Landlord Didn't Prove Financial Ability to Complete Demolition Project

Landlord asked the DHCR for permission to demolish a building containing rent-stabilized apartments. The DRA ruled against landlord, finding that the "owner has not 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 the 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. 

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 the undertaking. Further, proof of financial ability to complete the project may include a Letter of Intent or Commitment Letter from a financial institution, or such other evidence as the DHCR may deem appropriate under the circumstances. In this case, landlord wasn't able to show that it had the financial ability to complete the demolition project because a stock brokerage statement without a commitment letter, a letter of intent, or other acceptable evidence from the financial institution holding the fund, wasn't sufficient proof under OB 2009-1. The DHCR ruled that the DRA reasonably determined that the bank letter and owner affidavit that landlord submitted by landlord didn't demonstrate the necessary good faith intent to carry out the demolition. The DHCR noted that other owners who had the necessary funds have been able to submit to the DHCR a commitment letter from a financial institution to support successful demolition applications. [Download PDF of decision here.]

58E83 Realty, LLC: DHCR Adm. Rev. Docket Nos. KQ410028RO, KQ410027RO (3/24/23)[4-pg. document]