Matter of 81st Realty Corp. v. New York State Div. of Hous. & Community Renewal, 184 N.Y.S.3d 749 (2023)

DHCR's finding that petitioner had waived the rent increases by failing to timely apply them to the tenant's lease was supported by a rational basis (see Matter of Apar Realty Co. v State of New York Div. of Hous. & Community Renewal, 286 AD2d 274, 274 [1st Dept 2001]). Petitioner does not dispute that it failed to increase the rent for the subject apartment by 4% in 2014, as permitted by the Rent Guidelines Board Order #45 for rent-stabilized units. The 2014 major capital improvement (MCI) order permitted a rent increase for all stabilized and rent controlled apartments, but petitioner failed to include the subject apartment in its application because it was not treating it as rent-stabilized at the time. Because petitioner treated the apartment as a free-market unit, the 2014 MCI order did not apply to it. Accordingly, DHCR reasonably determined that a rent increase pursuant to the 2014 MCI order was not a "subsequent lawful increase[]" to be included in the legal regulated rent (Rent Stabilization Code [9 NYCRR] § 2526.1[a][3][i]; see Matter of Apar Realty Co., 286 AD2d at 274).