The Real Deal New York

59 tenants sue Gluck’s Stellar Management claiming rent overcharges

Group organized by nonprofit HRI seeking class-action status
April 18, 2017 03:50PM

UPDATED, April 18, 5:28 p.m.: Larry Gluck’s Stellar Management is facing a lawsuit for allegedly overcharging dozens of rent-stabilized tenants, violating the terms of property tax abatements the company receives from the city.

Fifty-nine tenants from more than a dozen of Stellar’s buildings say the landlord abused the J-51 tax abatement, a city subsidy for multifamily properties that requires landlords to keep apartments in the rent-stabilization program, the Wall Street Journal reported.

The action against Stellar TRData LogoTINY in New York State Supreme Court came together following an investigation by the Housing Rights Initiative, a nonprofit that’s inspired similar actions against New York City landlords receiving J-51, such as A&E Real Estate Holdings. It also comes in the wake of a mildly successful initiative by Gov. Cuomo to crack down on landlords who flouted J-51 regulations.

In addition to violating the terms of J-51, tenants further allege that in some cases Stellar misrepresented the costs of individual apartment improvements, or IAIs, that allow landlords to make legal increases to otherwise stabilized rents, and routinely failed to register apartments with the Department of Housing and Community Renewal, the state agency that regulates rent-stabilized housing.

In a prepared statement, a spokesperson for Stellar told The Real Deal that “Stellar Management has a 30 year track record serving as one of the largest and most venerable landlords in New York City, working diligently to abide by all rent regulatory laws. We have serious concerns about the validity of both the merits and motivations underlying this suit and will vigorously defend against these claims.”

It’s a path that Gluck and Stellar Management have been down before. Nearly a decade ago, Gluck attempted to deregulate a Tribeca complex known as Independence Plaza North. Gluck initially lost a New York State Supreme Court case brought by tenants based on J-51 rules that required Gluck to refund rent overcharges and return units to stabilization. Not long after, State Sen. Cathy Young introduced a bill in Albany specifically designed to keep J-51 rules from applying to Gluck’s building, a report by The Real Deal and ProPublica recently detailed. That bill failed to pass both chambers of the legislature, but Gluck ended up winning on appeal anyway.

J-51 cases have been coming to the courts in increasing frequency since a landmark 2009 case regarding unlawful apartment deregulation at Stuyvesant Town-Peter Cooper Village saw tenants win $68.8 million from Tishman Speyer.

According to the HRI’s Aaron Carr, Gluck filed 3,900 eviction cases against tenants between 2013 and 2015 alone.

“Government is responsible for protecting its citizens from corporate exploitation and abuse, not giving our tax dollars to those who engage in corporate exploitation and abuse,” Carr said in a statement. “This is a flagrant abdication of responsibility on the part of our enforcement system.” [WSJ] — Will Parker