Landlord Didn't Document Sub Rehab or Show Building Was 80% Vacant Before Work Began

Landlord applied to the DHCR for a ruling that its building was exempt from rent stabilization due to substantial rehabilitation of the building that took place after Dec. 31, 1973. The DRA ruled against landlord based on landlord's failure to submit necessary information or evidence to prove that the building had been substantially rehabilitated as meant by RSC Section 2520.11(c). Landlord appealed and lost, claiming that the DRA arbitrarily ignored evidence showing that the building was 80 percent vacant and in substandard condition before the rehab work commenced. Landlord claimed that it also had submitted DOB permits and a Letter of Completion for the work performed, and that at least 75 percent of building systems had been replaced. Landlord also submitted additional proof of a sub rehab with its PAR. 

The DHCR ruled that documentation of the sub rehab submitted for the first time with landlord's PAR were beyond the scope of review unless such evidence could not reasonably have been offered to the DRA while the matter was pending before the DRA. The DHCR's Operational Bulletin 95-2 also clearly outlined what documentation landlord was required to submit to the DHCR. In addition, documentation submitted didn't prove that the building was 80 percent vacant or that it was in a substandard condition prior to commencement of the rehabilitation. Proof submitted showed that two of the six apartments, or 66.66 percent thereof, were vacant when the work commenced. So the building wouldn't have qualified for a substantial rehab exemption and it therefore didn't matter whether 75 percent of the building systems had been replaced.

Suydam Street Corp.: DHCR Adm. Rev. Docket No. LW210013RO (6/12/24)[6-pg. document]