J-51 Status Questioned in Deregulation Case

Landlord applied for high-rent/high-income deregulation of five apartments in 2007. The DRA ruled against landlord, finding that the building was receiving J-51 tax benefits and that landlord failed to respond to many requests for additional information concerning the J-51 benefits. Landlord appealed. Landlord admitted that it failed to provide the requested additional information and had therefore abandoned its deregulation applications. But landlord argued that the DHCR should make clear that the the DRA rulings were based only on landlord's failure to provide the requested information. Landlord said that the orders shouldn't state as a matter of law that apartments couldn't be deregulated when a building receives any type of J-51 tax benefit. In this case, landlord said that it received the J-51 benefits for a minor, routine improvement and not a conversion or substantial rehabilitation. Landlord claimed that there was therefore no impact on the rent-regulated status of the building, and that the building was otherwise subject to stabilization and therefore should be subject to high-rent/high-income deregulation. The DHCR ruled for landlord. Given landlord's abandonment of its applications, it wasn't necessary for the DRA to make any findings concerning the applicability of high-rent/high-income deregulation to the apartments as a result of landlord's J-51 benefits. The DRA's orders were amended to revoke any such findings.

167 Avenue A Owner LLC: DHCR Adm. Rev. Docket Nos. WF410057RO et al. (1/2/9/09) [3-pg. doc.]