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Yesterday, the state appeals court ruled that developer Tishman Speyer "had wrongfully raised rents and deregulated thousands of apartments after receiving special tax breaks," the NY Times reports.
Tishman Speyer paid $5.4 billion for the development, Stuyvesant Town and Peter Cooper Village, which includes both rent-stabilized and market-rate apartments. Building owners can raise stabilized units' rents if tenants are making more than $175,000 for two years in a row—which Tishman Speyer did and had always eyed doing to make the purchase profitable —but the court found, per the Post, "that threshold should not apply to Stuyvesant Town because Tishman Speyer, which now owns the complex, received a tax break for having affordable housing." Tishman had been scheduled to receive the tax breaks until 2017.
While tenants' advocates are thrilled—Benjamin Dulchin of the Association for Neighborhood and Housing Development told the News, "For landlords like Tishman Speyer, whose strategy has been to undermine affordable housing at a rapid rate, this decision brings them back into compliance with the law."—building owners are worried. Rent Stabilization Association's director of government affairs Frank Ricci told Crain's, “This is not just bad for Stuy Town. It is very bad for all New York City real estate," because it affects any landlords who "make significant improvements to their buildings, like upgrading the plumbing or electrical system" and "may qualify for J-51 tax benefits."
Tishman Speyer may now have to pay $200 million back to tenants, if it doesn't appeal or loses an appeal. A forecast about Stuy Town finances earlier this year was grim, because there was only a few months of cash on reserve: "When the reserve is completely eroded, Tishman Speyer... would need to put in more cash or potentially face default on its loans."
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pay up jerkies
To quote the Big Lebowski, "this is what you get when you... "
Anyway, can't they just use some of the money they stole from NYC when they built Yankee Stadium?
They speculated like everyone else did. Sometimes you lose...oh well.
According to the Times article:
Landlords say the decision could also affect hundreds of other apartment house owners who, like Tishman Speyer, obtained tax breaks under the city’s J-51 tax program for property renovations and then raised rents beyond certain set levels. The Appellate Division ruled that apartments must remain rent-regulated as long as the building owners enjoy J-51 tax benefits.
So this isn't limited to Stuy Town, and I for one am going to find out if my building - which used to be stabilized before it was renovated - falls into this category. And I would encourage everyone else reading this to do the same.
I love it. Gothamist regularly brings out all of the rent regulation-haters UNTIL there is the possibility that they might be able to make out with a roll-back. So, rent stab/rent control is bad for others but good for you, right?
rent stabilization is always great for me. Eff the haters.
No double dipping.
Normally I'm against rent regulation. However, I'm also against tax breaks for douchewads who raise my rent $1200 in two years. That is not affordable housing! You can't have it both ways.
the real elephant in the living room here is Met Life who made off w/ the 5.4 billion after originally getting the land (80 acres) for free, enjoying DECADES of tax breaks, all on the assumption that they would provide affordable housing to middle class NYers. They likely operated at a profit from almost day one, and were allowed to sell out the tenants for a king's ransom. Shame on City Hall and Albany for allowing this to happen.
It would be poetic justice if Tishman defaulted and lost the buildings. Payback's a bitch.
First, they were dumb enough to buy a huge complex of ugly, public housing-looking buildings for an astronomical sum. Then they shrewdly bounced the r/s tennants as if millionaires from all over the world would beat a path there to enjoy living in...a huge complex of ugly, public housing-looking buildings. Not Fail, not Epic Fail, this one is Supernova Fail.
There's just so much abuse and so many people who won't give up their affordable apartments even when their situation changes. I know a woman who lives her with her family. Her husband has a professional job and she runs a lacation consulting business. She was talking about how her 3 children were kind of crowded into two bedrooms, but because the apartment is so affordable they don't want to give it up. Anyway, it OK because on the weekends they go to their house upstate. I don't think that's right.
stop being so nosey, jerky