More Fact-Finding Needed on Demolition Application

Landlord asked the DHCR for permission to refuse lease renewals for three rent-stabilized tenants. Landlord wished to demolish the building. In addition to the three rent-stabilized apartments, there were two vacant units and three apartments that previously became exempt from rent regulation based on luxury decontrol. Landlord submitted various documentation to the DRA, including a deed, current tenant list, termination notices, a bank letter listing landlord's account balance in excess of $289,000, and a permit from the NYC Landmarks Preservation Commission (LPC).
Tenants objected. They claimed that the application was incomplete and fraudulent. They said that landlord had no permit from the city for demolition, showed no proof of financial ability to pay for the demolition, and submitted no architectural plans or engineering reports. They also said that landlord didn't mention that the proposed demolition would be done in connection with demolition of the building next door, which contained rent-controlled tenants.
Landlord then submitted architectural plans that it said were approved by the LPC and that it would submit DOB approval as soon as it became available. Later, landlord submitted architectural plans that were approved by DOB, and a letter from its bank stating that bank permission wasn't needed because the plans didn't affect the banks' mortgage on the property. Landlord submitted additional banking documents showing over $400,000 on account. The DRA ruled for landlord.
Tenants appealed, claiming that the DRA didn't consider their arguments and should have held a hearing. The DHCR ruled for tenants and reopened the case. Tenants correctly pointed out that the DRA's decision didn't contain any discussion of the issues raised or whether landlord provided its good-faith intent to demolish the building. A hearing was needed to determine landlord's good-faith intent and address other questions.

Berkowitz, Milbourn, Farwell: DHCR Adm. Rev. Docket Nos. UH410047RT - UH410049RT (10/16/08) [6-pg. doc.]