New York City tenants were hoping for a freeze in June.
When the Rent Guidelines Board met earlier this week to set rent increases for leases due to expire during the 12 month period beginning on October 1, there was great anticipation that for the first time in history the board with its newly minted de Blasio appointments would vote for a zero percent increase. After all, the new mayor was supporting that position and legions of tenants and neighborhood groups were rallying around a rent freeze.
It did not happen. Instead the board voted for the lowest increases in history… a one percent increase for a one-year lease and a 2.75 percent increase for a two-year lease. That’s not bad. In other words for rent stabilized apartments currently renting for $2,000 per month the rent will rise by $20 a month for a one year lease renewal, and by $55 for a two year renewal. And of course if the rent for an apartment is lower than that the rent increase too will be lower. And while that is “not nothing” it’s not the triple digit dollar increases of past years that drove rents to an unaffordable level for many.
The purists will condemn this vote as a betrayal, but the truth is that a one percent rent increase for a one-year lease is a big victory for tenants. It is below the inflation rate and it is next to nothing. Even the two-year lease option which would lock in a 2.75 percent increase over a 24-month period of time will prove to be below the inflation rate for the next two years. Never before have tenants seen such miniscule adjustments, and it bodes well for the next three years of the de Blasio administration.
Many “Roberts v. Tishman Speyer” tenants, who received their payouts from the class action suit last week were unpleasantly surprised last week when they saw numbers that were smaller than what they were expecting, in some cases due to money CWCapital believed was owed in back rent. Then there were the legal fees and expenses (roughly 30-32 percent of the damages for current tenants). Former residents meanwhile also had money taken out for retroactive MCIs (major capital improvements). Attorneys have previously said that payments would be 100 percent of what tenants overpaid according to the complicated settlement formula that was recently finalized minus legal fees and expenses. They also warned about the possibility of non-payment deductions. However, some tenants told Town & Village they were still surprised, thinking that the figures they saw on the Berdon Claims Administration website as their payouts were what they’d end up with.
Alex Schmidt, the lead attorney representing tenants in “Roberts,” said the fact that the legal fees were 27.5 percent of the $68.5 million cash to be paid to tenants, and possibly up to $5 million in additional fees if there were sufficient unclaimed funds, was shared with tenants on the Berdon site as well as in court orders. Due to how many files were claimed, attorneys got paid an additional $3 million instead of $5 million. As for the money CW believes it is owed in back rent and has withheld as non-payment deductions, Schmidt said his firm has gotten some calls from people who want to file objections. The MCIs, however, Schmidt said, CW can legally charge to former tenants. The Roberts settlement permitted CW to add all MCIs that were approved by the Division of Housing and Community Renewal to the base rent covering periods before December 31, 2011.
“Thus, the MCI Orders that DHCR approved in late October or early November of 2013 covering improvements made in 2008-2009 are chargeable to all class members under the settlement,” Schmidt said.
Current tenants were covered by a settlement recently negotiated by the Tenants Association that either eliminated or reduced MCIs. However, Schmidt said it is possible that a “Roberts” class member could be paid from the current tenants’ “pool” but still be charged retroactive MCIs if they moved out between May 15, 2013 and the date the MCI settlement was finalized in early April, 2014.
As for why the former tenants stuck with MCIs hadn’t been warned about them, Schmidt pointed out that the five MCIs had only been issued last fall. “It was the timing; no one really foresaw that DHCR would grant in October 2013 MCIs for 2008 and 2009 and allow CW to recoup them retroactively,” the attorney said.
Despite the deductions, Schmidt noted that overall the suit still preserves significantly more affordability in ST/PCV than if there had been no legal challenge at all.
“All one has to do initially is to remember how Tishman Speyer was pushing people out before we filed suit and, had we not won, would likely have succeeded over the past six years to convert most of the 11,250 units into market apartments,” said Schmidt. “The 7,000 units that remained rent regulated are now part of the DeBlasio/Garodnick 6000-unit pledge from Fannie and Freddie to keep those units affordable, which I think would have been much harder if not impossible to obtain had we not won. Then, of course, there’s the $173 million in combined damages and past rent savings that the class realized, and the future rent savings many current tenants will continue to realize.” Schmidt noted that former tenants got 110 percent of their estimated damages (before MCIs or deductions). This, he explained, is because about 40 percent of the dollars from the former tenants “pool” was not claimed so those funds paid all the fees for that pool.
Attorneys also answered some of tenants’ questions via an email blast sent by the ST-PCV Tenants Association. In the email, attorneys reiterated that the one third in legal fees and expenses was due to how many class members filed for damages. If not too many people had filed, tenants could have gotten up to 100 percent or even up to 110 percent of their damages. However, following an outreach effort to class members a year ago, nearly 100 percent of eligible current tenants filed for damages, along with 64 percent of eligible former tenants.
Another question was why former and current tenants were in different pools, which meant they could only collect damages from their own pool, even if there was more money remaining in another pool. This one didn’t get an answer with attorneys citing a confidentiality agreement.
“The attorneys cannot comment on them except to say that the issue of dividing the damages from the Tishman Speyer/CWCapital period of ownership into two pools was one of many involved in the give-and-take of the settlement negotiations,” the firm, Wolf Haldenstein, said. Meanwhile, in the end it wouldn’t have made a difference if the rules were different, because all the money in the former tenants’ pool already went to claimants or attorneys.
Police are looking for an East Village senior who’s been missing since Tuesday evening.
Sixty-one-year-old Carlos Pena of 620 East 13th Street was last seen on Tuesday at 9 p.m. at home. He is described as 5’8″, 185 lbs. with a stocky build, Hispanic with a light complexion, brown eyes and gray hair. He was last seen wearing tan colored pants with a white belt and a tan button down shirt.
Anyone with information in regards to this missing is asked to call the NYPD’s Crime Stoppers Hotline at 800-577-TIPS or submit tips online at www.nypdcrimestoppers.com.