268 Bowery Realty Inc. v New York State Div. of Hous. & Community Renewal
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268 Bowery Realty Inc. v New York State Div. of Hous. & Community Renewal 2023 NY Slip Op 33282(U) September 22, 2023 Supreme Court, New York County Docket Number: Index No. 160559/2022 Judge: Nicholas W. Moyne Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 160559/2022 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 09/22/2023 YORK STATE OF NEW SUPREME COURT COURT OF THE STATE NEW YORK SUPREME NEW YORK COUNTY YORK COUNTY NEW PRESENT: PRESENT: PART PART HON. NICHOLAS NICHOLAS W. MOYNE MOYNE HON. Justice Justice ---------------------X --------------------------------------------------------------------------------X 268 BOWERY BOWERY REALTY REALTY INC., INC., 268 INDEX NO. INDEX NO. MOTION DATE MOTION DATE Petitioner, Petitioner, 160559/2022 160559/2022 12/11/2022 12/11/2022 001 NO. MOTION SEQ. SEQ. NO. MOTION -- vV AND OF HOUSING NEWYORK DIVISION OF HOUSING AND STATE DIVISION YORK STATE NEW COMMUNITY RENEWAL, MARTHA MARTHA DIAMOND, DIAMOND, CARMEN CARMEN COMMUNITY RENEWAL, CICERO CICERO, MARY ABELL ABELL CICERO CICERO, MARY DECISION + ORDER ORDER ON DECISION MOTION MOTION Respondent. Respondent. - - - - - -- - -- - - - - - - -- - - X --------------------------------------------------------------------------------X The e-filed documents, documents, listed listed by NYSCEF NYSCEF document document number number (Motion (Motion 001) 001) 2, 12, 13, 14, 15, 16, 16, following e-filed The following .' 17,18,19,20,21,22,23,24,32,33,34,35,36,37,38,39,40 18, 19,20, 21, 22, 23,24, 32, 33, 34, 35, 36, 37, 38 , 39, 40 17, ARTICLE 78 (BODY ARTICLE (BODY OR OR OFFICER) OFFICER) were motion to/for to/for this motion were read on this Upon documents, it is foregoing documents, Upon the foregoing In this Article Realty Inc., seeks Bowery Realty petitioner 268 Bowery proceeding, petitioner Article 78 proceeding, York State respondent New York 2022, by respondent review of of an order issued on October October 19, 19,2022, DHCR order at of Housing Housing and Community Community Renewal ("DHCR"). ("DHCR"). The DHCR Division of consolidated and denied the petitioner's administrative appeals (termed a petitioner' s two administrative issue consolidated Petition for Administrative "PAR") which challenged challenged two orders of of the Administrative Review, "PAR") DHCR's ("RA"), issued on April 22, 2022, concerning concerning the Administrator ("RA"), DHCR's Rent Administrator Bowery Street, housing accommodations accommodations known as Apts. 3 and 5 located at 268 Bowery application for an petitioner's application New York, NY. The RA's determinations denied the petitioner's RA's determinations of the subject lease and approval to order granting approval to refuse renewal of intended to proceed to evict the residential residential tenants on the ground that the petitioner petitioner intended PAR was of the PAR demolish the subject building. Petitioner Petitioner argues that the denial of arbitrary and capricious capricious.. . based upon "Demolition", DHCR Owner's application application based "Demolition", that to grant an Owner's DHCR found that interior space in the project "include a complete gutting of of all interior minimum, "include project must, at a minimum, of including the removal of the building from the ground floor up through through the roof, including DHCR noted that after the building systems." DHCR such roofs and all internal building "see the sky" deconstruction part of of a project project is completed, one needs to be able to "see deconstruction application failed if standing on the ground floor. Id. The RA further found that the application DHCR found: to meet that criteria. In affirming affirming the RA decision, DHCR AND OF HOUSING 160559/2022 268 BOWERY REALTY REALTY INC. INC. VS. NEW YORK DIVISION OF HOUSING AND STATE DIVISION YORK STATE vs. NEW 268 BOWERY 160559/2022 AL COMMUNITY RENEWAL ET ET AL COMMUNITY RENEWAL Motion No. Motion No. 001 [* 1] 1 of 6 Page 1 of of 6 Page INDEX NO. 160559/2022 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 09/22/2023 The Commissioner P ARs must must be denied. denied. Commissioner is of of the opinion opinion that that these these PARs First, instant context First, it is not contested contested that that a "demolition" "demolition" in the instant context can be There is therefore therefore no need need something something less than than the full razing razing