The BroadsheetDAILY ~ 3/11/21 ~ Quid Pro No? Another FiDi Renter Seeks Recompense for Years of Rent Overcharges

Quid Pro No?

Another FiDi Renter Seeks Recompense for Years of Rent Overcharges

A map, compiled by New York University’s Furman Center (which advances research and debate on housing, neighborhoods, and urban policy) illustrating the dozens of Lower Manhattan buildings—erstwhile office towers, converted to residential use—that have benefited from the 421-g program, which gave developers tax breaks for creating some 5,000 apartments, but was also supposed to secure rent protections for tenants.

The wave of Financial District tenants going to court to demand restitution from years of illegally high rent gathered further momentum on Tuesday, when another tenant at 50 Murray Street filed court papers arguing that she is entitled to rent stabilization protection along with reimbursement for six years worth of overcharges, and triple damages.

Heather Horn moved into 50 Murray Street in May, 2014, at an initial rent of $4,695 per month. Since then, according the documents filed with the new York State Supreme Court, she has renewed her lease six times, and her rent has increased by almost 26 percent, to $5,900.

These increases are based on unregulated market rates, under which landlords are legally free to raises rents as much as they believe that can get from tenants. But increases limited to those allowed rent stabilization during the same years yield a very different set of numbers.

The City’s Rent Guidelines Board (RGB), which regulates increases for rent-stabilized apartments, has allowed rents to rise only four times since Ms. Horn moved into 50 Murray Street: in 2015 (1.0 percent), 2017 (1.25 percent), 2018 (1.5 percent), and 2019 (1.5 percent). For 2016, 2020, and 2021, the RGB permitted no increases at all.

These four rent escalations, when compounded, yield a total increase 5.35 percent. This means that today, Ms. Horn’s maximum allowable rent should be approximately $4,946.18. But the amount she was actually paying climbed above this benchmark in the first lease renewal she signed, in 2015, when she began paying $5,095. (The 1.0 percent increase authorized for that year would have permitted her rent to climb just to $4,741.95.) Over the following two years, when the RGB authorized no increases at all, Ms. Horn’s rent climbed to $5,300 and $5,565. When the Board began authorizing small increases again, in 2018, her maximum authorized rent could have increased to $4,801.22. But her landlord raised it to $5,634. In the following two years, the RGB allowed increases of 1.5 percent, which means that Ms. Horn’s rent could have legally increased to $4,813.08 (in 2019) and $4,885.27 (for 2020). But the renewal leases the landlord presented her with instead jumped the rent to $5,850 and $5,900.

Based on these calculations, it appears that Ms. Horn has paid approximately $55,422.96 in illegally high rent since 2014. The lawsuit she filed on Tuesday is asking for reimbursement for all overcharges, plus interest, plus triple damages (as provided for under the Rent Stabilization Law and Code), plus attorney’s fees and expenses. While the interest, expenses, and legal fees are difficult to calculate, just the reimbursement and damages portion of her claim appears to come to approximately $221,691.

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.

But tenants at half a dozen buildings have come to realize that their landlords did not offer the legally required benefits and protections of rent stabilization. This has led to litigation not only at 50 Murray Street, but also at 90 West Street, 90 Washington Street, 63-67 Wall Street, Ten Hanover Square, and 53 Park Place.

Court papers related to all of the lawsuits allege that in these buildings, very few (in some cases, none) of the apartments were ever registered with City or State regulatory agencies as being subject to rent stabilization. The suits also contend that tenants were never informed of their rights to rent-stabilized leases, and instead were compelled to pay unregulated, market-rate rents and subsequent increases.

The language of the 421-g statute that covered all of these buildings (and dozens of other 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 (until being repealed in 2019) for rent stabilization to be annulled on any apartment once the legal rent reaches a threshold of $2,700 per month.

This incentivized developers to 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. It 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.

The rental building at 50 Murray Street, where tenants allege they have been denied rent stabilization benefits to which they are legally entitled.

