Landlord Doesn't Prove Building Exempt Due to Substantial Rehab

Landlord asked the DHCR for a ruling that its building was exempt from rent stabilization due to substantial rehabilitation after Jan. 1, 1974. Landlord claimed that the building's interior was demolished and rebuilt as new between 2008 and 2009, and that 100 percent of the building's systems were replaced. Landlord submitted architectural plans submitted to DOB, a DOB Work Permit and Application Detail, construction photos, cancelled checks, and an engineer's affidavit. The DRA asked landlord to submit either a Certificate of Occupancy or Letter of Completion issued by DOB. Landlord stated that, to obtain that documentation, DOB required installation of a new electric HVAC system to speed the process.

The DRA ruled against landlord, based on the missing C of O or Letter of Completion. The DRA also found that not all systems were replaced, and that the requisite 75 percent of building systems weren't replaced. Landlord's architect admitted that the heating distribution system, fire escapes, interior stairways, and roof weren't replaced. And DOB had no record showing electrical wiring replacement. Five out of 15 building systems weren't completely replaced.

Landlord appealed and lost. Landlord then filed an Article 78 court appeal of the DHCR's decision. The DHCR took the case back to reconsider and again ruled against landlord. While landlord had now obtained a DOB Letter of Completion, landlord didn't show that at least 75 percent of building-wide and apartment systems had been replaced. Landlord still failed to prove that electrical system work was done. And six open DOB boiler violations disqualified the boiler/heating system from consideration for substantial rehabilitation.

Gates Residence LLC: DHCR Adm. Rev. Docket No. HX210008RP (7/21/20) [9-pg doc.]