Landlord Didn't Prove Building Was Substantially Rehabilitated

Landlord applied to the DHCR for a ruling that its building was exempt from rent regulation due to a substantial rehabilitation completed during the 1980s. The DRA ruled against landlord, finding that it failed to prove that 75 percent of building-wide and individual apartment systems had been replaced.

Landlord appealed and lost. The DHCR ruled that the building was part of a horizontal multiple dwelling with another neighboring rent-stabilized building and again found that landlord hadn't replaced 75 percent of building systems. Landlord then filed an Article 78 court appeal, and the DHCR took the case back for further consideration. After reconsideration, the DHCR again ruled against landlord. 

Landlord argued that DHCR Operational Bulletin 95-2, outlining the 75 percent requirements shouldn't apply to sub rehab work done in the 1980s. But the DHCR found that although the work done in the 1980s was performed prior to issuance of DHCR Operational Bulletin 95-2 in 1995, OB 95-2 was based on the ETPA of 1974, RSC Section 2520.11(e), enacted in 1985, and ETPR Section 2500.9(e), enacted in 1974. OB 95-2 derived its authority from this law and regulations, and didn't create any new law, regulation, or requirement for work to qualify as a sub rehab. 

And, assuming landlord's DOB documentation showed that plumbing, gas, heating, electrical, kitchen, and bathroom systems were replaced building-wide, this showed that only six of the 14 applicable systems for landlord's application were replaced. The 2020 engineer's affidavit, submitted to the DRA 35 years after the work was done, lacked any indication that the engineer was involved in the work done and was based on conclusory claims and an inspection conducted at least 35 years after the work was completed. Landlord also failed to prove that all ceilings, floors, and plasterboard in common areas were replaced, as required by OB-95-2. 

382 8th Avenue Realty Corp.: DHCR Adm. Rev. Docket No. MS410001RP (9/10/24)[7-pg. document]