When residents of the first buildings to file suit (50 Murray, 90 West, and 53 Park Place) 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.

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 governed it, such as vacancy decontrol.

In October 2019, the owners of 50 Murray Street petitioned the United States Supreme Court to overturn the New York State Court of Appeals decision that sided with FiDi renters the previous June. A brief filed in that action 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.”

A month later, 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, 2020, the U.S. Supreme Court sided with the tenants by declining to consider the landlord’s petition, which effectively affirmed the New York State Court of Appeals decision.

Matthew Fenton

Letter

Dear Neighbors,

I have a dream . . .

I dreamed of a Seaport Museum from Scotch and Soda to Sarah Jessica Parker as one renovated building structure housing the lynchpin of the Historic District with a brand new state of the art building next door across from the River and our ships.

I dreamed of this lynchpin with a $50M endowment; enough to bring our museum into the digital age. All this was foreseen by CB1 when we created the Save our Seaport Museum Taskforce.

I dreamed of our New Market Pier surviving its predicted collapse into the East River and being rebuilt ending in a much needed community center for downtown.

I continue to dream of charitable funding to so many institutions including the Rescue Mission, our downtown hospital, our Spruce Street School, our Peck Slip School, our Downtown Little League. All these and more funded thru Howard Hughes, member of our community.

I dream of the addition of 100 truly affordable housing in our community. This will not replace the 1650 affordable middle income housing that SBT residents voted to remove from the community in favor of greed. Many of these folks opposing the above in favor of their view corridor.

Now . . . unfortunately, all of the above have been traded for “I want to keep my view of the bridge” without concern for the overall picture our our Seaport. Indeed, SOS has translated to Sabotage our Seaport. We need to look past our personal needs and represent the South Street Seaport and our community.

A vibrant Seaport Historic District increases the land values, our property value. Before Pier 17 opened the Seaport was veritably a Ghost Town.

Please . . . we could lose all of the above and simply end up with a 120 feet +20-40 additional feet for the Flood Zone blockhouse. This is As Of Right!

Respectfully submitted,

Paul Hovitz, Retired Vice Chair of CB1

They Listened

City and Seaport Developer Revamp Pavilion Plans,

In Response to Community Input

Community Board 1 (CB1) is endorsing a proposal by Howard Hughes Corporation, the real estate firm that is redeveloping the South Street Seaport, and the City’s Parks Department, to create a new outdoor restaurant underneath the FDR Drive.

The plan calls for an oak-framed pavilion that will be 11 feet tall and 76 feet long, situated between FDR Drive, at South and Fulton Streets, in front of the historic and newly refurbished Tin Building. Open patios will extend from the north and south ends of pavilion, where food and drink will be served year-round. Removable panels will provide shelter from the elements during cold-weather months. To read more…

A Decade of Development

Lower Manhattan Quietly Becomes Home to Equivalent of a New Neighborhood – Almost None of It Affordable

In the ten-year period that ended in 2020, Lower Manhattan absorbed the equivalent of an additional Battery Park City, through the number of new households created by real estate development, according to an analysis from the Department of City Planning.

Community District 1—a collection of neighborhoods encompassing 1.5 square miles, bounded roughly by Canal, Baxter, and Pearl Streets and the Brooklyn Bridge — saw the creation of 6,477 new housing units in the decade that begin in 2010. To read more…

They Plan to Unpave the Parking Lot, and Put Up a Paradise

The East Side Competes with the Hudson as Downtown’s Go-To Waterfront Destination

Although the Hudson River Park has emerged in recent years as a focus of Lower Manhattan community life, it may soon have a rival. Planning and development for an East River waterfront park are roughly a decade behind the political dialog and physical construction surrounding the West Side’s network of piers and esplanades, but are nonetheless gathering momentum. To read more…

Today’s Downtown Calendar

Thursday March 11

Seaport District

Fitness classes via Instagram released every Tuesday and Thursday, featuring Trooper Fitness, Pure Barre and Lyons Den Power Yoga. Free

