DHCR Issues Guidance re: 2023 RSC Amendments

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As we advised in a prior client email blast, DHCR recently adopted amendments to the Rent Stabilization Code (“the Amendments”) which became effective on November 8, 2023. DHCR has now issued various documents as guidance to the Amendments, including fact sheets, operational bulletins and an FAQ. Links are below.

Among the guidance is Operational Bulletin 2023-3 (“OB 23-3”), which replaces the prior longstanding Operational Bulletin 95-2 (“OB 95-2”) and addresses substantial rehabilitation.  

The Amendments authorized DHCR to promulgate an operational bulletin setting forth requirements to qualify for a substantial rehabilitation. Although DHCR could have made far more drastic changes, fortunately, with some exceptions, OB 23-3 contains very few changes from its predecessor OB 95-2.  Examples of these changes in OB 23-3 are detailed as follows:

  • It remains unchanged that at least 75% of listed applicable building and apartment-wide systems need to be replaced, notwithstanding that the Amendments authorized DHCR to require more than 75% in an operational bulletin. The listed 17 systems to be replaced are the exact same systems listed in the prior OB 95-2. However, all required applicable systems must be replaced because DHCR eliminated the “good cause shown” exception for an individual system not being replaced.
  • It remains unchanged that an owner must establish that the building was in a substandard or seriously deteriorated condition before the rehabilitation work was commenced. However, DHCR eliminated the rebuttable presumption of a substandard condition when a building is 80% or more vacant. The owner has the burden to affirmatively establish the building’s substandard condition, at the outset, in all cases. 

We note that there is still no requirement in the Amendments, OB 23-3, or any current statute for a building owner to file an application for an administrative determination with DHCR to claim a substantial rehabilitation of the building.

Links to the updated guidance are below for your convenience:

This email provides just a brief overview of some portions of DHCR’s updated guidance. Given the ever-evolving law surrounding substantial rehabilitation and demolition, we urge you to contact your trusted Rosenberg & Estis, P.C. attorney or Zachary J. Rothken, Member & Head of the firm’s Administrative Law Department, who authored the above, to discuss an effective strategy tailored to your needs, or to answer any general questions that you may have. 

Happy Thanksgiving!