Matter of Terrace Court, LLC v. New York State Division of Housing & Community Renewal

Summary

The New York Court of Appeals held that DHCR had authority to grant a major capital improvement rent increase while permanently exempting particular apartments affected by construction-related water damage. The court concluded that DHCR's permanent exemption of five apartments was rational and was not arbitrary or capricious. It also held that the governing regulation did not require DHCR to use only temporary suspensions of the rent increase.

Holdings

1. DHCR has authority in appropriate circumstances to grant a major capital improvement rent increase while permanently exempting particular apartments from the increase.
2. Rent Stabilization Code § 2522.4(a)(13) did not require DHCR to temporarily suspend the MCI increase for the five apartments because the phrase 'all required services' refers to required services unrelated to the MCI project.
3. DHCR did not improperly depart from its precedent because its prior determinations were not limited to temporary suspensions and included permanent exemptions in similar circumstances.
4. DHCR acted rationally and not arbitrarily or capriciously in permanently exempting the five apartments from the MCI rent increase.

Questions Presented

1. Whether DHCR had authority to grant a major capital improvement rent increase while permanently exempting particular apartments from paying the increase.
2. Whether DHCR was required to temporarily suspend the increase for the affected apartments under Rent Stabilization Code § 2522.4(a)(13).
3. Whether DHCR's permanent exemption of the five apartments was arbitrary or capricious or represented an unexplained departure from agency precedent.

Disposition

affirmed