Guterman hopes to get 5,000 tenants to hire him

By Sabina Mollot
Developer Gerald Guterman, who recently expressed his desire to see Stuyvesant Town tenants organize to demand a conversion and re-settle the “Roberts” and MCI settlements, while also hiring him as a consultant to help with the effort, has continued to pursue tenants as clients by drawing up a contract over the weekend.

However, he wants to see at least 5,000 tenants participate in such an effort. Otherwise, he warned, his LLC company, West Palm Beach-based Guterman Partners, won’t take the job.
“Before we can accept an ST/PCV assignment, it will be necessary for at least five thousand (5,000) separate residents families to sign a Consulting Agreement with a consulting subsidiary of Guterman Partners, LLC,” he said.
In exchange for his services as an independent contractor, he’d get $10 per participant (a total of at least $50,000).

His statement was part of a letter he wrote directed to tenants (though so far unmailed) asking them a number of questions such as whether tenants were told they’d be charged for the MCIs they received and for the “Roberts” tenants, if they received “the full dollar recovery” in damages for all the rent they overpaid. The letter also went into quality of life issues.

“ST/PCV residents, were you told (when you signed your lease) that the building you lived in was being converted to ‘high population’ student/dormitory housing?” He also blasted the recent concerts in the Oval as a scheme to attract students.
He also said, after the news that CW’s parent company Fortress was preparing a bid of $4.7 billion, that he wasn’t sure he was still interested in preparing a bid of his own, preferring instead to be a consultant in a tenant-led effort.

The contract itself, while saying Guterman would provide consulting services, makes no mention of the re-settlement of litigation, student housing or other issues he wants tenants to fight. Those issues are instead mentioned in the letter. Questions include asking if tenants were told, upon signing their leases, that the Oval would be rented out for commercial purposes or that businesses would come “alive” right on the Oval or that the quiet of tenants’ apartments would be disrupted “because the landlord is using mass-entertainment to attract students to the recently converted dormitory housing?”
He also invited tenants to contact him through the email address: stpcv@gutermanpartners.com.

A spokesperson for CWCapital declined to comment on Guterman’s letter.

As for the odds of Guterman being able to secure all the signatures he wants, it may prove a challenge. In May, 2013, attorneys representing tenants in the “Roberts” suit had a tough time just getting tenants to file their paperwork authorizing them to receive their damages checks. So much so that the Tenants Association and local elected officials stepped in to go door to door in ST/PCV in an effort to get tenants to file. This, recalled lead “Roberts” attorney Alex Schmidt, was even after all the “Roberts” tenants received documents in the mail with application forms.
Schmidt declined to comment on Guterman’s letter.

In previous statements directed at tenants, Guterman urged a “gloves off” fight in court against CWCapital in order to renegotiate “Roberts” and the MCI settlement and force a conversion and the end to student housing and apartments with pressurized walls.

When asked about this, an attorney very familiar with “Roberts,” Leonard Grunstein, said he thought that a court agreeing to re-consider the case was highly unlikely. After Stuy Town was put up for sale by Met Life, Grunstein was hired by the Tenants Association to help with a tenant-led bid. It was then that he discovered that landlords benefiting from J-51 tax abatements could not deregulate apartments, which is what ultimately led to the “Roberts” lawsuit.
“I don’t think that can change,” said Grunstein. “Anything is possible, but it doesn’t sound realistic. You would have to prove that they are overcharging new tenants.”

Another attorney, Jeffrey Turkel, who represents owners and groups representing the real estate industry, told Town & Village that generally, courts don’t like to overturn cases.
Turkel, along with a partner at his firm, Rosenberg & Estis, represented the Rent Stabilization Association, an owners’ organization, in “Roberts” when the RSA submitted an amicus brief, or document in support of Tishman Speyer.
Although he didn’t want to comment on “Roberts” specifically, Turkel said, “If someone wanted to undo or overturn a stipulation, they would have to establish fraud or mistakes or overreaching or something like that. Once a stipulation of a settlement is signed by two parties it is binding. What courts don’t like is for people to sign a stipulation and then come back and say, ‘We didn’t mean it.’ That’s basic, settled New York law. Otherwise, you’d have chaos.”

