The Appellate Division of the New York Supreme Court unanimously ruled today that some buildings in the city that receive certain tax benefits could not deregulate apartments.
According to an article by Theresa Agovino in today's on-line edition of Crain's New York, "The decision is devastating because it derails the business plans of owners like Tishman Speyer, which purchased rent-regulated complexes with an eye toward deregulating units and boosting rents to market rates in order to pay off their mortgages."
"Tishman Speyer is already having major financial problems at Stuyvesant Town/Peter Cooper Village, the sprawling complexes it purchased in 2006 for $5.4 billion, because it hasn't been able to covert units fast enough. In January, Fitch Rating said the company had only six months of reserves remaining to cover the trust portion of the debt on the property," the article noted.
The court decision was in a case brought in 2007 by tenants against Tishman Speyer that alleged that their rents had been improperly deregulated.
The decision held that apartments must remain "regulated as long as the building's owner is receiving J-51 tax benefits," the article said, adding that Stuyvesant Town and Peter Cooper Village are "slated to receive such benefits until 2017." The article said that Tishman Speyer issued a statement in which it maintained it is convinced that a lower court dismissal of the case was correct and that it intends "to continue to pursue all potential appeals and defenses."
The article said that Alexander Schmidt, who represented the tenants, estimated there are about 300 rent regulated buildings with J-51 tax benefits with more than 100 units and said that "we feel terrific about the decision," adding "we think it is an important victory for our clients and renters all over the city."
The two complexes, which were built by MetLife after World War II with public subsidies and the powers of eminent domain, contain more than 11,200 apartments in 110 red-brick buildings between 14th and 23rd Streets east of First Avenue. About 25,000 people lived in the complexes. There were 8,037 rent-stabilized apartments when Tishman Speyer acquired the properties and that as of last May there were 7,297.
According to an article by Theresa Agovino in today's on-line edition of Crain's New York, "The decision is devastating because it derails the business plans of owners like Tishman Speyer, which purchased rent-regulated complexes with an eye toward deregulating units and boosting rents to market rates in order to pay off their mortgages."
"Tishman Speyer is already having major financial problems at Stuyvesant Town/Peter Cooper Village, the sprawling complexes it purchased in 2006 for $5.4 billion, because it hasn't been able to covert units fast enough. In January, Fitch Rating said the company had only six months of reserves remaining to cover the trust portion of the debt on the property," the article noted.
The court decision was in a case brought in 2007 by tenants against Tishman Speyer that alleged that their rents had been improperly deregulated.
The decision held that apartments must remain "regulated as long as the building's owner is receiving J-51 tax benefits," the article said, adding that Stuyvesant Town and Peter Cooper Village are "slated to receive such benefits until 2017." The article said that Tishman Speyer issued a statement in which it maintained it is convinced that a lower court dismissal of the case was correct and that it intends "to continue to pursue all potential appeals and defenses."
The article said that Alexander Schmidt, who represented the tenants, estimated there are about 300 rent regulated buildings with J-51 tax benefits with more than 100 units and said that "we feel terrific about the decision," adding "we think it is an important victory for our clients and renters all over the city."
The two complexes, which were built by MetLife after World War II with public subsidies and the powers of eminent domain, contain more than 11,200 apartments in 110 red-brick buildings between 14th and 23rd Streets east of First Avenue. About 25,000 people lived in the complexes. There were 8,037 rent-stabilized apartments when Tishman Speyer acquired the properties and that as of last May there were 7,297.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
6sqft delivers the latest on real estate, architecture, and design, straight from New York City.
