The Real Deal New York

Turtle Bay tenants, alleging illegal deregulation, granted class action status

Landlord charged market rate while receiving J-51 tax credit, group says

August 07, 2012 03:30PM
By David Jones

350 East 52nd Street (credit: PropertyShark)

A New York State Supreme Court judge on Monday granted class action status to a suit by tenants who claim that their landlord illegally deregulated 72 apartments in a luxury Turtle Bay rental.

Nine tenants at the 137-unit Whitehouse, at 350 East 52nd Street, alleged that landlord William Koeppel charged tenants market rate rents for 20 years, even though he received J-51 tax breaks from the city. The court in in the landmark 2009 Stuyvesant Town/Peter Cooper Village case ruled that landlords could not deregulate units while receiving those benefits.

Class action status means that the final ruling would apply not only to existing tenants, but also to those who have moved out of the building and future tenants, too. “The named plaintiffs and the putative class members share a common goal — namely, ensuring that the landlord charges tenants of the apartment building no more than the maximum legal rent,” Judge Ajay Singh wrote in his opinion. “…That they be afforded the protections of the [Rent Stabilization Law and Rent Control Law] and that they receive compensation for past overcharges.”

Tenants at the 11,000-plus-unit Stuyvesant Town/Peter Cooper Village complex won a landmark ruling requiring landlords to give back hundreds of millions of dollars in refunds to tenants after they charged market rent to tenants when the landlord received J-51 benefits. That ruling required landlords to reduce existing rent and to refund rent to previous tenants. Since then, allegations have been made against landlords across the city, including at London Terrace Gardens, in Chelsea.

“Landlords are not uniformly changing all apartments back to rent stabilization,” Matthew Brinkerhoff, co-counsel for the tenants, told The Real Deal. “Landlords are either resisting or trying to interpret the ruling from a couple of years ago to try to minimize the amount of overcharge.”

However, Koeppel downplayed the impact of the decision, telling The Real Deal that the judge’s ruling was merely a procedural decision that would help make the case easier to manage. “It’s just that the judge is looking for judicial efficiency,“ he said. “The case is meritless.”

He said the building is fully rented, and that the units, which include studios and one-bedrooms, are rapidly turning over, and generating starting rents between $3,500 and $4,000 a month.

The building has been the subject of protest by tenants and employees, including a 2011 strike by doormen and porters over a dispute with Local 32BJ of the Service Employees International Union.

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