Building Reclassified from Hotel Stabilized to Rent Stabilized

Chelsea Hotel tenant complained of rent overcharge in 2007.  The DRA ruled that two adjoining units occupied by tenant should be treated separately rather than as a combined unit since there was no vacancy of unit 629 in 1999, tenant’s rental of adjoining unit 631 in 1999 didn’t create a new unit that would qualify for a first rent given the absence of proof of significant work, and there was no requirement to combine the rents. The DRA also found that Unit 631 was deregulated because tenant failed to challenge his $2,000 vacancy rent within four years. There was no rent overcharge for Unit 629 although the $1,900 base date rent was frozen due to failure to register. Tenant’s rent was reduced by certain monthly amounts for some periods based on landlord’s failure to provide hotel-stabilized services such as maid, linen, furnishings, and 24-hour lobby staffing. The DRA also reclassified the building from hotel stabilized to rent stabilized effective Jan. 1, 2014, because landlord wasn’t providing hotel services to 51 percent of the permanent tenants.

Landlord and tenant both appealed and lost. There was no support for tenant’s claim of landlord fraud in deregulating Unit 631. Landlord claimed that the two units were combined to create a new unit in 1999 and therefore both were deregulated. But the units weren’t combined structurally and tenant already lived in Unit 629 in 1999. Only Unit 631 was deregulated, under high-rent vacancy deregulation. The building also was properly reclassified for many years as hotel services weren’t provided at the building. But the DRA incorrectly gave tenant a refund for the value of hotel services and revoked the refund. 

Notarberardino/Chelsea Dynasty LLC: DHCR Adm. Rev. Docket Nos. CM410038RT, CM410039RO (8/6/15) [11-pg. doc.]