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Tuesday, March 24, 2009

Tenants facing rent de-regulation win reprieve - Crain's New York Business

Tenants facing rent de-regulation win reprieve - Crain's New York Business

Some tenants who were about to lose their rent-regulated apartments because of their salaries have been granted a reprieve.

The agreement to suspend what are known as high-income deregulations comes in the aftermath of a decision earlier this month by the Appellate Division of New York’s Supreme Court, which ruled that apartments in buildings that receive certain tax benefits must remain rent regulated. That decision stemmed from a 2007 case brought by residents of Stuyvesant Town and Peter Cooper Village, who alleged that Tishman Speyer and previous landlord Metropolitan Life, illegally deregulated apartments and wrongfully raised rents while receiving J-51 tax benefits, which are awarded for building improvements. However, Tishman Speyer was following standard industry practice.

In the wake of that ruling, tenants’ lawyerJack Lester filed a lawsuit demanding renewed leases at rent-stabilized rates for two clients whose apartments were about to lose their rent-regulated status. Mr. Lester claimed it was inappropriate to deregulate such apartments when the court ruling essentially said they should remain stabilized. However, Tishman Speyer is hoping to have the ruling overturned on appeal. The big landlord has filed a request for an appeal but the court has not decided whether to grant it.

Mr. Lester and lawyers for Tishman Speyer and the New York State Division of Housing and Community Renewal agreed to halt high-income deregulations while the court case continues. DHCR is in charge of deregulating apartments. Under state law, apartments can be deregulated when the monthly rent hits $2,000 a month and the tenant has earned $175,000 annually for two years.

Mr. Lester believes the agreement he reached should cover all tenants in rent stabilized buildings with J-51 tax benefits. A spokesman for DCHR didn’t have an immediate comment.

Tishman Speyer Properties purchased Stuyvesant Town and Peter Cooper Village in 2006 for $5.4 billion with the intention of quickly deregulating apartments to pay off debt. However, it hasn’t been able to change the status of many of the apartments and is losing money on the massive deal.

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