Appeals Court Will Hear Stuy Town Dispute (Updated)

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This week, the Second Circuit New York State Court of Appeals agreed to take a look at a case that could have implications for at least 350,000 tenants in New York.

The court will examine a recent decision in the ongoing legal battle that pits the tenants of Stuyvesant Town/Cooper Village case against the large real estate developer Tishman Speyer Properties.

At issue in the case is whether Tishman Speyer, which bought the historic properties in 2003, was allowed to deregulate apartments that had been rent-stablized for thirty years. (Landlords who buy properties with a certain number of rent-stabilized units receive special tax breaks. Tishman Speyer received the tax breaks, but then immediately began deregulating the apartments and selling them at market rate.)

On March 5, a State Supreme Court said that Tishman Speyer couldn't do that: since the company got beneficial tax breaks for buying rent-stabilized properties, in what are known as J-51 buildings, they couldn't turn around and deregulate them. The developer appealed, and the Second Circuit will be taking this up in a few weeks.

Meanwhile, a lot is going on behind the scenes: A few weeks ago, the Division of Housing and Community Renewal -- the state agency that deals with rent regulation -- has put out a press release giving advice to tenants.

In a tiny line at the bottom of the page, the release tells tenants who feel they are in danger of getting pushed out because their apartments might be deregulated to sit tight: Feel free to send your complaints to the agency, but nothing would be done until the outcome of the case had been determined once and for all.

That press release struck a number of people as a little odd. It turns out that the tenants had every reason to worry. According to Dan Garodnick, councilman for the Stuy Town district, the agency has continued to send deregulation notices to tenants since March -- after the state supreme court said Tishman Speyer couldn't deregulate them.

"They are now deregulating units in a J-51 building," said Garodnick. "When the only legal precedent says they can't do that."

In an angry letter to the agency this week, Garodnick and some other officials -- including Borough President Scott Stringer, State Senators Daniel Squadron and Liz Krueger, and Councilwoman Rosie Mendez -- wrote, "We fail to understand why rent overcharge claims by tenants are being stalled by the DHCR while deregulation claims by landlords are proceeding unabated."

This is especially disturbing, they added, because the agency had allowed tenants to be evicted right up to the state Supreme Court ruling, even while publicly promising to abide by the ruling. That ruling -- though stalled now until an appeals court decides what to do -- could render those evictions illegal.

The agency could not be reached by phone for comment. Photo via Wikipedia.


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