12NOON

China Institute

For thousands of years, Chinese emperors, literati scholars, and great men of letters have waxed poetic about the pleasures of getting drunk. The distilled spirit known as “Baijiu,” 白酒，was developed by the Ming dynasty, but it was during the Communist era that this “working man’s drink” was elevated to the national sensation that we see in China today. Any businessperson will tell you that nary a deal can be sealed without a flurry of baijiu shots and bleary-eyed, drunken toasts. Derek Sandhaus, author of Drunk in China and founder of a Baijiu company, will share the secrets of the world’s most fiery liquor. As China becomes more international, how has its drinking culture changed? Will the West learn to drink baijiu and clink glasses with China? Free

2PM

Museum of Jewish Heritage

More than 7,000 Danish Jews were evacuated to Sweden in October 1943. After crossing the Øresund by boat and landing on Swedish shores, approximately 6,000 of the refugees were interviewed by the Swedish Police Authority, to whom they disclosed a wealth of information about their lives in Denmark and the logistics of their escape. The Police Authority’s records have only recently been uncovered and explored by Danish scholars. Join Therkel Straede, Professor of Contemporary History at the University of Southern Denmark in Odense, for a discussion of the police records and what they reveal about this extraordinary feat of rescue. $10

6:30PM

Fraunces Tavern Museum

In this lecture, Donald Johnson will discuss his book Occupied America: British Military Rule and the Experience of Revolution. In the midst of British military occupation, men and women from a variety of backgrounds navigated harsh conditions, mitigated threats to their families and livelihoods, took advantage of new opportunities, and balanced precariously between revolutionary and royal attempts to secure their allegiance. In so doing, Johnson argues that these people and their experiences shaped the course of the Revolution, gradually discrediting Britain’s ability to govern the former colonies and rotting their attempts to restore order from the inside out. This lecture will take place via Zoom. Registration ends at 3:30pm on the day of the lecture. $5

CLASSIFIEDS & PERSONALS

Swaps & Trades, Respectable Employment, Lost and Found

To place a listing, contact editor@ebroadsheet.com

A Guide To Lower Manhattan’s 2021 Light Installations

Winter is a little brighter in Lower Manhattan, where you can bask in a whole bunch of colorful light installations this season.

There are two Downtown Alliance-sponsored public art projects on loan from Amsterdam’s Light Art Collection at the public plaza adjacent to 85 Broad.

The sculpture “C/C,” designed by Singapore-based artist Angela Chong, is a bench for seating that transforms into a colorful LED light show at night.

“Talking Heads,” designed by Hungarian artist Viktor Vicsek, is made up of two massive heads dotted with 4,000 LED lights that change to reveal different facial expressions in conversation.

Another Alliance sponsored installation is Ziggy. At the public plaza at 200 Water Street, this interactive piece by design studio Hou de Sous uses cords tied to a steel structure illuminated by colorful lights to create exciting views of the surrounding landscape. You can enter the installation from all angles, and sit on the several “gateways” that serve as benches. At night, Ziggy’s lights add an inviting extra pop of brightness.

Head up Water Street to the Seaport and find “Electric Dandelions,” created by artist Abram Santa Cruz and LA-based art collective Liquid PXL and presented by The Howard Hughes Corporation. In daylight, the ten 28-foot steel-and-acrylic structures look like dandelion flowers; at night, LED lights turn the structures into colorful, rhythmic animations.

(sponsored content)

Downtown Depreciates

Reports Show That Lower Manhattan Properties Are Dwindling in Value

A range of reports indicates that the Downtown real estate market has imploded in the wake of the recession brought on by the pandemic coronavirus. The Downtown Alliance’s “2020 Lower Manhattan Real Estate Year in Review” documents that office leasing fell by almost 70 percent from 2019 levels, to deeper troughs than those that followed the 2008/2009 financial crisis, while local office vacancies spiked to 20-year highs.

