Lower Manhattan’s Local News
Justice Delayed, But Not Denied
Ten Years Later, It Turns Out That FiDi Tenants Were Entitled to Rent Stabilization
Tenants at two FiDi rental buildings scored a major victory on June 25 when New York State’s highest court ruled that they had been illegally deprived of rent stabilization benefits. The suit, which has been winding its way through the courts for a decade, focused on residents of 90 West Street and 50 Murray Street, but has implications for more than 5,000 apartments spread across more than a dozen buildings throughout Lower Manhattan.
Both 50 Murray and 90 West are former office buildings that were converted to residential use — the former in 1999 and the latter in 2005. The developers sought lucrative tax exemptions and abatements given to such buildings within a zone created by the State legislature (in Lower Manhattan, south of a line created by connecting Murray Street to City Hall and the Brooklyn Bridge) in 1995. This program, known as 421-g, was designed to encourage Downtown’s transformation into a residential district, by offering rich incentives to developers. But it also offered a potent lure for tenants who moved to such buildings: their apartments would be subject to rent stabilization for as long as developers received the tax benefits.
But while the language of the 421-g statute 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 when this was considered in the light of another part of New York’s housing law, known as “luxury decontrol,” which allows for rent stabilization 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, 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 50 Murray and 90 West 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.
Lawyers for the tenants argued that legislators would not have written the language about rent stabilization into the 421-g statute if they had intended for such protections to be made moot by rents that began above the threshold of luxury decontrol. Attorneys for the developers and landlords made the case that, if Albany’s lawmakers had intended the 421-g catchment to be an exception from the rules about luxury decontrol that apply elsewhere, they would have made this explicit in the statute, but had not. (They noted, also, that in other, similar situations — such as the 421-a and J-51 tax abatement programs — legislators had specifically exempted such apartments from luxury decontrol, but no such carve-out was created for 421-g.)
In the initial trial, in 2017, the tenants won, with the court ruling that the legislature’s clear intent had been that luxury decontrol would not apply to apartments receiving 421-g tax benefits. Last year, however, the Appellate Division overturned that decision, finding that the lack of an explicit exception made 421-g apartments subject to luxury decontrol. This reversal was influenced, in part, by a filing from former Mayor Rudolph Giuliani, who weighed in on behalf of the landlords, telling the court that it has always been his understanding that vacancy decontrol would apply within the 421-g zone, even if that meant these apartments were effectively removed from rent stabilization on the day the first tenants moved in.
Last month, the case came before the State’s highest panel, the Court of Appeals. During oral arguments before the seven-judge court, Robert Smith, one of the attorneys for the tenants, argued that lawmakers, “could not have meant to eviscerate the very rent control they were enacting.” He also alleged that Mr. Giuliani was, “trying to achieve high-rent decontrol, but trying to achieve it in a statute that does not provide for it, by putting it into the legislative history.”
James McGuire, a lawyer for the landlords, called Lower Manhattan a residential “ghost town” in the 1990s, and said, “when the legislature enacted this program, they obviously hoped it was going to succeed, and a vibrant community was going to ensue. And it did succeed, probably beyond their wildest expectations.”
Citing rents thousands of dollars above the vacancy decontrol threshold of $2,700 per month, Mr. McGuire asked, “does it make any sense whatsoever to think that either house [of the State legislature] thought that people who were paying that kind of rent were deserving of the solicitude and the protections of the rent stabilization law?”
Court of Appeals judge Michael Garcia retorted, “but then why put that provision in at all?”
Mr. Smith noted that, “Mr. McGuire makes a, “come on, you don’t want any rent control for the rich” argument. What those arguments always forget is that if the law had been followed, if the rents were where they should be, the people in those buildings would be considerably less wealthy. You’d have more middle-class people in the buildings, because the rents would be lower, and that’s the whole point.”
Returning to Mr. McGuire’s point about the law’s primary intent being to encourage residential development, Janet DiFiore, the chief judge of the State’s Court of Appeals, asked, “so the purpose is revitalization?
Mr. McGuire answered, “yes, right, of this ghost town.”
Judge Jenny Rivera noted, skeptically, that, “one could seek to revitalize, and also to provide for affordable housing,” adding that, “revitalization, of course, could also mean having affordable housing, where you have a thriving community of tenants who live in that affordable housing. They’re not mutually exclusive.”
When Mr. McGuire tried to point to Mr. Giuliani’s filing as indicative of what the legislature had intended, Judge Leslie Stein asked rhetorically, “since when is the Mayor a part of the legislature?”
Judge Rivera then asked lawyers for both sides, “if the legislative history is completely at odds with the text, and the only sensical reading of the text, which do we choose between?”
Mr. Smith argued that, “the tie breaker is the text, Your Honor. You read the statute is how you figure it out.”
Judge Eugene Fahey seemed to agree, positing that, “we, as a court, always rely first and foremost on the language.”
