Deregulation Doesn't Apply in Co-op Building Receiving J-51 Tax Benefits

Landlord applied for high-rent/high-income deregulation of tenant’s apartment in 2009. The DRA ruled against landlord because the building was receiving J-51 tax benefits when landlord filed its deregulation application. Landlord appealed, and the DHCR reopened the case in September 2015. But the DHCR later issued a new order, ruling against landlord. The DHCR was bound by the Court of Appeals’ ruling in Roberts v. Tishman Speyer Properties, LP, so the DHCR’s prior PAR decision was illegal. It is DHCR’s position that, in buildings that convert to cooperative ownership that contain apartments that became rent stabilized for a reason other than the building’s receipt of tax benefits, nonpurchasing rent-stabilized tenants aren’t subject to high-income rent deregulation while J-51 tax benefits are still being received by the building. Also, nonpurchasing rent-controlled tenants in occupancy of such apartments aren’t subject to high-income rent deregulation at any time after J-51 tax benefits start being received by the building.

Roc-Century Associates LLC: DHCR Adm. Rev. Docket No. BR410040RO (12/7/15) [3-pg. doc.]