24 Hour Local Real Estate News

NY Appeals Court Reinstates Kingston's 15% Rent Rollback

A state appeals court in New York has overturned a lower court and ruled that a November 2022 decision by the Rent Guidelines Board in Kingston to roll back rents with a 15% cut—believed to be the first government-mandated rent rollback in U.S. history—was legal and can be enacted.

As the state appeals court ruling was made, the Hudson Valley Property Owners Association (HVPOA)—a plaintiff in the lawsuit challenging the Kingston rollback—moved quickly to file a lawsuit in federal court aiming to halt vacancy surveys that could result in rent stabilization in the city of Poughkeepsie and the Village of Nyack.

In the summer of 2022, Kingston, which sits halfway between NYC and Albany on the Hudson River, opted to invoke New York's Emergency Tenant Protection Act (ETPA), which permits municipalities to declare a housing emergency that is grounds for rent stabilization if the city's vacancy rate is below 5%.

In November 2022, Kingston's Rent Guidelines Board voted 6-3 to approve a 15% rent reduction that applies to renters of 1,200 apartments in 64 rent-stabilized buildings with leases between Aug. 1, 2022 and Sept. 30, 2023.

Before the rent rollback could be implemented, it was challenged in state court by the HVPOA, which alleged in its lawsuit that a vacancy survey conducted by Kingston counted properties that did not respond to the survey as completely occupied, did not count reported vacancies and failed to include some eligible buildings in the survey.

Last week, the state Appellate Division's Third Department overturned a state Supreme Court decision from February 2023 which had upheld Kingston's rent stabilization law while vacating the city's decision to reduce rents in buildings covered by the ETPA.

The Appellate Division sided with tenants, affirming Kingston's vacancy study, upholding the rent rollback and allowing tenants to challenge rent increases between January 2019 and July 2022.

"The appellate ruling is a resounding victory for tenants and municipalities experiencing rapidly escalating housing costs," Kingston Corporation Counsel Barbara Graves-Poller said, in a statement. "The Appellate Division established clear standards for cities facing housing emergencies and recognized the latitude Rent Guidelines Boards have to address local conditions."

HVPOA immediately filed a lawsuit in the United States District Court's Northern District in Albany challenging the constitutionality of vacancy surveys and asking the court for an injunction to block surveys in the city of Poughkeepsie and the Village of Nyack.

The state's Division of Homes and Community Renewal, which administers the surveys in accordance with the ETPA, was named as a defendant in the federal lawsuit, according to a report in the Mid-Hudson News.

The plaintiffs in the federal lawsuit are alleging that an ETPA requirement that landlords turn over business records amounts to an unconstitutional warrantless administrative search. An ETPA amendment adopted in December 2023 allows the surveys without requiring the state to demonstrate probably cause and obtain search warrants.

The lawsuit repeats the claims that were made in the lawsuit against the Kingston board, challenging an ETPA amendment that deems owners who don't respond to vacancy surveys as having no vacancies, which the plaintiffs allege skews the results of the survey.

Net Lease Spring:

Held April 16-17 in NYC, Net Lease Spring will bring together hundreds of dealmakers from the nation’s top firms. This year’s program will feature 5.5 hours of face-to-face networking and over 5 hours of content focused on micro and macro trends for 2024, being resilient through market volatility, how to serve your corporate tenant clients and much more! Learn more or register here.


Multifamily Spring:

Multifamily Spring is coming to New York City this April 18. This year’s program will bring together the industry's most influential and knowledgeable real estate executives from the multifamily sector for 5 hours of face-to-face networking and over 5.5 hours of can’t miss sessions. Learn more or register here.
Reprinted with permission from the Fri, 29 Mar 2024 05:57:30 EDT online edition of GlobeSt © 2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.