Pinnacle Group reaches settlement in rent-regulation suit

The Pinnacle Group has reached a $2.5 million settlement with
rent-regulated tenants who had claimed in a lawsuit that they were subject to harassment, unlawful rent increases and
aggressive eviction attempts during the real estate boom, the New York
Times reported. Under the settlement, Pinnacle Group, as the landlord,
will pay $2.5 million to legal and tenant-rights groups to help
current and former tenants make legal claims for damages.

The Pinnacle
Group, which owns about 15,000 apartment units citywide, must now set up a
help line and in the future must carefully notify tenants of plans to
increase rents or start evictions.

“This settlement seems to be a
significant admission of wrongdoing by Pinnacle,” said Benjamin
Dulchin, executive director of the Association for Neighborhood and
Housing Development, which represents tenant groups. But a lawyer for
Pinnacle, Kenneth Fisher, said the company settled to avoid a costly long
trial, and never thought the allegations had merit.

During the housing boom, a large number of apartment buildings in
far-flung parts of the city were bought by what housing advocates
described as predatory equity buyers, who paid more than what the
buildings’ rent rolls could support, the Times reported. Existing
tenants would find themselves facing viction notices, and new owners
often ended up walking away from buildings after defaulting on their
mortgages.

The Pinnacle Group spent hundreds of millions of dollars
buying hundreds of apartment buildings from May 2004 to May 2006, but
consistently denied any wrongdoing, claiming it was trying to improve
conditions at deteriorating buildings, the Times reported.

Bobby Jones, who is president
of the tenant association at Dunbar, a large complex in Harlem that
Pinnacle recently lost to foreclosure, said that the settlement was
“better than nothing,” but that Pinnacle had caused lasting damage on
the place. About 45 percent of Dunbar’s tenants left their homes or
were forced out during Pinnacle’s five-year ownership, he said. [NYT]