Lawsuit: Big landlord owes back rent after taking tax break

New York’s highest court ruled in June that 421g benefit mandates rent-stabilized leases

TRD New York /
Dec.December 18, 2019 09:22 AM
Rockpoint Group co-founders Keith Gelb and Bill Walton (Credit: iStock, Rockpoint, CityRealty)

Rockpoint Group co-founders Keith Gelb and Bill Walton (Credit: iStock, Rockpoint, CityRealty)

A lawsuit alleges that the owner of 63 Wall Street charged market-rate rents for hundreds of units despite receiving tax benefits that — according to a recent court ruling — required it to offer rent-regulated leases.

Rockpoint Group, the owner of 63 and 67 Wall Street in the Financial District, under the 421g program, got a break on property taxes for 14 years. All of the units should have been covered under rent stabilization, according to the lawsuit, but tax bills show that as of June, only one was.

The two buildings have 795 apartments, according to public data.

A Boston-based private equity firm, Rockpoint Group has been one of New York’s most active investors in recent years. It received a $430 million acquisition loan in January from Brookfield Asset Management and Wells Fargo for a $600 million purchase of the One Dag Hammarskjöld Plaza. The firm also owns Starrett City with the Brooksville Company, which the two closed on in 2018 for $905 million.

Rockpoint Group did not return a request for comment.

The lawsuit contends that the owners carried out a “fraudulent scheme to evade the rent stabilization laws.” It is the latest in a string of similar lawsuits filed after New York’s highest court ruled six months ago that because the landlord at 50 Murray Street received the 421g break, its tenants are legally owed rent-stabilized leases and possibly back rent. (The 50 Murray Street landlord, Clipper Equity, is also bankrolling a constitutional challenge to the state’s new rent law.)

“It’s only as of June that the Court of Appeals reversed the decision and said you can’t luxury-deregulate these units,” said landlord attorney Blaine Schwadel, who supervises the regulatory law group of law firm Rosenberg and Estis. “To say the landlords had done anything wrong before June is crazy.”

The tenants’ lawyer did not portray it that way.

“With each passing day, as tenants become more aware of the chicanery, we’re uncovering additional irregularities and violations of the law,” said Lucas Ferrara, the attorney who is representing the plaintiffs. He claimed that larger institutional landlords had not previously been held accountable.

The recent cases are just “the tip of the iceberg,” according to Ferrara.

“New York legislators just pulled the rug out from under them,” he said. “It’s judgment day.”


Related Articles

arrow_forward_ios
Book Culture at 450 Columbus Avenue (Credit: Google Maps)

Upper West Side bookstore closes amid accusations of fraud

Firefighters work to extinguish a fire as a building burns after an explosion on 2nd Avenue in March 26, 2015 (Credit: Getty Images)

$24K in rent set in motion the fatal 2015 East Village blast. Prison now looms for the landlord and contractors

Harry and Linda Macklowe (Credit: Getty Images, iStock)

The Macklowes’ massive art collection nears auction

Heritage Equity Partners Toby Moskovits and Michael Lichtenstein

Lawsuit: Toby Moskovits, Michael Lichtenstein owe investor $3M

250 Fort Washington Ave and 310 Convent Avenue with Housing Rights Initiative’s Aaron Carr (Credit: iStock, Facebook, Google Maps)

Two more rent-overcharge lawsuits get class-action status

1074 Eastern Parkway in Brooklyn (Credit: Google Maps)

Crown Heights tenants sue infamous landlord for rent overcharges

Rent overcharge claims against landlords are on the rise (Credit: iStock)

Rent overcharge cases pile up

Crunch at 250 West 54th Street and Zar Property NY Principas David Zar (top) and Dario Zar (Credit: Google Maps)

Crunch sues landlord for trying to evict it from 54th Street location

arrow_forward_ios
Loading...