Tenants of Stuyvesant Town-Peter Cooper Village have reached a settlement in their long-running class action lawsuit against the owners of Manhattan’s largest apartment complex. The deal, signed today, is worth roughly $146.9 million, including almost $68.8 million cash in compensation for rent overcharges over a nine-year period.
“We believe this settlement provides an extraordinary recovery for our clients and we couldn’t be happier for them,” Ronald Aranoff, an attorney at Bernstein Liebhard who represented the tenants, said in the statement.
Stuy Town residents, led by tenant Amy Roberts, filed the class action suit in 2007, seeking $215 million in excess rent. The residents claimed that then-owners MetLife and Tishman Speyer (which paid a record $5.4 billion for the property in 2006) improperly deregulated the rent-stabilized apartments while taking J-51 tax benefits.
The New York Court of Appeals, the state’s highest court, found in October 2009 that the apartments had been removed improperly from rent stabilization while receiving the benefits, which are provided as incentives for upgrading residential properties.
Under an interim agreement reached in December 2009, tenants received a $2.4 million refund, and have since saved a total of $75.5 million in rent—the remainder of the value of the settlement.
Today’s deal also ensures that rents for the formerly decontrolled 4,311 apartments at issue in the suit are retroactively stabilized through June 2010. Tax benefits for the 11,000-unit complex expire in 2020.
The current owners—two trusts controlled by special servicer CWCapital Asset Management, which took over the complex when Tishman Speyer defaulted on its mortgage in 2010—contributed $58 million of the cash component, while MetLife contributed the remaining $10.5 million.
“We have worked hard to try to balance the interests of residents and bondholders, recognizing that our fiduciary responsibility to investors must respect the concerns of tenants who call Peter Cooper Village Stuyvesant Town home,” said Andrew MacArthur, managing director at CWCapital.
The settlement concludes almost 18 months of negotiations, the tenants’ statement said. They were also represented by Wolf Haldenstein Adler Freeman & Herz.
Rents going forward may also be adjusted by the landlord after the settlement is officially approved.
The settlement was preliminarily approved today by a New York State Supreme Court judge but requires final court approval. A final hearing is set for April 9. – Hayley Kaplan