Court makes demolition decision count for owners.

Owners and developers planning in demolish buildings with rent regulated units received a boost of support recently from the state's highest court.

The New York State Court of Appeals unanimously found that owners have the right to rely on long-established standards when seeking to demolish a building occupied by rent regulated tenants. The court said that a state agency cannot change the rules after it has issued a final order.

"At its core, this case is about due process," says Magda L. Cruz, a partner at Belkin Burden Wenig & Goldman who represents the owner, Chelsea Partners, LLC, in Peckham v. Calogero.

Chelsea Partners submitted its application to demolish the interior of a three-story building and end the tenancies of its rent regulated tenants five years ago and was approved by the New York State Division of Housing and Community Renewal (DHCR). The sole remaining tenant contended that the agency had no standards defining "demolition" despite scores of administrative and court decisions addressing this term over the past five decades. Over DHCR's objection, the Supreme Court sent the case back to DHCR to clarify the standards of demolition. On appeal to the Appellate Division, DHCR changed its position and sought to have the opportunity to examine the standards it had applied to the case.

The Court of Appeals upheld DHCR's granting the owner's application and said the question is "not whether DHCR can change its regulation, standards or orders (it certainly can), but when."

The agency, the court said, "may not get what amounts to a second chance to rule on Owner's application after setting and applying a new standard regarding what constitutes a 'demolition.'"