Moinian sued for charging market-rate rents despite tax break
As many as 500 tenants could get money back, plaintiffs say
A lawsuit filed today alleges the Moinian Group improperly charged market-rate rents at a FiDi tower while receiving tax benefits.
At 90 Washington Street, where the Moinian Group holds the ground lease, tenant Chad Vignola alleges that he and as many as 500 others were not provided with rent-regulated leases, despite the landlord getting a tax break known as 421-g.
The complaint argues the tenants are entitled to monetary damages, interest, and at least $500,000 in attorney’s fees.
A spokeswoman for Moinian declined to comment.
The 27-story tower once housed the Bank of New York. Now it offers “incomparable panoramic views, state-of-the-art appliances and 24-hour concierge service,” according to its website. A one-bedroom rents for $4,285, according to listing service StreetEasy.
Lucas Ferrara, an attorney at Newman Ferrara, is representing the plaintiffs.
“We are astounded by the number of FiDi landlords who have skirted the requirements of New York City’s tax-abatement programs. This is yet another example of a major property owner caught red-handed, and who failed to treat its apartments as rent-regulated,” said Ferrara. “Such malfeasance will not stand.”
But for years it was not settled law that buildings receiving 421-g could not remove apartments from rent stabilization under a provision known as luxury decontrol, which was passed in 1993 and expired last June.
A state judge issued a decision in tenants’ favor on that question, only to have the Appellate Division side with landlords. But the Court of Appeals reversed that ruling in June 2019, deciding that all apartments should have been rent-stabilized while those properties received the 421-g tax break.
In October, Clipper Equity, a real estate investment trust that owned two of those properties, filed a Supreme Court challenge, alleging that the Court of Appeals ruling violated the constitution.
In January, the Supreme Court declined to hear the case, as it does with most of the 7,000 it is tasked with reviewing each year.
Landlords who receive 421-g benefits now must provide their tenants with riders explaining what the exemption is and when it expires.
The 421-g program was a property tax exemption and abatement passed in 1995 to spur the conversion of unused commercial space in Lower Manhattan into apartments. Applications were accepted until 2006.
Benefits included a one-year exemption during construction, a 12-year exemption from the increase in taxes resulting from the work, and a 14-year abatement of about 80 percent of the real estate taxes paid on the property before conversion, according to the NYU Furman Center for Real Estate.