The Tenants Association, meanwhile, responded to the letter by defending its own conversion plan and partnership with Brookfield Asset Management.
“Now that our property is in play again, we expect old and new players to surface from time to time,” TA Chair Susan Steinberg said. “We are committed to delivering on our goals of long term affordability and stability for this community, and believe we have the right advisors and partners to accomplish that goal.”

Over 100 object to ‘Roberts’ MCIs, deductions

Tenants attorney Alex Schmidt Photo courtesy of Wolf Haldenstein

Tenants’ lead attorney on “Roberts v. Tishman Speyer” Alex Schmidt
(Photo courtesy of Wolf Haldenstein)

By Sabina Mollot
With the deadline for “Roberts” tenants and former tenants to file objections to non-payment deductions and retroactive MCIs having passed on Monday, attorneys have counted objections from 125 people. This is after over 5,000 “Roberts” plaintiffs received non-payment deductions (NPD) and former tenants in the class action had to pay retroactive MCIs, which were reduced or eliminated for current tenants only.

As of Monday, attorneys said there were 81 objections to the deductions from tenants believed by CWCapital to be in arrears with their rent, 22 objections to the retroactive MCIs, and 24 objections to both the arrears and the retroactive MCIs. While attorneys said they had not yet had a chance to review all the complaints, it did appear that the NPDs were being challenged because tenants thought they were inaccurate and former tenants’ reason for objecting to the MCIs was mostly lack of notice.

However, attorney Michael Liskow, of the firm Wolf Haldenstein, said former tenants were notified about the MCIs to be paid to the owner in the “Roberts v. Tishman Speyer” settlement agreement and the notice of the settlement that was sent to all the class members.
In some cases, former tenants may have been unaware of the MCIs due to their having moved out by the time they were finally approved by the state housing agency last fall. But even without notice, the MCIs have to be paid as a result of the settlement, attorneys have said.

Not many tenants are challenging ‘Roberts’ non-payment deductions

By Sabina Mollot

Alex Schmidt

Alex Schmidt

Although over five thousand ST/PCV residents and former residents had non-payment deductions taken out of their “Roberts” damages checks, so far, it looks like only dozens are attempting to try to get that money back.

As of Monday, July 21, only 78 people had filed to object to CWCapital’s claims that the owner was entitled to the money. This was one week from the deadline to object, July 28.

Alex Schmidt, tenants’ attorney in “Roberts v. Tishman Speyer,” said he isn’t expecting that there will be too many additional objections before time is up since people with objections don’t typically wait until the last minute. As for why more tenants aren’t challenging the deductions, Schmidt guessed this is because more than half of the deductions were for amounts lower than $100 and that in other cases, tenants may have just been aware they owed the money.

At this time, Schmidt said he doesn’t know how much money tenants are fighting to get back or what kind of payments are in dispute. Attorneys won’t be calculating the total until all the challenges are in, since CWCapital has said it won’t negotiate until then.

Susan Steinberg, chair of the Stuyvesant Town-Peter Cooper Village Tenants Association, said the Association has heard from a number of tenants concerned about the accuracy of their deductions. However, the TA doesn’t know how many people went on to challenge them.

In addition to the 78 objections, Schmidt said 30 former tenants who were mistakenly paid from a pool of money intended for the distribution of damages to current tenants have also submitted claims. This is because current tenants had 30 percent of their damages taken out for legal fees and expenses. Former tenants meanwhile, got 110 percent of their damages (before MCI deductions) since there was more money left over in that pool due to fewer people filing. Schmidt said that is currently being corrected.

Former tenants hoping to fight their MCI (major capital improvement) deductions may have a tougher time, since, according to Schmidt, the owner is entitled to the money. It’s different, he said, if the former tenant thinks they might have been calculated improperly.

