Building Rehabbed Under PHFL Program with HUD Financing Remained Rent Stabilized

Landlord asked the DHCR for a ruling that its building was exempt from rent stabilization due to a substantial rehabilitation landlord claimed was completed between 1978 and 1981. The DRA ruled against landlord.

Landlord appealed, and the case was sent back to the DRA for further consideration. The DRA then ruled that the work completed in 1981 was done pursuant to Article 5 of the Private Housing Finance Law (PHFL), which placed the building under a Regulatory Agreement supervised by HPD. This precluded deregulation, and landlord didn't submit additional information requested by the DRA that might have changed the result.

Landlord again appealed and lost. The DRA had given landlord 18 months to submit: (a) a clear copy of the deed transferring the building to the initial developer; (b) a letter from HPD explaining when, why, and how HPD regulation ended; (c) a list of complete building addresses and units involved in the rehabilitation; (d) the complete DOB job file, including a full-scale copy of the approved architectural plan and all certifications of the building systems replaced in the rehabilitation; and (e) a sworn statement from a licensed architect or engineer who had reviewed the plans/DOB job file and inspected the building, which described the specific building and apartment systems that were replaced.

After a number of extensions were granted, landlord hadn't submitted any of the requested documentation or provided an explanation as to why it was unable to do so. The description of the proposed rehabilitation set forth in the Regulatory Agreement wasn't enough to demonstrate the sufficiency of the sub rehab. And, while the Regulatory Agreement had expired and the mortgage seemingly was paid off, nothing in that agreement stated any expiration date. The project also was financed by HUD, requiring all dwelling units to become subject to rent stabilization under PHFL Article 13, Section 608.

602 44 Realty LLC: DHCR Adm. Rev. Docket No. KT210018RO (2/24/23)[4-pg. document]