‘A Fraudulent Scheme to Evade the Rent Stabilization Laws’
FiDi Renters Seek Recompense for Years of Rent Overcharges; U.S. Supreme Court Declines to Overturn Tenants’ Victory
A map, compiled by New York University’s Furman Center (which advances research and debate on housing, neighborhoods, and urban policy) illustrating the dozens of Lower Manhattan buildings—erstwhile office towers, converted to residential use—that have benefited from the 421-g program.
More Financial District tenants are going to court to demand restitution from years of illegally high rent, on the heels of a 2019 ruling by New York State’s highest court, which found that as many as 5,000 Lower Manhattan apartments had been illegally deprived of rent stabilization benefits.
The most recent suit was filed on behalf of tenants at 90 Washington Street, a 397-unit rental building located between Rector and Joseph P. Ward Streets. This filing follows similar legal actions on behalf of tenants at 63-67 Wall Street, Ten Hanover Square, 50 Murray Street, 90 West Street, and 53 Park Place.
At issue is the 421-g subsidy program, which was designed to encourage Downtown’s transformation into a residential district, by offering rich incentives (chiefly in the form of tax abatements) to developers who converted former office buildings—south of a line connecting Murray Street to City Hall and the Brooklyn Bridge—into apartment towers. But it also offered a potent lure for tenants who moved into such buildings: Their apartments would be subject to rent stabilization regulations for as long as building owners received the tax benefits.
Court papers related to all of the lawsuits allege that in these buildings, very few (in some cases, none) of the apartments were ever registered with City or State regulatory agencies as being subject to rent stabilization. The suits also content that tenants were never informed of their rights to rent-stabilized leases, and instead were compelled to pay unregulated, market-rate rents and subsequent increases.
90 Washington Street
Papers filed with the New York State Supreme Court in the 90 Washington case by the law firm of Newman Ferrara (which is representing the plaintiffs in all of these buildings) allege that this pattern is, “part of a fraudulent scheme to deregulate the apartments,” and argue that “defendant’s fraudulent scheme to evade the rent stabilization laws” has harmed tenants.
The language of the 421-g statute that covered all of these buildings (and dozens of other structures, comprising a total of nearly 5,000 apartments) was unequivocal, stating that “the rents of each dwelling unit in an eligible multiple dwelling shall be fully subject to control under such local law.” Ambiguity arose, however, when this was considered in the light of another part of New York’s housing law, known as “luxury decontrol,” which allowed (until being repealed in 2019) for rent stabilization to be annulled on any apartment once the legal rent reaches a threshold of $2,700 per month.
The problem arose when developers unilaterally set the rent on the vast majority of the apartments they had created in these newly converted buildings at higher than $2,700 per month. This had the effect of erasing the rent stabilization benefit that the legislature had intended for tenants (usually before the first renter moved in), while preserving the tax benefit for landlords. In the years since, landlords and developers have, in the aggregate, reaped a windfall of tens of millions of dollars from this program. But tenants received very little benefit or protection from the rent stabilization that had been intended for them.
When residents of the first buildings to file suit (50 Murray, 90 West, and 53 Park Place) realized that they were being charged market rents, with no limits on increases, and no right to automatic lease renewal (along with other privileges that come with stabilization), while their landlords reaped a bonanza in tax benefits at public expense, they sued for reimbursement.
That suit wound its way through State courts for a decade, before being finally settled last June, when the New York Court of Appeals found (by a margin of six to one) that, “apartments located in buildings receiving tax benefits pursuant to 421-g are not subject to the luxury deregulation provisions of the Rent Stabilization Law.” The Court’s decision hinged both on a plain reading of the language in the 421-g statute, and a distinction between rent stabilization versus all the other provisions contained in the rent stabilization law. In effect, the judges found that the 421-g statue made the apartments created under this program subject only to rent stabilization itself, but not subject to other codicils within the law that governed it, such as vacancy decontrol.