On June 25, the Court of Appeals handed down its decision, finding (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.
Paul Newell, a Lower Manhattan political leader, housing activist, and longtime advocate for affordability, said, “that these apartments are no longer subject to ‘luxury’ decontrol means that thousands of Downtown families now have the security of knowing they can live here without fear of eviction or unconscionable rent increases.”
“Communities cannot thrive unless residents know they are secure in their homes,” he continued. “People do not invest the psychic energy it takes to make a geographic area a neighborhood if they can be evicted at any time. This win will pay dividends for Lower Manhattanites for decades to come.”
Mr. Newell, who helped lead the legal fight on behalf of 421-g tenants, added, “I am tremendously proud to have worked for over ten years to extend rent regulation to 421g tenants. But the largest credit goes to the champion of Lower Manhattan affordable housing, the late Tom Goodkind. Tom’s passing earlier this year was a huge loss to our community. So it is especially moving to see his legacy so affirmed and made permanent today.”
Mr. Goodkind was a longtime member of Community Board 1, who served as the first chair of that panel’s Housing Committee, and fought relentlessly to preserve affordability protections in Lower Manhattan.
A few months before his death, Mr. Goodkind told the Broadsheet that, “the revival in Lower Manhattan’s residential population has been primarily due to 421-g conversion from office to apartments in the Financial District. The ongoing problem of landlords receiving 421-g tax abatements but not giving our neighbors stabilization in return has always been abhorrent.”
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Cass Gilbert and the Evolution of the New York Skyscraper
by John Simko
Free Flicks Under the Stars
The Howard Hughes Corporation is offering Seaport Cinema, a series of free, outdoor movies on the rooftop of Pier 17, throughout the summer.
Tonight’s film is Shark Tale. Doors open at 6:30 pm; films start at sundown.
The Hudson River Park Trust is offering two free, summer film programs.
On Wednesday evenings, films are shown on Pier 63 (near 24th Street), with Do the Right Thing scheduled for July 31.
Monday July 29
Alexander Hamilton U.S. Custom House Tour
Smithsonian’s National Museum of the American Indian
Tour highlights include a discussion of the history of the site, architect Cass Gilbert, viewing the Collectors office; Tiffany woodwork; Reginald Marsh murals; and the 140-ton rotunda dome by Raphael Gustavino. One Bowling Green. https://americanindian.si.edu/calendar
BPCA and CB1 to Host Discussion of Ball Fields Resiliency Plans Tonight
Tonight (Thursday, July 25), the Battery Park City Authority (BPCA) and Community Board 1 (CB1) will co-host a public meeting to review resiliency plans for the ball fields in Battery Park City’s northern section. To read more…
Dulce et Decorum Est…
City Council Overrules CB1 on Naming Tribeca Intersection for NYPD Officer Killed in Iraq
The City Council on Tuesday overturned a preliminary determination made by Community Board 1 last October, by deciding to approve a proposal to co-name the Tribeca intersection of West Broadway and Lispenard Street in honor of James D. McNaughton, who, on August 2, 2005, at age 27, became the first New York City Police officer to be killed in action while serving in “Operation Iraqi Freedom.”
In a vigorous debate, CB1 members voiced competing priorities.
Bumptious Bumpkins Make for Bus Bumpy Ride for Locals
Lower Manhattan community leaders are grappling with concerns about crowding, safety, and possible criminal activity surrounding the Connection shuttle bus, operated by the Downtown Alliance, which ferries riders around Lower Manhattan, free of charge.
For several years, apprehension about spurious ticket sellers hawking fake boarding passes to boats that purport to bring tourists to the State of Liberty have overlapped with concerns about the Connection bus.
A Super-Tall Laid Low
Stalled Tower at 125 Greenwich Street May Be Headed to Foreclosure
The troubled residential tower at 125 Greenwich Street may be facing foreclosure by lenders who say the development team has defaulted on the terms of several mortgages.
In May, work stopped on the building when multiple construction contractors filed liens against the developers for some $40 million in unpaid fees. This prompted several creditors — most prominently, the United Overseas Bank — to file notice with New York courts that they are owed $199 million in mortgage payments. The bank’s overall loan to the developers of 125 Greenwich is more than $450 million, and it is only one of half a dozen creditors.
EYES TO THE SKY
July 22 – August 4, 2019
The Eagle has landed
It was a three-day journey from Earth to the Moon for the three Apollo 11 astronauts aboard the spaceship, or command module, Columbia, headed for the first landing of humans on the moon. Columbia – named for the historical epithet for the Americas – lifted off from the Kennedy Space Center in Florida on the morning of July 16, 1969. Soon after launch, Columbia docked with the lunar module, the Eagle, a vehicle designed to land two of the astronauts on the Moon while the third stayed with Columbia until the moonwalk was completed.
Today in History
238 – The Praetorian Guard storm the palace and capture Pupienus and Balbinus. They are dragged through the streets of Rome and executed. On the same day, Gordian III, age 13, is proclaimed emperor.
