IN RE: 609 REALTY LLC et al. (2024)

Judgment (denominated an order), Supreme Court, New York County (Lynn R. Kotler, J.), entered October 3, 2023, denying the petition to annul the December 20, 2022 determination of respondent agency (DHCR), which denied petitioners’ application for a rent increase based on major capital improvements (MCIs), and dismissing this proceeding brought pursuant to CPLR article 78, unanimously affirmed, without costs.

Petitioners’ application was denied on the basis that less than 35% of the apartments in their building were rent regulated (Administrative Code of City of N.Y. §§ 26–204.1[a][6], 26–511.1[a][6]).  DHCR “rationally concluded that the amendments from HSTPA part K should be applied when considering petitioner[s’] MCI application,” as “there had been no determination issued” as of the effective date (Matter of 4040 BA LLC v. New York State Div. of Hous. & Community Renewal, 221 A.D.3d 440, 440, 198 N.Y.S.3d 69 [1st Dept. 2023], lv denied 41 N.Y.3d 907, 2024 WL 2278614 [2024];  see Matter of 101 E. 16th St. Realty LLC v. New York State Div. of Hous. & Community Renewal, 226 A.D.3d 494, 495, 209 N.Y.S.3d 370 [1st Dept. 2024]).  Indeed, as this Court has previously held, “Part K's amendments were effective immediately and applied to any determination issued after the act's effective date” (Matter of 4040 BA LLC, 221 A.D.3d at 440, 198 N.Y.S.3d 69;  see also L 2019 ch 36, part K, §§ 5, 6, 11, 18[c];  L 2019 ch 39, part Q, § 29).

We also find no violation of due process, since applying part K “affected only the propriety of petitioners’ prospective rent increases and had no potentially problematic retroactive effect” (Matter of 101 E. 16th St. Realty LLC, 226 A.D.3d at 495, 209 N.Y.S.3d 370;  see also Matter of Aaron Manor Rehabilitation & Nursing Ctr., LLC v. Zucker, 42 N.Y.3d 46, 55–57, 216 N.Y.S.3d 584, 241 N.E.3d 136 [2024]).  Contrary to petitioners’ contention, there is no legally significant difference between their case and those where MCI applications were partially granted.  Instead, as with those other cases, “[w]hen the HSTPA was enacted, petitioner[s] had no vested right in a future MCI rent increase, or in the more beneficial pre-HSTPA law or regulations” (Matter of 4040 BA LLC, 221 A.D.3d at 441, 198 N.Y.S.3d 69).  Nor does the statute in question lack a rational basis for its implementation.

We find no basis to remand to DHCR “for a review of petitioners’ unpreserved claim that application of the part K amendments might result in prejudice or undue hardship” (Matter of 101 E. 16th St. Realty LLC, 226 A.D.3d at 495, 209 N.Y.S.3d 370;  see also Matter of Almanzar v. City of N.Y. City Civ. Serv. Commn., 166 A.D.3d 522, 524, 89 N.Y.S.3d 140 [1st Dept. 2018];  9 NYCRR 2527.7, 2529.10).

We have considered petitioners’ remaining contentions and find them unavailing.