Unit Deregulated Before June 2019 Remained So Despite Appeal Decided Post-HSTPA

Landlord applied for high-rent/high-income deregulation of tenant's rent-stabilized apartment in 2011. The DRA ruled against landlord in 2015, finding that the building received J-51 tax benefits and that none of tenant's leases contained a notice indicating the expiration date of the tax benefits. Therefore, the apartment remained rent stabilized until it became vacant and couldn't be deregulated.

Landlord appealed, and in January 2019, the DHCR found that, because the unit was subject to rent stabilization before the building received J-51 tax benefits and wasn't regulated solely because of receipt of the tax benefits, landlord wasn't required to give tenant any lease notices concerning the J-51 expiration date. So the DHCR sent the case back to the DRA for further processing. The DRA then ruled for landlord in April 2019 because tenant's annual household income had been in excess of $175,000 in both 2009 and 2010. In September 2019, the DRA sent landlord an Explanatory Addenda to its April 2019 deregulation order, noting that if the lease in effect on April 10, 2019, hadn't yet expired prior to passage of the HSTPA on June 14, 2019, the tenant wouldn't be subject to deregulation.

Landlord appealed the Explanatory Addenda and lost. Landlord then filed an Article 78 court petition appealing the DHCR's decision. The court sent the case back to the DHCR for further consideration. The DHCR now ruled for landlord. Appellate courts have generally upheld EAs issued by the DHCR. But in this case, the DRA already had issued an order of deregulation before HSTPA was passed, and also the lease had expired. So, the apartment was "lawfully deregulated" before HSTPA went into effect. 

Mayflower Development Corp.: DHCR Adm. Rev. Docket No. KM410005RP (4/22/22)[7-pg. document]