Court Deals Blow to Owners of Huge Apartment Complex

New York Times ^ | October 22, 2009 | Charles Bagli

[La Lydia]

The state’s highest court dealt a financial blow on Thursday morning to the already beleaguered owners of the sprawling Stuyvesant Town and Peter Cooper Village complexes in Manhattan when it ruled that they improperly began charging market rents on thousands of apartments. The ruling by the Court of Appeals may mean that the current owner, a partnership of Tishman Speyer Properties and BlackRock Realty, and the former owner, Metropolitan Life, may have to pay an estimated $200 million in rent overcharges and damages to tenants of about 4,000 apartments.

In a majority ruling (two of the six judges dissented), the court said the owners improperly raised rents beyond certain set levels at the complexes while receiving tax breaks from the city for major renovations. The decision could also affect landlords of as many as 80,000 apartments across the city who may also have improperly raised rents and deregulated apartments while receiving special tax breaks.

Tishman Speyer Properties and BlackRock, which purchased the properties in 2006 for a record-breaking $5.4 billion, are already under enormous financial pressure. The partnership is running out of cash to pay building loans and could default within the next several months.

In its decision, the court acknowledged that the developers had predicted “dire circumstances for our ruling, for themselves and the New York City real estate industry generally.” But the court pointed out that numerous unresolved issues could lessen the amount of money the owners may have to repay. And “if the statute imposes unacceptable burdens, defendants’ remedy is to seek legislative relief.”...

[La Lydia]

Socialism marches on. The concept of "private property" in our nation continues to circle the drain.

[SouthTexas]

A new government housing project!

[Izzy Dunne]

the owners improperly raised rents beyond certain set levels at the complexes while receiving tax breaks from the city

If you take the king's coin, you play the king's tune.

[2banana]

Wonder how the tenants are going to like living in a bankrupted apartment complex???

[blam]

If we would just let government run things from the very beginning, we wouldn’t have these costly problems that take up so much the court’s time. <>

[Waco]

BOHICA

[bmwcyle]

It sounds to me like the owner made a pact with Satan on taxes and didn't read the fine print.

[La Lydia]

They argued that the court had misread the state law, which did not prevent landlords who received city tax breaks for building improvements from deregulating apartments, and had overturned “15 years of real estate industry practice that had been endorsed by two government agencies with primary responsibilities in this area.”

Under state law, landlords can deregulate an apartment when the rent for a vacant unit reaches $2,000 or more per month, or the rent is above $2,000 and a tenant’s household income is above $175,000 for two consecutive years. Once the apartment is deregulated, there are no restrictions on the landlord’s ability to raise the rent. Landlords are also allowed to pass along a portion of the cost of major renovations to the tenants.

[La Lydia]

Yeah, I really, really want to live in an apartment that is built, managed and maintained by the Post Office and the DMV. :)

[bmwcyle]

Yes but the deal was made in New York. They forgot they have elected people who think they are kings and queen over the past 60 years.

[La Lydia]

They no longer have laws, or a Rule of Law. In New York, the law is what ever the rent control/tenant advocacy attorneys say it is.