Hoylman: J-51 tenants need info from HCR

State Senator Brad Hoylman (Photo courtesy of Brad Hoylman)

By Sabina Mollot

With the exception of residents of Stuyvesant Town and Peter Cooper Village, for most New Yorkers, the letter J followed by number 51 has no meaning whatsoever. And consequently, this could mean they are living in an illegally deregulated apartment without even knowing it.

However, State Senator Brad Hoylman said he wants to make sure New York’s renters know what their rights are if they’re living in buildings where the landlords have benefitted from the J-51 tax break.

In a letter, he called on the state housing agency, Homes and Community Renewal, to inform tenants living in deregulated buildings if their landlords have been enrolled in the tax benefit program. The letter, which was sent to the agency’s commissioner, RuthAnne Visnauskas on August 7, Hoylman noted that the HCR routinely reaches out to the owners of more than 4,000 buildings with information about reregulation. But renters, meanwhile, are left in the dark as to their buildings’ history and may not know if they’re being overcharged.

He called the practice of keeping landlords but not tenants in the loop “baffling.”

Hoylman added, “It’s tenants who don’t know what their rights are and should be informed that their building may have been illegally deregulated because the owners had received J-51. It’s fine to notify landlords so that they will be compliant but they should let the tenants know.”

Continue reading

Advertisements

On the rent laws’ limited improvements

By Assembly Member Brian Kavanagh

With the rent laws that protect more than 2 million tenants set to expire on June 15 this year, and the inadequacies and loopholes in the current laws all too apparent, the Assembly’s Democratic Majority, led by Speaker Heastie, fought resolutely to renew and strengthen these vital protections, in negotiations with Senate Republicans and Governor Cuomo.

In taking up this cause, we were joined by a diverse coalition, including thousands of my constituents and other New Yorkers who took the time to call and write their elected officials, attend rallies, and travel to Albany to make sure their voices were heard; advocacy organizations like the Alliance for Tenant Power, the Real Rent Reform Campaign, Tenants and Neighbors, the Stuyvesant Town-Peter Cooper Village Tenants Association, Good Old Lower East Side, and the Cooper Square Committee; and many elected officials, including Senators Squadron, Hoylman, and Krueger whose districts overlap with my Assembly district.

While it was critical that the laws be extended, and there are minor improvements in the extension passed last night, I am profoundly disappointed that notwithstanding all of our efforts, the bill fails to provide anything close to the protections we need to maintain stable, affordable communities. I voted against it.

Continue reading

Pols tell tenants their stories are needed in rent law fight

 

Over 400 people listen as local state elected officials brief them on the uphill battle over the rent laws coming in June. (Photo by Sabina Mollot)

Over 400 people listen as local state elected officials brief them on the uphill battle over the rent laws coming in June. (Photo by Sabina Mollot)

By Sabina Mollot
On Saturday, over 400 residents of Stuyvesant Town and Peter Cooper Village gathered for a meeting held by the Tenants Association that focused on the upcoming expiration of rent laws and the uphill battle tenants would have in trying to get them strengthened.

Speakers briefed the audience on the current power dynamic in Albany, while also telling those in attendance that without tenants writing to Albany lawmakers, especially the governor, the effort is a lot less likely to succeed.

“If I go to Albany and say (to Governor Cuomo) two and half million people are going to be very upset with you, if that’s not clear in the streets and not in the mail in his email inbox, it’s very hard to believe,” said Assembly Member Brian Kavanagh.

Kavanagh was one of the speakers of the event, which was held at Simon Baruch Middle School, along with State Senator Brad Hoylman and TenantsPAC treasurer Mike McKee.

McKee told the crowd if the laws are renewed in their current state, “It would be a terrible defeat for tenants.” Referring to a recent Daily News article that quoted Cuomo as saying the laws and the controversial 421-a tax abatement for developers could possibly just be renewed and not changed, due to the federal investigations being conducted in Albany, McKee added, “I’m sorry, but that is crap.” McKee has said that 421-a is expected to be used as leverage during the rent law negotiations.

Both Hoylman and Kavanagh spoke about Albany’s power system and how with the Senate in the hands of Republicans whose campaigns are financed largely by real estate, the only hope for tenants is in swaying the Assembly, led by Carl Heastie, and the governor.

