Buildings Rehabbed Under Land Disposition Agreement with HPD Remain Rent Stabilized

LVT Number: #32418

Landlord applied to the DHCR for rulings that five buildings had been substantially rehabilitated between 1985 and 1987. The DRA ruled against landlord, finding that the buildings were rehabbed under a NYC Urban Development Action Area Project (UDAAP), that the work was done on vacant city-owned buildings, and that the rehabilitations were accomplished by means of government loans made under the city's Participation Loan Program (PLP) and under agreements with NYC that the Disposition Area would be used to house persons and families of low income.

Landlord applied to the DHCR for rulings that five buildings had been substantially rehabilitated between 1985 and 1987. The DRA ruled against landlord, finding that the buildings were rehabbed under a NYC Urban Development Action Area Project (UDAAP), that the work was done on vacant city-owned buildings, and that the rehabilitations were accomplished by means of government loans made under the city's Participation Loan Program (PLP) and under agreements with NYC that the Disposition Area would be used to house persons and families of low income. This precluded deregulation of the buildings based on the claimed sub rehab.

Landlord appealed and lost. It was unclear whether PLP funds were used when prior landlord bought the premises. But HPD gave prior landlord $1.4 million as a purchase money mortgage, HUD insured a private rehabilitation loan of $6.15 million to prior landlord, the Land Disposition Agreement (LDA) signed by prior landlord required that the housing units in the buildings be used for low-income persons or families, there was no amendment to this requirement, and prior landlord and subsequent owners--including the current landlord--were bound by these requirements at least for the duration of the LDA, which remained in effect. So, the DRA correctly found that the premises covering the five buildings wasn't subject to deregulation. Deregulating the buildings also would be contrary to the purpose and policy of the UDAAA and UDAAP.

5523-Washington Ave and Saint James Brooklyn, LLC: DHCR Adm. Rev. Docket Nos. KU210009-KU210013RO (1/26/23)[4-pg. document]

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