Demolition Application Denied Due to Lack of Proof of Segregated Funds

Landlord applied to the DHCR for permission to demolish a building and, as part of the process, refuse to renew tenant's rent-stabilized lease. The DRA ruled against landlord, finding that landlord failed to provide a Letter of Intent or Commitment Letter from a financial institution showing the building owner's present ability to access a segregated fixed-income account to complete the proposed demolition.

Landlord appealed and lost. DHCR Operational Bulletin 2009-1 provides that no demolition application will be accepted by the DHCR unless the owner has submitted proof of "financial ability to complete such undertaking, and plans for the undertaking have been approved by the appropriate government agency." Operational Bulletin 2009-1 also specifies that proof of financial ability to complete a project could include a Letter of Intent or Commitment Letter from a financial institution. Landlord submitted only a bank statement showing a balance of $499,250 and a letter from Capital One Bank stating that an individual involved had a balance of over $20 million on deposit. The DHCR noted that it wasn't the existence of funds alone that meets the requirements for demolition approval but the existence of funds that have been segregated and committed to the demolition that will meet these requirements. Since landlord presented no such proof, its application was properly denied.

71st Street Properties LLC: DHCR Adm. Rev. Docket No. MS410023RO (11/6/25)[5-pg. document]