Landlord Didn't Prove Building Was Substantially Rehabbed

Landlord asked the DHCR for a ruling that its building was exempt from rent stabilization due to substantial rehabilitation. The DRA ruled against landlord, who appealed and lost.

Landlord claimed that: (a) the building became 80 percent vacant; (b) there was therefore a presumption that the building was in substandard or seriously deteriorated condition; (c) documentation showed landlord spent over $1,081,000 on the work; and (d) DOB issued permits and applications showing that at least 75 percent of the building's systems had been replaced.

During processing, the DRA asked landlord for a number of items of additional information. Despite several extensions, landlord failed to respond. The DRA found that, among other things, landlord failed to submit proper architectural plans for the projected approved by DOB or an architect/engineer's affidavit regarding the scope of the work performed. 

Landlord argued in its PAR that it had submitted sufficient documentation of the sub rehab. But the DHCR noted that landlord didn't submit enlarged building plans, an architect/engineer affidavit, and DOB Certificate of Occupancy or Letter of Completion. A contractor's records, proof of payment, and DOB filings alone are insufficient to prove substantial rehab without direct proof from engineer or architect outlining the scope of the work and stating that the required percentage of building systems and common area replacements were made. The DOB job description submitted stated only that there would be "interior renovation to all apartments, replacing existing lath and plaster of nonbearing partitions, replacing existing plumbing fixtures on existing roughing as per plan, no change in egress, occupancy or bulk."

Landlord also never answered the DRA's question as to what caused the building vacancies. Section I(C) of DHCR Operational Bulletin 95-2 requires the DRA to determine that vacancies weren't caused by any fault of the landlord before granting an exemption for substantial rehabilitation. The DHCR rejected additional proof submitted by landlord for the first time with its PAR. Landlord provided no reasonable excuse for failing to provide the engineer's statement and DOB Letter of Completion to the DRA. 

Wilson Properties & Equities Inc.: DHCR Adm. Rev. Docket No. HV210232RO (2/14/20) [7-pg. doc.]