Meanwhile, Kavanagh has said he wants to close the “LLC loophole” that makes New York one of the few states where each LLC created counts as a separate campaign contributor, but, he admitted, “I’m not sure we’re going to do that this year.”

However, he added that recent media attention on the issue may prove helpful anyway.
“There may an opportunity to shame people into backing off,” he said.

Assembly Member Brian Kavanagh, ST-PCV Tenants Association Chair Susan Steinberg and State Senator Brad Hoylman (Photo by Sabina Mollot)

Assembly Member Brian Kavanagh, ST-PCV Tenants Association Chair Susan Steinberg and State Senator Brad Hoylman (Photo by Sabina Mollot)

McKee said that while in the past, major decisions in Albany have been made behind closed doors by the “three men in a room” (the governor, the Assembly speaker and Senate Majority Leader Dean Skelos) this year there might be four — if Jeff Klein is allowed to participate. Klein is the head of the State Senate’s Independent Democratic Conference, a breakaway group that caucuses with Republicans. McKee, who’s often blasted Klein as being a tool of the real estate industry, commented that his participation would only be to tenants’ disadvantage.

As for Skelos, McKee added, “Dean Skelos will not do anything voluntarily to help tenants or to hurt landlords. The Assembly has to do what’s called taking hostages. There are dozens of things everybody wants at the last minute. Some of it is minor stuff, nothing to do with housing even.”

One advantage of tenants, he added, is that with Heastie being new as speaker, “he has to prove himself. He has to be accountable not only to us but the members that elected him speaker.” Heastie has said he considers strengthening the rent laws a priority. That said, McKee warned, there’s still always the possibility a tough talking pol will “wimp out” at the eleventh hour. “There is always a wimp factor in Albany,” he sighed.

As for what tenants could do, he urged people to write to the aforementioned three men (letters rather than postcards), and get three neighbors to do the same as well as turn out, if possible for any upcoming rallies. One rally, organized by the Real Rent Reform campaign and the union 1199SEIU, which is aimed at strengthening the rent laws, is scheduled for Thursday, May 14 at 5 p.m. at Foley Square (corner of Centre and Worth Streets). The group will then march over the Brooklyn Bridge.

“We need a very big turnout,” said McKee.

Another rally is on Wednesday, May 6 in front of Cuomo’s Manhattan office at 633 Third Avenue (between 40th and 41st Streets) from 10 a.m.-noon.

He then claimed to have a plan aimed at shaming Cuomo into helping tenants. McKee declined to discuss this further. “That’s all I’m prepared to say,” he said later.

When taking his turn at the podium, Tenants Association President John Marsh echoed the sentiment of the other speakers, calling on neighbors to get involved. “If everyone takes a small step, we can have a very loud voice,” said Marsh.

He also mentioned a door-knocking campaign that he and Council Member Dan Garodnick led through ST/PCV the following day, with Garodnick’s two young sons in tow. Garodnick later said the building walk-throughs resulted in many tenants being appreciative of the reminder of the looming rent negotiations in June.

Kavanagh, when addressing the audience, said that while he realizes many new residents at ST/PCV probably feel the rent laws have no teeth when they look at the numbers on their rent bills, being rent regulated still offers New Yorkers protections they wouldn’t have otherwise.

“It prevents landlords from arbitrarily evicting tenants and that doesn’t exist for most tenants in the city,” he said.
Because of the outcome of the “Roberts v. Tishman Speyer” lawsuit, all units in ST/PCV will be regulated until the property’s J-51 tax abatement expires in 2020.

Kavanagh reiterated the goals for strengthening the rent laws, which include repealing vacancy deregulation and other policies that give incentive to owners to vacate units such as vacancy bonuses and reforming the way individual apartment improvement (IAI) rent increases are issued. Reform of major capital increases (MCIs) is another goal.

Kavanagh also got a round of applause after saying he wanted to close the preferential rent loophole. Due to preferential rents, which are given to most new residents in renovated apartments in ST/PCV, rent increases can be far higher than those issued by the Rent Guidelines Board, if the tenants’ legal rents are higher than what they’ve been paying (the preferential rent).

“In our community it’s a particular problem due to the way ‘Roberts’ played out,” said Kavanagh. “(Tenants) are facing enormous increases.”

