A two-and-a-half-year legal battle over the city’s rent control law will go before the state’s highest court next week as attorneys for the city and a landlord advocacy group present oral arguments before the seven-member state Court of Appeals. The outcome of the courtroom showdown is likely to have major implications for rent control laws statewide.

The case involves Kingston’s 2022 declaration of a housing emergency and subsequent imposition of rent control under New York’s Emergency Tenant Protection Act. The law applies to all rental housing with six units or more built before 1974. Eligible buildings are placed under the oversight of the state Division of Homes and Community Renewal. The law gives tenants added protection against arbitrary eviction and a process to appeal rent hikes and other fees imposed by landlords. Critically, the law gives a locally appointed nine-member Rent Guidelines Board the power to set “fair market rent” for eligible units and cap annual rent increases. In 2022, at its first meeting, Kingston’s RGB took the unprecedented step of ordering a 15 percent rent reduction at eligible properties. In 2023 and 2024 it voted to freeze rents.

The Hudson Valley Property Owners Association’s lawsuit was filed in October 2022 and has been before the courts ever since. The legal action seeks to overturn the city’s declaration of housing emergency by claiming it was based on a flawed and biased vacancy survey conducted by the city’s own Office of Housing Initiatives to demonstrate that the vacancy rate in ETPA-eligible properties was below the law’s 5 percent threshold. The lawsuit claims that the survey’s finding of a vacancy rate of 1.57 percent was manipulated to produce a desired outcome in line with Mayor’s Steve Noble’s wishes to have the city opt into the ETPA.

HVPOA conducted their own survey which found the vacancy rate of at least 6.22 percent, a figure that does not include units which are vacant but not currently available because of renovations or other issues. That figure is more in line with the results of a third vacancy survey conducted by consultants GAR on behalf of the city in 2020 which pegged the vacancy rate at 5.7 percent. HVPOA used a similar strategy of targeting vacancy surveys to overturn ETPA emergency declarations in Poughkeepsie and Newburgh. That leaves Kingston as the only community to successfully enact rent control since 2019 when state lawmakers amended the ETPA to allow municipalities outside of New York City and its immediate suburbs to opt into the law.

Another part of the HVPOA’s legal action argues that the RGB exceeded its authority when it ordered the 15 percent rent reduction. A 2023 ruling by state Supreme Court Judge David Gandin upheld the housing emergency declaration, while rejecting the rent rollback. The next year, a five-judge panel of the appellate division of the Third Judicial District similarly upheld the vacancy survey while reinstating the rent reduction. HVPOA then sought and received leave to appeal to the state’s highest court.

While the ETPA has remained in effect as the case has made its way through the courts, tenants’ rights advocates have complained of widespread noncompliance and spotty enforcement by DHCR. At a June 2024 meeting of the RGB, DHCR representative Woody Pascal conceded that the ongoing litigation had left the ETPA in Kingston in a legal “gray zone.”

“We have to recognize that this court case that’s still kind of out there may impact our ability to do certain things,” Pascal said.

Meanwhile, challenges by individual landlords to their property’s inclusion in the rent control law have steadily whittled down the number of units under DHCR oversight and subject to the RGB’s directives. When the law passed in September 2022, it covered about 1,200 units. By the end of 2023 that number was down to 610, representing just 5 percent of Kingston’s rental housing stock.

On May 15, when the opposing parties are scheduled to present oral arguments before the Court of Appeals, the city will be represented by Corporation Counsel Barbara Graves-Poller. Graves-Poller is an experienced litigator who has argued before the state’s highest court on several occasions in her previous role as a senior attorney in the appellate division of the New York City Department of Law. The HVPOA will be represented by Magda Cruz, a partner in the Manhattan-based law firm Belkin Buren Golman who previously served as an owners’ representative on the New York City Rent Guidelines Board. While the Court of Appeals is New York’s last stop for litigation, both sides said that if the court upholds the ETPA in Kingston, they expected the litigation to continue in the federal courts.

“We feel optimistic about next week since the law is on our side,” wrote Graves-Poller in an email to Kingston Wire. “At the same time, we know that this will not be our last legal battle. Attorneys involved in this matter have brought lawsuits challenging every step in the rent stabilization process from contesting vacancy study calculations to claiming that laws facilitating rent roll data collection are unconstitutional. The arguments in those cases and theories advanced in the amicus briefs submitted in our case point to future federal litigation.”

HVPOA Executive Director Rich Lanzarone said if the state courts uphold Kingston’s rent control law, they would open the door to federal litigation that could have implications far beyond Kingston. Lanzarone said that while the issue of the vacancy survey would be focused more narrowly on process, the rent rollback argument could cast doubt on the constitutionality of the ETPA itself. Lanzarone said a federal court, or even the U.S. Supreme Court, could rule that the rent rollback amounted to a “taking” of private property in violation of the Constitution.

“If this case gets to federal court with the 15 percent rent reduction, it might be the case that breaks the back of rent stabilization in New York,” said Lanzarone.

Like Lanzarone, Mayor Steve Noble — who plans to attend the hearing along with members of Kingston High School’s law club — said he believes that whatever the outcome, the case would resonate beyond the city. Since Newburgh and Poughkeepsie’s laws were overturned, no upstate community has attempted to declare a housing emergency and opt into the ETPA. Noble said that the outcome of Kingston’s case would send a clear signal of whether or not the 2019 expansion of the ETPA presented a viable option for upstate communities attempting to address the housing affordability crisis.

“The case next week and the decision will really be either a green light to the rest of New York State to be able to go through this process and have a really clear plan on how to achieve rent control if they need it,” said Noble. “Or it will be a step backwards for those who want to see rent control in Upstate New York.”