Florida Lost $250 Million on New York’s Stuyvesant Apartments

wow!

Good Observer article.

http://www.observer.com/2009/real-estate/irony-stuy-town-tenant-suit?page=1

But underlying this fight is an irony too large to ignore: the biggest beneficiaries of a landlord defeat would be people who apparently don’t need affordable housing at all: the hundreds of millions in back-rent would go to tenants paying market-rate rents—the $3,300 for a two-bedroom renters who came in after their previously rent-stabilized apartments were deregulated. Subsequently, all of those 3,000 or so units would stay rent stabilized, guaranteeing a major decrease in rent to those who had previously been forking out the big bucks (depending on the apartment, it would mean hundreds of dollars, if not more than $1,000 off per month).
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This irony has not been lost on the landlords, and they don’t seem amused.

In an amicus brief, the Rent Stabilization Association criticized the prospect of what the organization’s attorneys called an “extraordinary windfall to undeserving tenants.” In the group’s brief, the attorneys at Rosenberg & Estis estimated that between Tishman Speyer and other landlords, about $1 billion would be owed in back rent to tenants who have been paying marke-rate rents for years.

“It would be difficult to imagine less deserving recipients of this billion dollar windfall,” the attorneys wrote. The brief went on to give the example of David and Annmarie Hunter—plaintiffs on the suit—who pay, according to the brief, $2,595 per month.

“An affirmance would mean that the Hunters, and thousands of similarly situated tenants, will (1) have their rents reduced by hundreds of dollars per month; (2) receive thousands of dollars in “refunds,” (3) obtain a rent stabilized status they never expected to have, and (4) have their future rent increases limited to stabilization guidelines,” the lawyers wrote, before adding, acerbically: “These tenants do not need [or] deserve such generosity.”

What....a.....mess.

We were talking in the office about the billions soaked into Stuy town in hopes the could get rid of rent stabilized tenants...What were these financiers thinking? Were there any commentators back in 2006 who thought this was a scary risky investment, or was everyone smoking the same stuff?

Thanks for sharing this info, by the way. Poor Florida, too.

{Manhattan real estate agent.}

Riversider, how funny. had to take you off ignore for that. you do realize the rent stabilization board is totally landlord friendly? totally?

i actually have the PDF of the oral argument. the attorneys from Skadden were really quite foul. what about the "poor" landlord, they said. they BEGGED the court to keep the destabilized apartments from returning to the program, even if the court found it had been done illegally. this isn't a question of deserving (although the most deserving are those who were denied lease renewal inappropriately), this is a question of the LAW.

if the court finds in favor of TS this is essentially just another bailout. ooo, we couldn't possibly have a big company pay for their mistakes, that would not be capitalism at its best.

Suddenly I regret not moving into Stuytown last March...I wouldn't mind a refund plus a regulated lease.

AR, was Skadden the firm that represented TS in the deal? If so, I have to echo Fluter: where were the independent analysts in this transaction? I remember everyone was drinking the cool-aid and what that felt like, but even in 2006 the deal was criticized by a lot of lay commentators (bloggers, etc) for being unrealistic about the removal of regulated tenants. How could people so far from the deal spot really obvious errors and all these so-called "financially sophisticated" investors, attorneys, and so forth completely miss this?

I don't suppose that PDF is publicly available, is it, AR?

The Rent Stabilization Association is not merely "totally landlord friendly" ... they are a landlord lobbying organization, and that's all they are, and they make no effort to hide that, except their weasly and confusing name. To join, you must be a landlord.

“It would be difficult to imagine less deserving recipients of this billion dollar windfall,” the attorneys wrote. <--- this practically begs the reply "Tishman Speyer?" Stupid attorneys.

It's disturbing to me that nobody envisions multi-dimensional restitution to any displaced rent-stabilized tenants, including first right to the lease renewals they were ousted from (or similar ones in the complex); moving allowances to cover at least both moves, including out-of-state if applicable; the rent difference charged in the meantime (possibly treble damages, which is the norm for similar situations). I know that for one-offs for overcharges, the landlord is considered liable to the new, overcharged tenant, but the scale of this makes it seem that the new tenants are not the primary victims. I think the usual arrangement was designed more for people who were given rent-stabilized leases, but with fraudulent rents.

Tenants were represented in oral arguments by Alexander
Schmidt, a partner in the New York law firm of Wolf Haldenstein
Adler Freeman & Herz. Tishman was represented by Jay Kasner, a
partner in the New York office of Skadden, Arps, Slate, Meagher
& Flom.

pdf is available..

The RGB consists of nine members, all of whom are appointed by the Mayor. Two members are appointed to represent tenant interests. One of these serves a two-year term, and the other a three-year term. Two members are appointed to represent owner interests. Like the tenant members, one serves a two-year term, and the other a three-year term. Five members (including the chairperson) are appointed to represent the general public. One of these serves a two-year term, another a three-year term and two serve four-year terms. The chairperson serves at the pleasure of the Mayor.

evnyc, i'll ask if i can put it up. i don't see why not.

i don't know who represented TS and the others in the purchase. there was a great line in the NYMag article about a meeting with Rose Associates shortly after the sale (they were managing the complex at the time). The Rose people told TS flat out that their destabilization estimates were grossly overoptimistic. If anyone had bothered to talk to them prior to the sale???

personally at the time i thought it was one of the stupidest transactions i had ever heard of.

RS, how are you enjoying your new construction tax abatement? do you feel worthy of such socialism?

actually, evnyc, i was wrong. my husband told me about the oral argument, and sent me a pdf of an article describing it. it's from a legal publication, but the pdf doesn't identify which one so as i currently have it i can't put it up. i'll ask him if he can send me a better copy, but i doubt i can put it up, as it's not readily available.

i'll try to find the same info elsewhere.

Riversider, that's correct about the RGB, but the Rent Guidelines Board is not what was quoted (amicus brief) or discussed here ... it was the Rent Stabilization Association. Whenever the latter is quoted in the media, the reader assumes it's something more like t former that's weighing in. Very deceptive. You seem like an educated person ... were you confused? Or were you trying to confuse?

Oh, no worries, it's just puerile curiosity on my part. I just wondered if it was available to link to or something.

What a mess.

My error Mr. Hart. No obfuscation intended.

Oh, but it's not your error, Riversider. You're a reasonably intelligent person, and you were subtly mislead, so you can imagine how the average person reads it. The intended obfuscation is on the part of the landlord lobby, and the choice of the name was deliberate. The same can be said of the names of the lobbying organizations of many other industries as well.

aboutready is a very intelligent person, and I believe she was also confused -- in this case with the government agency DHCR (Division of Housing and Community Renewal), which is the administrative body that oversees and enforces NYS rent regulations. Under Pataki, they went from being party-neutral (small "p") to being pro-landlord (IMO; others will slant it differently) and have remained there.

actually, AH, i had a lovely encounter with the rent stabilization association years ago, as i accidentally called them on an issue (THEN i was confused). they accused me of lying about my lease terms, claiming it was impossible that i was correct and that i must be disremembering what the landlord offerred at the beginning of the lease term (one year vs. two year rental, only offerred me two years and i had been unaware that ll was obligated to offer a one year option).

but you are right in that i had disremembered that the rent stabilization association is solely comprised of landlords, i only recalled learning that it was no friend of tenants, and that i had called the wrong organization.