Stuy Town Lawsuit Could Set Precedent for Tenant Refunds

Stuy Town and Peter Cooper Village tenants suing property owner Tishman Speyer had another big day yesterday, when the state's highest court heard arguments in a trial that could set a costly precedent for landlords at rent-regulated buildings citywide. The tenants' lawyers said Tishman's conversion of rent-regulated apartments into market-rate units was illegal because the developer received tax abatement, something the state legislature forbids. But Tishman's lawyers argued that the law doesn't apply to them because the apartments became rent-stabilized 18 years before the developers got the tax breaks. A semantic debate about the word "become" ensued, with Judge Robert S. Smith finally asking, "You might say that I became a grandfather for the third time last month. Isn’t that normal English, even though I was already a grandfather?" (His point, seemingly, was that the law's use of the word "became" shouldn't be so strictly interpreted by Tishman.) But the bigger question yesterday hinged on what impact a verdict for the tenants would have—they're seeking some $200 million in damages from Tishman, whose lawyers warned that landlords could have to repay “tens, if not hundreds, of millions of dollars” to tenants who were overcharged, should the Appeals court uphold the lower court's ruling.

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By John Del Signore in News on September 11, 2009 1:54 PM

Comments [rss]

Outter Burrougher

Congrats to Judge Smith on the (relatively) new grandchild.

loganmo

Why could the remedy not be having TS re-pay the abated property taxes rather than refund the extra rent? That seems more logical to me

Manitoba2

Because TS is basically bankrupt, they're credit line has basically dried up and no banks or investors are willing to float them the money at a reasonable rate.

Best case scenario: TS goes bankrupt and tenants celebrate nice, actual market-rate apts.

Most likely scenario: TS has to sell to some corrupt hedge fund, which is more evil towards tenants than TS but has the money to back it up.

JacqueMehoff

you really think a private equity group will buy it and play hardball with tenants again?

nicemarmot

It's funny because I'm completely against rent control/rent stabilization, but I don't feel remotely sorry for any of these landlords. They spent years playing both sides of the law and now they have to pay. I lived in PCV for two years. Then TS came in and tried to raise our rent $700/month, or $1000/month if we signed a two year lease. I hope that purchase (also known as the dumbest, most overpriced real estate transaction in history) bankrupts them.

Though I will say, if raising rents was illegal, shouldn't they be going after MetLife too? After all, Tishman just picked up where they left off.

xnan

Both MetLife and TS had attorney's deliver oral arguments yesterday (as both are named in the suit). So did the tenants. Because there were 2 landlord attys., and only one atty. representing the tenants, it appeared a bit lopsided. Fingers crossed-- TS goes down in flames... greedy bastards.