of of a building. building. There to analyze that support this contention. analyze the many many cases cases cited cited by the owner* owner* that support this contention. However, under Section 2524.5(a)(2) of However, contrary contrary to the owner's owner's contention, contention, under Section 2524.5(a)(2) of the RSC, issue and and not not to only only the RSC, "demolition" "demolition" refers refers to "the building" building" at issue residential portion portion ((or "housing accommodations accommodations "). Further, residential or "housing Further, the the general general standard for determining determining whether whether an owner's owner's plan plan meets of a standard meets the the definition definition of "demolition" under under the RSC is whether, whether, at the least, of the the "demolition" least, the interior interior of building at issue issue will will be totally totally gutted gutted and one can "stand "stand in the building the cellar cellar and look up to the sky". In the instant instant case, the owner's owner's plan short of of this this look plan falls far short standard. The owner owner seeks seeks to demolish demolish three three of of six levels, levels, demolishing demolishing the standard. three residential residential floors and leaving leaving the basement basement and first first and second second top three intact. By any standards, standards, this cannot cannot be considered situation in considered to be a situation floors intact. which, owner seeks which, as required required by RSC Section Section 2524.5(a)(2), 2524.5(a)(2), " [t]he [tJhe owner seeks to demolish the building. building. " Further, Further, whether whether the owner's 51% % or demolish owner's plan plan leaves leaves 51 just under 41 % of of the floor space undisturbed, undisturbed, the such a substantial substantial just under the fact that that such portion of of the floor floor will not be disturbed, disturbed, the fact that portion that the the owner owner plans plans to continue uninterrupted uninterrupted commercial commercial operations operations in half of the half of the building building (the continue cellar and and first and second second floors), and the fact that of the half of the six usable usable cellar that half of the premises premises will will not be disturbed, disturbed, clearly clearly supports supports the floors of the RA's RA's determination that that the owner's owner's plan plan does not not meet meet the requirements of a determination requirements of "demolition" under under the RSC, RSC, and that that the owner's owner's application "demolition" application must must accordingly be denied. denied. accordingly While the owner owner cites cites several several Agency Agency decisions decisions and of and court court cases, cases, none none of While these support support the owner's owner's position position that that the work work proposed these proposed by the the owner's owner's plan meets meets the definition definition of of "demolition" "demolition" under under the RSC, RSC, as explained explained plan above. Mahoney Mahoney v Altman, Altman, 63 Misc2d Misc2d 1062 (S Ct NY NY County County 1970), was above. based on the Rent Rent Control Control Law Law and Regulation Regulation in effect effect in 1970, which which based stated that that a "demolition" "demolition" in this context context is "where "where the landlord seeks in stated landlord seeks good faith to recover recover possession possession of of housing housing accommodations accommodations for the good immediate purpose purpose of of demolishing demolishing them them (emphasis (emphasis added) (See Section Section 58 added) (See immediate of the 1970 City City Rent Rent Regulations). Regulations). The Mahoney Mahoney Court of Court found found that, that, pursuant to this Section, Section, only the housing housing accommodation accommodation portions of a pursuant portions of building need need be demolished demolished to satisfy satisfy the requirements requirements of of a "demolition". "demolition". building However, the RSC RSC has a different different standard, standard, the standard standard that However, that applies applies herein, herein, which standard standard clearly clearly requires requires that that "[t]he "[tJhe owner seeks to demolish and which owner seeks demolish the building ((emphasis added)." It is noted noted that that the Schneider Schneider decision building emphasis added)." decision (Agency (Agency NEW YORK YORK