After last week’s landmark Stuyvesant Town decision — in which a state appeals court found that the mega-developer Tishman Speyer had misused city tax breaks and illegally converted to market rate thousands of rent-controlled apartments in the historic complex — one would expect some confusion. But one wouldn’t expect the tenants whose apartments were illegally deregulated to be told that, at least for now, they should continue paying market-rate rents.
But that’s just what tenants are being told to do, reports Curbed. In addition to that disappointing bit of information, in an email blast sent shortly after the decision, the Stuyvesant Town-Peter Cooper Village Tenants Association advised residents not to file a rent overcharge application with the state. According to that email, the tenants could risk forfeiting their rights to be a member of the giant class action lawsuit they brought against the landlord…
Tishman Speyer received special tax-breaks, as well as some assistance from the Bloomberg administration, for the purchase of 110, largely rent-controlled apartment buildings in 2006. At the moment of the record $5.4 billion purchase, the company was promising investors high returns – returns that could only be achieved by charging market-rate rents. The company argued that it acted within its rights when it deregulated the apartments.
In response to last’s weeks decision, the real estate community made some dire predictions. A prominent lawyer who represents landlords was quoted in the press as saying the decision “could trigger the entire collapse of the real estate market.” Today, Crain’s New York tells landlords that (surprise!), they will survive; the decision is going to to affect far fewer apartments than was previously thought.
“Ironically, even for Tishman Speyer, which led the group that acquired the complex for $5.4 billion in 2006, the financial damage is surprisingly modest,” adds Crain’s. “…Tishman Speyer-led funds put only $112 million into the transaction. What’s more, they wrote down the value of that investment to zero last year.”