Rent-Controlled Tenant in Co-op That Received J-51 Benefits Not Subject to Deregulation

In 2011, landlord applied for high-rent/high-income deregulation of tenant's rent-controlled apartment. Tenant's monthly rent was $2,000 or more, and landlord sought verification that tenant's annual household income was over $175,000 in 2009 and 2010. The DRA ruled against landlord, finding that the building was receiving J-51 tax benefits until June 20, 2013, and therefore was under J-51 during the relevant time period.

Landlord appealed and lost. Among other things, landlord argued that the DHCR's ruling shouldn't apply because the building was a cooperative. But there was no exception to the J-51 rules for tenant's apartment because it was located in a co-op building. The nonpurchasing rent-controlled tenant, who was in occupancy before the building received J-51 tax benefits and before the building converted to co-op status, continued to be rent-controlled and wasn't subject to high-income rent deregulation once J-51 benefits had been received, notwithstanding that the building converted to cooperative ownership prior to the receipt of the J-51 benefits.

16th Street Holding LLC: DHCR Adm. Rev. Docket No. BQ420012RO (9/5/18) [7-pg. doc.]