Base Date Rent Calculated by DHCR Using "Bridge the Gap" Method

Tenants complained of rent overcharge and improper vacancy deregulation of their apartment. Landlord acknowledged that the high-rent apartment was rent-stabilized because the building received J-51 tax benefits but claimed there was no overcharge. The DRA ruled for tenants and ordered landlord to refund $1,800 with interest.

Tenants appealed and lost. They claimed that the DRA improperly calculated the rent overcharge. The DHCR noted that the DRA reviewed rent history records dating back 14 years prior to the filing of tenants' complaint, instead of four years. Landlord received J-51 benefits commencing February 2003 but filed an exit registration in 2003 claiming that the apartment became exempt prior to June 1, 2002. The DRA reasonably commenced rent calculations beginning with the last rent-stabilized rent prior to June 1, 2002, which was $1,822, and then "bridged the gap" from that rent to the base date. The DRA's calculations were correct and need not be altered. Tenants claimed that there was an improper rent increase from $311 to $1,822 16 years before tenants complained and before landlord received J-51 tax benefits. But this rent increase wasn't subject to review. There was no evidence of a fraudulent scheme to deregulate the apartment in this case. A mere increase in rent alone is insufficient to indicate fraud. And landlord deregulated the apartment in 2003 in reliance on pre-Roberts DHCR policy, which stated that landlord could deregulate the apartment even though it was receiving J-51 benefits. 

Russo/Calong: DHCR Adm. Rev. Docket No. FQ410061RT (7/31/18) [6-pg. doc.]