huge news - sty town tenants win

Hmmm.

AR: any comment? Is Tishman liable for all damages? They only stepped into the picture in 2006, but the old LL (Metlife) benefited the most.

Before tenant advocates get too excited here - realize that this ruling ends the J-51 program. No landlord will sign up for it now. So certainly some good will come to some tenants, but overall the elimination of the J-51 program is a HUGE loss for tenants.

who exactly will get rent rebates out of this?

I agree with Steve.

JazzHands, that's a typical response from a supply-sider: what's bad for the business is bad for the consumer.

All this ruling does is stop developers from double-dipping: benefiting from taxpayer largess while at the same time overcharging tenants. One or the other, but not both.

steve I think there are large rent rebates due, no?

Re liability, depends what the contract says. But I predict flush times for tenant lawyers.

10023, no tishman is not liable for all of the damages. metlife destabilized our apartment, and metlife was named in the suit. but a a lot depends on whether the court allows the increases in rent garnered through improvements to the apartments. i am but one tenant, but metlife didn't increase rents horribly above the maximum allowed if the apartment improvement increases are allowed. rents were really jacked up by tishman.

the court of appeals, as a condition to hearing the case, required tishman to put up, I believe, $200mm, which is roughly $50k per destabilized apartment, but obviously the majority of the apartment destabilization occurred over the past couple of years.

jazzman, TS was triple using the system. they were destabilizing, getting the benefits from J-51, and passing on the costs of major capital improvements to RS tenants in the form of rent increases. i have a RS friend here who had 4 mci rent increases in one year. each one wasn't huge, but they were adding up. and there is nothing saying that alternative regulations can not now be promulgated. callling an absolute end to a program is simplistic, i think. programs can and do arise.

actually, malthus makes a good point. i don't know what kind of indemnification agreements existed in the TS/MetLife deal. If I were a betting person, i'd bet in favor of MetLife any day.

I am pretty sure Skadden was counsel for TS. This might have larger implications

the hubby has a copy of the decision. i'll read it tonight. he said the dissent is well-written, but he felt factually incorrect.

samadams, this is a shitshow.

I'm most interested in what happens to the already-ousted RS tenants (besides coronary arrest).

alanhart if I had to guess I would think that they are gonna get some FAT checks

95% sure the ruling means TS is out - it means the teachers of Florida are out - it means the Fed (who own the first 1.5B of the debt is on the hook. It's a huge win for L/T attorneys.

It will be crazy to expect landlords to dig up receipts from 10 years ago to prove how much money was spent on renovations. Say a unit was $1,500 and they did $40,000 of work. The legal rent would have been $2,500. But did they keep the receipts for 10 years? No because the statue of limitations was 4 years. Now what? Are you going to penalize landlords for not keep receipts for 10 years? Sure the books will show their renovation expense but it will not be broken down unit by unit. It will just have one number for paint. How do you know how to allocate the paint expense?

AR -you can take 4 MCI increase in a year - it just means the tenant got a lot of improvements - the MCI program is a huge success. And there are formulas in the J-51 and MCI rules that prevent the double dipping. You can get a J-51 and an MCI for one repair, but the amount for each is simply smaller . So it's not "double dipping" as some might say. Most landlords would go for one or the other but you can get half of one and half of the other.

As a market rate renter I'm not happy about this decision as a landlord without any J-51s I love this decision.

alanhart - What am I missing. I think the ousted RS tenants are out of luck. None of this ruling has to do with them as the increases weren't taken until the units were vacant.

malpractice?

ah, i've been thinking about that. i think very few of the destabilized units occurred because the occupied tenant had hit the $200k/$2000 limit, which was one of TS's big problems. most occurred because of attrition (death, even RS tenants buy occasionally, moving) or because of efforts to "prove" that the RS tenant wasn't using the property as a primary residence. some apartments did hit the $2000 level, and had the two-year above-income level, but it didn't happen for virtually any of the old-timers, and i don't think it was very common. the 2/2s in PCV are among the most expensive units in the complex, and I haven't heard of anyone hitting the $2000 level yet. I have friends who moved from one RS apt to another (PCV 2/2) about 12 years ago, and they were still about 3 years away from hitting the limit. the only ones i can think of would be people who moved into larger apartments in around 1998-2002, and the apartment had had multiple occupancies over the previous few years (the ll is allowed to increase the rent by a certain amount each time there is an occupancy).

