DHCR Approves Landlord's Demolition Application

The DHCR granted landlord’s application for permission to refuse to renew rent-stabilized leases in order to demolish the building. Tenants appealed, claiming that the DHCR didn’t perform an environmental impact study (EIS). The court ruled for tenants, but the appeals court reversed, finding no authority for the DHCR to conduct an EIS under the Rent Stabilization Code. The case was then sent back to the DHCR to allow tenants to comment on whether landlord had the financial ability to complete the project.

The DHCR ruled for landlord. Landlord’s plan to raze the existing building to the ground and build a new, 41-story building with 75 apartments over the existing underground parking garage qualified as a demolition. DOB approved landlord’s plans. Landlord demonstrated the financial ability to complete the project. The projected cost of the demolition project was $307,772,205, and landlord’s financial capacity was substantially greater. Landlord’s corporate balance sheet reflected over $4.2 billion in financial capacity, consisting of $2.068 billion available cash, $308 million restricted cash, and $1.873 billion of unused bank revolving credit. Landlord’s cost estimate, prepared by a major worldwide construction management firm, also was credible. Tenants also claimed that a hearing was required by law. But no hearing was required. Neither the Rent Stabilization Law nor Code require a hearing in a demolition proceeding. And landlord showed that it had the good-faith intent to carry out the project by submitting approved DOB plans and proof of its financial ability to complete the project.

Various Tenants of 220 Central Park South: DHCR Adm. Rev. Docket Nos. XG420040RT-XG420066RT (12/28/09) [14-pg. doc.]