Manhattan Borough President Gale Brewer, who’d been sitting in the audience at the meeting, along with Garodnick, at one point, popped up to comment about preferential rents, which she said was happening all around the city.

“We go case by case and try to fight it but there is no great answer,” she admitted.

The meeting then concluded with a Q&A period, with most of the questions from the audience—which were limited to the topic of rent—being on the theme of MCIs. Tenants mainly asked why they were being forced to pay them. Hoylman and Kavanagh suggested that tenants’ use their frustration and personal experiences as inspiration to write to the governor.

When a woman asked where the mayor was in this fight, saying, “He seems to have had a low profile lately,” Kavanagh responded to say he thought the mayor would be more visible soon. “This is the time we roll out this fight and I think you’ll see the mayor rolling out this fight,” he said. Hoylman added that a lot is done “behind the scenes,” going on to note that this is part of Albany’s dysfunction.

When a man asked if strengthening of the rent laws would help a conversion effort, Kavanagh said he thought it would in that it would help thwart predatory bidders.

Another tenant then asked if it could work to tenants’ advantage if Skelos, who’s being investigated by U.S. Attorney Preet Bharara, were to be indicted. The answer, however, was that it wasn’t likely to have any impact during rent negotiations.

“If he’s indicted and forced to step down, it’s unlikely that he’d go to trial before June and you don’t have to leave office until you’re convicted,” said Hoylman. “It would have a greater impact next year than this year.”

Town & Village later contacted the office of the governor to ask his position on strengthening the rent laws. In response, a spokesperson emailed prepared statements made by Cuomo at the Association for a Better New York breakfast on rent laws and 421-a.
Included in the written statement was a comment that “At a maximum maybe we can make some fine modifications in both of them.”

“The 421-a, first I believe has to be extended and I believe that’s essential,” the statement read. On changes to it, which he said he believed were needed, he said, “If it was a different time in Albany, frankly, and Albany was a little bit more of a stable situation I would normally take those negotiations to Albany and try to work it out among the parties. Albany has a lot going on right now let’s say, so I’m hoping and I’m asking the parties to work out the disagreements among themselves or their desires for modifications. If they can great, in any event 421-a has to be extended.”

He went on to say, “Rent has to be extended. It is a New York City issue. If we don’t extend rent you would have chaos in the real estate market, these are rent regulations, rent stabilization etc. You would have chaos in the real estate market unlike anything we have seen because it regulates the private industry not another government. It lapses one day you will see real estate entities and landlords start rising rents and evicting tenants. I mean it would be immediate mass mayhem.

“So at a minimum we have to extend those protections but in truth, because everyone has been watching the situation, to have these final negotiations on these delicate points is going to be problematic this year. So, at a minimum rents extended 421-a, is extended. At a maximum maybe we can make some fine modifications in both of them. The democratic assembly is going to be more aggressive on extending rent than the senate Republicans. 421-a, both houses want.”

A spokesperson, Frank Sobrino, when asked if the governor could clarify what was meant by “fine modifications,” said this was a general statement in response to suggested changes. He also denied that the statements were an attempt to remain neutral.

“He said that ‘at a minimum,’ both rent regulations and 421-a must be extended,” said Sobrino. “That’s not neutral.”

TenantsPAC: It’s time for tenants to step up the pressure in Albany

TeantsPAC Treasurer Mike McKee (Photo by Sabina Mollot)

TeantsPAC Treasurer Mike McKee (Photo by Sabina Mollot)

By Sabina Mollot
As is well known by tenant activists, the State Senate has long been the realm where any tenant-friendly legislation, from MCI limitations to elimination of preferential rents, has gone to die. While it did seem likely that the Democrats would be controlling the Senate after Election Day, following a decision by rogue Democrat group, the Independent Democratic Coalition, to end an alliance with Republicans, the Republicans then managed to win a narrow, but still clear majority, making an alliance with the IDC unnecessary.

Some critics have been quick to put the blame on the Election Day results on nation-wide voting trends as well as low turnout during a non-presidential election year. Others have said the blame is Governor Cuomo’s for not making an effort to help the Democrat candidates.
Mike McKee, treasurer of Tenants Political Action Committee, is in the latter camp, saying he believes Cuomo would rather have Republicans running the Senate.

“I’m very cynical about whether we will get any help from the governor,” he said. “On the one hand it’s better to have a governor who wants the rent laws on the books unlike George Pataki, but to keep them the way they are — containing the seeds of their own destruction — is not the answer.”