i don't know what remedies are allowed for someone who is ousted illegally from a rent stabilized apartment.

jazzman, you are wrong. the cost of renovations for each unit is an official document received by the tenant with the lease and filed with the proper authorities. i know exactly how much they spent on the renovations in our apartment.

like i said if i had to guess it is that the people who were ousted will get HUGE checks. We are talking about uprooting somebody from there home illegally. all sorts of fun things can be attached to this suit

alanhart -having read ah's comment I see you were talking about the people how were deregulated using the high income test.
I hadn't thought about the income tests - crazy!!
I believe there is some case law where tenants were restored to their original apartments (meaning the court evicted the current tenant to restore the old tenant -the same concept as the court taking away a stolen car from the new buyer) but I think most commonly the landlord is required to provide a similar apartment for a similar rent.

samadams, i suspect another suit will now be filed on behalf of those who were illegally ousted.

ah, were this is relevant in your calculations is for the people on the cusp of being ousted.

Declined to Speculate

Schmidt declined to speculate on whether the ruling would
cause Tishman Speyer to default on the debt it incurred to
purchase the apartment complex.
“If they end up transferring ownership to the lenders,
under New York law, the lenders are responsible for the
overcharges,” he said.
The case is Roberts v. Tishman Speyer Properties LP, No.
131, New York Court of Appeals (Albany).

From what I've read so far, Tishman can walk away from paying the debt service and then the lenders are on the hook for the damages. Wouldn't want to be a bank right now.......Tishman probably ripped up their checkbook 30 minutes ago.

I am not sure why the result of this necessarily is that the tenants get their money back, rather than the landlords having to pay the city/state taxes + penalties avoided from the J-51 program. No one here was hurt, other than the taxpayers. The developers could have just as easily extricated themselves from the tax programs, and this is a financial windfall for precisely those that the legislature said don't seserve one (i.e., high wage earners living in stabilized apartments).

positivecarry, the court of appeals required that TS put up a $200mm bond, i believe. they can't just walk away, i don't think, at least from that much. and this may be a potential piercing the corporate veil opportunity, which is never easy but may be possible here.

nyc_sport, because the illegal activity already occurred. they were found to have illegally destabilized apartments. they can't then say, oops, my mistake, we would rather not have the j-51 benefits.

So does this mean that tenants above the means test get rent stabilized apartments. Would be a shame if six figure families are taking away a unit from someone who truly needs one.

It doesn't sound like this would affect former stabilized tenants. RS tenants are usually evicted for the following reaons (ie, non-primary residence, illegal subletting, etc). If they were "illegally ousted" they have cause to fight the eviction irregardless of this decision.

So if I wanted to move into Stuy town now, how would rent be handled in the following scenarios?
A) moving into a deregulated apt that was renovated over the past few years?
B) moving into a deregulated unrenovated apt? (
C) moving into an unrenovated apt that a RS tenant previously resided in?

tushy speyer is gonna default, the banks take over and lose a couple billion in equity...cmbs market gets crushed and the commercial RE collapse officially begins.

"jazzman, you are wrong. the cost of renovations for each unit is an official document received by the tenant with the lease and filed with the proper authorities. i know exactly how much they spent on the renovations in our apartment."

Pretty sure that's a new procedure - but if it's not new it definitely wasn't widely used by most landlords.

rs, you constantly amaze me with your idiocy. these apartments have already been taken OUT of the RS pool.

a_g, the only ones it would affect are those who were ousted because of the income/rent rules.

they would all be rent stabilized. they have to figure out what the rent would be based on the rent that existed at destabilization, and then add the proportionate cost of renovations allowed, if they are allowed (i'm assuming they are), and then calculate the amount of RS increased allowed yearly.

AR - "nyc_sport, because the illegal activity already occurred. they were found to have illegally destabilized apartments. they can't then say, oops, my mistake, we would rather not have the j-51 benefits."

But the point is what did market rate renters do to deserve a huge payout. They took the apartment at an arms length transaction. Why should they (you) win the lottery here? Sure you've had a reduction in services but that's due to the purchase at a crazy number (of which you were aware years ago and could have seen the bankruptcy coming). Why don't these fines go to the government and why don't the now stabilized apartments go to teachers and fireman? The market rate tenants can go find another market rate apartment? I don't think this should really happen, I'm just saying........

a_g - all units are Sty Town will now be rent stabilized even if they are above $2K. Rents will be based on the normal rent increase guidelines.

