FiDi Renters Win Recompense for Years of Illegal Rent Overcharges
Residents of the luxury rental tower at 63-67 Wall Street will soon be $5 million richer.
Rentals tenants in a Financial District building, who sued their landlord to demand restitution for years of illegally high rent, have won a $5-million settlement. The building is the luxury rental tower at 63-67 Wall Street.
Last November, Tallen Todorovich, a renter in 63-67 Wall Street filed suit, seeking class-action status on behalf of all current and former tenants, and alleging that they had not been given rent-stabilized leases for their apartments, even though the building received tax abatements under a program intended for rent-stabilized buildings. Court papers related to Mr. Todorovich’s lawsuit alleged that of the 1,000 apartments in 63-67 Wall Street, only one was registered with City and State regulatory agencies as being subject to rent stabilization.
This action (along with half a dozen other, similar suits) stemmed from a June, 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. 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.
The language of the 421-g statute that covered more than two dozen such 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 for rent stabilization to be annulled on any apartment once the legal rent reaches a threshold of $2,700 per month.
The problem ensued 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 at several of these buildings within the 421-g catchment 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 derived 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 in June 2019, 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 governs it, such as vacancy decontrol.
The plaintiffs in all of these cases are represented by attorneys Lucas A. Ferrara and Roger A. Sachar, of the firm Newman Ferrara. Mr. Ferrara told the Broadsheet, “the shameless rapacity you see demonstrated here will only end when owners come to the realization that their illicit practices will come with a steep price. For too long, New York City’s tenants were hoodwinked by major landlords blinded by greed.”
Mr. Ferrara, who is also an adjunct professor at New York Law School, 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.”
50 Murray Street
In a separate (but related) development, the owners of 50 Murray Street (another building converted to residential use under the 421-g program) petitioned the United States Supreme Court to overturn the New York State Court of Appeals decision that sided with FiDi renters. A brief filed last October 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 affirmed the New York Court of Appeals decision.
Similar suits brought by residents of 50 Murray Street, 90 West Street, 53 Park Place, Ten Hanover Square, and 90 Washington Street, among other Lower Manhattan buildings, are still pending.
The court complaint in another of these cases alleges that the landlord’s, “failure to follow rent regulations was part of a fraudulent scheme to deregulate apartments in the building.” That complaint goes on to argue that the landlord’s, “conduct demonstrates an attempt by the Defendant to circumvent the requirements of New York City’s rent regulations, all at the expense of the tenants residing in the building.”
Words Come to Life Amid New Installation in Battery Park City
Poets House—a library, creative space, and meeting place that invites poets and the public to step into the living tradition of poetry, while cultivating a wider audience for the art—will celebrate its tenth anniversary in Battery Park City by launching the Poetry Path, an immersive public art installation running the northern length of Battery Park City, from Rockefeller and Teardrop Parks to the North Cove Marina.
Produced in partnership with the Battery Park City Authority (BPCA), the Poetry Path features fragments from more than 40 poets, reproduced on bench slats, banners, pavers, pathways, and signs. These are accompanied by in-depth Poetry Path web resources and a series of virtual events. Free and open to the public, the Poetry Path will remain in place through 2021. To read more…
Rice and Beans
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Another Much Admired Downtown Small Business Says Goodbye
In another symptom of the life-and-death struggle being waged by small businesses against the economic downtown triggered by the pandemic coronavirus, the Amish Market, which has served Lower Manhattan since 1999, will be closing by the end of September.
In a story first reported by Tribeca Citizen, the owners (who are not Amish) have announced that their reduced volume of business—which has shrunk by roughly 90 percent since the health crisis began—has rendered them insolvent.
Alliance Distributes Masks at Lower Manhattan Schools
The Downtown Alliance has distributed 28,000 personal protective equipment masks to seven Lower Manhattan schools, for use by students, teachers and staff.
Alliance president Jessica Lappin, who delivered the masks to the Spruce Street School, said, “we are pleased to be able to present our local schools with necessary personal protective equipment to help them kick off the academic year. It’s essential to help protect our students, hardworking teachers and support staff as they embark on a safe, productive and healthy semester.” To read more…
Bionomics Begins at Home
BPCA Launches Ten-Year Sustainability Plan
The Battery Park City Authority (BPCA) has begun implementation of a landmark plan to “achieve progressive sustainability targets over the next decade, and lay the groundwork for continued sustainability action after 2030.”
Join scholar Chris Wu as he virtually guides guests through the posters in The Sleeping Giant, talking about the evolution of printed Chinese typography. Chris Wu is a designer and creative director based in New York. He is a partner of the multidisciplinary design practice Wkshps.
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City Council Backs Study of Drones to Inspect Buildings
Lower Manhattan skies may soon be slightly more crowded. The City Council on Wednesday enacted legislation authorizing the Department of Buildings to study the feasibility of conducting facade inspections using the small, robotic aircraft known as drones.
City law requires such facade inspections every five years for all buildings taller than six stories. These reviews are usually performed by contractors suspended from the roof of each structure, but the danger of such overhead work requires the installation of the unsightly scaffolds commonly known as sidewalk sheds.
The impact of such a program would likely be especially significant in Lower Manhattan. To read more…
‘How Solitary the City Has Become…’
A Downtown Photographer, Forced to Pause and Reflect, Sees New York in a New Light
A Battery Park City resident has created a haunting evocation of Manhattan in the time of COVID. His new book, a compendium of photographs entitled “Quiet in NYC: Images from a Time of Quarantine,” eloquently documents the stark beauty and forlorn grace of an erstwhile-bustling streetscape, suddenly rendered desolate.
“The project was born from the inability to do just about anything else but walk around the City in the early days of the quarantine,” says Brad Fountain, who is a graphic designer in his professional life. “No sports, shopping, concerts, or museums. The stark emptiness of the streets seemed to be asking to be photographed. I could walk for hours and see only a half a dozen people, even if I visited some of the most famous sites in New York.”