Velasquez v. New York State Division of Housing & Community Renewal, 130 A.D.3d 1045 (2015)

As the First Department observed in Matter of 300 W. 49th St. Assoc., the Rent Stabilization Code accounts for increases in dwelling space, allowing a rent increase for such an improvement (prior to Sept. 24, 2011), amounting to one-fortieth of the cost of the improvement (see Rent Stabilization Code [9 NYCRR] § 2522.4 [a] [1], [4]; Matter of 300 W. 49th St. Assoc. v New York State Div. of Hous. & Community Renewal, Off. of Rent Admin., 212 AD2d at 254). In determining whether an owner is entitled to charge a first stabilization rent, therefore, it is necessary to distinguish between a mere increase in dwelling space and the creation of a new unit which renders the prior rental history “meaningless” (Matter of 300 W. 49th St. Assoc. v New York State Div. of Hous. & Community Renewal, Off. of Rent Admin., 212 AD2d at 253). The latter occurs when there is “reconfiguration plus obliteration of the prior apartment’s particular identity” (Matter of Devlin v New York State Div. of Hous. & Community Renewal, 309 AD2d at 194), such *1052as, if “two smaller dwellings were consolidated to form one large apartment” (Matter of 300 W. 49th St. Assoc. v New York State Div. of Hous. & Community Renewal, Off. of Rent Admin., 212 AD2d at 254). Thus, for example, a first stabilization rent was permitted where an apartment was converted from a single-floor unit to a duplex (see 446-450 Realty Co., L.P. v Higbie, 30 Misc 3d 71, 72-73 [App Term, 1st Dept 2010]; see also Matter of Fernandez v New York State Div. of Hous. & Community Renewal, 3 AD3d 366, 368 [2004]).