I've always thought that most likely TS will now withdraw from the J51 program and rescind any future tax benefits they have coming. Thus they will be able to destabilize vacant units (and this explains why they have so many vacant units still).

Thanks for your input aboutready. It still isn't 100% clear why all apartments would now be under rentstabilization based on this decision.

In an example like C) moving into an unrenovated apt that a RS tenant previously resided in? Couldn't the owner forgo any future tax breaks, and then renovate to get the over 2k and charge market rates.....

Thats what I got based on reading this from the times...."Landlords ae also allowed to pass along a portion of the cost of major renovations to the tenants. At Stuyvesant Town, for instance, the landlord routinely spent about $40,000 renovating vacant apartments and a s aresult was able to impose a $1,000 a month rent increase. As a result, the total rent would exceed the $2,000 threshold adn the landlord was permitted to charge market rates."

Couldn't they do this to newly vacated apartments that were rent-stabilized? If so, it would continue to give the owner incentive to get RS out.

Jazzman, like it or not rent laws and remedies are very skewed toward the tenant. Tenants frequently have little to no negotiating power against landlords. The sytem evolved into a rather punitive one to discourage landlord abuse. While I may not deserve a thing equally TS had no right to those rent increases.

jazzman, I think you just answered my question about future apts that become vacant.

AR - I agree that landlords should pay through the nose when they break the laws - but why should the spoils go to unsuspecting undeserving tenants? What if we used these hundreds of millions to build more affordable housing instead?

to clarify my last post - unsuspecting undeserving market rate tenants.

Jazzman I would think that if they exited the j51 program they could also destabilize any unit which met the income/rent guidelines

Jazzman, so based on what I'm reading. If an apt was destabilized and renovated 2 years ago, the future rent would be the stabilized rent 2 years ago + the allowed increase ( that the guideline board voted on). So instead of charging 3k for that one bedroom in PCV. The rent will actually be roughly $1500 (previous stabilized rent 2 yrs ago) + what ever increase was allowed for RS units over the past 2 yrs. Is that your interpretation? So a market rate tenant will see his rent drop, or would it be put in escrow until the details of the court case are worked out? You guys sound pretty sure that most units become stabilized over, other than the vacant ones.

Because jazzman that's not the remedy set forth by law. Whether or not it should be is a different issue.

Also, after the details are worked out. Isn't possible that a decison could be made where market apts remain that way, but j-51 tax breaks are returned, given that the law was not clear and it was the standard and accepted way of practice over the past decade. I am assuming that the tax breaks are far less than benefit of deregulating apts.

Don't get too excited, the details will take a long time to work out. Right, AR? Would your particular apt revert to RS-status?

No ag I don't believe so. New York states highest court ruled. They will not get around this.

Jazzman think of it this way. Any person regardless of income was entitled to rent my apartment at the rs rate under the regs. Just because I moved in doesn't mean they didn't overcharge me under the law for the product. Is NYC housing a crapshoot? Absolutely.

AR, I understand that the "illegality" alrady has occurred, but there are a host of issues left undecided by the opinion, and people here are jumping to many dire and unwarranted conclusions. All I am saying is that if I was a tax starved government official charged by statute with interpreting and enforcing the tax laws, the first thing I would do is pass a regulation that landlords can retroactively unelect the J-51 election provided that they repay all of the tax benefits, with interest, received from that election immediately. In fact, there is a decent argument that not providing an out to land owners that entered the J-51 program before the desabilization law was enacted is not permissible.

"cmbs market gets crushed and the commercial RE collapse officially begins. "

men, that sure would be fun (for me at least).

The damages issues will take awhile. But I'd think that TS would likely revert apts to RS (under a no-prejudice scenario) sooner rather than later to avoid further potential treble damages. Just a guess.

Yes my apt would revert and best I can tell my rent would decrease by about $1000.

AR..late to the thread..no time to read the whole thing...wouldn't a major judgement and/or major reduction in cashflow because of rents reverting back just cause failure to occur sooner and make it all moot anyway.

but that's only 25% of your current rent. kind of not so stabilized (thought most RS you can enter now have a discount over mkt rents of 30%-40%).

AR - but if your apt. reverted to RS,and came down to about $3,000/mo, wouldn't your income then put the apt. back to market?

yep, but within 2 years. hence, there's not a lot of loss for the landlord for those households earning more than $175k/year. they just get lower rent for 2 years and that's it.

