The Real Deal New York

Savoy Park tenants refunded $250K for overcharges

Remains in fight with investment partner over leasehold

August 29, 2014 05:40PM
By David Jones

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Savoy Park at 2300 Fifth Avenue

Savoy Park at 2300 Fifth Avenue

The owners of Harlem’s 1,800-unit Savoy Park apartment complex refunded about $250,000 to tenants just weeks after the group filed suit alleging the owners engaged in five years of overcharges, The Real Deal has learned.

A group of 47 tenants at 2300 Fifth Avenue, one of seven buildings at the complex, filed suit in Manhattan Supreme Court on Aug. 1, alleging the owners overbilled tenants in violation of a 2011 order to reduce rents by a state agency.

The ownership group, which includes an affiliate of L&M Development Partners, financial services firm TIAA-CREF and an affiliate of Manhattan-based real estate fund Savanna, refunded the money weeks after the tenants filed suit.

“Although it took a lawsuit to get them to do it, Savoy did the right thing by refunding the tenants named as plaintiffs overcharges ranging from $5,000 to $16,000 per tenant,” said attorney David Hershey-Webb,  who represents tenants in the case.  “We are in negotiations with the landlord to settle the action overall.”

A spokesperson for C&C management, which is management arm of L&M, said: “We made payments to the residents last week in response to a rent reduction order that was issued against the previous ownership. Under the circumstances we felt this was the right thing to do. We are committed to our ongoing investment in Savoy Park and to ensuring it remains a vibrant place to live.”

According to court filings, the overcharge complaint stemmed from a 2009 filing with the Department of Housing and Community Renewal alleging that the prior ownership, led by Vantage and AREA Property Partners, had not provided adequate services. By 2011, DHCR found that the owners had not provided adequate services and ordered a rollback in rents.

According to documents filed in the complaint, most of the tenants involved in the case are paying between $600 and $2,000 a month in rent and were overcharged anywhere from $7,000 to $32,000 since then, depending on the size of the apartment and other factors.

Hershey-Webb says that the $250,000 was refunded to the 47 tenants that sued, but about 40 additional tenants impacted by the overcharge are due refunds as well. Lawyers are in negotiations over remaining issues in the case, as tenants have asked for treble damages and legal fees in the suit, amounting to a total of about $700,000.

The overcharge issue was pursued only by tenants at one building in the complex due in part to rules that limit these complaints to individual buildings.

Vantage and AREA sold the Savoy Park complex to the current ownership group in 2012. They, however, they claim the lawsuit was the first time they learned of the overcharge issue.

However, officials with the Savoy Park tenants association have told The Real Deal that the new owners were told repeatedly about the overcharge issues in meetings with tenants since the complex was sold in 2012.

Officials from Savanna and L&M were not immediately available for comment.

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