Velasquez v. New York State Division of Housing & Community Renewal, 130 A.D.3d 1045 (2015)

In my view, the Marrones’ contention has merit. “The mechanism pursuant to which a landlord may charge a ‘first’ or ‘free market’ rent is an administratively created policy implemented by DHCR in its capacity as the administrative agency which regulates residential rents” (Matter of 300 W. 49th St. Assoc. v New York State Div. of Hous. & Community Renewal, Off. of Rent Admin., 212 AD2d 250, 253 [1995]; see Matter of Devlin v New York State Div. of Hous. & Community Renewal, 309 AD2d 191, 193 [2003]). Under that policy, “[w]here an owner significantly changes the perimeter and dimensions of an existing housing accommodation,” such that the previous apartment no longer exists, the owner may charge “a market or ‘first rent,’ subject to guidelines limitations for future rent adjustments” (NY St Div of Hous & Community Renewal Operational Bulletin 95-2 at 4 [Dec. 15, 1995]; see Matter of Devlin v New York State Div. of Hous. & Community Renewal, 309 AD2d at 194; Matter of 300 W. 49th St. Assoc. v New York State Div. of Hous. & Community Renewal, Off. of Rent Admin., 212 AD2d at 253). The rationale for the policy has been explained as follows: “If the rental history of a stabilized apartment is no longer applicable due to the creation of a new unit with completely different perimeter walls, there would be no rational method which DHCR could utilize to calculate the legal rent since the stabilized rent is based upon a continuous chain of rental history” (Matter of 300 W. 49th St. Assoc. v New York State Div. of Hous. & Community Renewal, Off. of Rent Admin., 212 AD2d at 253).