“Roberts” plaintiffs who want to challenge a deduction can do so by contacting the Berdon Claims Administration, either by email through the contact link on the BCA website, www.berdonclaims.com, or by calling (800) 766-3330.

‘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.

Many ‘Roberts’ tenants getting less money than expected

Alex Schmidt

Alex Schmidt

By Sabina Mollot
Many current and former residents of Stuyvesant Town/Peter Cooper Village who are members of the “Roberts v. Tishman Speyer” class action are getting less in damages than they were expecting.
Specifically, over 5,000 of them have had non-payment deductions taken out of their damages, as well as close to a third taken out for legal fees and expenses, and in some cases, with money also taken out for retroactive MCIs.

On Thursday, June 12, the overcharge payments from CWCapital were sent out, and those who received non-payment deductions will have 45 days to dispute those charges.
Tenants’ “Roberts” attorney Alex Schmidt said he plans to challenge the “NPD” claims for tenants who don’t think they’re accurate.
As for the reasons tenants got the non-payment deductions, he said he didn’t know since CW wouldn’t provide that information.
“We don’t have access to underlying evidence, so people who believe they’re wrong have to contact us,” said Schmidt.

However, out of the 5,000 non-payment deductions, more than half are for amounts under $100. Those cases may have been attributed to things like late fees or lost key charges, Schmidt guessed. “Collectively those things add up,” he said. “It’s up to the tenant if they feel $25, $50 or $100 is worth fighting for.”
A spokesperson for CWCapital declined to comment on the deductions.As for the major capital improvements (MCIs), it was former tenants who’ve been hit with those since the recent MCI settlement between CWCapital and the Tenants Association only includes reductions or eliminations of fees for current tenants.
“It doesn’t do anything for the former tenants,” noted Schmidt.

One former resident, Steven Zecca, commented on the Town & Village Blog about how he received a rather hefty MCI deduction.
“I received my check on Saturday, June 14th,” he said, “along with a third cut from the original damages amount, a non-payment deduction for back rent of $118 and over $1500 for retroactive MCIs…Stuytown resident from May 2010 through August 2013… Anyone have any idea how these retroactive MCIs work and what I was charged for?”

Schmidt said that attorneys investigated and learned that the law does permit CW to charge retroactive MCIs to former tenants.

Out of a $173 million settlement for tenants in apartments that were illegally deregulated by former owners Met Life and Tishman Speyer, $68.75 million is being paid out to tenants. The rest of the money is in the form of rent savings. “Roberts” tenants and former tenants who were owed money from when Met Life was the owner of Stuyvesant Town/Peter Cooper Village were paid at the end of 2013.
Damages range per person with some getting a minimal payout of $150 and others getting thousands.
The payments are being made from different pools out of the $68.75 million, with the pool of former tenants owed money by CW being the biggest. Schmidt has said tenants could expect to see 100 percent of what they overpaid as calculated by the settlement formula minus legal fees (around 30 percent).

In response to receiving a number of complaints from confused tenants, Council Member Dan Garodnick said he’d asked Schmidt’s firm, Wolf Haldenstein, to send tenants “a complete explanation to address these issues” and soon. And, he added, the firm has agreed.
“It’s apparent that a significant number of people got a deduction that didn’t expect it,” said Garodnick, “and they deserve clarification on what’s going on.”

Correction: The article was changed to reflect the fact that the pool of former tenants is the biggest, not the current tenants, and current tenants could see up to 100 percent of their damages.

‘Roberts’ payments should be sent out next week

Alex Schmidt

Alex Schmidt

In mid-May, Town & Village reported how “Roberts v. Tishman Speyer ” tenants would soon see their payments, specifically by the end of May, according to tenants’ attorney Alex Schmidt.

However, on May 30, Schmidt told T&V he had not yet gone to court to attempt to get the damages distributed, but attorneys would be going to court on Monday, June 2.