STATE STATE DIVISION DIVISION OF OF HOUSING HOUSING AND 160559/2022 268 BOWERY BOWERY REALTY REALTY INC. INC. vs. NEW 160559/2022 268 AND COMMUNITY RENEWAL RENEWAL ET AL AL COMMUNITY Motion No. No. 001 Motion [* 2] 2 of 6 Page 2 of Page of 6 INDEX NO. 160559/2022 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 09/22/2023 Rent the Rent under the made under Order owner, was also made cited by the owner, TB420052RT), cited Order TB420052RT), Law and Control Laws Laws and and Regulations, Rent Stabilization Stabilization Law under the Rent not under Regulations, and not Control Code apply herein. herein. which apply Code which indeed, as does indeed, Peckham 2009), does App 2009), NY3d 424 (Ct App Calogero, 12 NY3d Peckham v Calogero, total contended by the owner, owner, state that "demolition" need not be the total need not that a "demolition" contended outlined because, as outlined razing of a building. issue, because, however, at issue, This is not, however, building. This razing of was in fact a there was that there found that above, Peckham found established. Peckham contention is established. this contention above, this of the interior of entire interior the entire "demolition" that the based on the fact that case based that case "demolition" in that premises demolished. These These facts are were to be demolished. that case were issue in that premises at issue interior, the interior, half of which half substantially different of the instant case in which different from the instant substantially Peckham, undisturbed. Peckham, namely remain undisturbed. floors, are to remain usable floors, the usable of the half of namely half Rent the Rent that the position that therefore, owner's position support the owner's way support not in any way does not therefore, does herein does not work herein Administrator error in finding finding that proposed work that the proposed was in error Administrator was RSC. the RSC. under the meet "demolition" under of a. "demolition" definition of the definition meet the decision Contrary owner's contention (CAB decision decision (CAB Dalabar decision that the Dalabar contention that the owner's Contrary to the parts of ARL04567-L) found that demolition can leave leave commercial commercial parts ofaa that a demolition ARL04567-L) found had Administrator had Rent Administrator building said decision simply stated stated that that the Rent decision simply intact, said building intact, of parts of residential parts the residential been renovate the plan to renovate owner's plan that the owner's error to find that been in error was finding was a building should be denied further fact finding that further finding that denied on its face, finding building should commercial whether commercial required. finding regarding regarding whether ruling or finding made no ruling Dalabar made required. Dalabar qualifies as finally qualifies that finally work that portions undisturbed by work be. undisturbed could be building could of a building portions of a "demolition". "demolition". general cites the general Duane also cites case is analogous analogous to the instant instant case. Duane Duane case The Duane accomplished by RSC is accomplished principle "demolition" under and RSC RSL and under the RSL that a "demolition" principle that sometimes test is sometimes "the total interior, or, as the test building's interior, of a building's gutting of total gutting the sky look up to the characterized, being stand in the cellar and look sky"" the cellar being able to stand characterized, Number 15,680 (citing CAB CAB Order Order Villas of Forest Opinion Number 15,680 (1981)). (1981)). Hills, Opinion Forest Hills, Villas of (citing floor of the floor than 50% more than Duane 50% of because more that case because demolition in that found no demolition Duane found not to be were not floor were space and first floor cellar and because the cellar intact, because remain intact, was to remain space was the cellar disturbed, and and because commercial ventures cellar and first located on the ventures located because commercial disturbed, proposes to the owner floors were case the owner proposes instant case operation. In the instant remain in operation. were to remain floors and first and cellar and leave space undisturbed, leave the cellar undisturbed, to leave floor space of the floor leave 41-51 % of operations second commercial operations maintain commercial undisturbed, and to maintain floors undisturbed, second floors