Rent Stabilization—Court Rejects Housing Industry's Challenge to DHCR's Adoption of the 2014 Amendments to the Rent Stabilization Code, Which, Inter Alia, Codified a Tenant Protection Unit and Set Forth Exceptions to the Four-Year Statute of Limitations for Reviewing Rent Records

Real estate industry plaintiffs filed an action, challenging the NYS Department of Housing and Community Renewal's (DHCR's) adoption of 2014 amendments as being unconstitutional. The plaintiffs sought to “eliminate” a Tenant Protection Unit (TPU) and strike the amendments “in their entireties.” The plaintiffs requested, inter alia, “a permanent injunction barring DHCR from enforcing the…amendments and prohibiting TPU from conducting further investigations or issuing further determinations.” The plaintiffs based their claims “on the due process clause of the New York State Constitution and the Separation of Powers Doctrine.”

The plaintiffs argued that the government should “not be burdened by additional procedural safeguards to protect their interests” since the Office of Rent Administration (ORA) previously existed and functioned without TPU. The plaintiffs asserted that the TPU does not have powers that ORA does not have and that the TPU “is only being used to avoid ORA's existing adjudicatory process.” They contended that “TPU investigators very infrequently speak to potential witnesses, such as contractors,” about the individual apartment improvement (IAI) rent increases, and, “instead, rely upon correspondence with the owner.” They noted that the TPU “does not hold hearings or permit any internal administrative appeal.” In sum, they alleged that TPU audit practices fail to comply with due process requirements.