Building That Got HUD Loan Was Rent Stabilized

Tenant complained of rent overcharge and that landlord failed to register her apartment as rent stabilized even though the building received J-51 tax benefits. Landlord claimed that the building was exempt from rent stabilization because it was operated for charitable purposes on a non-profit basis under the Private Housing Finance Law (PHFL). Landlord also said that J-51 benefits had expired before tenant moved into the apartment in 2009. Tenants pointed out that, in a housing court case involving another building tenant, the court found that the building was subject to rent stabilization based on the building's receipt of a federal rehabilitation loan.

The DRA ruled for tenant in part and ordered landlord to register the apartment as rent stabilized. But the DRA found no overcharge since tenant was paying the same rent as paid on the base rent date. Landlord and tenant both appealed. The DHCR ruled for landlord based on an appeals court decision that reversed the housing court ruling and found that the building wasn't rent stabilized. The DHCR ruled against tenant. Tenant then filed an Article 78 court appeal of the DHCR's decision, and the case was sent back for further consideration.

The DHCR then ruled for tenant. The appeals court decision that landlord relied on wasn't on the merits. And landlord received a HUD loan for building rehabilitation. Under PHFL Section 607(1), the building then became subject to rent stabilization. And, although Rent Stabilization Code Section 2520.11(j) provides an exemption from rent stabilization based on charitable operation of the building, the PHFL law prevails, so the building remains rent stabilized. Still, the DHCR found no rent overcharge.

310 East 4th Street HDFC/Junge: DHCR Adm. Rev. Docket No. FQ410007RP (3/27/18) [10-pg. doc.]