904 – Sack of Thessalonica: Saracen raiders under Leo of Tripoli sack Thessaloniki, the Byzantine Empire’s second-largest city, after a short siege, and plunder it for a week.
1148 – The Siege of Damascus ends in a decisive crusader defeat and leads to the disintegration of the Second Crusade.
1836 – Inauguration of the Arc de Triumphe in Paris
1848 – Irish Potato Famine: Tipperary Revolt: In County Tipperary, Ireland, then in the United Kingdom, an unsuccessful nationalist revolt against British rule is put down by police.
1914 – The Cape Cod Canal opened.
1921 – Adolf Hitler becomes leader of the National Socialist German Workers Party.
1958 – President Eisenhower signs into law the National Aeronautics and Space Act, which creates the National Aeronautics and Space Administration(NASA).
1967 – Vietnam War: Off the coast of North Vietnam the USS Forrestal catches on fire in the worst U.S. naval disaster since World War II, killing 134.
1976 – In New York City, David Berkowitz (a.k.a. the “Son of Sam”) kills one person and seriously wounds another in the first of a series of attacks.
1981 – A worldwide television audience of over 700 million people watch the wedding of Charles, Prince of Wales, and Lady Diana Spencer at St Paul’s Cathedral in London.
1987 – British PM Margaret Thatcher and President of France Franзois Mitterrand sign the agreement to build a tunnel under the English Channel (Eurotunnel).
1580 – Francesco Mochi, Italian sculptor (d. 1654)
1805 – Alexis de Tocqueville, French historian and philosopher (d. 1859)
1904 – J. R. D. Tata, French-Indian pilot and businessman, founded Tata Motors and Tata Global Beverages (d. 1993)
1905 – Dag Hammarskjцld, Swedish economist and diplomat, 2nd Secretary-General of the United Nations, Nobel Prize Laureate (d. 1961)
1933 – Colin Davis, English race car driver (d. 2012)
1936 – Elizabeth Dole, 20th United States Secretary of Labor
1953 – Ken Burns, American director and producer
1030 – Olaf II of Norway (b. 995)
1507 – Martin Behaim, German-Bohemian geographer and astronomer (b. 1459)
1856 – Robert Schumann, German composer and critic (b. 1810)
1890 – Vincent van Gogh, Dutch painter and illustrator (b. 1853)
1974 – Cass Elliot, American singer (b. 1941)
1981 – Robert Moses, American urban planner, designed the Northern State Parkway and Southern State Parkway (b. 1888)
Cruise Ships in the Harbor
Arrivals and Departures
Tuesday, July 30
Inbound 7:15 am; outbound 4:30 pm; Grand Turk, Turks & Caicos/San Juan, PR/Dominican Republic
Wednesday, July 31
Inbound 6:30 am (Brooklyn); outbound 7:00 pm; New England/Canadian Maritimes/Quebec City
Thursday, August 1
Anthem of the Seas
Inbound 6:30 am (Bayonne); outbound 4:00 pm; Bermuda/Eastern Caribbean
Saturday, August 3
Inbound 7:15 am; outbound 3:30 pm; Port Canaveral, FL/Bahamas
Adventure of the Seas
Inbound 6:30 am (Bayonne); outbound 3:00 pm; Bar Harbor, ME/Canadian Maritimes
Sunday, August 4
Inbound 7:30 am Bayonne; 4:00 pm; Bermuda
Inbound 6:15 am; outbound 4:30 pm; Bermuda
Many ships pass Lower Manhattan on their way to and from the Midtown Passenger Ship Terminal. Others may be seen on their way to or from piers in Brooklyn and Bayonne. Stated times, when appropriate, are for passing the Colgate clock in Jersey City, New Jersey, and are based on sighting histories, published schedules and intuition. They are also subject to tides, fog, winds, freak waves, hurricanes and the whims of upper management.
The Tale of the Ticker Tape,
or How Adversity and Spontaneity
Hatched a New York Tradition
What was Planned as a Grand Affair became a Comedy of Errors
While the festivities in New York Harbor didn’t go as scripted that afternoon, the spontaneous gesture it generated from the brokerage houses lining Broadway famously lives on more than a century later.
On October 28, 1886, Liberty Enlightening the World was to be unveiled to New York City and the world as it stood atop its tall base on Bedloe’s Island. But the morning mist had turned to afternoon fog, blurring the view of the statue from revelers on the Manhattan shore and the long parade of three hundred ships on the Hudson River.
Come Hell and High Water
Federal Report Foresees More Frequent Flooding for Lower Manhattan
A new report from the
National Oceanic and Atmospheric Administration, the federal scientific agency responsible for study of oceans, major waterways, and the atmosphere, predicts that Lower Manhattan will, in the next 12 months, experience between double and triple the number of flooding days that it did in 2000.
Anthem of the Seas Spins About
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