Landlord Qualifies for Alternative Hardship Increases

Landlord applied to the DHCR for rent hikes based on the alternative hardship provisions of the Rent Stabilization Law and Code. The DRA ruled against landlord, who appealed and won in part. The DRA had found that the sale of the building to landlord wasn't an arm's-length transaction. The DHCR noted that, to apply for an alternative hardship rent increase, a landlord must have at least 5 percent equity in the property. Here, Neighborhood Restore was a qualified third party in HPD's Third Party Transfer Program that took title under a tax foreclosure judgment. Neighborhood Restore was an independent corporation not under the control of HPD, and had no connection to the prior owner. Under the Third Party Transfer Program, Neighborhood Restore would eventually transfer the building to a qualified developer that will own and maintain the building as affordable housing. Given the unique circumstances of this transfer, the DHCR found that landlord had sufficient equity to apply for alternative hardship. And landlord showed that standard rent-stabilized guideline adjustments were insufficient for the property to maintain an annual gross rent income level that exceeded the allowable annual operating expenses by an amount equal to at least 5 percent of this annual income.

44 Morgan Avenue: DHCR Adm. Rev. Docket No. ZH210054RO (2/13/13) [5-pg. doc.]