On Wednesday, June 4, he said a court order had been signed at around 3 p.m. that day to authorize the payments and checks should be going out next Thursday.

 

 

‘Roberts’ payments delayed again

Tenants Association President John Marsh (pictured last fall) alerts tenants to the latest delay in "Roberts v. Tishman Speyer" payments. (Photo by Sabina Mollot)

The ST-PCV Tenants Association (President John Marsh pictured last fall) alerted tenants to the latest delay in “Roberts v. Tishman Speyer” payments. (Photo by Sabina Mollot)

By Sabina Mollot
Residents and former residents of Stuyvesant Town and Peter Cooper Village who were waiting for their checks from the “Roberts v. Tishman Speyer” settlement will have to wait a while longer.
The second distribution of payments, this time the damages CWCapital is responsible for paying, has been delayed, the ST-PCV Tenants Association announced on Wednesday.
The Tenants Association, while not a party to the class action lawsuit, alerted neighbors in an email on Wednesday at the request of the “Roberts” attorneys.
“The delay is attributable to complexity in the claims administration process, but is expected to be a short one,” the TA said it was told by attorneys.
This is the second delay, with the first one being in the fall for tenants’ payments from Met Life.
Lead attorney Alex Schmidt of the firm Wolf Haldenstein told Town & Village the latest delay was due to a couple of reasons, the first being that CWCapital believes that many tenants owe back rent, which would be taken out of the damages, and the other was that many class members filed claims after the May 15, 2013 deadline.
“If they’ve expressed a good reason for filing late there no reason not to pay them,” said Schmidt. But, he noted, with each new claim, the amount of damages that’s spread among the pool changes.
The portion of damages former owner Met Life was responsible for, which is considered a separate pool from the CW damages, was paid at the end of last December.
Though he wasn’t sure when those owed money by CW would be paid, there “shouldn’t be an extended delay,” Schmidt said. He added, “We’re still ahead of where most class actions are. It’s rare to get distributions done within even a year of a settlement being approved.”
Out of a $173 million settlement for tenants in apartments that were illegally deregulated by former owners MetLife and Tishman Speyer, close to $69 million will be paid out to tenants. The rest of the money is in the form of rent savings.
Unlike the Met Life payments, in which class members received 110 percent of what they owed, there won’t be 110 percent payments for the CW payments for current tenants. There will be 100 percent of the overpayments paid back minus legal fees and expenses. This is because of how many current tenants (or specifically those owed money by CW who still lived in ST/PCV on May 15, 2013) ended up filing. (Current and former tenants are also in separate pools.) Current tenants filed for their damages at a 99 percent rate of eligible class members while over 50 percent of former tenants in the class filed.
Schmidt said for a class action suit, this was a “very good” result. He also noted that current tenants, while getting a smaller payout, also get the settlement’s benefit of rent savings. So, he reasoned, “It’s not inequitable.”
As for the tenants who CW believes owe back rent, there are quite a few out of the 11,800 people who filed claims. Schmidt didn’t have the exact number available, but said, “CW’s calculations turned out to be far more complex than anyone anticipated.”
Those who are not believed to be in arrears with their rent will be paid first, and those who are will still receive a portion of their damages. To get any amount that’s in dispute, the tenant or former tenant will have 45 days to object.
“If they’re not accurate I’m sure there’ll be a lot of objections,” said Schmidt, who says he plans to negotiate any claim of payment owed with CWCapital or if the parties fail to reach an agreement, ask the court to resolve the matter.
A spokesperson for CWCapital did not yet return a request for comment.

Tenants protest mid-lease rent hikes

Tenants protest outside the leasing office on Saturday. Photo by Sabina Mollot

Tenants protest outside the leasing office on Saturday.
Photo by Sabina Mollot

By Sabina Mollot

Following the discovery last week that close to 1,300 residents were being hit with mid-lease rent hikes that have been as high as $2,200, the Tenants Association, along with a handful of other tenants, have taken their grievances to the leasing office.

