Spitzer Alleges Misconduct in Demolition Delay
Spitzer alleges misconduct in demolition delay of luxury condominium project at 985 Fifth Avenue in New York.
Former New York governor Eliot Spitzer filed a lawsuit accusing the state’s Division of Homes and Community Renewal (DHCR) of “potential intentional misconduct” for delaying the demolition of the 25‑story rental building at 985 Fifth Avenue. The case, lodged in state court on Friday, centers on the agency’s failure to approve non‑renewal of six rent‑stabilized leases, a prerequisite for the luxury condominium project Spitzer plans to erect on the site.
Legal battle over lease termination
Spitzer obtained Landmarks Preservation Commission approval three years ago to replace the existing structure with a 20‑story, 26‑unit condo. However, the law requires DHCR to clear any rent‑stabilized tenancy before demolition can proceed. The six affected leases belong to tenants protected under New York’s rent‑stabilization program, granting them renewal rights except in cases of demolition.
The filing notes that Spitzer waited 26 months after submitting the non‑renewal applications in March 2024 before sending warning letters to DHCR, indicating he would pursue legal action if the agency did not act. The lawsuit claims the agency “has placed numerous unfair impediments and caused inordinate and unjustified delays.”
His team, led by attorney David Grill of Rivkin Radler, argues that all statutory requirements have been satisfied, including securing more than $100 million in financing for the demolition and new construction. A sworn statement from former senior DHCR official Woody Pascal alleges that political pressure and tenant‑advocacy groups influenced the agency to resist the loss of rent‑stabilized units.
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Tenants’ holdouts and negotiations
The building, originally constructed in 1969 by Spitzer’s late father Bernard, houses roughly 40 free‑market renters and four rent‑stabilized tenants who have refused to vacate. The free‑market occupants have no legal right to stay, as their rents exceed the thresholds for protection under the Good Cause Eviction law. The rent‑stabilized tenants—Eva Coriat De Aron, Stephanie Phillips, Mary Walsh, and Carlotta Jacobson—are each represented by different legal firms.
Adam Leitman Bailey, who represents two of the rent‑stabilized occupants, told the outlet that the offer from Spitzer “is not acceptable to my client.” The other two tenants are defended by Vernon & Ginsburg and Himmelstein McConnell Gribben & Joseph, respectively. This dispute gives the occupants leverage, as DHCR’s refusal to approve lease terminations effectively blocks the demolition.
Spitzer’s lawsuit alleges that DHCR requested additional information ten months after the initial applications, much of which had already been provided, and has not sought further clarification since. It also notes that the agency took eight to eleven months to forward tenant responses to Spitzer, a delay the filing characterizes as “a secret agenda to delay.”
Comparing this case to the 2022 Barnett dispute, where a similar legal fight lasted seven years before new state requirements were introduced, suggests that New York’s housing bureaucracy can become a significant obstacle for developers. The Barnett precedent led to tighter rules for demolishing buildings with rent‑stabilized tenants, a framework Spitzer claims to have followed.
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While the lawsuit focuses on procedural failures, the broader financial stakes are considerable. Units in the existing building command rents up to $59,000 per month, and the location—between East 79th and East 80th streets, across from the Metropolitan Museum of Art—makes the prospective condo development potentially lucrative.
They hope for a resolution.
The DHCR has declined to comment on the litigation. The case now proceeds through the state court system, where the court will decide whether the agency’s actions constitute misconduct or merely bureaucratic delay. The outcome could influence how quickly developers can manage rent‑stabilization regulations in future projects.