But LL will then denand tenants' earnings records for the PAST two years in determining
(non)eligibility for RS -

Admin - basically agreeing with you.

what are the broader consequences for RS across manhattan if there are any... (75% of housing units are rentals, 65% of which are RS).

"I've always thought that most likely TS will now withdraw from the J51 program and rescind any future tax benefits they have coming. Thus they will be able to destabilize vacant units (and this explains why they have so many vacant units still)."

exactly. much better is to return the tax benefits used in the past than going through the paper work and headaches of each lease.

What happens to the currently empty apartments for rent? Will those apt rents be reduced as well or are they all eligible for market rents? Or maybe some are and some aren't depending on how many times the apts flipped. Will there be restablization of the existing empty apts and if they revert will they require income qualifications for future tenants?

a_g - correct - units that were market rate yesterday will revert back to their stabilized status - the normal calculations will stand - 20% vacancy increase, plus 1/40th of the cost of renovations, plus longevity bonuses etc. No longer can they take a $1,000 apartment to $2,000 with the vacancy increase and $30,000ish of renovations and then charge $4,000. And in fact if they did that they will not have to refund the overage to the market rate renter (which doesn't make sense although that's the law) plus the market rate renter now gets a stabilized lease at the $2K number.

I'm still unsure about luxury decontrol though - not sure how this affects it. If someone's rent goes over $2k and their income in over $175K for two years how does this affect them? They still have to move out no? Sure the next person who moves in gets a stabilized lease but the landlord will get the 20% vacancy increase plus the renovation increase.

"If someone's rent goes over $2k and their income in over $175K for two years how does this affect them? They still have to move out no?"

you mean that RS apartment cannot become mkt rate so if there's the luxury thing the landlord can switch tenants? i see that if it's the only way the landlord can get a good increase (20% vacancy increase plus the renovation increase) there's a strong incentive towards checking incomes each year.

Let me get this straight. If an apartment is stabilized with a low rent (let's say 500), the tenant dies or moves, then the landlord renovates it and rents it at 2500 to someone who makes less than 200K a year, then he's violated the rule and owes the new tenant money??

no wad, i don't think so. at the most the new tenant will have a lower rent than what they are currently paying. if they earn more than $175k/year would be lower only for 2 years.

admin, i always said my rent was low :)

OK, here goes. under the j-51 program the rent stabilization issue lies in the apartment, not the tenant. the landlord is prohibited from destabilizing any apartment, regardless of the luxury destabilization laws. all destabilized apartments would revert to stabilized. whether or not they will stay there depends on what happens with j-51 going forward. but rents obviously are able to rise above $2000. and if and when the apartment is in the future a candidate for destabilization, i doubt anyone in a renovated apartment would be refused a renewal lease at "market" rates. TS had discontinued, i believe, renovating vacant apartments. they will probably rent them out unrenovated, and in those instances people who rent them may in the future be vulnerable to the luxury destabilization rules.

back in the day to get an rs unit here you just put your name on a waiting list. income didn't play a role.

p09, i don't see how or why. they're going down anyway, and the rent stabilization issue will persist regardless of who the landlord is. so the issue won't be moot. damages are another story, and an interesting one.

does this affect vacant apartments in stuytown/pcv...will the LL be "forced" to keep them rent stablized?

julia, where have you been!? yes, it affects vacant apartments. as of now, at least.

this is going to be crazy to watch so many big names are in for a real shit storm

I guess that is what they get for messing with 85 year old bubbies !!!

"Before tenant advocates get too excited here - realize that this ruling ends the J-51 program. No landlord will sign up for it now. So certainly some good will come to some tenants, but overall the elimination of the J-51 program is a HUGE loss for tenants. "

Sorry, I don't buy this: the program isn't a secret; many LL's have lived under the rules for many, many years, built buildings knowing what they had to do, etc. and did it. The last time a decision similar to this was made, it didn't end people using J-51 (this was the case where if you didn't include a rider stating that when the owner's J-51 benefits expired, so did the RS protection/status. **NB** This will be an interesting wrinkle in THIS case: people signed market rent leases, so they obviously didn't get those riders. But if they now get RS protection, they are in a RS unit and haven't gotten a rider saying when the J-51 benefits run out, so does their RS status - as required from above case. So what happens in those cases?).

