IAIs Apparently Paid by Landlord to Contractor with Identity of Interest

Tenants complained in 2017 of rent overcharge and improper deregulation of their apartment. The DRA ruled for tenants in part, finding that the unit was rent stabilized because the building received J-51 tax benefits. The DRA approved a rent increase for individual apartment improvements (IAIs) that landlord claimed were done before tenants moved in and cost $20,000. Tenants appealed, objecting to the IAI rent increase. The DHCR reopened the case and sent it back to the DRA for further review of the IAIs. Landlord Fairbanks LLC had paid Ella Realty Services, Inc. for the IAIs. In a separate case, the DHCR had ruled that an entity owned by the same individual who was also the principal of Fairbanks LLC had an equity interest in, or identity of interest with, Ella Realty Services, Inc. In this case, the $20,000 check submitted as proof of payment of the IAIs was written in December 2015, after the tenants moved into the apartment and months after the work was supposedly completed. These facts required further investigation of the IAI rent increase by the DRA.

Levine & Barnes: DHCR Adm. Rev. Docket No. JQ210031RT (9/20/21)[4-pg. document]