Landlord Proved Building Was Substantially Rehabbed After 2014 Fire

Landlord applied to the DHCR in 2021 for a ruling that its building was exempt from rent stabilization based on substantial rehabilitation commenced in June 2015 and completed in 2020. The DRA ruled for landlord, finding that the building was exempt due to a substantial rehabilitation completed after Jan. 1, 1974. But the DRA also ruled that 11 of the 25 apartments remained rent stabilized as long as current tenants remained in occupancy since they had lived there before a 2014 fire resulted in a HPD vacate order and had moved back into the building when the vacate order was lifted. Tenants appealed and won only to the extent that one additional apartment was added to the 11 that remained rent stabilized. 

The DHCR otherwise found that the building was in substandard or seriously deteriorated condition following the 2014 fire when HPD issued the vacate order for the entire building. Despite tenants' claims that the building wasn't in substandard condition, an expert's affidavit and photographs also supported the DHCR's finding. Also, despite the DOB application's reference to renovations in no more than 50 percent of the building, the DHCR found that other evidence from the DOB files and from the expert's file and affidavit proved that a sufficient number of building systems were replaced to qualify for a sub rehab finding. The DOB Letter of Completion obtained by landlord was a valid substitute for a C of O obtained from DOB since there was no alteration of ingress/egress or change in the number of dwelling units. Tenants also claimed that landlord's claimed costs were excessive and that it used insurance proceeds to pay for the work, but these points were irrelevant. In their PAR, tenants also claimed harassment, but this was outside the scope of review of whether landlord completed a substantial rehabilitation. And, the fire led to the building vacancy, not any alleged harassment. 

Zapata: DHCR Adm. Rev. Docket No. KS410014RT (4/11/23)[5-pg. document]