Judge finds city rent increases invalid
New York Post
by Dareh Gregorian
January 25, 2010
The city Rent Guidelines Board has overcharged hundreds of thousands of tenants since October of 2008, a Manhattan judge has ruled.
In a decision issued today, Manhattan Supreme Court Justice Emily Jane Goodman found the RGB improperly created a new housing class when it set fixed dollar increases - as opposed to traditional percentage increases - for 300,000 leases where apartments were renting for under $1000 a month.
A "court should not permit a quasi-legislative agency, with a nine member board, appointed by the Mayor of New York, to perform a function originally designated to the [City Council]," which enacted the rent stabilization law, Goodman wrote.
The ruling potentially paves the way for those tenants to seek millions in dollars in refunds. An exact dollar figure was not available, but the RGB predicted it would effect "both tenants and landlords throughout the city," and that untangling the amount of overcharges would create an "administrative burden."
Goodman countered that "any financial burden . . . cannot outweigh a court’s duty to invalidate any act taken in excess of statutory authority," and that the RGB had overstepped its bounds and created an inequitable system.
While the RGB set a maximum increase of 4.5 percent for one year leases and 8.5 percent for two year leases in 2008, it also unveiled a new formula for apartments renting for under $1000 a month to make it more equitable for landlords.
The new formula said landlords could charge whichever rents was higher for those apartments - a 4.5 percent increase or a $45 a month increase for one-year renewals, or an 8.5 percent or $85 a month for two year renewals.
"Hence, petitioner Mercedes Casado, who commenced her tenancy in 1992 and was paying $739.31 a month in rent at the time the petition was filed, is subject to an $85 or an 11.5% rent increase on January 1, 2009. Petitioner Paul Hertgen was paying $685 a month for his Staten Island apartment, and, as of October 1, 2008, his rent will be increased to $770, which is a 12% increase. Thus, the effective percentage increase for long-term tenants is nearly double the increases for short-term tenants," the judge noted.
In effect, she wrote, it "penalizes tenants for failing to move in a city that has virtually no affordable housing."
The city's top lawyer, Corporation Counsel Michael Cardozo, said they would appeal the ruling and ask for a stay until they get to present their case to the higher court.
"We respectfully but strongly disagree with the decision. We are especially disappointed that it has taken the court over a year to issue a ruling relating to 2008 rents that will cause confusion for thousands of rent-regulated tenants and owners throughout the City," Cardozo said.
"We intend to appeal, and will seek to ensure that the ruling does not go into effect until the appeal has been decided."