Perhaps the most radical undoing, however, was on the residential front. “According to our research, an estimated 40 percent of the local population left amid the pandemic,” To read more…

9/11 Victim Compensation Fund Report

More Survivors than Responders Now are Submitting Claims

The September 11th Victim Compensation Fund (VCF) has released its annual report for 2020, which documents some significant developments.

Over the course of its ten years of operation thus far, the VCF has awarded $7.76 billion to more than 34,400 individuals who have suffered death or personal injury as a result of the terrorist attacks of September 11, 2001 and their aftermath. The vast majority of these injuries take the form of illness caused by exposure to toxic materials that were released by the destruction of the World Trade Center.

TODAY IN HISTORY

March 11

1971 – Philo T Farnsworth, US TV pioneer, dies at 64

1425 BC – Thutmose III, Pharaoh of Egypt, dies (according to the Low Chronology of the 18th Dynasty).

537 – Goths lay siege to Rome

1513 – Giovanni de’ Medici chosen Pope Leo X

1665 – New York approves new code guaranteeing Protestants religious rights

1669 – Volcano Etna in Italy erupts killing 15,000

1702 – First English daily newspaper “Daily Courant” publishes

1789 – Benjamin Banneker with L’Enfant begin to lay out Washington DC

1824 – US War Dept creates the Bureau of Indian Affair

1851 – Giuseppe Verdi’s opera “Rigoletto” premieres in Venice

1862 – Lincoln removes George McClellen as general-in-chief

1867 – Great Mauna Loa eruption (Hawaiian volcano)

1888 – Great blizzard of ’88 strikes northeastern US

1897 – A meteorite enters the earth’s atmosphere and explodes over New Martinsville, West Virginia. The debris causes damage but no human injuries are reported.

1918 – Moscow becomes capital of revolutionary Russia

1941 – FDR signs Lend-Lease Bill (lend money to Britain)

1953 – American B-47 accidentally drops a nuclear bomb 15,000 feet on Mars Bluff, South Carolina; it created a crater 75 feet acrosss, but the nuclear core did not detonate, due to 6 safety catches

1982 – Menachem Begin and Anwar Sadat sign peace treaty in Washington DC

1985 – Mikhail Gorbachev replaces Konstantin Chernenko as Soviet leader

1988 – British pound note ceases to be legal tender, replaced by one pound coin

1997 – Ashes of Star Trek creator, Gene Roddenberry are launched into space

2004 – Terrorists explode simultaneous bombs on Madrid’s rail network ripping through a commuter train and rocking three stations, killing 190

2011 – An earthquake measuring 9.0 in magnitude strikes 130 km (80 miles) east of Sendai, Japan, triggering a tsunami killing thousands of people. This event also triggered the second largest nuclear accident in history, and one of only two events to be classified as a Level 7 on the International Nuclear Event Scale.

2013 – North Korea cuts the phone line with South Korea, breaching the 1953 armistice

Births

1544 – Torquato Tasso, Italy, Renaissance poet (Aminta, Apologia)

1860 – Thomas Hastings, NYC, architect (NY Public Library)

1903 – Dorothy Schiff, publisher (NY Post)

1903 – Lawrence Welk, Strasburg ND, orchestra leader (Lawrence Welk Show)

1926 – Ralph Abernathy, civil rights leader (Southern Christian Leadership)

1931 – Rupert Murdoch, Australia, publisher (NY Post)/CEO (FOX-TV)

Weddings

1302 – Romeo & Juliet’s wedding day, according to Shakespeare

Deaths

1955 – Alexander Fleming, English bacteriologist (penicillin), dies at 73

1957 – Richard E Byrd, US, explorer (Antarctica), dies at 68

1958 – Ole Kirk Christiansen, Danish inventor of Legos (b. 1891)

1971 – Philo T Farnsworth, US TV pioneer, dies at 64

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