The plan has been to have “sustained” picketing, with sign-holding tenants warning potential renters and passersby on First Avenue about the increases as well as various quality of life issues like the lack of laundry rooms in some buildings and bedbug sightings in others.

On Saturday alone, TA members said they spoke with with around 50 people outside the leasing office.

John Marsh, president of the Tenants Association, said protesters were telling anyone thinking of renting not to accept verbal representations by leasing agents. “Have everything in writing.”

Most people they spoke with, added Marsh, ending up being concerned about how mid-lease hikes and other issues like broken elevators could affect them. Others, however, simply ignored protesters as they went in and out of the leasing office.

After being asked by a reporter if he’d be moving in, one person in a small group of people leaving the leasing office, would only say, “We read our lease.”

Additionally, CWCapital fired back at the TA by having its leasing agents escort

Tenants Association Chair  Susan Steinberg talks to a neighbor outside the leasing office on Saturday. Photo by Sabina Mollot

Tenants Association Chair Susan Steinberg talks to a neighbor outside the leasing office on Saturday.
Photo by Sabina Mollot

prospective renters to model apartments after meeting them at the back of the leasing office. ST/PCV security also, on Saturday morning, called the cops on protesters, asking officers to force protesters to stand behind barriers that were put up over six feet away from the leasing office, close to the curb. However, according to protesters, the cops said the tenants were fine where they were, as long as they remained peaceful and didn’t block traffic. A couple of security officers remained outside the leasing office though for as long as the picketing continued.

As for those who were there on Saturday, around a dozen residents were participating, most of whom were longtime tenants, unaffected by the rent hikes that have been issued to “Roberts” class members.

“My heart’s breaking for the community,” said Susan Kasloff, a 17-year resident as she handed out flyers by the First Avenue Loop.

Marsh and TA Chair Susan Steinberg were also on the scene, as was TA Board Members Steven Newmark and Kirstin Aadahl. Both Aadahl and Newmark are “Roberts” class members, though she got a mid-lease increase and he didn’t. Aadahl said she’s been telling people who enter the leasing office to ask questions such as whether there have been bedbugs in the building. “Because we’re finding out that some tenants are being told after they sign their lease.”

She also said despite the hike she got, she’ll be sticking around. The increase was for $550, but this follows another increase of $200 when she last renewed her lease in February.

“We love living in Stuyvesant Town, but it’s going to be very hard,” said Aadahl.

According to Marsh, the TA is exploring its options, and there has been talk among tenants about a rent strike. However, Marsh said if anything, it would be a rent slowdown, and this would only be done as a last-ditch option since “Roberts” class tenants have a clause in their leases that would allow the owner to hit them with a $50 fee for not paying their rent on time. More longterm tenants however could technically participate in a rent slowdown and not pay their rent for three months before CWCapital could try to evict them, said Marsh. At this time, however, the TA is not recommending that anyone withhold or delay paying rent.

Tenants Association President John Marsh and residents Sandra Lynn and John Giannone Photo by Sabina Mollot

Tenants Association President John Marsh and residents Sandra Lynn and John Giannone
Photo by Sabina Mollot

In response to the protesting, Brian Moriarty, a spokesperson for CW, said that the special servicer was acting within its rights following the settlement.

“The rent adjustments were negotiated as part of the settlement and approved by the nine tenant representatives, their attorneys, and the court,” he said. “We intend to implement the agreement in accordance with its terms.”

The rent hikes came on the first day that CWCapital was legally allowed to issue them, which, tenants were warned back in January, the special servicer could do following the “Roberts” settlement. What kind of increase tenants got varied from $100 to $2,200 with most impacted tenants getting increases of hundreds of dollars. Residents were also initially told they’d have two weeks to decide whether they’d be staying or moving. However, the next day CW announced residents would get an extra month.

Residents T&V spoke with on Saturday, though, didn’t seem impressed by the concession.

