Apartment in Co-op Building Receiving J-51 Benefits Not Subject to Deregulation

Landlord applied in 2011 for high-rent/high-income deregulation of tenant's rent-controlled apartment. Tenant's rent was more than $2,000 per month and landlord sought verification of whether tenant's annual household income was more than $175,000 in 2009 and 2010. The DRA ruled against landlord because the building was receiving J-51 tax benefits during the relevant time period.

Landlord appealed and lost. Landlord argued that the building was converted to cooperative ownership in 1987, that landlord owned the shares of tenant's apartment but not the building, that landlord didn't file for or receive the J-51 tax benefits, and that the Court of Appeals' decision in Roberts v. Tishman Speyer Properties LP shouldn't be applied in these circumstances. But the building's J-51 tax benefits ran from July 1, 1992, through June 30, 2013, so the apartment wasn't subject to deregulation when landlord applied for luxury deregulation. In addition, the apartment was rent controlled and therefore would remain exempt from luxury deregulation after the J-51 benefits ended. It didn't matter that tenant's apartment was cooperatively owned. Any exception to the J-51 provisions for co-op or condo units applied only to units not subject to rent regulation.

RAM I LLC: DHCR Adm. Rev. Docket No. BQ420011RO (11/23/18) [7-pg. doc.]