No Sub Rehab Proved Where No Records Showed Prior Substandard Condition

Landlord applied to the DHCR for a ruling that its building was exempt from rent stabilization based on substantial rehabilitation. The DRA ruled against landlord, finding that it failed to present any substantive proof that building-wide and individual apartment systems were replaced.

Landlord appealed and lost. In a separate administrative determination where landlord sought a ruling on whether the building was rent stabilized, the DRA found that the building was rent stabilized, the DHCR denied landlord's PAR of that ruling, and landlord filed an Article 78 court appeal. As a result, the DHCR agreed to reconsider that case and consolidated it the sub rehab case. In the other proceeding, landlord had claimed that, because the building wasn't subject to rent stabilization on the 1974 base date, it couldn't subsequently become subject to rent stabilization even if it was later converted from a commercial building into a building containing more than six residential units. 

On remand, the DHCR found that the building became subject to rent stabilization when the number of housing accommodations increased to six or more units and that this occurred before July 2, 1974. The DHCR also found that the building wasn't exclusively commercial before the claimed sub rehab was performed, so landlord couldn't rely on the case of Bartis v. Harbor Tech LLC (App. Div. 2 Dept. 2016) to claim that sub rehab specifications generally applied under the law and DHCR Operational Bulletin 95-2 didn't apply. Landlord also failed to submit sufficient proof that the building was in a substandard or seriously deteriorated condition when the work at issue was commenced. Since this requirement wasn't met, the DHCR didn't have to consider whether 75 percent of the building systems had been replaced.

JLG Queens Holding, LLC: DHCR Adm. Rev. Docket No. 33621 (2/13/25)[5-pg. document]