DHCR Updates Demolition Stipend Chart

The relocation stipends for demolition orders have been increased.

One of the grounds upon which an owner may end a rent-regulated tenancy is where the owner intends to demolish the building. However, in such situations, an owner must first obtain DHCR approval by filing an application. At that point, the DHCR serves each tenant with a copy of the application; reviews all tenant responses; conducts a hearing, if appropriate; and then issues a written order granting or denying the application.

Last year, the DHCR filed the necessary “Notices of Adoption” required by law to enact rent-regulatory amendments to the Rent Stabilization Code. As part of the update, the DHCR added a “good faith” requirement to demolition. It requires the applicant at the time of the application to submit proof of financial ability to complete the proposed work, along with proof that the Department of Buildings has already approved the plans for demolition. The adopted amendments define demolition to mean “the removal of the entire building including the foundations.” Before, owners seeking to demolish a building could preserve the building’s exterior.

The amendments also increased the stipends given to residents displaced by demolition, allow the DHCR to revoke a demolition order if the owner fails to act in good faith or fails to undertake construction within a reasonable time, and permit the DHCR to initiate enforcement proceedings for failure to comply and make those penalties applicable to subsequent purchasers.

The DHCR recently issued a second revision to Operational Bulletin 2023-2. This bulletin replaces the original revision to Operation Bulletin 2009-1 regarding procedures owners must undertake when filing an application to refuse to renew leases and proceed for eviction based on demolition of the apartment building. The recent second revision increases the relocation stipends for demolition orders. We’ll go over the particulars of the payments made to tenants if an owner’s demolition application is granted.  

Tenant Protections

Beyond getting advance permission from the DHCR and providing proof of adequate financing, to be able to evict or deny a lease renewal on the grounds of demolition, an owner must pay the tenant’s reasonable moving expenses. In addition, if the tenant leaves by the vacate date in the DHCR’s order, the tenant is entitled to a stipend. If the tenant doesn’t vacate the apartment on or before the date in the DHCR order, the stipend is reduced by one-sixth of the total stipend for each month the tenant remains in occupancy after the vacate date in the final order.

There are three stipend options available to the owner. At the owner’s option, the owner may:

1. Relocate the tenant to a suitable housing accommodation at the same or lower legal regulated rent in a closely proximate area, or in a new residential building if constructed on the site, in which case suitable interim housing must be provided at no additional cost to the tenant; plus, in addition to reasonable moving expenses, a payment of a $5,000 stipend; or
2. Where an owner relocates the tenant to a suitable housing accommodation at a rent in excess of that for the subject housing accommodation, in addition to the tenant’s reasonable moving expenses, the owner may be required to pay the tenant a stipend equal to the difference in rent, at the commencement of the tenant’s occupancy of the new housing accommodation, between the subject housing accommodation and the new housing accommodation, multiplied by 72 months; or
3. Pay the tenant a stipend that’s the difference between the tenant’s current rent and the average rent for vacant apartments as set forth in the NYC Housing and Vacancy Survey as of the date of the determination. This difference is to be multiplied by 72 months. The stipend will be increased each year by a guideline beginning the first year after the vacancy survey is issued and continuing until a new vacancy survey is issued.

Third stipend option. For the third option, the DHCR provided an updated demolition stipend chart for the sample calculation of stipends. The stipend is calculated with a per-room, per-month amount of $904 in New York City. The first revision to the operational bulletin had a per-month base stipend amount of $526 for New York City.

The difference between the maximum monthly allowance and the current rent is multiplied by 72 months. And the stipend chart assumes the owner pays the tenant for a minimum of three rooms. This is the only option in which the owner isn’t obligated to find suitable housing accommodations. You can find this chart at https://hcr.ny.gov/operational-bulletin-2023-2.

Suitable accommodation requirements. Tenants who would lose income-dependent government benefits because of the stipend may elect to waive the stipend and have the owner relocate them to a suitable housing accommodation at the same or lower legal regulated rent in a nearby area.

For the relocation options, “suitable housing accommodations” means housing that’s similar in size and features to the respective housing now occupied by the tenants. The new accommodations must be freshly painted before the tenants move in and must include the same required services and equipment the tenants received in their prior accommodations. The new accommodations don’t have to be rent stabilized provided the owner submits a contractual agreement that places the tenant in a substantially similar housing accommodation at no additional rent for a period of six years, unless the tenant requests a shorter lease period in writing.

If you offer the tenant a comparable housing accommodation, the tenant may file an objection with the DHCR challenging its suitability within 10 days after you’ve made it available for the tenant to inspect. Within 30 days thereafter, the DHCR will inspect the accommodation, on notice to both parties, in order to determine whether it’s suitable.

If the DHCR determines that the housing accommodation isn’t suitable, you must offer the tenant another accommodation. The tenant will have 10 days to inspect it to consider its suitability.

If the DHCR determines that the accommodation is suitable, the tenant then has 15 days to accept it. A tenant who refuses to accept relocation to any housing accommodation the DHCR determines is suitable will lose the right to relocation by the owner and to receive payment of moving expenses or any stipend.