Rent-Stabilized Tenants Seek to Stop Spitzer’s Condo Project

Former New York governor and real estate scion Eliot Spitzer is facing opposition to his Fifth Avenue development from a familiar foe.

Spitzer is tantalizingly close to replacing the rental building at 985 Fifth Avenue, built by his father in 1970, with luxury condos. He’s received approval from the Landmarks Preservation Commission — twice — for the project, and battled through an adverse possession case filed by a neighboring co-op over a now-notorious “Pit” that he needed for the project.

Attorney Adam Leitman Bailey was the attorney in that case, and he has now returned.

The 46-unit rental building has six rent-stabilized units, which means Spitzer needs approval from the Department of Homes and Community Renewal to demolish the building. Spitzer submitted demolition applications for each tenant to DHCR in May 2024.

But at the end of February this year, Leitman Bailey submitted an emergency complaint to DHCR on behalf of one tenant, Stephanie Phillips, claiming that she received a lease renewal on February 6. The complaint states that three days later, “two men confronted this 89-year-old woman and demanded that she surrender the lease renewal offer, claiming it had been sent by mistake.”

Leitman Bailey claims that once a landlord sends an offer to renew to a rent-stabilized tenant, it is “binding and irrevocable during the tenant’s acceptance period,” according to New York law.

It is his office’s latest bid to slow down the project. Last year, Leitman Bailey’s office submitted letters to DHCR claiming that Spitzer’s demolition application was faulty because it didn’t provide proof of the developer’s ability to pay for the tenants’ relocation. The attorney’s office also claimed the developer didn’t account for how an open mortgage on the property might affect its financial ability to move forward with the demolition without rental income.

A settlement conference before a DHCR administrative judge took place on March 4, but the two sides remain at a stalemate, according to Leitman Bailey. “What he’s offering is not acceptable to my client,” he said.

“The documents were sent in error by the management company in direct contravention of what they were instructed to do. The tenant’s lease had been expired and no lease has been offered,” a spokesperson for 985 Fifth said. “In addition, there is an ongoing procedure in front of DHCR to enforce the owner’s right not to renew the lease.”

DHCR declined to comment on the pending matter.

The complaints are the latest twist in the long-running saga of the development, which Spitzer first proposed four years ago. Developers have chafed at the bubble wrap city rules place around rent-stabilized tenants, and have pointed out how situations like these are one of the many roadblocks to more housing in the city.

But Leitman Bailey says that this case — turning 46 rental units into 22 luxury condos — is not quite the same. “It’s a rental building — there’s no reason to knock this building down,” he said. The rest of the units, to be fair, are not particularly cheap, with some asking upwards of $30,000 per month, according to StreetEasy.

The dispute poses some existential questions for developers looking to build in the city, such as: Is it worth it if I’m going to have to deal with Leitman Bailey for years? For the gadfly attorney, it’s just another good real estate scuffle.

“There’s no better fight in real estate than one between a rent-regulated tenant and a developer,” Leitman Bailey said.

What we’re thinking about: A friend of mine just received an offer on their home in Brooklyn after listing it with Compass. When I asked if they used a private exclusive, they said they did but hardly thought about it (the offer came after listing on the open market). I’m curious how people outside the resi space (consumers) are interacting with these things. If you’ve listed, sold or bought a home, have private listings been a big part of the discussion? Let me know at jacob.indursky@therealdeal.com.

A thing we’ve learned: State Sen. Liz Krueger is sponsoring a bill that would allow grocery stores to sell wine, Hell Gate wrote. She says it’s common sense, pointing to the 40 other states that permit the practice. But local wine store owners, like this author’s favorite Bed-Vyne Wine, see it as an existential crisis.

Elsewhere…

— New York state agencies are getting funky with their social media accounts, Gothamist reported. It mirrors a trend of the meme-ification of official accounts, from the federal government posting highlight reels of bombings to the New York Times mixing it up in the comments on X. “I realized that in order to reach people, you just had to go full weird, and I’ve just kind of been doing that ever since,” the 27-year-old running the @NYGov account told Gothamist.

— Ryan Murphy’s “Love Story” is devouring New York, Curbed reported. Women and men around the city are trying to step inside the lives of Carolyn Bessette Kennedy and John F. Kennedy Jr. by going to some of the pair’s favorite haunts depicted in the show, like The Odeon and Panna II. As somebody who has been to a half-empty Panna II for multiple birthdays, I say: be more creative, New York.

Closing time

Residential: The largest residential sale on Friday was $15 million for 307 Hicks Street. The Brooklyn Heights townhome is 6,200 square feet. It last sold on the market in 2023 for $5.1 million. Carlos Saavedra of Park Property Advisors has the listing.

Commercial: The largest commercial sale was $16.5 million for 443 East 88th Street. The Upper East Side apartment is 16,200 square feet. It last sold on the market in 2022 for $12 million.

New to the Market: The highest price for a residential property hitting the market was $5.5 million for 1088 Park Avenue, Unit 15A. The Upper East Side co-op was listed by Brown Harris Stevens.

Breaking Ground: The largest new building permit was for a proposed 83,267-square-foot, nine-story, mixed-use building at 32-73 Steinway Street in Astoria. Christopher Fogarty of Fogarty Finger Architect is the applicant of record.

— Joseph Jungermann