So, after that case, LL's knew they needed those riders. In the same way, when the RS law was changed with the $2,000 limit, you saw lots of "preferential rent" riders. What these riders are is that the LL has the right under the regs (due to renovations, etc) to charge more than $2,000, but market is under $2,000, they have a rider that says essentially "even though the rent we are charging you less than $2,000 rent, the unit is not under RS because the "registered base rent" is over $2,000, but we are giving you a "preferential rent" below $2,000.

In any case, all this has been done by many LL's, for many units, for many years. And it's still going on and people are still building new rental buildings knowing it. In fact, this ruling is not going to effect these type of buildings. The buildings it's going to effect are OLDER buildings where the building got some MINOR J-51 benefits (like for installing new windows).

Note when I say "new buildings", I'm not talking about ground up construction, because you don't get J-51 benefits for that; I'm talking about gut renovations. However, since the rules are essentially the same for 421-A buildings (or any buildings getting almost any sort of tax breaks) I don't see how it's any different in any type of buildings.

I agree with AR and others who have stated that most likely this will not have much to do with former tenants. As far as i know, there were very few tenants evicted due to their rents going over $2,000 and their incomes being over the $175,000 limit. The vast majority are due to "natural" vacancy, but the market rent charged to the new tenant is about what TS wold have been entitled to based on the prior rent, plus vacancy increase, plus MCI increase. However, since TS did renovate almost all the units, I'm not sure things are as bad as it may seem at first blush. I wouldn't be too surprised that if on a lot of the 1 BR units which were renovated, the figure reached by the above items may not be all that much lower than market.

Also, this ruling doesn't actually give anybody anything directly as far as I can see. It gives them the right to sue TS for a rent reduction and back rent overcharges. Now, the good news for tenants is that there are enough of them that they won't have to all go out and individually hire attorney's, but will do it in one or some groups.

What the ruling does mean is that ALL units in PCV/ST are rent stabilized PERIOD, until such time as they are no longer receiving J-51 tax benefits, ALL units, whether you came in as a RS tenant or a market tenant, AND there is no means test to get a tenant out under the usual $2,000/$175,000 test.

I do think that this is most probably the final death knell for TS, because what got them in trouble was that they thought they would be able to get the project to work by getting more units vacant and decontrolled than they did; NOW it doesn't matter whether they would have hit their goals or not; they STILL wouldn't have been able to make the numbers work.

I think the question is whether TS just walks away, tries to re-negotiate their debt or tried to hold on despite the ruling. I think there is a decent chance they will make offers to settle with at least some tenants whereby they give them some amount of money and agree to a lower rent in return for not going to court and not being in jeopardy of treble damage claims.

30yrs - more specifically - this ruling ends the J51 for older buildings in Manhattan and trendy parts of the outer Boros -(anywhere where people pay more than $2K for rent). It just doesn't pencil for an owner to put in $40K for new windows for a $40k reduction in property taxes over time -if he can't destabilize units over that time. He'll just leave his old windows in and pay the extra $5K per year that it cost to heat his building because he's got bad windows.
But in the Bronx keeping the units stabilized doesn't make a difference so the program will continue to be used there.

30 yrs - "AND there is no means test to get a tenant out under the usual $2,000/$175,000 test."
Are you sure? Why? This ruling doesn't repeal luxury decontrol. Why can't TS evict someone paying $2,000 who makes $200K and then take the vacancy increase (this year it's 17% for a one year lease) and then rent the unit to someone else for $2,340. As long as the new lease is stabilized TS should be able to evict. Right?

I'm currently paying $2495 and the tenant before me paid $660....does this ruling affect me??

j-51 trumps luxury decontrol. the RS status remains with the apartment, irregardless of tenant. and 30yrs raises an interesting point regarding the decision in the earlier action involving j-51.

btw, the apartments will often be renting for more than $2000 even if rent stabilized. my apartment will be. if someone makes less than $175k their rent can continue to climb consistent with RS guidelines even though they retain their RS apartment. and as 30yrs pointed out, the RS rents for the one bedrooms may not be that far from today's market rates.

julia, in stuy town? it seems inconceivable that they'd be able to get the rent from $660 to $2495 with one vacancy and renovations for a one bed in stuy town.

AR - not too inconceivable. A full gut renovation could easily be $60,000 and with the vacancy increase and a longevity bonus they could have gotten the legal rent to $2,000.01. A legal rent of $2,000.01 would have allowed them to charge the next tenant $2,495.

Of course it's a huge increase and definitely worth looking into. It's very important to ensure that it's the tenant right before Julia and that there weren't any other tenants in between.