therefore, Duane, therefore, uninterrupted cellar and first and second second floors. Like Like Duane, uninterrupted in the cellar not plans did not the RA in the instant case was correct to find that owner's plans that the owner's was correct instant case noted RSC. it is noted and RSC. RSL and meet "demolition" under the RSL under the of a "demolition" definition of meet the definition AND ATE DIVISION NEW YORK STATE DIVISION OF OF HOUSING HOUSING AND 160559/2022 268 BOWERY REAL REAL TV INC. vs. NEW YORK ST TY INC. 268 BOWERY 160559/2022 AL COMMUNITY RENEWAL ET ET AL COMMUNITY RENEWAL Motion No. No. 001 Motion [* 3] 3 of 6 Page 3 of of 6 Page INDEX NO. 160559/2022 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 09/22/2023 was Duane was that, while issue of of the landmark landmark status status of of the building building in Duane while the issue status. this status. raised owner, the Duane decision in no way relied on this way relied Duane decision raised by the owner, the of the of "all demolition of" It is noted all of refer to demolition while OB 2009-1 does refer that, while noted that, the apartments subject building", change the not change does not reference does building", this reference the subject apartments in the which, as 2524.5(a)(2), which, RSC Section requirements "demolition" under Section 2524.5(a)(2), under RSC of a "demolition" requirements of building". "the building". mentioned "demolition" as the demolition of "the demolition of defines a "demolition" above, defines mentioned above, While explicitly requires demolition of apartments in the of all apartments requires demolition While OB 2 009-1 explicitly RSC, the RSC, of the building lessen the requirements requirements of thereby lessen issue, it does not thereby building at issue, itself. which demands the substantial substantial demolition demolition of of the building itself. entire building the entire which demands not a that is not The April states that owner states the owner cited by the Letter cited Opinion Letter April 13, 2001 Opinion parties substitute for a formal notice to all parties prior notice upon prior issued upon order issued agency order formal agency substitute Said heard." Said opportunity to be heard." and with afforded an opportunity been afforded having been parties having with all parties under Letter "DHCR may grant a demolition application [[under demolition application may grant that "DHCR states that also states Letter also of supports of RSC Section 2524.5(a)(2)] 2524.5(a)(2)] where outer walls structural supports and structural walls and where the outer RSC Section gutted being gutted interior being the building intact, with only the entire entire interior with only remain intact, building remain that issue in that work at issue that the work added)." The The Letter Letter also advises advises that emphasis added)." ((emphasis Therefore, circumstance may qualify as a "substantial "substantial rehabilitation". rehabilitation". Therefore, may also qualify circumstance floor commercial floor single commercial intact a single although the Letter opine that leaving intact that leaving Letter does opine although substantially of subject of while substantially demolition, while proposed demolition, of a proposed that is the subject building that of a building that demolishing "demolition", that qualify as a "demolition", may qualify building, may that building, of that rest of the rest demolishing the leading to a proceeding leading formal proceeding Letter states states that substitute for a formal not a substitute that it is not Letter of a interior of formal order ((such generally the entire interior the entire that generally instant one), that such as the instant formal order owner the owner building gutted to qualify qualify as a "demolition" "demolition" and that the and that must be gutted building must The might served by filing a substantial substantial rehabilitation application. The rehabilitation application. better served might be better Nor are the matter. Nor instant matter. Opinion Letter binding on the instant not binding therefore not Letter is therefore Opinion the said Letter analogous to the instant that the case in that instant case Letter analogous issue in said facts at issue least leaves at least demolition that leaves work that calls for work herein calls consideration herein under consideration plan under demolition plan intact. half building intact. subject building the subject of the interior of the interior of the