NY State Court Voids Kingston's 15% Rent Rollback

A retroactive 15% reduction of apartment rents in Kingston, NY—perhaps the first such effort by any city to grandfather in rent control—has been voided in a ruling handed down by a New York State Supreme Court judge.

In the same decision, the judge upheld the city’s approval of a new rent control measure in the Hudson Valley community, which is halfway between New York City and Albany.

State Supreme Court Judge David Gandin ruled this week that Kingston’s rent guidelines board (RGB) does not have the authority to unilaterally reduce rents, throwing out the 15% rent reduction before it could go into effect.

Gandin also tossed the plaintiff’s complaint that the RGB used flawed data to issue its rent control measure, which remains in effect. In his ruling, Gandin said state law does not specify how municipalities should measure vacancies.

“It is not this court’s function to second-guess methodology or results,” Gandin said, ruling that Kingston’s board acted “in a reasonable manner.”

“The mere presentation of some disputed issues of facts provides an insufficient legal basis for the Court to invalidate the study,” the judge said, in the ruling.

Under state law in NY, a vacancy rate below 5% signifies a housing emergency that is grounds for rent stabilization. A survey by Kingston’s RGB said the vacancy level in the city was 1.57%.

Hudson Valley Property Owners, which filed a lawsuit to block Kingston’s rent control/rent reduction law, said it would appeal the ruling. The landlords group claimed the city only polled one-third of city property owners regarding vacancies and counted properties where the landlord did not respond as fully occupied.

Proponents of the 15% rent reduction also said they would continue the legal battle. Sarahana Shrestha, a State Assembly member who represents Kingston, issued a statement declaring “the fight isn’t over yet.”

The legal jousting in state court over a local NY rent control law is likely to be eclipsed soon by what boxing aficionados call the Main Event: a challenge to New York State’s rent control law that appears to be heading to the US Supreme Court.

Last week, a federal appeals court tossed out two lawsuits, backed by NYC landlords, that sought to challenge New York’s rent reform and rent stabilization law, passed by the state legislature in 2019.

Landlord groups who were plaintiffs in one of the lawsuits immediately said after the ruling was handed down that they would appeal the case to the US Supreme Court, which could set the stage for the court to weigh in on rent control.

The decision by a panel of three Second Circuit judges affirmed a September 2020 ruling in NY’s Eastern District Court that had dismissed the lawsuits. The appeals court agreed with the lower court’s decision that building owners had failed to prove in their arguments that the 2019 rent reform law was an unconstitutional infringement on their property rights.

The 2019 rent reform law limited when and how a landlord can increase rents on stabilized apartments, of which there are an estimated 900K units in NYC. The reform also allowed tenants of any income to lease rent-stabilized apartments.

The appeals court found that New York State “has broad authority to regulate land use without running afoul of the Fifth Amendment.”

“The legislature has determined that the [rent law] is necessary to prevent serious threats to the public health, safety and general welfare,” the appeals court ruling stated. “No one can seriously contend that these are not important public interests, and courts are not in the business of second-guessing legislative determinations.”