Co-op Corporation Can't File Hardship Application

Landlord cooperative corporation applied for alternative hardship rent increases. The DRA ruled against landlord, finding that alternative hardship relief wasn't available to co-op buildings. The DRA relied on DHCR Operational Bulletin 85-2, and pointed out that a co-op could file a comparative hardship rent increase application. Landlord appealed, claiming that under the ETPA and the Tenant Protection Regulations, ''owners of buildings'' were entitled to file for alternative hardship. The DHCR ruled against landlord. Courts have ruled on this issue and have found that the DHCR's policy stated in Operational Bulletin 85-2 was rational and that ''owners of buildings'' eligible to file alternative hardship applications didn't include cooperative forms of ownership. The intent of the law was to permit owners of rent-regulated units to make some minimum profit. But co-ops don't operate on a ''for profit'' basis and receive ''maintenance'' from shareholder tenants rather than ''rent.''

40 Schenck Owners, Inc.: DHCR Adm. Rev. Dckt. No. LG710084RO (3/4/98) [6-page document]