Lucas Ferrara, a partner at Newman Ferrara (also an adjunct professor at New York Law School), who is leading the lawsuits, told the Broadsheet that, “government may be asleep at the wheel, but justice is most certainly not. This lawsuit sends a clear signal that the days of cheating and profiteering at the expense of rent-regulated tenants are over.”
In a separate (but related) development, the owners of 50 Murray Street in October petitioned the United States Supreme Court to overturn the New York State Court of Appeals decision that sided with FiDi renters last June. A brief filed on October 24 raised the question of, “whether the Fifth and Fourteenth Amendments prohibit courts, like other branches of government, from eliminating established property rights without just compensation.” This brief goes on to argue that, “the New York Court of Appeals effected an unconstitutional taking by holding, contrary to decades of settled law and practice, that properties receiving benefits under Section 421-g of the New York Real Property Tax Law are ineligible for deregulation under New York’s rent-stabilization laws.”
In November, lawyers for the tenants filed a brief in response, arguing that the underlying case, “does not involve any ‘important question of federal law,’” and that the U.S. Supreme Court, “does not have jurisdiction to overrule the New York Court of Appeals’ interpretation of a New York statute.” In January, the U.S. Supreme Court sided with the tenants by declining to consider the landlord’s petition, which effectively affirms the New York Court of Appeals decision.
1) Brownfield Cleanup Program Update on 250 Water Street – Report
2) South Battery Park Resiliency Plan Update, including new entrance to Wager Park from Battery Place, revisions for Pier A and the north edge of the Battery – Discussion and possible resolution**
3) Lower Manhattan Resiliency Planning During the Pandemic and After – Discussion and possible resolution
4) Manhattan Community Board 1 Environmental Protection Committee Objectives and Strategies for 2020-2021 – Discussion
June 16 6PM
Waterfront, Parks & Cultural Committee
1) Howard Hughes Corporation Seaport Stakeholder Workshop #3 – Presentation by Skidmore, Owings and Merrill/Howard Hughes Corporation
June 17 6PM
Quality of Life & Service Delivery Committee
1) Social Distancing for Small Business, Sanitation & Noise Concerns – Discussion
2) Combined Sewer Overflows and Summer Swimming – Discussion
3) Addressing Systemic Racism and White Supremacy in Battery Park City & Lower Manhattan – Presentation by Taylor Banning & Katie Cuccia-Fenton, bpc4blm & Possible Resolution
4) Banning Pepper Spray to Prevent the Further Spread of COVID-19 – Discussion and Possible Resolution
5) The State of Policing in NYC – Discussion & Possible Resolution
June 18 6PM
1) Social Distancing for Small Business – Discussion and resolution
2) Improvements to Voting and Special Temporary COVID-19 Rules – Discussion & Resolution
3) Committee reports
Eyes to the Sky June 15 – 28, 2020
Summer Solstice – June 20, 2020
Every day is Sun day for the month of June, when the Sun is up for 15 hours plus a few minutes most days and darkness prevails, most days, for a few minutes less than 9 hours. The longest days of the year occur as Earth reaches the point in its orbit when the North Pole is tilted closest to the Sun, known as the summer solstice. This year, astronomers calculate that the solstice occurs on Saturday, June 20 at 5:44pm. According to my pencil on paper figuring from Starry Night* data, which is offered to a tenth of a second, day length at our location on Friday the 19this 3 seconds shorter than on the solstice and on the 20th day length is 2 seconds longer than on Sunday the 21st.
The chart, below, provides a picture, in numbers rounded to the minute, of markers in the progress of the day of the solstice. It is a useful guide until the end of June, given that day-to-day variations are just seconds.
Stephen Schneider, Professor of Astronomy, University of Massachusetts Amherst, adds to our understanding with this observation, “The sun’s angle relative to Earth’s equator changes so gradually close to the solstices that, without instruments, the shift is difficult to perceive for about 10 days. This is the origin of the word solstice, which means “solar standstill.”**
City Pushes Plan to Move Iconic Sculpture Away from Bowling Green
The City’s Public Design Commission is slated to consider on Monday a controversial plan that would move Charging Bull—the the iconic Arturo Di Modica bronze sculpture that has been snarling and pawing the ground just north of Bowling Green since 1989—to a new location in front of the New York Stock Exchange. Several local leaders are concerned that the administration of Mayor Bill de Blasio is pushing this plan while ignoring community objections. To read more…
Reactions to Mariama James’s Story
To the editor:
I found that dust-up between “All Lives Matter” versus “Black Lives Matter,” rather interesting.