As for what all of this will mean for tenants with the rent regulation laws up for renewal or expiration next year, McKee said while the real estate industry clearly has the edge with a Republican-controlled Senate, tenants may still have a shot at getting some meaningful reform. That is, if they’re willing to fight for it.

“We have some leverage we didn’t have three years ago if Shelly Silver chooses to use it,” said McKee, “things that can be traded.”

The leverage, he believes, is in the 421-a and J-51 tax breaks, which owners want to be passed and property tax caps, “which the governor very much wants.”
McKee made a point to note that he personally abhors the 421-a tax abatement since it subsidizes “billionaires buying condos.” But developers want it as well as J-51, with McKee saying they hadn’t been scared off by “Roberts v. Tishman Speyer,” which ruled that owners accepting those breaks couldn’t deregulate apartments in those properties. “Those programs are extremely lucrative,” he said. And, said McKee, tenants should keep their eyes on the prize, which is vacancy deregulation.

“We mean full repeal. Not simply raising the threshold like they did three years ago. They raised the threshold and called it a great victory and they’re still trying to spin it as a victory when it was a cosmetic change.” This was in reference to the amendment of the law that allowed landlords to de-regulate an apartment if the rent was $2,000 and the tenant’s income was $175,000 for two years, by increasing that amount to $2,500 or more and $200,000.

“We have rent stabilized apartments in Stuyvesant Town renting for $5,000 or more because politicians allowed the rent laws to be trampled,” McKee added.

What tenants can do, he said, is ask their Assembly members to put pressure on Speaker Sheldon Silver to get tenant-friendly legislation to become more than just one-house bills.

“Do I think Shelly Silver is likely to do this on his own initiative? No. He’s going to have to be pushed,” said McKee. “If he’s going to just posture and introduce bills that die in the Senate, and put out press releases saying how pro-tenant the Assembly is, we’re in trouble. The question is whether or not the governor and the speaker will use that leverage.”

What doesn’t need to be fought for, said McKee, is repeal of the Urstadt Law, which would return home rule on housing to the city. Focusing on that this year, he believes is a trap, since the odds of the Senate agreeing to to it are too slim.

“We need a lot of things,” he said. “We need MCI reform so MCI increases aren’t permanent and compounded into the base rent and reform of the Rent Guidelines Board and stopping the 20 percent vacancy bonuses. But without vacancy deregulation, none of those changes are going to mean anything, because without the rent regulation system, in a few years there won’t be anything left.”

McKee believes that close to 400,000 units of affordable housing have been lost in the past 20 years due to erosion of the rent laws. In 1996, 56 percent of rental units in the city were rent controlled or rent stabilized, based on figures from a city housing and vacancy survey that’s done every three years. Fifteen years later, in 2011, that number had been whittled down to 47 percent, based on the same source. “That should tell you something about the rate of loss,” he said. In some cases, this is due to condo or co-op conversion, but the majority of those cases are vacancy deregulation.

And as always, said McKee, tenants should also keep their mouths open — not to mention their wallets —in the effort to help TenantsPAC.
“I’m talking about money, I’m talking about bodies,” he said. “We have all volunteers so 95 percent of all we raise goes directly to the candidates we support.” (The other 5 percent goes to the organization’s phone, internet, and office rent expenses.) The money, however, never comes close to what the real estate industry spends to elect Republicans. (As of October 20, the Real Estate Board of New York had spent $1.9 million and owner group the Rent Stabilization Association spent $500,000.) Additionally, unlike REBNY, the RSA did this quietly, funneling the funds to a Washington, D.C.-based Republican State Leadership Committee which then gave an even larger amount to a New York group which spent heavily to elect Republicans, Crain’s reported on Friday.

The tenants do have one advantage though. “One of the things we bring to the table that the real estate lobby doesn’t is volunteers.”

He noted that many volunteers as well as donors have been residents of Stuyvesant Town and Peter Cooper Village. But for those whose rent demands don’t allow for large donations or work schedules don’t leave time for trips upstate to go door-knocking, McKee recommends phone banking as a good alternative for would-be volunteers. This can be done at home, usually in the evenings, and even after elections, since TenantsPAC phone banks in support of legislation.

