Stuy Town Tenants Win Major Lawsuit Against Tishman Speyer

Mary Altaffer/AP

In a decision that could have major repercussions for landlords of rent-controlled buildings citywide, the state’s highest court has ruled this morning that owners of the sprawling Stuyvesant Town and Peter Cooper Village complexes in Manhattan improperly charged market-rate rents on thousands of apartments. In what is probably the final deathblow for Tishman Speyer's ownership of Stuy Town, the Court of Appeals ruled that the owners should not have raised rents beyond certain set levels while also receiving tax breaks from the city for major renovations.

When Tishman Speyer purchased the property from MetLife in late 2006 for $5.4 billion, they anticipated turning thousands of rent-regulated units to luxury rentals. But the market for luxury rentals tanked with the economy, and the property is worth only $2.1 billion now, less than half of the purchase price. Tishman Speyer is at high risk of default on some $4.4 billion in loans, and today's ruling means they may have to pay an estimated $200 million in rent overcharges and damages to tenants of some 4,000 apartments.

Lawyers for Tishman Speyer had argued that landlords citywide could have to repay “tens, if not hundreds, of millions of dollars” to tenants who were overcharged if the court ruled for the tenants, because landlords at as many as 80,000 apartments may have improperly raised rents and deregulated apartments while receiving special tax breaks. In its decision, the court acknowledged the "dire circumstances" predicted by Tishman Speyer as a result of such a ruling, but said that that "if the statute imposes unacceptable burdens, defendants’ remedy is to seek legislative relief."

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By John Del Signore in News on October 22, 2009 10:39 AM

Comments [rss]

morty Saul

Tishman Speyer, is an evil company that is very powerful

in NYC. They are a greedy family who may give to charties,The decisions of Gerry Speyer and his son have desroyed many a family in this city. Its too bad there board of directors do not boot them out. I hope there stock goes to nothing.

,

leftylib

What an amazing turn of events!

Kim Bong Ill

I'm glad Tishman's getting fucked, because they suck, but I'm also glad they got rid of all those rent-controlled tenants who were using their apartments as cash cows, subletting them and living elsewhere.

Maybe we live in a just universe after all!

TheCowman

Awesome!!!

dreamking

This is very, very cool. I'm worried that 1) another company will swoop in because they're more organized than a tenant association and then we'll be back where we started, and 2) that a tenant association isn't going to be able to run such a huge place as Stuy Town. but I will, in this case, file #2 under "Problems I Want to Have".

Spirit of 76

Lawyers for Tishman Speyer had argued that landlords citywide could have to repay “tens, if not hundreds, of millions of dollars” to tenants who were overcharged if the court ruled for the tenants, because landlords at as many as 80,000 apartments may have improperly raised rents and deregulated apartments while receiving special tax breaks.

Ah. Who cares whether it's right or wrong when you have the "but they did it too!" defense?

NannyState

"Please don't make us repay the $200 million we stole because all the other landlords rip their tennants off too!"

babyhitler

stuy town is the whiteboy projects. No way you can ever get over the white man.

zodak

"if the statute imposes unacceptable burdens, defendants’ remedy is to seek legislative relief"

translation: suck it!

xnan

"In a decision that could have major repercussions for landlords of rent-controlled buildings citywide,..."

That's RENT STABILIZED, not controlled. Huge diff!! I'm just sayin'...

Kojak

Who wins?

Metlife. They dumped it at the nick of time.

WesleySnipesAlot

Free-market armchair economist rebuttal in 3.. 2.. 1..

jpeditor

Good explanation for Govt bail-out (from raised taxes) for subsidizing Stuy town after Tishman bankruptcy coming.... never...

(think back to South Bronx / Brooklyn / Harlem when HPD had to run 40,000 apt units from buildings defaulted in rem for non-payment of taxes (rent control /stabiled rent revenues didn't meet OIL COSTS for heating the building, forget about taxes, forget about "profit").

FunChop

Suck it Tishman!

JacqueMehoff

maybe some people will wake up and see how bad this sale was.

what does bloomberg say about this? that's what I want to know.

nicemarmot

Worth two billion now? Please, it wasn't worth that in 2006! I remember how metlife tried to hide the flaws but they didn't even need to bother. Tishman just wanted their trophy property and overpaid by a factor of three.