When taken out of context, “All Lives Matter” is a mere truism, which has little meaning or significance. When used in response to “Black Lives Matter,” then it clearly has a malicious intent because the point is to negate the latter statement, i.e., that, in fact, Black lives do not matter.
Given the continued racism and its effects, for all people of good will, it is not enough to say “All Lives Matter.” We must embrace and affirm that “Black Lives Matter.”
To the editor:
Mariama James is a dedicated leader of the downtown community and her efforts have improved the quality of life for everyone who lives here.
Mariama’s work advocating for residents in the aftermath of 9/11 has been long, strong and effective. She has given an extraordinary amount of time and energy to help every one of us affected get the resources and medical care so desperately needed.
Mariama is also a long-time member of Community Board 1 – where she serves as co-chair of the Quality of Life Committee. Her efforts have resulted in countless improvements to the entire CB1 District on any number of issues including health and housing.
Most recently, she organized the Board’s Large Venue Working Group to ensure that noise, traffic, and safety are taken into consideration for our neighborhoods.
In sharing her personal story, Mariama James has taken another step in making a better world. This is an opportunity to listen and learn. Thank you Mariama. Black Lives Matter.
CB1 Wants to Claim Part of the Pike for Cyclists
Community Board 1 is calling upon City and State transportation officials to close—at least temporarily—the lane of Route 9A (also know as the West Side Highway) that adjoins the Hudson River Park, between Chambers and Canal Streets, to enable continued social distancing, as New York scales back quarantine measures in the wake of the pandemic coronavirus outbreak.
The plan would use concrete barriers to bar traffic from the westernmost lane of the eight-lane highway, for a half-mile stretch of the waterfront boulevard, in order to allow users of the Hudson River Park additional room for biking, jogging, and walking.
‘When People Answer that All Lives Matter, They are Lying’
A Lifelong Resident of Downtown Considers Blackness Within a Bubble of Privilege
Ms. James moved to Lower Manhattan as a child, in 1971, when her family took up residence in the newly opened Southbridge Towers. “My dad worked for Citibank, at 20 Exchange Place; my mom worked at Bache, on Gold Street, and I was a latchkey kid, attending local schools,” she says. “Race was something we were conscious of, but in different ways. My best friend growing up was Italian, and her family loved me, but always made clear that I was an exception in their eyes.”
Each day, a different encore presentation from the company’s Live in HD series is available for free streaming on the Met website, with each performance available for 23 hours, from 7:30 p.m. EDT until 6:30 p.m. the following day. The schedule will include outstanding complete performances from the past 14 years of cinema transmissions, starring all of opera’s greatest singers.
Lunchtime program with veteran CNBC reporter Bob Pisani, in conversation with “WealthTrack” anchor and executive producer Consuelo Mack, as they discuss what the financial markets may look like in the post-COVID world. Noon. Free. Museum of American Finance.
Test your trivia IQ at home with your friends and family! Follow along on Zoom and enter your answers via Kahoot (links to be provided) for a digital version of Brookfield Place’s weekly trivia series with ThinkFast. Part of the #BFPLatHome series. Prizes: 1st Place: $150 gift card to a BFPL restaurant of the winner’s choice; 2nd Place: $20 BFPL Gift Card; 3rd Place: Two bags of For Five Coffee – winner’s choice! (must live in NYC, NJ, or CT). Free. 7pm.
Inspired by confinement and virtual connectivity, The Attendants 2020 is a re-imagining of the cutting edge interactive performance presented at Brookfield Place in 2011, during which the public communicated with performers through text messages and tweets. The plexiglass cube from the 2011 performance has been replaced by the 2020 2-D rectangular screens we have all become so familiar with and reliant on. Viewers will be able to influence the piece by sending messages to the performers through a digital platform from noon to 6pm EST. The performers can only respond with their bodies, each streaming in from the safety of their own homes.
