Fighting an MCI Increase: PAR and Article 78 Insights

According to Fact Sheet #24 on the DHCR website,

“Will violations affect the granting of an MCI?

DHCR can deny the application in whole or in part, if the owner is not maintaining all required services, or if there are current immediately hazardous violations outstanding pursuant to any municipal, county, State or Federal law relating to the maintenance of such services. Certain tenant-caused violations may be excepted. An MCI rent increase will not be approved if there is a DHCR finding of harassment outstanding on the building or if there is a DHCR issued building-wide rent reduction order in effect, based upon a decrease in services. DHCR will expedite any owner filed rent restoration applications. A tenant whose apartment has an individual rent reduction order in effect, based upon a decrease in service will be exempt from the MCI rent increase until the rent is restored by DHCR.”

However, it is important to note that, if the HPD violations are issued after the MCI is approved, the violations will not retroactively bar the MCI rent increase such as in the Petition for Administrative Review (PAR) of  900 Riverside Drive: DHCR Adm. Rev. Docket No. XD430030RT.

The decision was as follows:
The landlord applied for MCI rent hikes based on gas and water repiping. The District Rent Administrator (DRA) ruled for the landlord, and tenants filed a PAR. The tenants claimed that the landlord’s costs weren’t sufficiently proven and that a DHCR building-wide rent reduction order barred the MCI increase. The DHCR ruled against tenants. Landlord submitted all required documentation proving the work performed and its cost. The rent reduction order in question wasn’t issued until after the DRA granted the MCI application, so it didn’t bar the MCI rent hikes. So, the date when violations and rent reductions are issued is important.

An Article 78 proceeding is a special proceeding initiated in New York State Supreme Court under Article 78 of the Civil Practice Law and Rules to overturn the determinations of administrative agencies like the DHCR. It is the final venue to object to the MCI rent increase order. This proceeding should be filed by an attorney.

In the matter of Tenants Committee of 36 Gramercy Park v. DHCR: 968 NYS2d 82, 2013 Slip Op 04984 (App. Div. 1 Dept.; 7/2/13; Friedman, JP; Sweeny, DeGrasse, Richter, Feinman, JJ.), the DHCR granted landlord’s application for MCI rent hikes. The building’s tenant association filed an Article 78 appeal, challenging the rent increases. The court and appeals court ruled against tenants. One tenant, who was a member of the association, claimed to represent the association and filed on its behalf  but the tenant wasn’t an attorney and a voluntary association can be represented in court only by an attorney and not by one of its members who wasn’t an attorney licensed to practice law in New York.  So, the tenants’ appeal was summarily dismissed.

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