The Real Deal New York

Tenants at 50 Murray mull taking on Bistricer over 421g

Clipper's luxe Tribeca rental could become latest battleground in series of suits over rent stabilization

January 14, 2016 04:30PM
By Will Parker


50 Murray Street (inset: Clipper Equity’s David Bistricer and District Leader Paul Newell)

On Tuesday evening, a group of tenants at David Bistricer’s 50 Murray Street gathered on the 19th floor of the Tribeca high-rise to discuss an increasingly under-the-spotlight tax break: 421g.

Rent-stabilization disputes at Financial District buildings that receive the 421g tax abatement are heating up in New York courts, as The Real Deal reported earlier this week. Cases at 85 John Street, 10 Hanover Square, and 90 West Street, where more than 40 tenants are suing their landlord, are well underway. And as more tenants in the neighborhood get wind of what the tax break requires of developers, more cases could be coming.

John Kuzmich, the 50 Murray resident who brought in about 20 people for Tuesday’s session, wanted to spread the word about the obligations of 421g building owners to keep apartments rent-stabilized, with annual increases capped at rates given by the Rent Guidelines Board. For 2016, that rate was zero percent.

But residents who attended said they had recently seen rent hikes of as much as 30 percent, and were eager to find out if they had been overcharged by their landlord, Bistricer’s Clipper Equity.  Some tenants noted that they had successfully talked down rent increases in the past, while others hadn’t been as lucky — or as bold.

When Kuzmich started his presentation, there were at least a few skeptics. After all, as one tenant argued, owners of most rent-stabilized buildings can legally deregulate apartments that cross a certain price threshold, currently $2,700 a month. But after HMGDJ attorney Serge Joseph, who represents tenants at 85 John and 90 West, went through the requirements of 421g, explaining that so-called luxury deregulation does not apply to landlords receiving the abatement, the mood seemed to turn.

Joel Roodman and Jill Tafrate, two tenants at 85 John who claim their rent jumped more than $2,000 in a single lease renewal, were invited to the meeting and shared their stories. They stressed that although their rents may be far higher than the Manhattan average, sudden and steep increases of this magnitude are destabilizing to families.

Roodman, who says he has been contacted by tenants from at least 10 buildings receiving 421g since his case with landlord Kibel Companies became public, said he wants to be a resource for other tenants in a similar situation.

“Anything we can do to get more people involved is important,” he said. “I think 50 Murray is a really good example of the type of support that we could use.” Two other guests were tenants from 71 Broadway, another 421g building. They said their rent has gone up at least 100 percent since they moved in approximately a decade ago.

Sherwin Belkin, who is representing Bistricer at 50 Murray as well as Kibel at 85 John and 90 West, told TRD in a statement that “owners of those properties have acted in full compliance with both the Rent Stabilization Law and the 421-g program, such that it was permissible to deregulate apartments rented above the high-rent-deregulation threshold.”  Belkin added that his clients’ position is backed up by regulatory and legislative history, including correspondences between then- mayor Rudolph Giuliani and State Senate Majority Leader Joseph Bruno in 1995, and an advisory opinion from DHCR.

As for Kuzmich, he first got wise to 421g when an anonymous group began posting flyers in his building’s elevators. (Curiously, a member of an anonymous group was also handing out flyers on the street front of 50 Murray on Tuesday night, but declined to say who had hired her when asked.)

Also in attendance at Tuesday’s meet-up was Manhattan District Leader Paul Newell, who will run for Sheldon Silver’s vacant seat in the 65th Assembly District and has a long history of tenant organization in the area.

“There was a goal there,” Newell said of 421g, first passed by the New York Assembly in 1995. “The goal is to create a stable, healthy community in Lower Manhattan, and to do that residents need to know that their rent is not going to be doubled when their lease ends,” he said.

Newell was involved in organizing tenants at 37 Wall Street, where in 2010 a housing court judge ruled that apartments benefitting from 421g must remain rent-stabilized through the duration of the abatement, whether or not the rent exceeds the luxury deregulation threshold. The same judge, Bruce Scheckowitz, also noted that most of the apartments created by 421g were already above the deregulation threshold to begin with, and allowing luxury decontrol would “eviscerate” the legislative intent of mandatory stabilization.

There has yet to be a definitive appellate court ruling on 421g, but that day may not be far off. With the rising number of tenants and landlords tussling on the issue, a ruling in New York County Supreme Court could push one side or the other to take the matter further up the judicial chain.

Meanwhile in Albany, legislators and lobbyists are running out of time to extend the terms of another builder tax exemption, 421a. And the news coming from the capital suggests those negotiations are falling apart.

At the close of Tuesday’s meeting, Kuzmich asked for a show of hands: who’s willing to chip in for the retainer fee to begin exploring legal options? Most hands shot up without hesitation.