Landlord Didn't Prove Building Was Substantially Rehabilitated

Landlord applied to the DHCR for a ruling that its building was exempt from rent stabilization due to a substantial rehabilitation performed in 2018. The DRA ruled against landlord in July 2023. Noting that DHCR Operational Bulletin 95-2 (OB 95-2) applied to this sub rehab project because it was "effective at the time of completion of the work at issue," the DRA noted that landlord's application stated that it was filed with respect to only three of the building's seven apartments. The DRA also found that the Tenant Protection Plan (TPP) filed by the landlord with DOB indicated that two apartments were to remain occupied while the renovation was to take place. So, the DRA found that the building wasn't 80 percent vacant when the project commenced and that landlord failed to show that the building was in a substandard condition. The DRA  also found that landlord failed to show that 75 percent of the building-wide systems and common areas were completely replaced with new systems, as required by OB 95-2 and RSC Section 2520.11(e).

Landlord appealed and lost. Although landlord claimed that an optional basement apartment to be occupied by a building super didn't count toward the total number of apartments, the DHCR found it to be a housing accommodation in the building, to be included for a total of seven apartments. And, since two units were occupied during the work, at most 71.4 percent of the building units were vacant prior to and during the work at issue. Also, since 28.6 percent of the tenants still lived in the building before the work started, the building wasn't in substandard condition when the project began. Landlord also indicated in its application that the two occupied units weren't rehabbed.  So landlord couldn't have completely replaced plumbing, heating, gas supply, electrical wiring, intercoms, windows, kitchens, bathrooms, floors, ceiling and wall surfaces, or door systems building-wide. Landlord at most completed 35.3 percent of the building systems. 

826 Marcy Avenue LLC: DHCR Adm. Rev. Docket No. LT210004RO (5/1/24)[4-pg. document]