Landlord Claims Buildings Are Exempt Due to Substantial Rehab

Landlord filed three separate applications with the DHCR to determine if its three buildings were exempt from rent regulation based on substantial rehabilitation. Landlord bought the buildings in 2014 and claimed that prior landlord completed gut renovations in the early 1980s under a city redevelopment program supervised by HPD. The DRA dismissed the application based on landlord's failure to submit requested additional information.

Landlord appealed and lost. An HPD Regulatory Agreement and Land Disposition Agreement between prior landlord and HPD indicated that HUD would set rents for apartments in the buildings and HPD would administer the rents from 1981 until 2021 or until the federal mortgage was satisfied. Records showed that landlord satisfied the mortgage in 2007. Neither of the agreements involved indicated what would happen to the regulatory status of the apartments after the mortgage was satisfied. So, it was reasonable for the DRA to request a clarification letter from HPD before deciding whether the DHCR had jurisdiction and when, if at all, the apartments in the buildings could be deregulated. Landlord's failure to comply with the DRA's request for such information reasonably resulted in termination of its applications.

968 Bronx Park South LLC et al.: DHCR Adm. Rev. Docket Nos. JO610005RO, JO610007RO, JO610008RO (5/10/21) [3-pg. doc.]