Landlord Presented Insufficient Proof of Financial Ability to Complete Demolition

Landlord applied to the DHCR for permission not to renew leases and to demolish a building that contained three rent-stabilized apartments. The DRA ruled against landlord, finding that it hadn't satisfied the minimum demolition requirements and had failed to submit proof that it had the financial ability to complete the proposed project.

Landlord appealed and lost. The DHCR noted that landlord didn't submit any Letter of Intent or Commitment Letter from a financial institution, and also failed to provide other appropriate evidence to show financial ability to complete the demolition. Although landlord submitted "Detail - Transfer" documents showing several alleged transfers from a trust to an owner account totaling $490,000, these documents had no letterhead or other indication that a bona fide financial institution was involved. Nor was there any indication that such funds had been segregated and earmarked for the demolition. Landlord's sworn statement that the funds were earmarked for this purpose wasn't sufficient to show that funds actually were earmarked. A bank or other institution that has control over the funds must submit a letter to the DHCR stating that the funds were earmarked solely for the demolition. Here, landlord's submitted documents made it impossible to ensure that funds wouldn't be used for nondemolition purposes and to determine what balances remained and if landlord would at the time of undertaking in fact have sufficient funds to perform it. An unnotarized bank letter stating that one of the owner's offers had $20,000,000 in that bank also didn't document that sufficient funds would be available for the demolition project. 

Prince Street Holding LLC: DHCR Adm. Rev. Docket Nos. MM410007RO, MM410008RO, MM410013RO (8/13/24)[4-pg. document]