Matter of 826 Marcy Ave., LLC v. State of N.Y. Div. of Hous. & Community Renewal

Opinion

Matter of 826 Marcy Ave., LLC v State of N.Y. Div. of Hous. & Community Renewal

2026 NY Slip Op 05180

September 2, 2026

Appellate Division, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This decision is uncorrected and subject to revision before publication in the Official Reports.

In the Matter of 826 Marcy Avenue, LLC, appellant,

v

State of New York Division of Housing and Community Renewal, respondent.

Supreme Court of the State of New York, Appellate Division, Second Judicial Department

Decided on September 2, 2026

2025-04059, (Index No. 517895/24)

Betsy Barros, J.P.

Lara J. Genovesi

Helen Voutsinas

Carl J. Landicino, JJ.

Ike Agwuegbo & Co, P.C., Brooklyn, NY, for appellant.

Mark F. Palomino, New York, NY (Christina S. Ossi of counsel), for respondent.

[*1]

DECISION & ORDER

In a proceeding pursuant to CPLR article 78 to review a determination of a Deputy Commissioner of the New York State Division of Housing and Community Renewal dated May 1, 2024, which denied a petition for administrative review and affirmed a determination of a Rent Administrator dated July 6, 2023, the petitioner appeals from a judgment of the Supreme Court, Kings County (Joy F. Campanelli, J.), dated February 19, 2025. The judgment denied the petition and dismissed the proceeding.

ORDERED that the judgment is affirmed, with costs.

The petitioner is the owner of an apartment building located in Brooklyn. The petitioner purportedly renovated multiple common areas and certain apartment units, and subsequently filed an application with the New York State Division of Housing and Community Renewal (hereinafter DHCR), seeking an exemption from the Rent Stabilization Law. In July 2023, a Rent Administrator of DHCR denied the petitioner's application. The petitioner filed a petition for administrative review (hereinafter the PAR) with DHCR. After 90 days passed without a decision on the PAR, the petitioner commenced a proceeding pursuant to CPLR article 78 to compel DHCR to make a determination on the PAR, and the Supreme Court directed DHCR to make a final determination. In a determination dated May 1, 2024, a Deputy Commissioner of DHCR affirmed the determination of the Rent Administrator and denied the PAR. In June 2024, the petitioner commenced this proceeding pursuant to CPLR article 78 to review the Deputy Commissioner's determination. In a judgment dated February 19, 2025, the court denied the petition and dismissed the proceeding. The petitioner appeals.

"'Judicial review of an administrative determination is generally limited to whether the determination was made in violation of lawful procedure, was affected by an error of law, or was arbitrary and capricious or an abuse of discretion'" (Matter of East Riv. Group, LLC v New York State Div. of Hous. & Community Renewal, 244 AD3d 851, 852, quoting Matter of Teore v State of New York Div. of Hous. & Community Renewal, 234 AD3d 860, 861; see CPLR 7803[3]). "'An action is arbitrary and capricious when it is taken without sound basis in reason or regard to the facts'" (Matter of 88-05 171, LLC v New York State Div. of Hous. & Community Renewal, 230 AD3d 679, 680, quoting Matter of CHT Place, LLC v New York State Div. of Hous. & Community Renewal, 219 AD3d 486, 487). "If the court finds that the determination is supported by a rational basis, it must sustain the determination even if the court concludes that it would have reached a [*2]different result than the one reached by the agency" (Matter of East Riv. Group, LLC v New York State Div. of Hous. & Community Renewal, 244 AD3d at 852 [internal quotation marks omitted]). "In reviewing a determination of the DHCR, the court is limited to a review of the record which was before the DHCR" (Matter of CHT Place, LLC v New York State Div. of Hous. & Community Renewal, 219 AD3d at 487 [internal quotation marks omitted]). "[T]he interpretation given to a regulation by the agency which promulgated it and is responsible for its administration is entitled to deference if that interpretation is not irrational or unreasonable" (Matter of Gaines v New York State Div. of Hous. & Community Renewal, 90 NY2d 545, 548-549).

Here, contrary to the petitioner's contention, DHCR's determination has a rational basis in the record and was not arbitrary and capricious (see Matter of 88-05 171, LLC v New York State Div. of Hous. & Community Renewal, 230 AD3d at 680; Matter of Parsons Manor, LLC v New York State Div. of Hous. & Community Renewal, 219 AD3d 945, 946). The record supports DHCR's finding that the petitioner failed to establish that the building was "substantially rehabilitated," as that term is defined by the applicable operational bulletin, in that the petitioner failed to demonstrate both that the building was "in a substandard or seriously deteriorated condition" and that at least 75% of the building-wide and apartment systems had been totally replaced (see 9 NYCRR 2520.11[e]; Matter of H.M. Vil. Realty v New York State Div. of Hous. & Community Renewal, 304 AD2d 346, 347).

The petitioner's remaining contentions are without merit.

BARROS, J.P., GENOVESI, VOUTSINAS and LANDICINO, JJ., concur.

ENTER:

Darrell M. Joseph

Clerk of the Court