The Real Deal New York

Nearly 200 NYC buildings messed with the taxman: officials

Landlords failed to register their units as rent-stabilized, despite receiving tax breaks

August 26, 2015 08:04AM

New York Attorney General Eric Schneiderman

New York Attorney General Eric Schneiderman

Scores of developers are disregarding rent-regulation and disclosure requirements under 421a, officials charged in a letter sent to the owners of nearly 200 buildings.

The letter, issued by three agencies, including the New York Attorney General’s Office, gives owners a “one-time, non-negotiable opportunity” to fulfill the requirements without penalty.

The action covers 2,472 apartments in 194 buildings across the city, with the largest number concentrated in Brooklyn. The letter didn’t name any developers or give any specific addresses.

Developers at all 194 buildings initially planned to construct condominiums and applied for tax breaks under 421a, but opted to rent the apartments instead, officials said.

Property owners, officials charged, were not necessarily required to offer below-market rents but had to register rented units as rent-stabilized apartments with the state government.

Michael Slattery, senior vice-president at REBNY, told the New York Times the agency’s approach was, “a fair and reasonable response to the situation.” He suggested the problem might be simple ignorance or confusion among owners, given the complexity of 421a’s requirements.

Developers by Oct. 2 must provide notice to tenants that dwelling units are rent stabilized, comply with government requirements, and abandoned any condominium plan for the property, the Attorney General’s Office said.

The 421a tax abatement program grants developers exemptions from property taxes while requiring them, in many cases, to designate a percentage of units as affordable housing. Mayor Bill de Blasio has pursued changes in the program, in accord with his wider affordable housing agenda. The issue was the subject of furious debate in the State Legislature in recent months. [NYT]Ariel Stulberg