"The woman explained that if CW would go to a judge and the judge grants them legal right to raise rent [mid-lease] I will be bound by that decision - one of the reasons is financial hardship."
The very fact that the woman at the leasing office stated "financial hardship" as a reason to raise rents mid-lease suggests that the idea is out there. How seriously has this idea been considered? That I don't know, and perhaps, hopefully, the woman was just speaking off the top of her head and not revealing a landlord's potential or even speculative plan. If she was speaking off the top of her head, her boss should admonish her for even suggesting such a concept and potentially traumatizing all the tenants here.
I think if any landlord of this place tried to raise rents due to "financial hardship," there'd be such an uproar and revolt that New York City would have an earthquake or two. No landlord should even think of stepping in this direction.