It’s not possible to predict when there might be an outcome in a lawsuit challenging New York state’s 2019 Housing Stability and Tenant Protection Act (HSTPA), attorney Kenneth Finger of the White Plains-based law firm Finger & Finger told the Business Journal during a Feb. 11 interview.
The case was brought by the Building and Realty Institute (BRI) of Westchester and Putnam Counties Inc., The Apartment Owners Advisory Council, The Cooperative and Condominium Advisory Council, both component associations of the BRI, and several landlords. Finger & Finger is chief counsel to the BRI and its affiliate organizations and is representing the plaintiffs in the litigation, which was filed in White Plains at the U.S. District Court for the Southern District of New York.
The action was brought against The New York State Homes and Community Renewal Agency (HCR)/Division of Housing and Community Renewal (DHCR) and also names DHCR/HCR Commissioner Ruthanne Visnauskas as a defendant.
“I would presume that it would be a number of years mainly because I would suspect that either way the local judge or the district court decides there will be an appeal to the Federal Court of Appeals,” Finger said. “You’re talking about years, and then, possibly again, depending on the decision of the Court of Appeals, there might be an application to the United States Supreme Court for review of the decision below and that takes years.”
The lawsuit seeks to overturn changes to the underlying Emergency Tenant Protection Act (ETPA) of 1974. In June 2019, Gov. Andrew M. Cuomo signed into law an amendment to the ETPA, the HSTPA. Finger said the state had not yet filed its answer to the complaint.
“That act substantially modified the ETPA in a considerable number of ways, which we believe constitute an unconstitutional taking, a violation of due process and other illegal and improper aspects of the law,” Finger said.
The BRI said the HSTPA covers approximately 25,000 rental apartments in Westchester County and certain of its provisions apply to approximately 500,000 other residences in the county including co-ops, condominiums and single-family dwellings.
“It has done away with the ability to have a vacancy increase, or an increase where you’re not subject to ETPA anymore, such as for high rent or high income,” Finger said. “You can have a person now living in an apartment making $500,000 a year and where the rent has gone up over what used to be the statutory amount (limit for ETPA to apply) and that person will still have the protections of the Emergency Tenant Protection Act and still be subject to maybe a 1% or 2% increase a year.”
The BRI contends that among the unintended consequences of HSTPA are limiting the ability of cooperatives to investigate potential shareholders and restricting the ability to collect overdue maintenance and additional charges.
“They’ve limited the ability to recoup expenses for individual apartment improvements and major capital improvements in the building,” Finger said. “What’s happening is that when the apartment becomes vacant, for example, after someone’s been there 20, 30 or 40 years, most landlords historically want to renovate the apartment and get a reasonable rent increase for renovating the apartment.”
Finger said the law being challenged limits what a landlord can recoup.
“On a major capital improvement, if you want to do a roof or new windows or a boiler or anything like that, you’re only entitled to collect a 2% a year increase on any amount of money that you spend. So, there are now big projects of major capital improvements that are not going to be done, apartments that won’t be renovated and the ones that ultimately are going to be hurt are the tenants,” Finger said.
Finger noted that HSTPA has changed the court process for handling tenants who have not been paying their rent. He explained that the process “has been extended by probably six weeks at a minimum so a landlord could lose three or four months by the time he gets to the point of maybe having a decision in his favor to deal with a nonpayment or a holdover.”
The BRI and the other plaintiffs do not want to overturn the underlying ETPA and their lawsuit is concerned with properties in Westchester County, according to Finger, although he could not rule out the possibility that the outcome of the lawsuit would affect what happened elsewhere.
Finger expressed concern that if HSTPA stands as is, “within a few years you’re going to have housing that’s going to deteriorate because the money will not be there. We don’t want a New York City Housing Authority situation up here. We don’t want the Bronx of the 1970s where people walked away from buildings.”