AG reaches rent deal at Sheffield57
Attorney General Andrew Cuomo’s real estate finance bureau ordered a settlement that allows nearly two dozen market-rate tenants to remain in the Sheffield57 condominium, while limiting a rent increase proposed by developer Kent Swig.
Housing Court Judge David Cohen originally blocked the evictions of 23 market-rate tenants in a landmark 2007 decision. That decision was overturned in 2008, and was under appeal by the tenants. During settlement talks with the AG’s office, Swig proposed an agreement that would let the tenants remain in the building if they agreed to significant rent increases.
In a June 17 letter to Swig’s attorney Stuart Saft, and obtained by The Real Deal, Assistant Attorney General Marisa Peisman said that the rental increase proposed by Swig was well above comparable rates.
“After reviewing the numerous submissions both sides have made, we find that the rents sought by the landlord are unconscionable and that the monthly rents of the tenants in the proposed occupancy agreements should be fixed at $3.70 per square foot,” Peisman wrote.
She noted that Swig wanted to raise rents to $4.42 per square foot, while the comparable rents for market-rate tenants were $3.70 per square foot, a figure proposed by lawyers for the tenants.
The ruling will likely end more than two years of litigation following the decision to overturn the 2007 court ruling to block the eviction of market-rate tenants at Sheffield57. The building, located at 322 West 57th Street tower, was converted into a luxury condo.
After buying the 845-unit building for $418 million in 2005, Swig and his two equity partners, Serge Hoyda and Yair Levy, allowed leases for hundreds of market-rate tenants to expire, which opponents say is so that the units could be converted for sale as condominiums. About 35 market-rate tenants refused to leave and a total of 23 tenants fought the evictions in court.
The tenants appealed the ruling, while entering talks with the AG’s office and Swig to allow them to stay without facing exorbitant rent increases.
Sheffield57 officials denied that Swig ever wanted to evict the tenants, and argued that holdover tenants are normally required to vacate an apartment once a lease expires.
“The AG’s office granted a 6 percent increase to the owner [that is] retroactive to the lease expiration,” said a spokesperson for Sheffield57. “The tenants under those conditions will be permitted to stay if they conform to the lease and what the AG’s office has agreed to.”
Kevin McConnell, attorney for the tenants, said the agreement calls for the tenants to sign so-called “use and occupancy” agreements that are retroactive to February 2009.
“We said you can call them that, but we want many of the same rights you would have in a lease,” McConnell said.