Two residents protesting outside the leasing office on Saturday, Sandra Lynn and John Giannone, said they hadn’t gotten increases, but have been hearing horror stories from neighbors who did. Giannone said he found out about them when neighbors knocked on the door to ask if they’d gotten one. “They got a statement under their door that said their rent was going up $1,100 with no explanation,” he said.

Another resident who approached the protesters said she was unaware of exactly what her rent hike was, though it wasn’t for her lack of trying. The woman, who didn’t want her name printed, said she was listed one new price somewhere in her lease renewal document and another elsewhere in the paperwork, and said she’s been unable to reach anyone in the leasing office to ask what she’s supposed to be paying. It’s either $600 or $800 more. After going in, she was told that no one in there could answer her questions and was referred to the property’s legal department. However, when she tried to negotiate the rent increase with an attorney, she said he wouldn’t budge. Interestingly, when she later walked into the leasing office with her boyfriend and the two posed as would-be tenants, they were given the impression that there was some wiggle room in price for new tenants.

In other “Roberts” related news, the case’s attorney for tenants, Alex Schmidt, said on Monday that an effort to extend the deadline for class members to file for their damages has been successful. The original deadline was May 15 and the new date is May 31. However, if residents don’t file their paperwork by then, their share of the nearly $69 million in rent overcharge returns will go back to CWCapital and MetLife.

The extension will likely be seen as good news by a member of the class action suit who approached Steinberg on Saturday to ask what it was all about. The resident wanted to know if he was entitled to anything even though he thought he may have gotten someone else’s paperwork. No one in the apartment, he explained, is named Roberts. However, after getting filled in on what Roberts meant, he said he’d be filing.

CW to tenants: Pay up

Council Member Dan Garodnick (at podium) blasts the latest round of rent hikes. Pictured with him are: Steven Newmark, Tenants Association board member; Kevin Burke, an impacted resident; Assembly Member Brian Kavanagh; State Senator Brad Hoylman (behind Garodnick); Tenants Association President John Marsh and Council Member Jessica Lappin Photo by Sabina Mollot

Council Member Dan Garodnick (at podium) blasts the latest round of rent hikes. Pictured with him are: Steven Newmark, Tenants Association board member; Kevin Burke, an impacted resident; Assembly Member Brian Kavanagh; State Senator Brad Hoylman (behind Garodnick); Tenants Association President John Marsh and Council Member Jessica Lappin
Photo by Sabina Mollot

By Sabina Mollot

On Tuesday night, well over a thousand residents of Stuyvesant Town and Peter Cooper Village were shocked to see notices slipped under their doors alerting them to the fact that their rents would be raised mid-lease. Additionally, in most cases the hikes were for hundreds of dollars and in at least one known case, went as high as over two thousand. Residents were also told that they’d have 60 days to figure out whether they’d be staying (paying the higher rent in two weeks time) or going.

The notices were immediately blasted by local elected officials and the Tenants Association, who at an impromptu rally the next morning, called CWCapital’s actions “crass” and “destructive.”

“A mid-lease rent increase of $900 is nothing less than an eviction notice,” said a livid Council Member Dan Garodnick, who lives in Peter Cooper Village. “Have you ever heard of such a thing from any decent landlord? Or any landlord?”

Garodnick also noted that he believes there have been deceptive business practices on the part of CWCapital’s leasing agents who’ve given tenants the impression that their rents wouldn’t be increased mid-lease. He added that he’s bringing the matter to the attention of the attorney general. “Leasing agents were telling people not to worry,” he said.

Other elected officials at the event, saying they were supporting tenants, were State Senator Brad Hoylman, Assembly Member Brian Kavanagh and Council Member Jessica Lappin, who’s running for borough president.

John Marsh, president of the ST-PCV Tenants Association, said he was concerned the hikes would make living in the complex unaffordable to anyone except “groups of transients” packing into apartments with pressurized walls. “Who will replace these families? The woo-hoo generation,” he said.

