Spitzer Sues NYS for Not Granting 985 Fifth Ave Demolition

Former Gov. Eliot Spitzer is taking the state he once ran to court, accusing its housing agency of “potential intentional misconduct” for sitting on his application to demolish 985 Fifth Avenue.

It has been three years since Spitzer got Landmarks Preservation Commission approval for the luxury condominium he plans to build in its place, but first he needs the Division of Homes and Community Renewal to allow non-renewal of the six rent-stabilized leases at the 25-story rental building.

After waiting 26 months and sending letters warning DHCR he would sue if it failed to act, Spitzer filed papers in state court Friday.

“DHCR is the Valley of Death,” he said in a phone interview. “It’s a demolition permit case. It’s as simple as can be. They simply refuse to do what they’re statutorily required to do.”

Spitzer, who runs the company founded by his late father, Bernard Spitzer, is using the same lawyer, David Grill of Rivkin Radler, who won a similar case in 2022 for developer Gary Barnett at 352 East 86th Street. Barnett’s battle dragged on for seven years and prompted the state to impose new requirements for anyone wanting to knock down a building with rent-stabilized tenants.

Spitzer’s lawsuit says he has checked those boxes, including lining up more than $100 million in financing for the demolition and the condominium project, and therefore the state is legally obliged to grant the application.

The filing alleges “a pattern of not just neglect, but … potential intentional misconduct,” saying “the DHCR has placed numerous unfair impediments and caused inordinate and unjustified delays.”

The suit cites an extraordinary sworn statement by former senior DHCR official Woody Pascal, first reported by The Real Deal, asserting that pressure from politicians and tenant advocates caused the agency to oppose the loss of rent-stabilized units rather than execute the law as required.

“This inaction … is not innocent, much less the product of ordinary bureaucratic inertia,” Spitzer’s filing says.

Ten months after Spitzer’s March 2024 applications to non-renew the six leases, DHCR requested additional information, much of which was in the initial applications, and has requested nothing since, according to the suit.

The agency also waited eight to 11 months before sending the four responses from tenants to Spitzer. “There can be no other explanation … other than a secret agenda to delay,” the lawsuit asserts.

The approximately 40 free-market tenants at 985 Fifth Avenue, which Spitzer’s father built in 1969, had no legal right to stay because their rents are far too high to qualify for protection under the state’s Good Cause Eviction law.

But the rent-stabilized tenants, four of whom are holding out, are entitled to lease renewals with extremely limited exceptions, one of which is demolition. DHCR’s failure to approve the termination of their leases gives those tenants leverage in negotiations with Spitzer.

“What he’s offering is not acceptable to my client,” Adam Leitman Bailey, who represents tenants Eva Coriat De Aron and Stephanie Phillips, told The Real Deal in March following a settlement conference called by DHCR. Tenants Mary Walsh and Carlotta Jacobson are represented by Vernon & Ginsburg and Himmelstein McConnell Gribben & Joseph, respectively; Walsh recently came to terms.

Although 985 Fifth Avenue apartments rent for up to $59,000, its prestigious location between East 79th and East 80th streets, across from the Metropolitan Museum of Art, offers the potential for a huge payday if Spitzer can get his 20-story, 26-unit condominium built.

DHCR did not immediately respond to a request for comment.