Appeals Court Upholds DHCR's Denial of Landlord's Demolition Application

Landlord asked the DHCR for permission to demolish a building containing rent-stabilized apartments. The DHCR ruled against landlord, finding that the owner hadn't submitted a firm commitment letter from a financial institution or a bank statement showing a segregated account with sufficient funds to complete the project, and that documents submitted by landlord didn't indicate actual commitment by its financial institution to use such funds or guarantee the funds would remain available and marked for this specific project. DHCR Operational Bulletin 2009-1 provided that no demolition application will be accepted by the DHCR unless the owner has submitted proof of financial ability to complete the undertaking. The DHCR found that the bank letter and owner affidavit that landlord submitted didn't demonstrate the necessary good faith intent to carry out the demolition. 

Landlord then filed an Article 78 court petition, claiming that the DHCR's decision was arbitrary and unreasonable. The court ruled against landlord, who appealed and lost. In this case, the DHCR had a rational basis for finding that the proof landlord did submit, including affidavits and a brokerage account statement, was insufficient to establish its financial ability to complete the demolition project.

58E83 Realty, LLC v. DHCR: Index No. 154642/23, App. No. 2116, Case No. 2024-00042 (App. Div. 1 Dept.; 4/23/24; Manzanet-Daniels, JP, Kapnick, Kennedy, Higgitt, O'Neill Levy, JJ)