He added that if this is being done so CWCapital can sell soon, the TA has approached the special servicer more than once with an offer to buy. “We’re ready to make their bondholders whole, yet they ignore us.”

TA Chair Susan Steinberg added that she thought “This is the most ruthless action in the history of ruthless landlords. They want to eject as many tenants as they can.”

The increases came on the heels of the final approval of the “Roberts v. Tishman Speyer” settlement, in which it was mentioned that CWCapital did have the right to issue the increases, even mid-lease. The TA and Garodnick, who’ve cheered “Roberts” as a historic win for tenants, have also refrained from fully endorsing the settlement due to concerns of possible rent hikes.

In response to the concerns, CWCapital issued the following statement:

“CW Capital took over Peter Cooper Village and Stuyvesant Town in October 2010, nearly four years after the class action suit was originally filed.  Almost immediately we began to work with the plaintiffs to reach a settlement.  Last fall, we agreed to a historic settlement with the impacted residents.
“Those tenants who are affected by these increases participated in a $173 million settlement agreement that was approved by the court and every one of these residents received notice several months ago with respect to the terms of the settlement, including the ability of the landlord to increase the rent mid-lease term.
“They were represented by counsel in that process and their counsel was directed by a group of nine tenant representatives.  The attorneys and tenant representatives were fully aware of these terms and concluded that they preferred this outcome to others that were available to them during the negotiations.  These terms were widely publicized and the tenant attorneys specifically addressed the issue of midterm rent increases during their information sessions in January.  Nonetheless, there were no objections made to the court with respect to these terms.
“Despite these facts, we recognize that the timing of these increases may pose logistical challenges for some residents. In recognition of this, we are extending the date on which increases will go into effect by 30 days.  Rent increases will now go into effect on July 1st and not June 1st as allowed for in the Settlement.  Additionally, the Settlement give residents receiving the mid-term adjustment the option to terminate their lease by providing notice to the landlord within 30 days. We are also extending this deadline. Anyone who gives notice of their intent to terminate their lease by July 1 will have until August 1 to vacate and will not receive an increase during that time. New notices will be distributed confirming these dates.”

Tenants’ “Roberts” attorney Alex Schmidt said that the rent hikes were not a result of the settlement, but language CWCapital had included into new leases after it took over operations of the property. Schmidt said because attorneys became aware of language that would allow the special servicer to raise rents mid-lease, they negotiated to include some protections for tenants should they end up getting the hikes. Had it not been for the settlement, said Schmidt, CW could even sue tenants if they choose to break the lease and leave. But because of the settlement, a tenant can break the lease, penalty-free. He also noted that while around 30 percent of the units in ST/PCV are being hit with rent hikes, “up to 10 percent are getting rent reductions.”

However, this didn’t come as much comfort to tenants who attended Wednesday’s event in front of the leasing office.

Carla Massey, a 28-year-resident and a psychologist, carried a homemade sign expressing her concern that she was going to become homeless as a result of the 21 percent rent increase she received.

She declined to share what she’s currently paying, but said, “I have no place to go.” She hasn’t yet told her two children that they’ll be moving. “I think it’s a little traumatizing,” she said.

Another resident, who’s currently paying $3,900 for a two-bedroom apartment in Peter Cooper, said his rent will be going up by $1,000.

“To add insult to injury, I live in one of the buildings affected by hurricane Sandy and my wife has to do laundry a quarter mile away. There’s no use of the basement.”

The resident, John Beasely, said he does plan to stick out another year in the apartment since he works for Con Ed, but after that, he’s gone. “I’m going back to Oregon. I’m done with New York and I’ve been here five years.”

Kevin Burke, another resident socked with a rent hike, said after he saw the notice under the door he went to the leasing office, demanding answers. But he didn’t get any. “They said, ‘We’re clueless.’ Damn right you’re clueless,” he said. Burke added that he and his wife had spent three months trying to figure out where to send their children to school and were now given “two weeks to figure out where we’re going to live. This is not something New Yorkers should tolerate.”

