1^st Dept. 2022]; Matter of Schutt v New York State Div, of Hous, and Community Renewal, 278 A.D.3d 58 [1^st Dept 2000]). Here, application of HSTPA Part K affected only the propriety of a prospective rent increase, that is, how much additional rent petitioner could charge after DHCR decided its MCA rent increase application. Application of the state had no potentially problematic retroactive effect (Regina Metropolitan, 35 N.Y.3d at 365)."

To the extent the petitioner challenges the Final Determination here on constitutional grounds, i.e. that application of post-HSTPA RSL to its petition which was filed prior to the enactment of the HSTPA constitutes a retroactive application violative of its right to due process, its arguments are without merit. Regina Metropolitan Co. LLC v New York State Div, of Hous, and Community Renewal, 35 N.Y.3d 332, 365 (2020), where the Court held that HSTPA Part F, relating to rent overcharges, could not be applied retroactively, does not control here. In Regina, the Court of Appeals expressly limited its holding to Part F, stating that the HSTPA "is almost entirely forward-looking - only Part F's effective date provision contains language referring to prior claims." The Court noted that "Part F relates almost entirely to the calculation of overcharge claims, and any such claim that was pending at the time the HSTPA was enacted necessarily involved conduct that occurred prior to the statute's enactment. Id. at 374; see also Stuyvesant Town-Peter Cooper Vill. Tenants' Assoc., v BPP ST Owner LLC, 78 Misc.3d 309 (Sup Ct, NY County 2023).

In its petition, the petitioner notes that it filed its application for MCI rent increases on December 10, 2018, approximately six months prior to the enactment the HSTPA, and was awaiting decision, as "MCI applications are routinely decided within a year at most." Where a statute has been amended during the pendency of a proceeding, the application of that amended statute to the pending proceeding is appropriate and poses no constitutional problem.... unless it can be demonstrated that the [agency] deliberately or negligently delayed...