Third Avenue Residential Apartments at 160 East 84th Street. Image credit: CityLaw.
State used sampling method to set new base rent for studio improperly deregulated under luxury decontrol. The owner of a rental building at 160 East 84th Street, Manhattan, took advantage of the luxury decontrol provisions of the Rent Stabilization Law to deregulate a studio apartment. Subsequently, the New York Court of Appeals ruled that buildings like 160 East 84th Street were ineligible to take advantage of luxury decontrol because the building was also receiving tax incentive benefits under New York City’s j-51 program.
The tenant whose studio had been improperly deregulated under luxury decontrol sought to establish a new lower, stabilized rent. The tenant had been paying a monthly rent of $2,200. The State Department of Housing and Community Renewal established the tenant’s new base rent by using a sampling method. The tenant of the studio challenged the new rent as too high and sought application of the more favorable punitive default formula which would have produced a lower rent.
The Appellate Division, First Department, disagreed with the tenant, upheld the State’s sampling method for establishing the new base rent, and found no basis for applying the more punitive default formula. The landlord had decontrolled the studio and raised the rent based on a mistaken belief that the studio apartment could be lawfully deregulated, a belief that was legitimate prior to the decision by the Court of Appeals. Under these circumstances, and in the absence of any evidence of fraud, the State’s use of the sampling method to set the new base rent was rational and not arbitrary.
160 East 84th Street Associates v. New York State Div. of Housing & Comm. Renewal, 75 N.Y.S.3d 141 (1st Dep’t 2018).
By: Ross Sandler