Artist & poet Rachel Eliza Griffiths reads from her forthcoming book Seeing the Body (W. W. Norton, 2020) from her home in New York. Rachel Eliza Griffiths is a multi-media artist, poet, and writer. She received the MFA in Creative Writing from Sarah Lawrence College and is the recipient of numerous fellowships including Robert Rauschenberg Foundation, Provincetown Fine Arts Work Center, Kimbilio, Cave Canem Foundation, Vermont Studio Center, Millay Colony, and Yaddo. Noon. Free.
June 15: Today in History
The SS General Slocum
763 BC – Assyrians record a solar eclipse that is later used to fix the chronology of Mesopotamian history.
1215 – King John of England puts his seal to Magna Carta.
1648 – Margaret Jones is hanged in Boston for witchcraft in the first such execution for the Massachusetts Bay Colony.
1844 – Charles Goodyear receives a patent for vulcanization, a process to strengthen rubber.
1846 – The Oregon Treaty extends the border between the United States and British North America, established by the Treaty of 1818, westward to the Pacific Ocean.
1864 – Arlington National Cemetery is established when 200 acres (0.81 km2) of the Arlington estate (formerly owned by Confederate General Robert E. Lee) are officially set aside as a military cemetery by U.S. Secretary of War Edwin M. Stanton
1878 – Eadweard Muybridge takes a series of photographs to prove that all four feet of a horse leave the ground when it runs; the study becomes the basis of motion pictures.
1904 – A fire aboard the steamboat SS General Slocum in New York City’s East River kills 1,000.
1977 – After the death of dictator Francisco Franco in 1975, the first democratic elections took place in Spain on this day.
1479 – Lisa del Giocondo, Italian model, subject of the Mona Lisa (d. 1542)
1843 – Edvard Grieg, Norwegian pianist and composer (d. 1907)
1911 – Wilbert Awdry, English author, co-created Thomas the Tank Engine (d. 1997)
1914 – Yuri Andropov, Russian politician (d. 1984)
1914 – Saul Steinberg, Romanian-American cartoonist (d. 1999)
1849 – James K. Polk, American lawyer and politician, 11th President of the United States (b. 1795)
1968 – Wes Montgomery, American guitarist and songwriter (b. 1925)
1996 – Ella Fitzgerald, American singer and actress (b. 1917)
2019 – Franco Zeffirelli, Italian film director (b. 1923)
Previously Published Downtown News
Gauges Become Less Grim
Fourteen New Cases, and One Additional Death in Lower Manhattan
A New York City prepares to begin reopening on Monday, this will be the Broadsheet’s final weekly update about local health statistic related to the pandemic coronavirus — until and unless the outbreak reemerges.
Downtown Non-Profit Sues to Gain Release of Protestors
A non-profit based in Lower Manhattan is suing the New York Police Department (NYPD) to obtain the release of more than 100 protestors arrested during the recent demonstrations over the death of George Perry Floyd in Minneapolis, Minnesota, on May 25.
The Legal Aid Society, headquartered at 199 Water Street, filed suit on Tuesday in New York State Supreme Court, on behalf of 108 detainees who were arrested in Manhattan during the first five days of protests.
CB1 Endorses Push to Expand VCF Coverage to Pandemic Illness
Community Board 1 (CB1) has signed on to a campaign that aims to expand the eligibility criteria of the September 11 Victims Compensation Fund (VCF) to include illnesses related to the outbreak of the pandemic coronavirus.
Crashes in Tourism and Business Travel May Signal Trouble for Downtown Hotel Sector
A hotel developer seeking to repeat a 2017 coup may face headwinds that could work against such a reprise. Last December, Hidrock Properties, a Manhattan-based builder of hotels and office properties, completed demolition of two small buildings at 110 and 112 Liberty Street, between Greenwich Street and Trinity Place, which it bought for $38 million in 2018. (Local residents may remember them as the home of the Ho-Yip and Essex World restaurants.)