13 N.Y.3d 270 (2009)

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A landlord receiving J-51 tax benefits cannot utilize luxury decontrol provisions of the Rent Stabilization Law, even if the building was subject to rent stabilization before receiving those benefits.

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Summary

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Nine tenants of Peter Cooper Village and Stuyvesant Town sued the owners, claiming they improperly charged market rents while receiving J-51 tax benefits. The tenants argued that luxury decontrol was not available due to the J-51 benefits. The Court of Appeals held that landlords receiving J-51 benefits forfeit their rights to luxury decontrol, regardless of whether the building was subject to rent stabilization prior to receiving those benefits. This decision invalidated DHCR’s interpretation that J-51 benefits only precluded luxury decontrol if they were the sole reason for rent stabilization.

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Facts

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MetLife received J-51 tax benefits for Peter Cooper Village and Stuyvesant Town starting in 1992. The apartments were rent-stabilized since at least 1974. In 1993, the Rent Regulation Reform Act (RRRA) introduced luxury decontrol, allowing deregulation for high-rent, high-income apartments. The RRRA contained an exception stating that luxury decontrol would not apply to apartments subject to the Rent Stabilization Law (RSL)