J-51 Exception to Deregulation Applies Even After J-51 Benefits End

Landlord applied for high-rent/high-income deregulation of tenant’s apartment. Tenant claimed that the apartment was exempt because the building became subject to rent stabilization due to landlord’s participation in the J-51 tax benefit program. Landlord appealed. Since the J-51 benefits had expired, landlord argued that tenant’s apartment was eligible for luxury decontrol.

The DHCR ruled against landlord. The building wasn’t otherwise subject to rent stabilization before getting J-51, so there was no question such as that raised in the Stuyvesant Town case. And any apartments subject to rent stabilization by virtue of J-51 remain ineligible for high-rent/high-income deregulation, even after the J-51 benefits expire. The subsequent 1985 substantial rehabilitation of the building that took place after the initial rehab that resulted in the J-51 benefits didn’t affect the status of the apartment and whether it was subject to luxury decontrol after expiration of the J-51 benefits.

73 Warren Street LLC: DHCR Adm. Rev. Docket No. XG410019RO (10/1/09) [3-pg. doc.]