No Luxury Deregulation for Rent-Controlled Apartment After J-51 Tax Benefits Expire

Landlord applied for high-rent/high-income deregulation of tenant's rent-controlled apartment in 2011 when tenant's monthly rent was $2,000 or more, to determine whether tenant's annual household income was more than $175,000 in 2009 and 2010. The DRA ruled against landlord after the Department of Taxation and Finance (DTF) found that tenant's income was below the deregulation threshold in 2009.

Landlord appealed and lost. Landlord claimed that additional occupants lived in the apartment during the relevant time period. But the DHCR noted that landlord had previously received J-51 tax benefits for the building. Although these benefits had expired, luxury decontrol wasn't available for rent-controlled apartments in buildings that had received J-51 tax benefits at any time. In Matter of RAM 1 LLC v. DHCR, an appeals court had ruled in 2014 that the plain language of Rent Control Law Section 26-403(e)(2)(j) explicitly provided that rent-controlled apartments remained exempt from luxury deregulation law after J-51 expired for the building.

Empire International Realty, LP: DHCR Adm. Rev. Docket No. BM420036RO (11/6/17) [4-pg. doc.]