Building Was Exempt from Rent Stabilization Due to Substantial Rehab

Landlord asked the DHCR for a ruling that its building was exempt from rent stabilization because it had been substantially rehabilitated between November 2013 and September 2014. The DRA ruled for landlord. One tenant appealed, claiming that landlord's application was fraudulent and that the building had a number of HPD violations.

The DHCR ruled against tenant. Landlord showed that the building was in substandard or seriously deteriorated condition prior to commencement of the rehab, that it replaced more than 75 percent of the building-wide and apartment systems, and that the work at issue was paid for and conducted in compliance with applicable building codes and requirements. Landlord submitted a sworn statement from its architect stating that before the work began he inspected the 29 vacant apartments in the 31-unit building and that they were exceptionally deteriorated and uninhabitable at the time. The architect also stated that 100 percent of building systems were replaced.

Landlord also documented that all of the building interior, including all existing building systems and individual apartments, had been renovated. Landlord's work contract called for replacement of all ceilings, flooring, and walls; the reframing of all apartments; electric and plumbing work; installation of new windows, doors, moldings, flooring, and tiles; as well as general labor and rubbish removal and demolition. DOB filings and other contracts for windows, for a new burner/boiler, and for consulting supported the application. Photographs showed that the entire interior of the building was essentially gutted and reframed, all interior systems were replaced, and all apartment spaces and systems were also replaced.

DOB issued a Letter of Completion for the work in September 2014, stating that a new C of O wasn't required. Landlord also documented costs of over $2.7 million through a contract, a PW3 Cost Affidavit, and cancelled checks. Finally, any boilerplate statements by landlord's attorney in prior court cases that apartments were rent stabilized did not amount to admissions by landlord that the building hadn't been substantially rehabilitated.

Shupak: DHCR Adm. Rev. Docket No. KP410050RT (1/5/23)[11-pg. document]