Is J-51 Building Subject to Stabilization and Deregulation?

Landlord applied for high-rent/high-income deregulation of tenant's apartment. The DRA ruled against landlord and dismissed its application. The DRA found that the building was renovated after Jan. 1, 1974, and landlord received J-51 benefits for the renovation. Because the building was rent stabilized due to J-51 status, it was exempt by law from high-rent/high-income deregulation. Landlord appealed, claiming that the building was otherwise subject to rent stabilization before landlord received J-51 benefits. Because it wasn't rent stabilized solely as a result of J-51, the exemption didn't apply. The DHCR reopened the case and sent it back to the DRA for reconsideration. The DRA needed to examine whether the J-51 benefits were obtained for substantial rehabilitation of the building after Jan. 1, 1974. There wasn't enough in the record to prove that it was. It the building wasn't actually substantially rehabilitated, tenant's apartment would therefore be subject to stabilization due to its original regulated status, and would be subject to luxury deregulation.

EQR-41 West 86th, LLC: DHCR Adm. Rev. Docket No. VJ410098RO (12/20/07) [3-pg. doc.]