Arlynne Miller, who was at the rally, said she was there because, “My entire community is being destroyed. It’s like a never ending tsunami of destruction around here. They’re boosting rents and they don’t care if it’s unrealistic or unsustainable. They want to roll rents as high as they can so they can go to potential sellers and get what they can get.”

Mitchell Posilkin, general counsel for the Rent Stabilization Association, a group that represents apartment owners, said the rent move shouldn’t come as a surprise to anyone.

“There were some tenants in Stuy Town and Peter Cooper Village who were paying less as free market tenants than they would have been paying as stabilized tenants,” said Posilkin. “These notices are intended to increase their rents pursuant to the formulas that were agreed under the terms of the settlement.”

The landlord lawyer, who was not involved in the settlement discussions, added, “The settlement was agreed to between the tenants and their attorneys, the owners and their attorneys and, ultimately was reviewed and approved by the court, so it was no secret that there was a potential for rents to go up.”

Tenants not filing claims for ‘Roberts’ money

Tenants attorney Alex Schmidt Photo courtesy of Wolf Haldenstein

Tenants attorney Alex Schmidt
Photo courtesy of Wolf Haldenstein

By Sabina Mollot

When tenants attorney Alex Schmidt announced last month that current and former residents of Stuyvesant Town who’d overpaid on their rent would get a total of $68.75 million in damages, it was cheered as the biggest tenant settlement in history.

Therefore, three weeks later, Schmidt said he was shocked — and confused — to discover that thousands of eligible recipients of damages from the “Roberts” settlement are not filing to claim their money.

As of Tuesday, there were around 5,400 current tenants who haven’t filed and 18,000 former tenants who haven’t filed. The deadline for them to do so is May 15. After that, those who have filed will be paid up to 110 percent of their expected cut, but then the remaining funds will go back to CWCapital and Met Life.

“We don’t know if they threw out their (claim papers) or just forgot,” said Schmidt, of the firm Wolf Haldenstein. “It could be that they’re confused. So we’d like to get the word out.”

He added that, upon discovering a class action member who was entitled to thousands, but hadn’t filed, attorneys called him to ask why he hadn’t.

“He said, ‘My rent was lowered three years ago so I figured that’s all I was entitled to.’”

There are over 27,000 class action members of the “Roberts v. Tishman Speyer” suit, which established that apartments in Stuyvesant Town and Peter Cooper Village were illegally deregulated.

The settlement, in addition to damages, totals an estimated $173.25 million when past rent savings from rents lowered a couple of years ago are factored in.

As for the damages, they range from $150 for tenants who never overpaid or left ST/PCV when their apartments went to market rate, to over $200,000. That particular payout went to someone who “vastly overpaid for many years,” said Schmidt.

If all eligible class members file their claims, they will receive 70 percent of what they overpaid, with the rest going towards legal fees and other costs. However, Schmidt said at this point, it’s likely that those tenants will get the maximum allowed amount —110 percent — because there will be enough money left in the pot due to people who aren’t filing.

To remind those who haven’t yet filed, Wolf Haldenstein will be sending out postcards to class members this week and conducting a phone bank to call former residents.

Schmidt said he thought the phone bank was necessary because some people might dismiss the mailed notices as junk mail.

“People get so much junk mail, they’re trained not to trust something that says, ‘You’re owed money,’” said Schmidt, “but the money is sitting there waiting for them. All they have to do is fill out some paperwork.”

The Tenants Association will also be trying to get the word out by conducting a door drop at apartments where class members live.

Council Member Dan Garodnick, who’ll be helping out with the door drop on Thursday, said, “We’re going to try to make sure people know that the deadline is fast approaching. People shouldn’t lose out just because they didn’t realize there’s some paperwork to do.”

Class members who’ve lost their paperwork or never got it can get forms through the Berdon Claims Administration, which can be reached at (800) 766-3330.

This article has been updated from an earlier version on the Town-Village Blog published last Thursday to add information about the number of class members and the door drop and phone banking.