As for why Election Day was such a dismal one for Democrat legislators and candidates, McKee believes Democrat voter apathy is partially to blame. While he was in upstate Kingston going door to door to campaign for Democrat Senator CeCe Tkaczyk, who ended up losing, he saw it firsthand.

“In non-presidential election years, Republican voters show up and Democrats tend to stay home,” he said.

Letters to the editor, Sept. 25

Conversion would allow NYU tenants to buy

To the Editor,

A letter in your Sept. 18 edition says conversion of PCVST to condos can serve to end dormitory living here by NYU undergraduates. The opposite could happen. In a conversion, existing leaseholders have the right of first refusal to buy the apartments they are leasing.

If NYU holds leases on the apartments occupied by students, NYU would have the right to buy those apartments in a conversion.  Also, NYU would be able to buy any apartments not purchased by other leaseholders. NYU obviously needs student housing in this area. A conversion could result in an increase in the number of apartments occupied by undergraduate students.

There are efforts to keep, or make, PCVST affordable housing. That’s consistent with having undergraduate students as neighbors. Students need affordable housing. NYU undergraduates will disappear from PCVST when NYU builds more dormitories, or when rents rise to a level where the owner finds it more attractive to rent to someone other than students.

Another letter in the same issue wonders what happened to the concept of converting PCVST to condominiums. The beginning point of a conversion is either a purchase of PCVST by a new owner who will pursue conversion, or a decision by the present owner to do a conversion. If the property isn’t for sale, there can’t be a new owner.  So the basic question is: How likely is it that the existing owner will sell, or convert, the property?

PCVST was built and owned by MetLife as an income producing property, because MetLife wanted a reliable source of income. When MetLife sold the property, the largest source of financing for the buyer was first mortgage bonds purchased by large institutions. They bought those bonds, because they wanted a reliable source of income, and the bonds provided that.

When the owners of the bonds took over ownership of PCVST, they acquired a property that provides the reliable source of income they want. Ownership of PCVST meets their investment objective.

The amount of income the owners can earn from the property is limited by rent stabilization, until the low interest rate J-51 financing on the property matures in June 2020 (or earlier if the J-51 financing is prepaid).  Then apartments can move to market rents as provided by New York law. Thus, in six years the owners will be able to start increasing their rental income.

The owners are large, deep pocket, institutions.  For them, six years is a reasonable wait.

As the total rental income increases, the value of the PCVST will increase. The increase in rental income will occur gradually over a considerable number of years, and the property’s value will continue to rise during those years. At some point, the owners may want to cash out, either by sale or conversion. But right now the property is meeting the owners’ investment objectives, and future of the property is positive. It will be a lot of years before the present owners sell or convert.

Floyd Smith, PCV

Continue reading

Lieutenant governor hopeful takes tour of Stuy Town

Kathy Hochul gets an earful from tenants and local elected officials during a walk through the complex. (Pictured) Council Member Dan Garonick introduces her to Public Safety Chief Bill McClellan. (Photo by Sabina Mollot)

Kathy Hochul gets an earful from tenants and local elected officials during a walk through the complex. (Pictured) Council Member Dan Garonick introduces her to Public Safety Chief Bill McClellan. (Photo by Sabina Mollot)

By Sabina Mollot

The Stuyvesant Town-Peter Cooper Village Tenants Association, which has recently enlisted the aid of the de Blasio administration in an effort to maintain some affordability in the complex, is also now hoping it will have an ally in Kathy Hochul, Governor Cuomo’s choice for the next lieutenant governor.

On Thursday afternoon, Hochul joined Tenants Association Chair Susan Steinberg along with a handful of TA volunteers on a stroll through Stuy Town, and got filled in on tenants’ more pressing concerns. She’d come at the request of Council Member Dan Garodnick, who was also there with Assembly Member Brian Kavanagh. Prior to the walk through the grounds, Hochul, a former Congresswoman asked the small group, “What’s on your mind?”

“You got a whole afternoon?” was Steinberg’s answer.