AR - also very interesting that the J-51 trumps luxury decontrol - there are some CRAZY ramifications to that. WOW.

jazzman, my reno was $50000 for a large two bed/two bath (2004). i know prices of renos rose, but it seems like labor would be similar now. and my kitchen was large, unlike the stuy town ones. but i guess it could happen.

yes, these rent laws can be crazy. and i'll admit it. frankly, if TS hadn't been such douchebags the first three years (which they quasi-admitted, btw), i'd feel less glee at their demise.

it's an ugly situation, and i've resigned myself to little or no services for the duration. but this is my home.

"30yrs - more specifically - this ruling ends the J51 for older buildings in Manhattan and trendy parts of the outer Boros "

Not necessarily: we're in a falling market. The registered rent will be higher than the market rent, and will increase at the renewal rates every year. There's a very good chance that for many buildings, even with RS status it will be quite a while before the market rents make it back up to the registered rent, and LL's will just have to include both the preferential rent rider and the J-51 rider. In addition, since we're in a falling market, there will be LOTS of vacancy increases, which will further increase the gap between market rent and registered rent. I think you may see some spaces where LL's could charge $5,000 under RS and only get $3600 market today. Look at the unit someone just rented in the Ellington.

"jazzman, my reno was $50000 for a large two bed/two bath (2004). i know prices of renos rose, but it seems like labor would be similar now. and my kitchen was large, unlike the stuy town ones. but i guess it could happen."

Not that they would, but playing Devil's Advocate they could add $25,000 to the reno just in appliances, tubs, sinks and fittings, couldn't they? Now, for the J-51 the city has caps on what they will compensate you for no matter what you paid, but I think as far as rent increases, it's anything that they actually spend.

"I wouldn't be too surprised that if on a lot of the 1 BR units which were renovated, the figure reached by the above items may not be all that much lower than market."

exactly, i'd add in that 2 BR too, those RS are not a bargain. this ruling might have anticipated the demise. but the assumption of always increasing mkt rates was a flawed one, and imho was more than enough to send them to ch11 (the obvious flaw was the velocity of transitioning from RS to mkt rates). the deal had so many flaws you have to wonder what were they smoking. the improvements will stop, forget about landscaping and the like... but is not the end of the world. blackrock really disappointed me by being involved in such a stupid move.

30yrs, of course they could. it's just that they have very standardized apartments. maybe they add a few bells and whistles if they need to to get the price up, and since ST has a cheaper base rent to work with maybe they did so. just a wee bit surprised.

AR: it was more of an academic argument. (but I think one the prior issues I raised some points which aren't, and that even a bunch of the atty's haven't thought about yet).

i currently live in a rent stab. bldg, NOT stuy town where the previous tenant paid $660 and I moved in last Nov with two months free rent and am currently paying $2495.

I read the decision. It's all about statutory interpretation, so I'm not sure how many people will find it too interesting unless that's your bag. I think that it will be some time before a tenant receives any $ out of this-no different from any other litigation. I would expect that TS will be out of project before such time. From what we've all read, all of the equity, mezz and a decent portion of the CMBS is underwater at this point. Why wouldn't TS just mail the keys to the lenders at this point? That is one big borrower benefit of nonrecourse loans.

Tenants who entered into arms-length market rate leases and are awareded damages are no better than bank bailout recipients. Any damages should solely go to a tenant who was stabilized and was removed from his apartment, and then the balance to the city or state or whoever collects on the property taxes and had awareded the J51.

aaflights,

Isn't the point that NO stabilized tenant, righfully there (ie., not acting as his/her own landlord and subletting) were removed? This applies to two classes of apts. 1. A vacancy -- therefore, no "victim", only means that if the rent is re-set lower the current tenant gets a big gift. 2. An apt where the renter was making over 175k and rent got over 2k -- in this case I could not care less as this family should be paying mkt rent.

My god, to read the differant takes on this and the politicians falling over themselves to say how great this is for tenants you would think middle class people were getting evicted left and right over this issue. That is not the case at all. Never thought I would see so many looking out for a lucky handfull of wealthy renters trying to keep their below mkt apts.

yes, 30yrs, the implications of notification of termination date of j-51 involvement is interesting and i hadn't heard it before.

jojo10, as i've said a couple of times before, the court made TS post a $200mm bond in this matter, i believe. it's not that simple. and there are two issues. rent stabilization and damages.

aaflights, the law is the law. a landlord receives benefits under certain circumstances. one of the conditions in this case is that the apartments affected must remain rent stabilized. prior to the luxury decontrol laws rent stabilized apartments, depending on the program, went to whoever was lucky enough to get them, and wasn't generally income restricted.

hurts my head to think of all the ramifications here.

