Approval of Substantial Rehab Deregulation Delayed Until DOB Issues New C of O

Landlord asked the DHCR for a ruling that its building was exempt from rent regulation due to a substantial rehabilitation of the building. When landlord bought the building in 2003, it was vacant and completely demolished. The building had contained Class B SRO units, and, with DOB approval, landlord converted the building to four Class A units. Landlord submitted work records and an architect's affidavit stating that more than 75 percent of building-wide and apartment systems had been replaced. Landlord pointed out that DOB wouldn't issue a new Certificate of Occupancy (C of O) until an interior staircase and bulkhead were installed. The DRA ruled against landlord, finding that landlord hadn't met the requirements listed in DHCR Operational Bulletin 95-2 for a finding of substantial rehab.

Landlord appealed and lost. Landlord argued that the C of O should be required for approval of its application. Landlord admitted that it couldn't get the C of O because DOB required installation of a second means of egress leading to the roof with a bulkhead--that is, an interior staircase. This work required taking a portion of a tenant's apartment to add to the common area, but tenant had refused to provide access for the work. Landlord had filed a separate court action to compel tenant's cooperation. The DHCR found that the DRA couldn't grant landlord's application pending landlord's receipt of the new C of O. But landlord could file a new application with the DHCR if and when the new C of O is obtained.

Contempo Acquisition LLC: DHCR Adm. Rev. Docket No. GR410039RO (10/16/18) [4-pg. doc.]