IN RE: 382 8th Avenue Realty Corp. (2026)

Horing Welikson Rosen & Digrugilliers PC, Williston Park (Santo Golino of counsel), for appellant.

Mark F. Palomino, New York State Division of Housing and Community Renewal, New York (Robert Ambaras of counsel), for respondent.

Order and judgment (one paper), Supreme Court, New York County (Paul A. Goetz, J.), entered on or about June 3, 2025, which denied the petition to annul the September 10, 2024 determination of respondent New York State Division of Housing and Community Renewal (DHCR) denying the petition for administrative review of the rent administrator's denial of petitioner's application for an administrative determination that the subject building was substantially rehabilitated between 1981 and 1984 and therefore exempt from rent regulation, and dismissed the proceeding brought pursuant to CPLR article 78, unanimously affirmed, without costs.

The determination of DHCR was not arbitrary and capricious (see CPLR 7803[3];  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 [1974] ).  Initially, although petitioner contends that DHCR arbitrarily applied Operational Bulletin 95–2, which was issued on December 15, 1995, to rehabilitation work alleged to have been performed between 1981 and 1984, this Court has held that such retroactive application is appropriate for work performed prior to the issuance of the operational bulletin, even though at the time of the work there were no published standards or guidelines concerning substantial rehabilitation (see Matter of Woodcrest Mgt. Corp. v Division of Hous. & Community Renewal, 2 AD3d 172, 172 [1st Dept 2003] ).  We reaffirm that “Operational Bulletin 95–2 conforms to the guidelines regarding substantial rehabilitation of a building set by this Court” in Matter of Eastern Pork Prods.  Co. v New York State Div. of Hous. & Community Renewal (187 A.D.2d 320 [1st Dept 1992] ) (see Matter of H.M. Vil. Realty v New York State Div. of Hous. & Community Renewal, 304 A.D.2d 346, 347 [1st Dept 2003] ).

On the merits, DHCR did not issue its determination “without sound basis in reason” or “without regard to the facts” but rationally found that petitioner failed to prove that at least 11 of its 14 building-wide systems and the common area ceilings, floors, and walls were replaced (Matter of Pell, 34 N.Y.2d at 231).  It was rational for DHCR not to credit conclusory statements made by petitioner's owner and architect since their statements lack detail as to the work performed.  “It is established that the administrative agency charged with enforcing a statutory mandate has broad discretion in evaluating the pertinent factual data and the inferences to be drawn therefrom” (Matter of Wembly Mgt. Co. v New York State Div. of Hous. & Community Renewal, Off. of Rent Admin., 205 A.D.2d 319, 319 [1st Dept 1994], lv denied 85 N.Y.2d 808 [1995] ).

DHCR did not “deviate” from its prior precedent because it cites Matter of Clarista Realty Corp., Admin.  Rev. Docket No. MV2310003RO (Jan. 21, 2025), which was issued after the PAR determination in question (see Matter of Terrace Ct., LLC v New York State Div. of Hous. & Community Renewal, 18 NY3d 446, 453 [2012] ).  In any event, the two matters are distinguishable insofar as in Matter of Clarista Realty Corp. the renovation had been performed by a predecessor owner and the original architect had died.  Here, petitioner's principal was an owner of the building when the renovations were performed, and the engineer who oversaw the work was still alive.

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