But, wow, is TS completely screwed.

And likely the same for a lot of landlords....

Good points mkmaker. Everyone expresses OUTRAGE at wall street, but it's totally ok, when a six figure renter scores a below average rent due to some technicality or legal loophole. Hard to imagine why anyone would want to be a landlord of a development like this. You can pretty much assume who ever runs this complex will do as little as possible.

AR, not sure I follow. Why couldn't TS just put the keys on the table and leave? Sure it may not get back it's $200MM, but TS is already underwater on all of its equity anyway. Staying involved to try to salvage some of the $200MM would cost a lot of money through a loan restructuring and may be throwing good $ after bad $. The WSJ has quoted an appraisal of the project at $2.1BN. There is a $3BN mortgage and $1.4BN of mezz debt. Maybe it's worth it to TS to try to buy the top layer of mezz on the cheap and then foreclose out the junior mezz to get the debt down. Still leaves a mortgage that is underwater to the tune of almost $1BN. Or maybe TS can buy the mortgage on the cheap instead. Seems less likely to happen anytime soon though since getting the special servicer to agree could be a long road. Maybe whole debt gets restructured with massive debt write downs and TS agreeing to put in more $. A deed in lieu of foreclosure still seems like a viable way out here.

TS was already screwed, but not that much given the pretty limited $ they had invested in this. It also appears by no means certain that the only remedy here is for the landlords to pay the wronged tenants - the court's statement specifically alludes to a legislative alternative to reduce the potential damages. I think nycsports thought that state/city could reclaim the unpaid taxes is interesting - and given their desperate need for revenue, certainly valid.

While I'm typically no rent-stab lover, the concept that a LL could reap tax benefits, which I presume were put in to improve the living conditions of rent-stab tenants, and then turn around and use those improvements to de-stab the apt, thus booting out the tenants, seems perverse, and I don't really understand how that was the accepted interpretation for 15yrs.

We are also forgetting about the possible negative effects on the majority of renters in the city - the market renters. With potentially so many places being put back into the rent-stab system, you are squeezing the mkt rate market even more. In the short term, given the weakness of that market its not a big deal, but in the longer run it could put a strong upward bias towards mkt rents.

TS could just leave keys... but ONLY if its not cross-collateralized.

Thats what took down olympia and york (world financial center, canary wharf, once the biggest and richest by far).

They had buildings as collateral for other buildings.

TS might have done some of that...

Of course, all not as stupid as personal guarantees... which killed trump.

nyc10022, a CMBS loan/mezz structure like this wouldn't typically be crossed to another property (especially since the owner of the property has to be a single purpose entity) and there wouldn't be a personal guaranty-just a nonrecoruse carve out guaranty. Of course, what is typical about a deal this large? Regardless, I would still be quite surprised. If there was a bridge equity loan involved here (like what Macklowe had), then that's a different story but I have not heard anyone mention that before. The one wild card I see here is the reputational risk that TS runs here with abandoning the project. TS is as big a player in NYC real estate as there is. I recall Bloomberg, etc. sticking up for TS when they bought the project. That reputation would certainly take a hit.

The proletariat mindset of this city disturbs me.

NYC is heavily democrat....but as the posts show , rich or poor, everyone likes to play the system. Personally, I think the whole transaction to buy Peter Stuy was ill conceived, but there is something salacious in how some are enjoying the court ruling.

> That reputation would certainly take a hit.

Maybe, but I think the "cover" that a lawsuit killed them - and one that overturned a 15 year practice - will mitigate that. I can't imagine there being any real big backlash there, they lost a big suit, thats all.

Wall Street has a short memory.. Hey John Merriweather is back

I don't live in StuyTown or work for Tishman, but who the heck are the illiterate morons using the fake word irregardless. Where did you guys go to school? UofP? Is English your second language?

Hey - why are you knocking Penn? Have something against my school HFS? Did they reject you?

that's the second time i've used it. ah got me last time. alas, the former english teacher and editor isn't so careful while typing on blogs.

get over yourself.

UofP - University of Phoenix

Apparently that's where aboutready learned to communicate.