Landlord Can Recover Building's Last Rent-Stabilized Apartment and Demolish Building

Landlord applied to the DHCR for permission to recover tenant's rent-stabilized apartment, in order to demolish its building. The DRA ruled against landlord in 2020, and the DHCR denied landlord's PAR. The DHCR found that landlord had failed to show its good faith intent to demolish the building. Landlord then filed an Article 78 appeal, claiming that the DHCR's decision was arbitrary, unreasonable, and based on an error of law.

The court ruled against landlord, who appealed and won. The appeals court found that landlord had demonstrated its plans to demolish the building through the submission of plans, approvals, and segregation of appropriate funds. New York's highest court then denied tenant's request for further appeal. The case was sent back to the DHCR for further ruling on landlord's requirement either to relocate tenant to a suitable housing accommodation or pay tenant a stipend and moving expenses. 

The DHCR proposed a 72-month stipend at $860.29 per month plus $3,000 as reasonable moving expenses. Tenant didn't dispute the amount of the stipend but claimed that the proposed moving expenses were insufficient and that he needed two years to move due to an acute housing shortage. Tenant also argued that RSC Section 2524.5, as amended in late 2023, required landlord to demonstrate removal of the entire building, including the foundation, and that the case should be sent back to the DRA to decide whether landlord's demolition application met the new requirement. And, since landlord's demolition application was now five years old, landlord now should show that its contractors would honor their initial contract bids and that it still had the financial capacity to complete the demo project.

The DHCR agreed only to increase tenant's moving expenses to $10,000 and otherwise denied tenant's requests. The Appeals Court already determined that landlord's demolition application was supported by adequate documentation. DOB had approved landlord's plans, and landlord held $1 million in the bank while only an estimated $447,750 was required to complete the work. Any claim that the set-aside amount was stale was rejected since landlord held in the bank more than 100 percent more than its estimated cost. As to the amended regulation, the Appeals Court already ruled on what was required to obtain demolition approval. And the RSC called for application of the RSC as it existed at the time the DRA ruled on landlord's application. The DHCR also denied tenant's request for a two-year delay to move out of the apartment, and directed landlord to commence eviction proceedings if needed within four months of the DHCR's final order. 

First NY LLC: DHCR Adm. Rev. Docket No. LP410002RP (4/25/24)[5-pg. document]