Project-Based Section 8 Building Is Exempt from Rent Stabilization

Tenant complained to the DHCR that services had been reduced in his apartment. The DRA ruled for tenant and reduced his rent. Landlord appealed, and argued that the apartment and building weren't rent stabilized because they were subject to a HUD mortgage and HUD Housing Assistance Payment (HAP) contract. The DHCR opened a separate "AD" proceeding file to consider this issue. The DRA ruled against landlord based on landlord's failure to answer the DRA's requests for information, and reinstated the rent reduction order.

Landlord appealed and won. Landlord argued that the DHCR didn't have subject matter jurisdiction over the building because its rents were set and regulated under HUD's project-based Section 8 program. The building therefore was federally exempt from rent stabilization due to HUD administration and the National Housing Act. Rent Stabilization Code Section 2520.11(c) exempts from rent stabilization any dwelling units contained in buildings aided by government insurance under any provision of the National Housing Act to the extent rent regulations would be inconsistent with such act. And the issue of subject matter jurisdiction can be raised at any time during a DHCR proceeding. 

Poonam Apartments LLC: DHCR Adm. Rev. Docket No. GN310002RO (12/5/19) [4-pg. doc.]