Building Substantially Rehabbed in 1984 Was Exempt from Rent Stabilization

Landlord asked the DHCR to rule on whether its building was exempt from rent stabilization due to substantial rehabilitation performed after Jan. 1, 1974. The DRA ruled for landlord and noted that, since the building received J-51 tax benefits that expired in 1999, any tenants in occupancy upon J-51 expiration who didn't receive lease riders advising them of that basis for their rent-stabilized status, would remain rent-stabilized until they moved out. One tenant appealed, claiming that the building didn't qualify for substantial rehabilitation coverage. The DHCR ruled against tenant, who then filed an Article 78 court appeal. The case was sent back to the DHCR for further consideration.

The DHCR again ruled against tenant. The building was substantially rehabilitated in 1984 under a rent regulatory agreement managed by HPD. The rent regulation imposed by that agreement automatically ceased after five years. The work performed met the criteria for substantial rehabilitation set forth in DHCR Operational Bulletin 95-2. The fact that HUD approved a loan to landlord for the work and the scope of the work recorded in HPD records led to the reasonable conclusion that the building was in a substandard or seriously deteriorated condition. The work done also showed that landlord replaced 75 percent of building and apartment systems in the building. 

Schroeder: DHCR Adm. Rev. Docket No. GS210001RP (7/31/18) [6-pg. doc.]