Tenants then began chiming in about the dormification of the community with students packing into apartments in order to make the rent affordable, major capital improvements (MCI) for what often seems like unnecessary work — and tenants’ frustration at having to pay for those improvements in perpetuity — and the fear of both longterm and newer tenants of getting priced out. Other topics brought up included more longterm tenants’ fear of harassment, increased transience and questions about what will happen to the rents when the J-51 tax abatement expires in the year 2020. Steinberg also briefed Hochul on the TA’s partnership with developer Brookfield aimed at a condo conversion as well as CW’s lack of interest in talking business with them. Al Doyle, the former president of the Tenants Association, brought up the ongoing issue of predatory equity throughout the city, with Stuy Town, of course, being the poster child for the practice.

Aug7 Kathy Playground10

Assembly Member Brian Kavanagh and Kathy Hochul (Photo by Sabina Mollot)

Kavanagh and Garodnick brought up that they wanted to see the rent laws get strengthened, but the State Senate hasn’t exactly been friendly to tenants. While refraining from making any promises, Hochul said she thought the community is “worth fighting for.” If she becomes lieutenant governor, she pointed out, she’d have the tie-breaking vote in the event of a deadlock in Albany. From 2011-2013, Hochul represented New York’s 26th District, which includes the areas of Buffalo and Niagara Falls.

During her time in Congress, she lived with colleague Carolyn Maloney in Washington.

“We used to say that we should have a reality show, ‘The Real Women in Congress,’” said Hochul. When asked how Maloney was as a roommate, Hochul admitted, “She’s a lot cleaner than I am.” As for the current state of the Congress, Hochul casually remarked that it’s “the most dysfunctional government on the planet.” However, she added quickly, “There are still a lot of good people out there.”

Hochul also touted her experience, claiming she’d helped make the Department of Motor Vehicles “a more positive experience” when she served as county clerk and when in Congress, fought with other Democrats “like pit bulls” to get more cash for restoration after Hurricane Sandy than Republicans wanted to allocate. During the walk through the grounds, Hochul said that from what she’s seen, “Everybody wants the same thing. A safe house, a job, their kids to get a good education. It’s universal. It’s not downstate or upstate. This is what the governor and I are focused on.”

Steinberg pointed out some positive aspects of the community like the playgrounds, a few of which recently got new water features, and the hayrides for kids that take place each Halloween. When passing by the Oval Café/Playground 9 area, Hochul remarked, “I’d like to live here.”

When the group walked past the Public Safety office, Garodnick, realizing officers might think tenants were about to rally, made a point to say hello and introduce Hochul to Public Safety Chief Bill McClellan. Soon afterwards, Hochul left the complex at First Avenue and the crowd dispersed.

Hochul (right) listens to tenants, including Tenants Association Chair Susan Steinberg and Council Member Dan Garodnick, discuss quality of life issues and dwindling affordability in Stuy Town. (Photo by Sabina Mollot)

Hochul (right) listens to tenants, including Tenants Association Chair Susan Steinberg and Council Member Dan Garodnick, discuss quality of life issues and dwindling affordability in Stuy Town. (Photo by Sabina Mollot)

Steinberg then said that she did feel Hochul was genuinely listening to tenants. “I think she got it,” Steinberg said. Kavanagh also said he thought she’d make “a strong partner in the executive branch,” and support tenants, while Garodnick also said he believed Hochul would be in tenants’ corner. “She is clearly a serious and thoughtful person who was willing to take the time to understand our unique challenges,” Garodnick said.

Doyle, meanwhile, just seemed happy that the would-be lieutenant governor got to hear firsthand from tenants how all the different types of rent increases were impacting the community.

“Homeowners outside the city, when we tell them how (an MCI) is a permanent increase, they don’t believe us,” he said.

Following the stroll, T&V asked what Hochul’s thoughts were on the Cuomo administration doing something to preserve dwindling stability and affordability in the community.

Responding in a written statement, she said, “Stuyvesant Town and Peter Cooper Village are critical to keeping New York affordable. I will work closely with the governor, along with the office of New York State Homes and Community Renewal, to ensure that the rights of thousands of rent-regulated tenants are maintained and preserved for generations to come.”

There was no response, though, when T&V asked Hochul’s campaign reps if she wanted to comment on investigation over corruption in the governor’s Moreland Commission. However, in an interview this week with Buffalo-based NBC news outlet WGRZ, she defended the commission, saying, “they had the independence to do what they needed to do.”

