Landlord Seeking DHCR Demolition Approval Needn't Prove Finances for Post-Demolition Work

Landlord who sought to develop an area on a block on Manhattan's Upper East Side filed a demolition application with the DHCR. Landlord sought permission to remove the sole remaining rent-stabilized tenant in the building. The DRA denied landlord's Application for an Order Granting Approval to Refuse Renewal of Lease and/or to Proceed for Eviction. Landlord appealed, and the DHCR denied landlord's PAR. The DHCR found that landlord failed to provide approved post-demolition planning for the site and segregation of the funding.

Landlord then filed an Article 78 court appeal, which the court denied. Landlord appealed further, and the First Dept. reversed the DHCR's decision. Landlord demonstrated its intention to demolish the building by submitting to the DHCR a detailed demolition application. The DHCR had no rational basis to decide that landlord failed to establish "good faith" in seeking not to renew tenant's lease. Landlord's failure to submit similar documentation of its plans for the property after the demolition of the presently existing building didn't logically negate its proof of its demolition plans. The DHCR had in fact amended RSC Section 2524.5(a)(2) more than 20 years ago to delete the very requirement the DHCR now sought to impose. Landlord was only required to prove its financial ability to complete the demolition and regulatory approval for that work.

First NY LLC v. DHCR: Index No. 155909/21, App. No. 16288, Case No. 2022-00687, 2022 NY Slip Op 05269 (App. Div. 1 Dept.; 9/27/22; Manzanet-Daniels, JP, Friedman, Scarpulla, Mendez, JJ)