Two tenants, DHCR block Lenox Hill demos for 3-plus years, holding up 134-unit project

Two rent-regulated tenants in two aging walkup buildings in Lenox Hill — along with the state’s Division of Housing and Community Renewal — are holding up demolition of the two buildings, which property owner Gatsby Enterprises is seeking to tear down to clear the way for a 134-unit residential tower at 142 East 71st Street.

The family-owned Gatsby Enterprises, which includes Nader Ohebshalom as an executive, filed plans in January 2022 for the 21-story mixed-use building. The city has not yet permitted the plans.

And that project can’t start construction until two 16-unit buildings at 1343 Second Avenue and 1347 Second Avenue, are demolished. Gatsby filed plans in April 2020 to demolish the rental buildings, and the city’s Department of Buildings agreed to the plans, but the state’s DHCR has not given a final approval. It says it needs additional information, which Gatsby claims it has already provided. Gatsby through the owner entity 71st Street Properties LLC, filed two suits in New York State Supreme Court yesterday, seeking a judge’s order requiring the state to make their final decision. 1343 LINK  1347 LINK

The demolition of the two buildings with a total of 32 units, but only occupied by one tenant in each building, is being held up as a homeless and housing crisis grips the city, and bureaucratic demands extend the time and cost of development.

The state is delaying the decision at the same time as the tenant who lives in 1347 Second Avenue, through an attorney, claims the property is in poor repair, and the tenant is being harassed. Such delay as this is not uncommon, and PincusCo is reporting on this case as an example of a wider trend, not because there is a particular aspect to this case.

According to the attorney’s filing, “The Owner is doing everything possible to isolate [the tenant], intimidate her, and harass her into prematurely leaving her home. In this regard, the following is merely a few examples of Owner’s insidious behavior…” The litany of claims includes a non-locking door, a temporarily lowered fire escape ladder, heat and hot water issues, and more.

The Ohebshalom family alleges in the filings that, “It does not serve the public policy to maintain the existing mediocre apartments for the benefit of one tenant. A tenant’s self-interested desire to retain the affected unit for convenience is the type of conduct that contributes to the City’s housing shortage.”

The filings include quotes from housing officials, such as New York City Department of Housing Preservation and Development Commissioner Adolfo Carrión, who spoke at Bisnow’s New York Affordable Housing Conference on August 23, 2023, and who said, “We have an affordability crisis. It’s related to supply.”

And the filings quoted RuthAnne Visnauskas, president and CEO of the New York State Division of Homes and Community Renewal, as saying, “We’re really trying to control something, in some ways, that is multifactored and many of them are sort of uncontrollable.”

Direct link to the property’s ACRIS page and link to DOB NOW portal.