Gary Barnett’s Holdout Will Not Fold

Gary Barnett won the right to show a holdout tenant the door last spring when a court ruled Extell Development could deny his rent-stabilized lease renewal.

But Greg Marshall has yet to be evicted from 1651 First Avenue, which Barnett’s firm plans to replace with a mixed-income building, and now the Yorkville resident is mounting a last stand with help from tenant advocates.

Tenant group Met Council on Housing and racial justice nonprofit The Black Institute have launched a $200,000 campaign dubbed Save Affordable Rent. Its goals: fight Marshall’s eviction, change the law that lets Extell build, and cast Barnett as a villain.

The website BlameGaryForIt.com lays out the coalition’s critique.

“I’M GARY THE ARCHITECT OF THE HOUSING CRISIS,” reads the text at the feet of a blown-up photo of Barnett. A video brands Barnett as a “billionaire bandit.”

“Barnett harassed and did everything he could to get every other tenant out of that building,” Black Institute founder Bertha Lewis said. “Somebody has got to stand up to these guys. These developers are running amok in this town.”

The coalition, which has hired Scott Levenson’s lobbying firm the Advance Group, wants to change the law to make it tougher for developers to follow Barnett’s playbook. Given the cost of advertising in New York, $200,000 is a very modest sum by the standards of New York politics. Part of those funds are going toward canvassing, according to the campaign’s spokesperson.

Rent-stabilized tenants are entitled to automatic lease renewals and can sometimes negotiate hefty buyouts from landlords who want them out. But a 20-year-old provision in the rent law enables landlords to deny renewals if they have legitimate plans to raze a building.

One catch: The developer needs the state housing agency’s permission.

The state Division of Homes and Community Renewal got in Barnett’s way at 1651 First Avenue, repeatedly denying his request to end Marshall’s lease. The agency argued Extell needed to prove it had plans for the site and financing to carry out the project.

Extell sued and lost, but won on appeal in late 2022. The Appellate Division ruled unanimously that the law only required proof that demolition would happen.

Save Affordable Rent has persuaded Sen. Liz Krueger to sponsor legislation that would make it tougher to clear out tenants. Her bill, introduced last session, would require a landlord to have nailed down “all required building permits” if seeking to not renew a rent-stabilized lease.

Marshall contributed about $100,000 to Save Affordable Rent but it’s unlikely it will save him from eviction. Extell filed suit in housing court and is just waiting for a judgment of possession, a source familiar with the case said.

After the Appellate Division’s ruling, Marshall held out hope that the Court of Appeals would take his case. But the high court rarely hears appeals of unanimous rulings, and Marshall was turned down in November. The Office of Rent Administration then notified the parties in the case that it would re-open Extell’s demolition application.

Rejection by the high court is usually the end of a case, but Fred Seeman, Marshall’s attorney, said in a statement, “We have many legal options ahead and we will leave no stone unturned in our pursuit of justice.” He did not offer specifics.

“If Extell and Barnett are able to do this, then these other guys will, too,” Lewis said.

Sherwin Belkin, a housing attorney not involved in the case, said he has seen “some increased interest” by developers looking to use Barnett’s strategy since Extell’s victory in court.

Short of persuading every tenant in a building to take a buyout, which can cost millions of dollars and be stymied by a lone individual, landlords have few legal avenues to replace rent-stabilized buildings with something more lucrative.

But not everyone has Extell’s stomach for litigation, which can take years and be expensive.

As for the campaign’s holding up Barnett as an architect of the affordable housing crisis, a person familiar with his plans said the billionaire developer expects to include affordable units in his new building. According to the source and plans filed with the city in 2021, the 22-story building could have 100 income-restricted apartments.

Extell had hoped to qualify for 421a before the tax break expired in 2022. Extell could tap a new version of the tax break for rental projects should the state come up with one.

Marshall is the last tenant in 1651 First Avenue, in which two of 14 units are rent-stabilized, according to property tax records.

Extell plans to wrap his project around a building owned by the Podolsky brothers, who, like Marshall, have refused Barnett’s offers.