The State Goes in the Tank: The MBR Fight Continues

by Jenny Laurie

Rent-controlled tenants have been given a reprieve from exorbitant rent hikes, thanks to Local Law 73, passed by the City Council and signed by the mayor on September 30. This law returns the 1996-97 MBR factor to 3%, the number originally set by the state Division of Housing and Community Renewal. (see October Tenant).

The ink on Local Law 73 was barely dry at 9:40 the following morning, when a coalition of landlords, upset at losing their 32.4% MBR factor, filed a lawsuit challenging it.

By October 3, the DHCR had mailed out notices to rent-controlled tenants suspending the 32.4% MBR hike, telling tenants that “it is impossible to predict the outcome of this litigation with any certainty at this time. To avoid uncertainty, confusions and hardship among tenants and owners regarding the application of this law during the pendency of litigation DHCR is hereby suspending the 1996-97 amended MBR order of eligibility.” The notice goes on to say that tenants should pay the rent they were paying prior to September 12, 1997.

While tenant advocates expected the landlords to challenge the city law on the grounds that the state’s 1971 Urstadt Law prohibits the city from adopting stricter rent rules than the state, it was a surprise that the lawsuit was filed in Albany County, and against the state, not the city. The landlords have calculated on two things. By suing the DHCR, which is run by the Pataki Administration, they are suing a friend who will not fight back. By suing in Albany, they can get a judge who will be unfamiliar with rent laws and city housing conditions, if not openly hostile to tenants. In order to defend the new city law, Corporation Counsel (the city’s lawyer) and a group of tenant organizations, including Met Council, have gone into court in two lawsuits. In one, they are asking the judge in the Albany case to allow them to intervene for the purposes of getting the case dismissed or moved to New York City where affected tenants live. (As of this writing, the judge has given permission to the tenants to be part of the case, but has not yet ruled on the city’s application.)

As evident in the papers filed in court on October 24, the state does not intend to defend the city law. In other words, the state has suspended the amended MBR of 32.4% until the lawsuit is settled -- but it is not going to defend the city law. Instead, it will simply wait until the landlords win, and then lift the suspension so that landlords can collect rent increases based on the higher MBR.

In its papers, the city claims that the landlords’ lawsuit was “commenced in a collusive fashion” and that the landlords and the Pataki Administration planned how to get the city law knocked out by the court. “This shows once again that the Pataki administration is a wholly-owned subsidiary of the real-estate industry,” says Scott Sommer, chair of Met Council’s board.

In the second lawsuit, the city has gone into State Supreme Court in Manhattan asking the court to declare the city law in force and to require that the DHCR issue a new order returning the 1996-97 MBR factor to 3%. One important aspect of the city’s case against the DHCR is that it was filed in New York County, and will therefore be in front of New York City judges. Thanks to the generous pro bono work of two tenant law firms, Himmelstein, McConnell, Gribben, & Donoghue and Collins & Dobkin, the voices of rent-controlled tenants will be heard in these lawsuits. Representing Met Council and other tenant organizations with rent-controlled members, these attorneys have permission to intervene in the first case (Rent Stabilization Association v. New York State Division of Housing and Community Renewal) and will soon be asking for the same in the other (The City of New York v. New York State Division of Housing and Community Renewal).

What does this mean for you?

The DHCR’s suspension order of October 1, 1997 will stay in effect until there is a decision in one of the court cases. Tenants should do two things: Continue paying the rent they paid before September 12, 1997 (unless there were other increases such as for Major Capital Improvements) until the lawsuits end; and express their outrage at being double-crossed by Governor George Pataki, who promised last spring to protect senior citizens living in rent-regulated housing.

The Pataki Administration chose not to appeal the June decision that brought in the 32.4% increase. Now these same officials have decided that they will not fight the landlords, but will go along with them on getting the new city law overturned.

Tell Governor Pataki to fulfill his promise to protect the seniors living in rent-controlled housing. Write him at: Governor George Pataki, Executive Chambers, State Capitol, Albany, New York 12224; or call him at (212) 681-4580.