DOB Records Don't Support Landlord's Substantial Rehab Claim

Landlord applied to the DHCR for a rent stabilization exemption order based on claimed substantial rehabilitation of landlord's building. Landlord bought the building in March 2014, performed renovation work that was completed in 2015, and said it spent almost $400,000. The DRA ruled against landlord, who appealed and lost.

The DHCR pointed out that the DRA had correctly relied on DOB records since, "The genesis of a substantial rehabilitation is in the DOB filings," while contractor invoices, construction work records, and proof of payment were insufficient by themselves to support a sub rehab finding. While landlord claimed it filed a job number with DOB for a gut renovation, the filings landlord made at DOB contradicted this claim. For example, for the DOB form questions concerning whether landlord was performing work in 50 percent or more of the building's area and whether landlord was demolishing 50 percent or more of the building's area, landlord answered "no." And landlord never applied to DOB for a scope of work encompassing a substantial rehab.

The DOB PW3 Cost Affidavit submitted by landlord contained a description of the work as interior renovation for an existing three-story building, with a total cost of $62,500, and relocating plumbing fixtures for $3,000. So the total claimed job cost was $65,500, which was $333,072 less than the cost for the claimed sub rehab before the DHCR. The DOB instructions for the PW3 form called for a detailed construction cost breakdown for the work. So landlord's PW3 "grossly underestimated" the job cost and is devoid of work descriptions. The DRA also reasonably relied on DOB's Letter of Completion showing that the work DOB signed off on in 2015 under a particular DOB job number didn't encompass the extent of work needed for substantial rehabilitation under RSC Section 2520.11(e) and DHCR Operational Bulletin 95-2. And the sworn statement of landlord's architect, simply stating that work was completed, didn't prove that a substantial rehabilitation was performed. 

219 Troutman LLC: DHCR Adm. Rev. Docket No. IX210029RO (5/4/21) [6-pg. doc.]