IN RE: 8 AVENUE HOLDINGS LLC (2025)

Order and judgment (one paper), Supreme Court, New York County (Arlene P. Bluth, J.), entered on or about July 28, 2023, which denied the petition to annul the January 31, 2023 determination of respondent New York State Division of Housing and Community Renewal (DHCR), denying petitioner's application for an exemption from the Rent Stabilization Law based upon its alleged substantial rehabilitation of the building, and dismissed the proceeding brought pursuant to CPLR article 78, unanimously affirmed, without costs.

The administrative agency charged with enforcing a statutory mandate has broad discretion in evaluating the pertinent factual data and the inferences to be drawn from that data (see Matter of Wembly Mgt. Co. v. New York State Div. of Hous. & Community Renewal, Off. of Rent Admin., 205 A.D.2d 319, 319, 613 N.Y.S.2d 7 [1st Dept. 1994], lv denied 85 N.Y.2d 808, 628 N.Y.S.2d 50, 651 N.E.2d 918 [1995]), and DHCR's determination was not arbitrary and capricious (CPLR 7803[3];  see Matter of Pell v. Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 N.Y.2d 222, 231, 356 N.Y.S.2d 833, 313 N.E.2d 321 [1974]).  Under the Rent Stabilization Code and Operational Bulletin 95–2, DHCR determines applications for substantial rehabilitation exemptions based on the totality of the circumstances (see 9 NYCRR 2520.11[e]).  The operational bulletin also provides a nonexclusive list of documents that DHCR may require for an owner applicant to submit in support of its claim of substantial rehabilitation.

In this case, although petitioner claimed that its work was completed in July 2011, the letter of completion issued by the Department of Buildings gives a completion date of April 25, 2019.  Petitioner also registered the units in the building as rent stabilized with preferential rents between 2011 and 2021.  As a result, it was not unreasonable for DHCR to require petitioner to submit the leases, renewals, and riders for current tenants to determine whether any preferential rents were provided because of ongoing construction and thus to identify the actual completion date (see Matter of 201 E. 81st St. Assoc. v. New York State Div. of Hous. & Community Renewal, 288 A.D.2d 89, 90, 733 N.Y.S.2d 23 [1st Dept. 2001]).  DHCR's denial of the exemption application was rationally based on the administrative record, including factual omissions created by petitioner's refusal to provide the requested documents (see e.g. Matter of Benjamin Shapiro Realty Co. v. New York State Div. of Hous. & Community Renewal, 2 A.D.3d 220, 221, 769 N.Y.S.2d 226 [1st Dept. 2002], lv denied 2 N.Y.3d 708, 781 N.Y.S.2d 290, 814 N.E.2d 462 [2004]).

Contrary to petitioner's contention, DHCR did not deviate from its prior precedent (see Matter of Terrace Ct., LLC v. New York State Div. of Hous. & Community Renewal, 18 N.Y.3d 446, 453, 940 N.Y.S.2d 549, 963 N.E.2d 1250 [2012]).  Petitioner's own evidence showed that the work was completed eight years after the date claimed, and DHCR explained why the refusal to provide additional evidence precluded a finding that petitioner proved its entitlement to an exemption.

We have considered petitioner's remaining contentions and find them unavailing.