Tenants, Stuy Town reach ‘Roberts’ settlement, which provides $68.75 million in damages, total tenants’ rent recovery to exceed $146.85 million

Tenants' "Roberts" attorney Alexander Schmidt in Stuyvesant TownPhoto by Sabina Mollot

Tenants’ “Roberts” attorney Alexander Schmidt in Stuyvesant Town
Photo by Sabina Mollot

By Sabina Mollot

On Thursday, a settlement was finally reached in the “Roberts v. Tishman Speyer” class action that will compensate the involved tenants and former tenants to the tune of $68.75 million for rent overcharges from January 22, 2003 through December 31, 2011.

“Once finally approved, today’s $68.75 million settlement agreement, when combined with past refunds and rent savings the tenants have already received, will bring the total recovery in the lawsuit to at least $146.85 million,” said Alexander Schmidt of Wolf Haldenstein, the plaintiffs’ lead attorney, in a written statement.  “There will also be future benefits,” he added.

The settlement was preliminarily approved by Justice Richard B. Lowe, III, the chief Justice of the Appellate Term, First Department.  The agreement requires final court approval. A hearing on final approval is scheduled for April 9, 2013.

Ronald Aranoff of Bernstein Liebhard, another of the tenants’ lead attorneys, said that the settlement includes a “generous legal rent formula” for the past rent overcharge claims, which yields damages of almost $10,000 per leasehold and average damage awards of $3,200 for the 21,250 class members.

As for the nine named plaintiffs in the suit, they will each receive at least $25,000, a New York Times report also noted. Schmidt defended the higher payouts though, saying such payments are not unusual in class actions and that each one of the nine plaintiffs did a lot of work on the case.

“They were very actively involved in the case every step of the way,” he said, adding that they initially filed the suit “at tremendous personal risk. What if we’d lost the case? They could have been blacklisted. A lot of people had that opportunity and didn’t take it.”

Four of the nine plaintiffs still live in Stuyvesant Town.

Aranoff added, “We believe this settlement provides an extraordinary recovery for our clients, and we couldn’t be happier for them.”

The current owners of ST/PCV (senior lenders represented by CWCapital, who in court papers are referred to as “PCV ST Owner LP” and “ST Owner LP”) contributed $58.25 million of the $68.75 million settlement. Metropolitan Life, the owner until November 2006, contributed $10.5 million.

The settlement also continues rent stabilization through June, 2020 for each of the 4,311 formerly decontrolled Stuyvesant Town and Peter Cooper Village apartments the suit represents. June, 2020 is when the residential complexes’ New York City “J-51” tax benefits expire.

Along with the protections rent stabilization offers, such as automatic lease renewal and succession rights, the court decision is also a win for tenants who hoped to eventually buy their units. The reason is that CWCapital, which initially supported the idea of a conversion to co-ops or condos, had refused to even discuss a possible deal with the Tenants Association until Roberts was settled.

In what has already concerned some tenants however, rents going forward may go up after the settlement is finally approved, subject to the preferential rent formula caps.

In response, Schmidt said it was a tradeoff.

“We don’t have a duty to future tenants,” he said. “We only have an obligation to members of the class. ”

The ST-PCV Tenants Association, which was not a party to “Roberts,” is planning to hold a tele-town hall to discuss the various aspects of the settlement, the Association’s president, John Marsh, said on Facebook on Friday. He also said the Association’s legal committee was analyzing the situation.

Council Member Dan Garodnick, a Peter Cooper resident who is affected by the class action since he is a former market rater, also held off on cheering the settlement.

“We will reserve judgment on the fairness of this agreement until we have had a chance to consider the aggregate impacts on current and former tenants,” he said. “Tenants had overpaid for years as a result of illegal rent deregulation, and they have been waiting a long time for relief.  I am concerned that a significant number of tenants may be subject to rent increases under this agreement, and that will be a point of interest to members of the class who will have an opportunity to object.  In the bigger picture, the Roberts settlement has been hanging over our heads for a long time as a barrier to tenant ownership of the property, and that barrier is now removed.”

Meanwhile, class members (current and former leaseholders who’d paid market rate rents between January 22, 2003 and December 31, 2011), shouldn’t expect checks to come in the mail any time soon.

Along with the final court approval needed, there is also a period through February 18 in which class members will have the opportunity to appeal or opt out. This, said Schmidt, could delay the process by “12 months, 24 months, who knows.”

