Justice Carol Robinson Edmead


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Defendant moved for summary judgment on plaintiffs’ complaint seeking declaratory judgment that their tenancies were subject to the local Rent Stabilization Law, damages from overcharging and various injunctive relief. Defendant also moved for a judgment declaring that its building was subject to federal preemption from local rent regulation. Plaintiffs cross-moved for summary judgment, arguing in the alternative, that if defendants’ building was subject to federal preemption then it was governed by HUD Handbook guidelines. In 1980 defendant’s predecessor-in-interest obtained a HUD flexible subsidy granted requiring the building to maintain its low and moderate income character until the maturity of the loan. When the former owner prepaid the loan, it obtained a use agreement continuing HUD’s preemption of rent regulation. The court granted plaintiffs’ motion in part, finding that the use agreement did not invoke federal preemption because it was not specifically authorized as an exercise of preemption by the federal government. Nor was the use agreement arrived at by traditional rulemaking methods or the methods enumerated by the Administrative Procedure Act to give the use agreement the status of a rule with the force of law.