Reconstruction of Demolished Building Resulted in Exemption from Rent Regulation

Landlord applied to the DHCR, seeking a determination that its Yonkers building was exempt from rent regulation based on substantial rehabilitation. The DRA ruled for landlord, who bought the building in 1989 when it was uninhabitable following a fire and vandalism. Landlord therefore showed that the building was in substandard or seriously deteriorated condition when the work began. Local DOB records showed that the building was demolished in 1989 and an entirely new building was constructed. This constituted a complete gutting of all interior space from the ground floor and above, including the removal of the building's roof and systems. A new C of O was issued in June 1991. At least 75 percent of all building-wide and individual apartment systems were replaced. Landlord, a not-for-profit corporation, received no tax benefits for the project but did receive funding from New York State for the work. As a result of the funding, the building was to be used solely for housing the homeless for 20 years starting Sept. 1, 1989. Since that agreement had now expired, the building was exempt from regulation under TPR Section 2500.9(e). 

The DHCR ruled against a tenant who appealed, claiming that she should remain rent stabilized. She had lived in the building for over 15 years. But the exemption from rent stabilization was retroactive to the point when the sub rehab was completed in 1991. So the building was exempt before tenant moved in, and she wasn't rent stabilized.

Pineda/Jara: DHCR Adm. Rev. Docket Nos. MS910008RT, MR910021RT (9/16/24)[9-pg. document]