The Appellate Division of the New York State Supreme Court gave permission this week to Tishman Speyer Properties and BlackRock Realty, the owners of the huge Stuyvesant Town and Peter Cooper Village residential enclaves along the East River 14th and 23rd Streets to appeal its March 5 ruling that they had wrongfully deregulated rents while receiving tax breaks from the city.
The court's ruling last month had been unanimous and could not normally be appealed unless the court granted permission, which it yesterday. The case will now go to the New York State Court of Appeals.
The Appellate Division's action Monday included a stay of its decision but required that the owners put the differences between the rents it charged at 4,400 apartments and the rent it would have charged were the apartments still regulated in an interest-bearing account.
Tishman Speyer and BlackRock had acquired the complexes, which contain more than 11,000 apartments, in 2006 for about $5.4 billion.
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.
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 owners have been planning to convert rental controlled apartments in the complexes to market rate rents. According to a recent article by Theresa Agovino in the on-line edition of Crain's New York, Fitch Rating in January said that the owners "had only six months of reserves to cover the trust portion of the debt on the property."
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."
An article by Charles V. Bagli in yesterday's edition of The New York Times said that "much of the real estate industry has supported claims that the decision would spur widespread defaults on loans and a drop in property tax revenues for the city," but added that "advocates for tenants contend that the landlords were overdramatizing."
The court's ruling last month had been unanimous and could not normally be appealed unless the court granted permission, which it yesterday. The case will now go to the New York State Court of Appeals.
The Appellate Division's action Monday included a stay of its decision but required that the owners put the differences between the rents it charged at 4,400 apartments and the rent it would have charged were the apartments still regulated in an interest-bearing account.
Tishman Speyer and BlackRock had acquired the complexes, which contain more than 11,000 apartments, in 2006 for about $5.4 billion.
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.
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 owners have been planning to convert rental controlled apartments in the complexes to market rate rents. According to a recent article by Theresa Agovino in the on-line edition of Crain's New York, Fitch Rating in January said that the owners "had only six months of reserves to cover the trust portion of the debt on the property."
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."
An article by Charles V. Bagli in yesterday's edition of The New York Times said that "much of the real estate industry has supported claims that the decision would spur widespread defaults on loans and a drop in property tax revenues for the city," but added that "advocates for tenants contend that the landlords were overdramatizing."
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.
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