East Village — A state regulation has been allowing private building owners to evict rent-stabilized tenants by demolishing apartment buildings – but the Division of Housing and Community Renewal (DHCR)says that no matter how it words the regulation, it doesn’t have the power to prevent owners from using the law to replace stabilized apartments with market-rate units.

In an interview, the director of DHCR’s policy unit said that some suggestions on DHCR’s proposed demolition regulation – voiced by elected officials and housing advocates at an impassioned hearing last week – do have merit. But he said a building can be demolished, or even just gut-renovated, for the purpose of removing tenants, and DHCR can’t stop it.

DHCR’s proposed regulations – which define “demolition” – allow for gutting the building and do not require demolishing it to the ground. That has led housing advocates to charge that the proposals will cause more evictions of rent-stabilized tenants by landlords. Advocates sounded off last week at the DHCR hearing and a rally on City Hall steps that drew local politicians and about 100 housing activists.

Changes to the demolition regulations would govern the roughly 1 million rent-stabilized apartments in New York City. DHCR must approve the end of all leases of all rent-stabilized apartments in New York state including those undergoing demolition. According to DHCR policy chief Gregory Fewer, his agency is updating the demolition language to meet a requirement in a New York State Supreme Court case and to put the agency’s long-standing practices into writing.

The proposed language (see p. 27 here) would spell out in DHCR regulations for the first time what constitutes a "demolition." Under the proposals, demolition can be “the complete gutting of all interior space in the building from the ground floor ... and including the removal of the building’s roofs and of all internal building systems.” The proposed wording goes on to say that “however, a demolition…shall not require the removal of the outer walls and structural supports of a building.” The upshot is that a gut rehab can meet DHCR’s standard for “demolition” and can be grounds for DHCR’s approval to evict tenants.

Strong opposition to the proposal is coming from city elected officials including City Councilmembers Rosie Mendez and Gale Brewer, State Sen. Liz Krueger and Assemblymembers Jonathan Bing and Deborah Glick. Many of them say demolition should be defined as razing the building to the ground, in order to prevent quasi-demolitions that just lead to market-rate housing. Krueger says that the landlord should be required to prove to DHCR that the demolition is needed for safety reasons, “which we believe was the original intent of the statute.”

DHCR disagrees and says that it can’t limit demolitions just to unsafe buildings. According to Fewer, who wrote the proposed regulations with input from other DHCR officials, there isn’t any language in the city’s Rent Stabilization Code or the state’s Emergency Tenant Protection Regulations that says demolition is limited to buildings with safety issues. To the contrary, he said, the Rent Stabilization Law and the Emergency Tenant Protection Act contain a demolition clause as a provision for private apartment building owners.

In asking DHCR to ban demolitions unless for unsafe structures, tenants are asking for something beyond the law, Fewer said. “Unfortunately, the state legislature gave the owners this remedy, for lack of a better word,” he said, referring to demolitions. According to Fewer, DHCR has been allowing the partial demolitions now spelled out in the proposal “for the past several decades.” The proposed regulations put that existing policy in writing.

The proposed definition of a demolition is extensive, requiring all of the building’s systems to be stripped out by the owner, Fewer said. But “could they do that and then put in luxury condos? Yes."

That’s exactly what angers tenant advocates, who say the new wording will make life worse, not better, for New York’s rent-stabilized tenants. In a statement read by her chief of staff at the Aug. 12 hearing before Fewer and DHCR legal staffers, Assemblywoman Glick called the proposal “beyond inadequate” and “dangerous” to tenants. According to DHCR figures and Glick’s office, more than 50 demolition applications for rent-stabilized apartment buildings statewide are pending with DHCR.

Bethany Jankunis, Glick’s chief of staff, said in an interview that the demolition provision isn’t for evicting and replacing tenants who pay stabilized rents. “The law wasn’t intended to say, ‘Here’s a couple ways you can deregulate the unit,'" says Jankunis.

The other big change drafted by DHCR – which also met with opposition at the hearing – is a new formula for the "stipend" that owners must pay to demolition-evicted tenants. In addition to paying moving expenses, the landlord would be required to pay six years of a rent allowance. The new formula calls for landlords to pay the difference between the tenant’s rent in the soon-to-be-gutted building and the rent for a similar-size, rent-stabilized apartment in the same zip code, plus 20 percent. (The stipend currently is based on a citywide average.) According to DHCR, the 20 percent was an attempt to approximate market-rate rents.

But market-rate rents should be the basis of the payment calculations, say housing advocates. With the scarcity of available rent-stabilized apartments, tenants being kicked out of a building likely won’t find a new home at a similar price, forcing them to pay market rate.

DHCR says many of the demolitions of rent-stabilized buildings are happening in Manhattan, hardly a locus of low rents. Councilwoman Mendez, who represents the East Village and other Lower Manhattan neighborhoods, testified at the hearing that “a tenant undergoing this [process] in my district would not be able to find another rent-regulated apartment.”

The housing agency will accept public comments on the proposed regulations until Sept. 30. Fewer said he and his colleagues will decide whether to keep them as is, make changes, "or whether this is just a stupid idea and scrap the whole thing."

- Rachel Nielsen