By Joseph Ax
NEW YORK, Dec 11 (Reuters) - The owners of an apartment
building who received tax breaks can deregulate the building's
units after the benefits have expired, a New York state appeals
court ruled Tuesday.
A unanimous panel of the Appellate Division, First
Department, found that the state Division of Housing and
Community Renewal did not violate the law when it allowed the
owners of 98 Riverside Drive to deregulate Alan Schiffren's
rent-stabilized apartment following the expiration of their J-51
tax abatements.
Schiffren moved into a rent-stabilized apartment in the
Upper West Side building in 1989. He filed a lawsuit against
both the housing division and the building seeking to annul the
DHCR's determination that his unit had been properly deregulated
in 2009.
Manhattan Supreme Court Justice Paul Wooten ruled against
Schiffren last year, prompting him to appeal.
The ruling Tuesday is one of several issued by the First
Department in the wake of the Court of Appeals' landmark 2009
decision Roberts v. Tishman Speyer Properties, which found that
residential property owners who were receiving J-51 tax benefits
cannot deregulate rent-stabilized apartments.
The Roberts decision, however, left open a number of
questions, including whether owners whose benefits have expired
can deregulate the apartments. The First Department on Tuesday
answered in the affirmative.
"The plain language of Administrative Code §§ 11-243 and
26-504(c) supports the conclusion that the Legislature intended
to provide that a building that is already regulated when it
receives J-51 benefits will continue to be regulated under the
original rent-regulation scheme when the tax benefits expire,"
the court wrote, referring to the statutes that govern the J-51
benefits and the deregulation process. "We conclude that the
reversion to pre-J-51-benefit rent-regulation status includes
the right of an owner to seek luxury deregulation in appropriate
cases."
Luxury deregulation allows building owners to convert units
to market rate if the monthly rent exceeds $2,500 and the
tenant's income is above $200,000.
Lawyers involved in the case did not respond to requests for
comment.
The case is In re Alan Schiffren v. Brian Lawlor, Appellate
Division, First Department, No. 8491.
For Schiffren: Ronald Languedoc of Himmelstein, McConnel,
Gribben, Donoghue & Joseph.
For the DHCR: Martin B. Schneider.
For 98 Riverside Drive: Magda Cruz of Belkin Burden Wenig &
Goldman.
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