ALBANY – In a decision that could have costly implications for landlords across the city, the state’s highest court this morning ruled that the owners of the sprawling Peter Cooper Village and Stuyvesant Town apartment complexes had improperly raised rents on thousands of tenants.
The stunning 4-2 decision by the state Court of Appeals may force the current owner of the Manhattan complexes, Tishman Speyer Properties and BlackRock Realty, and the prior landlord, Metropolitan Life, to pay tenants tens of millions of dollars for damages and rent overcharges.
The majority ruled that the landlords had improperly raised rents beyond set levels on some 4,000 apartment while collecting city tax breaks to make renovations. The ruling, which upholds a March decision by a lower court, could impact the owners of as many 80,000 apartments across the city.
The ruling is a huge defeat for the real estate powerhouse, which bought the property at a record $5.4 billion at the height of the real estate boom in 2006. The goal was to replace rent-stabilized tenants with renters who would pay higher market rates.
The court’s ruling today not only thwarts those plans, it could lead to foreclosure, watchers predict. Real estate experts have been predicting “jingle keys” – a term referencing keys jingling in the mail – for Stuy Town for several months now, as cash coffers funding the property have dwindled.
“This basically puts Tishman Speyer out of the picture – absent even any miracle I can think of,” predicted a tenant of the property.
“We agree,” the court wrote, with the argument that “the current and former owners of the properties, respectively, were not entitled to take advantage of the luxury decontrol provisions of the Rent Stabilization Law, while simultaneously receiving tax incentive benefits.”
The ruling upheld a decision by a lower appeals court in Manhattan.
“While we respect the Court’s decision, we view this as an unfortunate outcome for New York,” a Tishman spokesman said in a statement. “The ruling, which reverses 15 years of government practice, raises a number of difficult issues that will need to be resolved by the courts and various government agencies in the coming months and years.”