‘Roberts’ attorney responds to tenants’ concerns on checks

Alex Schmidt

Alex Schmidt

By Sabina Mollot

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.

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2 thoughts on “‘Roberts’ attorney responds to tenants’ concerns on checks

  1. I was not aware that CW Capital was part of the settlement? I thought they were not and as such, CW Capital is not authorized to collect any MCI. CW Capital was and is a debt holder, i.e. the invested capital when Tishmen Speyer bought PCSTV. It is illegal to collect any MCI by CW Capital. No matter what was negotiated by attorneys, they committed an illegal act, simply because CW Capital was not part of the settlement.

  2. Alex Schmidt still didn’t answer the most important questions. Why was the current tenants pool not calculated to presume 100% participation? It is my understanding that in class action calculations, pools must be calculated at 100% presumed participation. It is also quite suspicious that “our” attorneys agreed to a splitting of the pools, but say they can’t reveal why. The explanations he gives for the underpayments and splitting of pools don’t pass the smell test.

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