Tenants Win MBR Lawsuit

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For the full text of the decision, see MBR decision

In a smashing victory for rent-controlled tenants, a Supreme Court judge in Manhattan has upheld Local Law 73of 1997, in which the City Council revised the formula for calculating Maximum Base Rent increases.

As a result of the April 6 decision by Justice Leland DeGrasse, rent increases going back to January 1, 1996 for rent-controlled tenants will remain at the rates that have been temporarily utilized by the state Division of Housing & Community Renewal. The owners had sought a 32.4% increase in the MBR retroactive to 1996 cycle. Had the owners succeeded, rent-controlled tenants would have been virtually guaranteed increases of 7-1/2 % every year for many years to come.

The decision protects the relatively modest bi-yearly MBR increases of 3.8% and approximately 4% for the most recent cycles.

The owners had based their challenge to the city law on the infamous Urstadt Law, enacted in 1971, which restricts the City Council from enacting a “more stringent or restrictive” rent regulation than was in effect at the time.

In rejecting the owners’ claim, Justice DeGrasse noted that Local Law 73 “does not impose new regulations, or shuffle existing regulations to thwart rent control provisions designed to help owners. Instead it mandates that an existing element shall be determined in a more accurate way.” He also rejected the idea that “any change to existing rent control laws is invalid if it results in a diminution of rent increases for rent controlled units.” The tenants’ associations who participated in the suit, and Met Council, were represented by Collins, Dobkin & Miller, LLP, and by Himmelstein, McConnell, Donaghue and Gribben.

Editor’s note: See next issue for more analysis.