half of the Petitioner then then commenced commenced this Article Article 78 proceeding challenge the proceeding to challenge Petitioner denial of of the PAR. PAR. denial agency, determination by an agency, CPLR §~ 7803 provides court's review of a determination review of that a court's provides that CPLR of violation of made in violation was made such as DHCR, of whether determination was whether the determination consists of DHCR, consists such capricious and capricious lawful arbitrary and was arbitrary of law, or was error of affected by an error was affected procedure, was lawful procedure, mode or an abuse measure or mode the measure discretion as to the of discretion abuse of including abuse discretion, including of discretion, abuse of CPLR § ~ 7803[3]; of Montefusco of penalty imposed (see CPLR Montefusco v New York State 7803[3]; Matter of penalty imposed of County NY County Div. of of Hous. Community Renewal, 22 Misc 1131(A), (A), [Sup Ct NY Misc 3d 1131 Haus. & Community 160559/2022 268 BOWERY REAL REALTY INC. VS. NEW YORK STATE DIVISION DIVISION OF OF HOUSING AND HOUSING AND YORK STATE vs. NEW TY INC. 268 BOWERY 160559/2022 COMMUNITY RENEWAL RENEWAL ET ET AL AL COMMUNITY Motion No. No. 001 Motion [* 4] 4 of 6 Page of 6 Page 4 of INDEX NO. 160559/2022 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 09/22/2023 Haus & New York State 2009]; Matter of Windsor Windsor Place State Div. of ofHous Place Corp. v New Matter of Matter Dept 1990]; Matter 279 [1st Dept Community Renewal, Off. of 161 AD2d AD2d 279 Admin., 161 Rent Admin., ofRent Renewal, Off Community New Bambeck v New Matter of of Mazel of Bambeck Dept 1988]; Matter AD2d 600 [2d Dept Mirabal, 138 AD2d Maze! v Mirabal, of AD2d 51 Adm in., 129 AD2d Rent Admin., ofRent York State Community Renewal, Off. of Renewal, Off Hous & Community ofHous State Div. of ve reviewing art Dept 1987], Iv den 70 NY2d [1988]). In reviewing an administrati administrative NY2d 615 [1988]). [1st Dept basis for the rational basis there is a rational whether there agency ascertain whether must ascertain courts must determination, courts agency determination, Murphy v Matter of action in question question or whether arbitrary and capricious capricious (see Matter of Murphy whether it is arbitrary action NY3d 649,652 Renewal, 21 NY3d New Community Renewal, 649,652 ofHous. & Community State Div. ofHous. New York State NY3d 12 Calogero, v. [2013] [citation omitted]); Matter of Peckham NY3d 424,431 424,431 Peckham v. Calogero, Matter of ion omitted]); [2013][citat Community & of State York [2009], quoting Matter of Gilman v New State Div. of Hous. Community New quoting Matter of Gilman on is Renewal, [2002]). It is well settled settled that that a determinati determination NY2d 144, 149 [2002]). Renewal, 99 NY2d reason and is basis in reason arbitrary "without sound sound basis made "without when it is made capricious when arbitrary and capricious Board of Pell v Board generally taken (Matter of of Pel! of Educ. of of facts." (Matter regard to the facts." without regard taken without generally Mamaroneck, Westchester Union Free Westchester Scarsdale & Mamaroneck, ofScarsdale of Towns of No. 1 of School Dist. No.1 Free School decided County, 34 NY2d Even though though the court court might might have have decided 1974 ]). Even NY2d 222, 231 [[1974]). County, the agency's upset the not upset may not differently agency's position, court may agency's position, the court the agency's were it in the differently were the that record, that determinationn in the absence absence of of a finding finding supported supported by the record, determinatio New Mid-State Mgt. Corp. v New ofMid-State Matter of determination basis (see Matter rational basis had no rational determination had AD2d 72, 76 [1st Dept Conciliation & Appeals Dept 1985], affd 66 Appeals Bd., 112 AD2d York City Conciliation NY2d [1985]). NY2d 1032 [1985]). Court finds the Court record, the After administrative record, and the administrative arguments and the arguments reviewing the After reviewing basis and was not rational basis had a rational PAR had that determination DHCR to deny the PAR on by DHCR that the determinati plans and submitted application and arbitrary submitted plans that its application argues that Petitioner argues capricious. Petitioner arbitrary or capricious. clearly met standard for demolition demolition set forth in the Rent Rent Stabilizatio Stabilizationn Code Code met the standard clearly where, applications where, demolition