Naturally, Schmidt said he hoped no one would do this. “They should not appeal. They should not object, because all that’s going to do is delay people from getting paid by a year or two.”

If things go as scheduled though, after the hearing on final approval is held in April, class members will have until May 1 to file their claims and get their money in a period of around 30-60 days. Class members will be receiving a mailing on their options by January 3.

The past rent savings and refunds resulted from an interim agreement that was reached in 2009. Under that interim agreement $2.4 million in rent was refunded to tenants in 2010, and the tenants saved an additional $75.7 million in rent over the past three years.

Additionally, according to Schmidt, the $146.85 million amount could significantly increase in the future because the settlement sets future rents based on a “preferential rent” formula that will save tenants at least another ten to twenty million dollars, and potentially more than a hundred million, over the next eight years. The exact amount of future rent savings under the formula will depend on future rental market conditions and tenant turnover rates.

Also part of the settlement is that the total number of vacancy increases between the date of deregulation and December 15, 2010 the owner can charge for has been capped at three, even if the apartment turned over every year.

“And those are big increases,” said Schmidt. “It’s 17-20 percent every time a tenant moves out.”

In a statement on the settlement from CWCapital, the company said it has agreed that any additional vacancy increases beyond three within that time period will be treated as renewal increases.

Lead plaintiff Amy Roberts in Stuyvesant Town in 2009Photo by Sabina Mollot

Lead plaintiff Amy Roberts in Stuyvesant Town in 2009
Photo by Sabina Mollot

CWCapital also said all tenants who lived in their apartments before the Appellate Division decision on “Roberts” was made, in March 2009, and any tenant who signed a market rate lease during the escrow period will be offered the lesser of modified legal rent or their original contract rent with all applicable Rent Guidelines Board increases.

“We are committed to improving one of our city’s most unique properties,” Andrew MacArthur, managing director of CWCapital, said in the statement, “and that includes making sure Peter Cooper Village Stuyvesant Town remains attractive for individuals and families who see it as a long-term community.”

In his statement, released late Thursday, MacArthur made sure to note that when the special servicer took over operations in ST/PCV from Tishman Speyer, it was nearly four years after “Roberts” was filed.

“Since then we have worked hard to try to balance the interests of residents and bondholders, recognizing that our fiduciary responsibility to investors must respect the concerns of tenants who call Peter Cooper Village Stuyvesant Town home,” he said.

The New York Court of Appeals, the state’s highest court, found in October, 2009 that the apartments had been removed improperly from rent stabilization while the complexes were receiving J-51 tax benefits, which are available only for rent stabilized buildings.

Letters to the editor, Feb. 16

Black History Month is recognized in ST

Re: Letter, “Essential Black History Month,” T&V, Feb. 9

Dear Editor,
It is with great concern that I formulate this rebuttal to the recent reader comments that I read in your publication concerning Black History Month and Oval Essentials. Being one of the principals of the operations team that coordinates all programming, I take great pride in the offerings, service level and diversity of events that we put on monthly to enhance the entire resident experience here at Peter Cooper Village/Stuyvesant Town.

Let me start by stating that my intention is not to discredit these mistaken and misguided comments. But, rather to use this misinformed example as an opportunity to communicate to all of your readers the vastness of the offerings provided by the various teams working around the clock here at PCV/ST. Our goal is to develop and provide the most exciting and enriching programs at a minimum of cost to the participants, and quite frankly, I believe we succeed with flying colors.

For as low as $15 per month, residents have access to some 15 plus special events per month. We hold monthly How-To-Tuesday informative demonstrations that range from resume building to dating workshops. Recently we have held both salsa and tango dance classes. We put on free-for-all-residents parties centered on monthly pop culture and sporting events.  We also provide free tutoring for kids, monthly presentations from some of the city’s most interesting museums and our author lecture series. And, this doesn’t even begin to touch the surface of our myriad of children’s programs and fitness offerings. If the writer of these comments had taken the time to thoroughly explore all our offerings, she would have seen that in Oval Kids (just this week) we held an arts and crafts event centered around  Romare Bearden – the famed African-American artist and writer who worked in a variety of mediums including; cartoon, collage and oils. Upon further inspection of our monthly calendar, this writer would also have been informed of the two (2) Capoeira dance classes – the Brazilian dance/art form created by African slaves – that we are holding on February 22 and 29th. Continue reading