If you saw the story of a landlord’s fruitless quest for a city program to help money-losing, rent-stabilized buildings, you know its unhappy ending: The city has no such program.
It turned out that the owner’s problem — operating costs exceeded rent revenue — was so elemental that the city had nothing designed for it.
However, the state does. The program lets landlords raise rents if they can prove they are strapped for cash. It’s run by the Division of Homes and Community Renewal, but in a way so frustrating to applicants that it belongs in a Kafka novel.
Last year, The Real Deal found a small Manhattan landlord who applied, which was no easy task because only 11 applications had been filed in five years. Just five decisions had been handed down since 2022 — all rejections.
The owner’s pending application was featured in a Suzannah Cavanaugh story headlined, “Tenant groups tell distressed landlords to use government programs. One is barely working.”
We can now bring you the exciting conclusion to the saga. Well, exciting might be the wrong word. Maybe maddening? Infuriating? Some adjective that means “you’ll want to bang your head against a wall.”
The story begins in 2022, when the owner refinanced his mortgage two years after buying a four-unit building. The lender recommended he put the four-unit property into an LLC entirely owned by himself, which he did. This is among the most common, basic transactions in real estate.
Two years later, in 2024, DHCR denied his hardship application because, the agency said, ownership of the building had changed. He could start a new application in 2025, three years after the LLC’s formation.
The owner, who asked TRD for anonymity so as not to antagonize his regulator, requested an administrative review of the decision. Then he waited. And waited.
Five months passed. In early April, he contacted DHCR’s Office of Rental Administration.
“After sweet-talking someone at the ORA office a bit, they finally agreed to look at my application and found nobody has opened the file since December,” he emailed TRD. “Will let you know when I get the rejection and the reasoning.”
The rejection and the reasoning came two weeks later. “They wouldn’t look at the petition because I had included one document in duplicate and they wanted it in triplicate,” the owner reported.
If you were writing a satire about dysfunctional government, this instance would almost be too on the nose.
But the state was not done, perhaps because the applicant had not been straitjacketed and taken away by men in white suits. After the landlord resubmitted the form in triplicate, he received good and bad news.
“They agreed that my transferring a property I purchased from my name to an LLC didn’t block me from filing for hardship assistance,” the landlord explained. “However, because I didn’t include proof of our 2020 purchase in the [petition for administrative review], only in the initial application, they rejected the [petition], saying it was incomplete.”
He added, “You can’t make this stuff up.”
HCR does have at least one responsive office — its media relations arm — but its explanation to TRD wasn’t particularly satisfying:
“ORA processes each hardship application on its merits, based on the review of the owner’s documentation of income and expenses which must be tested both for accuracy and reasonability with an opportunity for the residents to also review and submit their evidence. On the basis of this process, applications will be either granted or denied, consistent with law.”
The state could have looked up the 2020 purchase on the Department of Buildings website in about 60 seconds. It could have made a photocopy of the page submitted only in duplicate. It could have ruled initially that the LLC was not a new owner.
Now the landlord is SOL, a technical term meaning shit-outta-luck. You only get one shot at an administrative review.
His only option now is to sue, which would cost more in legal fees than any gain from the hardship program, which offers a mere 6 percent rent increase on rent-stabilized units. In this case, with just two such units, that would be a few hundred dollars a year.
For most humans, the toll of applying — in both time spent and mental health — is not worth such a meager return, especially given the low odds of success. Despite what some politicians say, this — not a lack of distress in rent-stabilized housing — is why almost no one applies. They know better.
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