applications ("RSC") previously approved approved demolition DHCR has previously that DHCR ("RSC") and that sole proposes to leave case in the instant instant matter, owner proposes leave intact intact the matter, the owner as is the case building the of reminder of commercial space, while substantially gutting gutting the reminder building while substantially commercial space, these opinions that these including all the residential apartments. The Court Court agrees agrees that opinions are residential apartments. including stated in its DHCR and stated clearly given by DHCR reasons given distinguishable for the reasons clearly distinguishable ons cited many of determinationn quoted quoted above. above. Most of the determinati determinations cited by notably, many Most notably, determinatio standard RSC, a standard the RSC, under the demolition under the owner standard for demolition the standard involve the not involve owner did not rent pursuant to other that substantially differs differs from the standards standards for demolition demolition pursuant other rent that substantially Control Laws. regulations such as the Rent Control Laws. the Rent regulations such proposed analyzed the proposed carefully analyzed DHCR carefully that DHCR record that clear from the record It is also clear plan to not constitute they did not that they demolition plan concluded that constitute a plan reasonably concluded plan and reasonably demolition plans the plans and the affidavit and architect's affidavit fully gut the interior of the building. Both the architect's building. Both interior of three floors upper three indicate that demolition work only occur occur on the upper floors of of the would only work would that the demolition indicate cellar, first and the cellar, five-story building. including the building, including of the building, remainder of The remainder building. The five-story AND OF HOUSING STATE DIVISION YORK STATE NEW YORK DIVISION OF HOUSING AND 160559/2022 268 BOWERY REALTY REALTY INC. INC. vs. vs. NEW 268 BOWERY 160559/2022 COMMUNITY RENEWAL RENEWAL ET ET AL AL COMMUNITY Motion No. No. 001 Motion [* 5] 5 of 6 Page 5 of of 6 Page INDEX NO. 160559/2022 NYSCEF DOC. NO. 42 RECEIVED NYSCEF: 09/22/2023 its operate its to operate own er to the owner utilized by the second intactt and be utilized rema in intac wou ld remain floors would nd floors seco that plan that to aa plan equi vale nt to not at all equivalent commercial certainly not plan is certainly Such a plan businesses. Such commercial businesses. sky. the sky. at the up at look up and look cellar and would stand in the cellar pers on to be able to stand perm it aa person would permit is it is ground, it the ground, building to the While entiree building raze the entir necessary to raze be necessary not be may not it may While it at or at entire or the entire that the case, that this case, certainly not irrational DHC R did in this conclude, as DHCR irrational to conclude, certainly not demolition effectuate aa demolition order to effectuate least substantial of the inter interior guttedd in order ior be gutte part of tantial part least aa subs LLC vv Dua ne LLC 118 Duane of 118 Matt er of Cod e (see Matter within Stabilization ilization Code Rent Stab the Rent of the mea ning of the meaning within the Dep t 401[ 1st Dept AD3 d 401[lst Renewal, 212 AD3d New York State Community Renewal, ofHaus. & Community Div. ofHous. State Div. New York 2023]). 2023]) . decision the decision constitutes the forgoing constitutes The forgoing dismissed. The petition is dismissed. the petition Accordingly, the . Accordingly, court. this court. and order of this order of ~\/'d W. MOYNE,J.S.C. 9/22/2023 9/22/2023 NICHOLAS LAS W. MOYNE, J.S.C. . NICHO DATE ED CASE DISPOS DISPOSED CASE CHECK ONE: CHECK ONE: APPLICATION: APPLICATION: CHECK IF APPROPRIATE: APPROPRIATE: CHECK ~ GRANTED GRANTED 0 0 SETTLE ORDER SETTLE ORDER '• DENIED DENIED INCLUDES TRANSFER/REASSIGN ES TRANSFER/REASSIGN INCLUD ~ ~ NON-FINAL DISPOSITION NON-FI NAL DISPOSITION GRANTED PART . IN PART, GRANT ED IN SUBMIT ORDER SUBMIT ORDER FIDUCIARY APPOIN TMENT FIDUCIARY APPOINTMENT AND HOUS ING AND OF HOUSING DIVISION OF ST ATE DIVISION YORK STATE NEW YORK 160559/2022 REALTY INC. vs. NEW TY INC. BOWE RY REAL 268 BOWERY /2022 268 160559 AL AL ET COMMUNITY RENEWAL ET AL COMMUNITY RENEW Motion No. No. 001 Motion [* 6] 6 of 6 . 0 0 OTHER OTHER REFERENCE REFERENCE of 6 Page Page 6 of
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