Testimony Of State Senator Duane Before The New York State Division Of Housing And Community Renewal Hearing On Proposed Demolition Regulations

My name is Thomas K. Duane and I represent New York State's 29th Senate District, which includes the Upper West Side, Hell's Kitchen, Greenwich Village, Chelsea, and part of the East Side, including The East Village, Stuyvesant Town, Peter Cooper Village and Waterside Plaza. This mixed-income district is composed largely of tenants, thousands of them rent-stabilized. I had hoped that this hearing would be postponed until September to enable more members of the public to participate and allow time for more detailed information on the proposed stipend methodology to be produced and made available for review. Nonetheless, I appreciate this opportunity to present testimony before the New York State Division of Housing and Community Renewal (DHCR) today regarding its proposed demolition regulations.

I was quite heartened earlier this year when I learned that DHCR was considering regulatory amendments to the Rent Stabilization Code (RSC) with respect to demolitions. The need for a review of these regulations has been especially urgent in recent years because a rising number of building owners have been passing off gut renovations of existing units as demolitions in order to exercise a provision of the RSC that allows an owner who "intends in good faith to demolish the building" to evict rent-stabilized tenants. This practice, commonly referred to as "phony demolition," is a blatant exploitation of the law, as the sole purpose is to evict longtime tenants and low-income individuals so that the properties can be converted into luxury housing or other high-profit ventures.

Naturally, I, other elected officials and tenant advocates expected DHCR to close this gaping loophole and strengthen other aspects of the demolition regulations. Indeed, in March of this year, at DHCR's request, many of us submitted recommendations to DHCR on ways it should do so. I was therefore extremely disappointed that the revised demolition regulations DHCR proposed, which are being considered today, do not incorporate any of our suggestions and, in fact, leave tenants as vulnerable as ever to eviction by disingenuous landlords.

Most shocking to me is the proposed new definition of the term "demolition." Rather than tightening it, as we suggested, to mean only the "complete razing of the entire building, including all exterior walls, in order to construct a new building with the same or greater number of rental housing units," DHCR explicitly loosened it to include the "complete gutting of all interior space in the building from the ground floor and above." This broad definition would only legitimize the bad faith practice of phony demolitions, by specifying that an owner does not need to substantially reconstitute a building in order to have an application to evict its rent stabilized tenants approved under the amended RSC. This flies in the face of a primary tenet of the Rent Stabilization Law: to prohibit the eviction of tenants simply to deregulate housing units with no other purpose. DHCR should revise its proposed definition to specify removal of outer walls and structural supports and ensure that owners are only allowed to evict rent stabilized tenants if the demolition will result in a substantial increase in the number of habitable dwelling units, a shift to non-residential use, or other substantial change in the use or occupancy of the premises.

I am also dismayed that DHCR's proposed regulations do not raise the bar for the approval of demolition-eviction applications. Given the devastating consequences of demolitions on rent stabilized tenants, DHCR should have a mechanism in place to provide for the thorough examination of each demolition-eviction application. Towards this end, I and other elected officials have recommended that DHCR re-instate its policy of requiring formal hearings in all demolition cases. The lack of such scrutiny denies tenants a fair opportunity to be heard, and increases the likelihood that applications for non-renewal of rent-stabilized leases based on ineligible demolitions will inadvertently be approved.

DHCR should also require owners seeking approval of demolition-eviction applications to provide proof of their financial ability to accomplish the demolition and new construction as well as evidence that they have all pertinent permits to do the work before such applications will be accepted for consideration. Currently, DHCR allows owners to file incomplete applications and then holds the proceeding open while the owners gather their evidence. This results in tenants being placed in limbo and sets up a situation where tenant harassment and/or unfair buyout offers are likely.

Under any circumstances, harassing tenants into leaving their homes or accepting unfair buy-out offers is unconscionable and should not be rewarded. As I suggested in the recommendations I submitted in March, DHCR should require owners of non-SRO buildings to obtain a Certificate of No Harassment in order to qualify for non-renewal of leases due to demolition. Moreover, the RSC should expressly provide that at demolition-eviction application hearings, evidence of harassment by the owners may be presented and owners found to have harassed their tenants shall have their applications denied.

I also have concerns over DHCR's proposed stipend formula, even though in the absence of a list by zip codes of the average registered rents that DHCR proposes to utilize, it is difficult to fully assess its adequacy. While I appreciate that DHCR's goal is to prevent the displacement of tenants from their neighborhoods, I fear that the proposed formula will not only fail in that regard, but also burden displaced tenants with the challenge of finding affordable housing in a market where there is an extremely short supply.

According to the proposed formula, owners will be required to provide tenants with a stipend for 72 months equal to 20 percent more than the difference between the tenant's rent and the monthly mean registered rent in the tenant's zip code. Given the dearth of available affordable housing, in neighborhoods where there is a large difference between registered rents and market-rate rents, such a stipend will be wholly inadequate to help a displaced tenant find viable new housing. Furthermore because owners only have to pay the stipend to cover 72 months, displaced tenants who are able to find new accommodations that they can afford with that assistance will likely be displaced again in six years when the stipend runs out. Instead of implementing this flawed formula, DHCR should make the stipend equal to 20 percent more than the difference between the tenant's rent and the monthly mean market-rate rent in the tenant's zip code, to be paid for the duration of the new tenancy. Alternately, DHCR should require owners to find all displaced tenants new apartments with comparable rents in the same zip code, and owners should be required to pay for any relocation expenses.

On its website, DHCR states that its mission is "to make New York State a better place to live by supporting community efforts to preserve and expand affordable housing, home ownership and economic opportunities, and by providing equal access to safe, decent and affordable housing." While I have great respect for the progress that DHCR has made in the last two years, and its willingness to revisit this clearly problematic issue, I cannot say that the proposed regulatory changes fit within its stated mission. I urge DHCR to reconsider the proposed demolition regulations and incorporate the recommendations that I and other tenant advocates have proposed today. I look forward to continuing our dialogue and working with DHCR to better the lives of all New Yorkers.