Building Operated Exclusively as Nonprofit Exempt from Stabilization

Tenant complained of rent overcharge and claimed that she was subject to rent stabilization. Tenant claimed that the building received J-51 tax benefits. Landlord argued that its entity was organized under Private Housing Finance Law Article XI, was operated for charitable purposes on a nonprofit basis, and therefore was exempt from rent stabilization. Landlord also claimed that the J-51 tax benefits expired before tenant moved into the building. The DRA ruled for tenant based on a housing court decision in another case involving another tenant in the same building. In that case, the court ruled that the building was subject to rent stabilization based on landlord’s receipt of the federal rehabilitation loan. However, the DRA found no overcharge since tenant’s rent hadn’t changed since the base rent date. Landlord and tenant both appealed.

The DHCR ruled for landlord. An appeals court had reversed the housing court decision and found that the building was exempt from rent stabilization because it was operated exclusively for charitable purposes on a nonprofit basis. 

310 East 4th Street HDFC/Junge: DHCR Adm. Rev. Docket Nos. DW410019RO, DW410042RT (8/11/16) [4-pg. doc.]