The Irony of the Stuy Town Tenant Suit
Eliot Brown Sept. 14, 2009, 2:50 p.m.
The extraordinarily significant Stuyvesant Town lawsuit now pending in New York State’s highest court has been quick to galvanize opinion in a familiar divide, pitting advocates of affordable housing against rent-hungry landlords. With the fate of rent regulation rules at stake in the 13,000-unit apartment complex, many elected officials have publicly backed the tenants’ position—hailing an earlier court ruling in their favor as “a victory for the City”—and all the landlord groups have been loudly supporting their members.
Both sides have dumped amicus friend of the court briefs on the Court of Appeals, which last week heard arguments in the case, with each offering many a justification for their respective side. And for good reason: If an appellate court ruling is upheld, it could mean landlord Tishman Speyer would suddenly owe an estimated $200 million-plus in back rent, re-regulating over 3,000 market rate apartments at substantially lower rents. Other landlords, too, would owe back rent, estimated by one landlord group at a total $1 billion.
But underlying this fight is an irony too large to ignore: the biggest beneficiaries of a landlord defeat would be people who apparently don’t need affordable housing at all: the hundreds of millions in back-rent would go to tenants paying market-rate rents—the $3,300 for a two-bedroom renters who came in after their previously rent-stabilized apartments were deregulated. Subsequently, all of those 3,000 or so units would stay rent stabilized, guaranteeing a major decrease in rent to those who had previously been forking out the big bucks (depending on the apartment, it would mean hundreds of dollars, if not more than $1,000 off per month).
Of course this isn’t a point that’s all that relevant to the arguments of the case, which is not about the morality of regulated rents. Rather, the suit, Roberts v. Tishman Speyer Properties, is a question of whether or not a landlord was allowed to deregulate apartments. The lawyer for the tenants, Alex Schmidt, argues that the landlord was, by law, barred from taking any units out of the rent-stabilization program while it received a modest subsidy to encourage renovations.
Tishman Speyer and other landlords in the J-51 renovation program had been taking units out of rent stabilization for years (and received guidance from the state to do so), so the reverberations of a tenant victory would be enormous. An appellate court ruled unanimously for the tenants in March.
IN FAIRNESS TO THE tenants, it’s not as though there’s no reason for affordability advocates to cheer them on in the suit. The various elected officials backing them—Manhattan Borough President Scott Stringer, state Senator Liz Krueger, Councilman Dan Garodnick, Council Speaker Christine Quinn, to name a few—have long decried the rapid rate of apartment deregulation at Stuyvesant Town and other complexes, and a victory for the tenants would definitely halt the rise of market rate apartments in the complex. (Manhattan landlords can generally deregulate apartments in the rent-stabilization program, which restricts annual rent increases, when the units go vacant.)
If upheld in favor of the tenants, the ruling would be a return to a relic of years past for Stuy Town: apartments, once again, would presumably be available to anyone moving in at prices far more affordable (leased at rent-stabilized rates).
No doubt: tenants would pay less (at the landlord’s expense), but the most immediate beneficiaries would clearly be all of those market-rate renters who await their unexpected checks in the mail.
This irony has not been lost on the landlords, and they don’t seem amused.
In an amicus brief, the Rent Stabilization Association criticized the prospect of what the organization’s attorneys called an “extraordinary windfall to undeserving tenants.” In the group’s brief, the attorneys at Rosenberg & Estis estimated that between Tishman Speyer and other landlords, about $1 billion would be owed in back rent to tenants who have been paying marke-rate rents for years.
“It would be difficult to imagine less deserving recipients of this billion dollar windfall,” the attorneys wrote. The brief went on to give the example of David and Annmarie Hunter—plaintiffs on the suit—who pay, according to the brief, $2,595 per month.
“An affirmance would mean that the Hunters, and thousands of similarly situated tenants, will (1) have their rents reduced by hundreds of dollars per month; (2) receive thousands of dollars in “refunds,” (3) obtain a rent stabilized status they never expected to have, and (4) have their future rent increases limited to stabilization guidelines,” the lawyers wrote, before adding, acerbically: “These tenants do not need [or] deserve such generosity.”