State’s Highest Court to Reconsider
MBR Case
By Jenny Laurie

The New York State Court of Appeals has agreed to hear an appeal of a lower-court decision affecting the rent increases of rent-controlled tenants (Tenant/Inquilino, January 2001). Last January, the Appellate Division of State Supreme Court had ruled unanimously against landlords’ challenge to a formula set by the City Council in 1997 to determine the maximum base rent.

The Council had adjusted the method used to calculate increases in the MBR, the maximum rent theoretically possible for rent-controlled apartments. What tenants actually pay is the maximum collectible rent (MCR), which goes up 7.5% a year until it reaches the MBR. As a result of the 1997 change, MBR increases were much lower, which resulted in thousands of rent-controlled tenants not having to pay the full 7.5% increase in their MCR. The Council had changed the formula (which it had originated in the early 1970s) to conform it to changes in the state tax rules. The landlords immediately sued, claiming that the state’s Urstadt Law prohibited the Council from acting; they claimed that only the state legislature had that power. However, the landlords lost in the courts at every level, including the Appellate Division’s January decision.

“The effect on tenants will be devastating if the Appellate Division is reversed,” says Steve Dobkin, of Collins, Dobkin and Miller, who is representing tenant groups. “This case would affect rent increases going back to January 1, 1996.”

The change in the formula has affected thousands of rent-controlled tenants—who are overwhelmingly low-income and elderly—by blocking the full 7.5% per year rent increase for them since 1996. A change back to the old system would allow the retroactive charging of those increases. However, tenants shouldn’t panic. “Every judge that has heard this case so far has agreed with our case,” Dobkin says.

Tenant groups, including Met Council, are being represented in the case by Dobkin, as well as William Gribben of Himmelstein, McConnell, Gribben & Donohue.