On November 12, a group of eight tenant associations filed suits
against the state Division of Housing & Community Renewal (DHCR)
to challenge it setting the 1996/97 Maximum Base Rent factor at
32.4%.
In three separate lawsuits, the tenant groups are claiming that
the DHCR violated both the original MBR law and the May 1997
decision by the state Appellate Court, Third Department, when it
set the MBR factor, used to determine rent increases for
rent-controlled apartments, at 32.4%. These three lawsuits are
separate from the ones filed in October by the City of New York
(in which Met Council and other groups have intervened) which
support the city’s new law limiting the factor to 3%.
The City Council passed Local Law 73 in September in reaction to
the outcry of distressed, mostly elderly, rent-controlled
tenants who were suddenly threatened with 32.4% MBR increases
after landlords won a lawsuit reversing the original factor of
3%. The 32.4% MBR increase would force most rent-controlled
tenants--whose median income is $12,000 a year--to pay a 15% rent
increase over two years. Local Law 73 clarified the original MBR
law, passed by the Council in 1970, and requires the DHCR to
return to the 3% factor.
The landlords immediately sued in State Supreme Court in Albany
to stop the implementation of the new city law, which blocked
them from collecting increases based on the 32.4% factor. The
November lawsuits were filed in order to protect tenants in the
event the court strikes down Local Law 73 and allows DHCR to
return to the 32.4% factor.
According to Stanley Panesoff, program associate of the
Community Training and Resource Center, no matter what happens
to Local Law 73, the DHCR used incorrect calculations to set the
32.4% figure. "The lawsuits essentially allege that in
recomputing the 1996-97 MBR increase of 32.4% for 70,000
rent-controlled apartments, the DHCR misapplied sections of the
Real Property Tax Law." he says. "This resulted in an artificial
inflation of building values to more than double the values
published by the New York City Department of Finance. The
resulting values are in contradiction to the values determined
by the New York State Board of Real Property Services, the state
agency which has the final, legal word on determining the market
value of all taxable property. This faulty and, we think,
unlawful procedure rewards landlords with an 19% return on their
property, clearly violating the intent of the 8.5% return on
property as specified in the rent-control laws of 1970."
The tenant groups participating in the legal action are: 246
West End Avenue Tenants Association, 100 Riverside Drive Tenants
Association, 124 East 85th Street Tenants Association,
Roxborough Tenants Association, London Terrace Tenants
Association, Park Gardens Tenants Association, the Four Corners
Tenant Association, and The Belnord Landmark Conservancy.
