When Blackstone and Ivanhoé Cambridge bought Stuy Town for $5.3 billion in 2015, they reached a deal with the city that would allow them to deregulate and raise rents on 6,200 rent-regulated units beginning in July 2020. On Wednesday, tenants filed a lawsuit to block Blackstone from going forward with the rent hikes, The Real Deal reports. As part of the original agreement, the city allowed Blackstone to cap rent increases at 5 percent each year, which is considerably more than the 1.5 percent outlined in last year’s new rent laws. The lawsuit argues that this conflict should require Blackstone to adjust the agreement in accordance with the new law.
In 2009, when Tishman Speyer still owned the sprawling, 11,000-unit complex, tenants sued their landlord over improperly increased rents on roughly 3,000 units despite benefitting from J-51 tax breaks, which subsidize building improvements. The court ruled against Tishman Speyer in that case and those units were reregulated and subsequently taken over by Blackstone.
The landlord is pointing to their deal with the city and a 2012 court settlement that says the units can be deregulated once their J-51 tax benefits expire, which is set to take place in just a few months. As The Real Deal explains, “The agreement placed 5,000 units under rental and income restrictions and allowed 1,400 other apartments to pass out of regulation ‘if permitted by applicable law.'”
A spokeswoman from Blackstone said they are “confident that the court will reaffirm” that ruling. “We could not be prouder of what we have done for the residents of Stuy Town,” she continued. “We voluntarily restricted 5,000 Stuy Town apartments as affordable, spent hundreds of millions of dollars in capital improvements across the property, and massively improved service levels—doubling resident satisfaction since our ownership.” A lawyer for Blackstone told Crain’s, “Somewhat ironically, the units affected by this lawsuit, have average rents of over $4000 a month, with tenants with high incomes over $260,000 per year.”
Susan Steinberg, president of the Stuyvesant Town–Peter Cooper Village Tenants Association, said: “After decades of uncertainty, the Stuyvesant Town–Peter Cooper Village Tenants Association drew a breath of relief when the State Legislature passed the historic Housing Stability and Tenant Protection Act. This law meant thousands of our neighbors could now plan on staying in their homes, protected by rent regulation. We are not about to see them made orphans of the new rent laws when these laws are clear and unambiguous.”
The tenants’ lawyers argue that Blackstone’s course of action should follow the recent changes in rent law outlined in last year’s Housing Stability and Tenant Protection Act.
Borough President Gale Brewer voiced her support for the tenants on Twitter Thursday morning, saying she is “proud to stand with StuyTown and PCV tenants against the latest attack on their stabilized units.”
After the rent laws first passed last year, Blackstone was accused of “warehousing” 20 to 50 percent of rent-regulated apartments, or keeping them purposely empty. The reason, as 6sqft explained, was because the news laws reduced the amount landlords could claim in renovation expenses from $40,000 to $15,000 over a 15 year period. After word got out, a Blackstone spokesperson said in September that they were renovating and leasing all vacant units. As The Real Deal tells us, a bill is on the table that would impose fees on landlords for keeping units off the market.
[Via The Real Deal]
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Tags : Blackstone Group