L+M off hook for accusation of overcharging tenants 

Complaint alleged developer “hoodwinked” state at 421a building

L+M Cleared From Accusation of Overcharging Tenants
L+M's Ron Moelis with 180 Broome Street (L+M Development Partners, Google Maps, Getty)

The lawsuit claiming L+M Development Partners “hoodwinked” the state has been tucked back under the hood.

Lower East Side tenant Charles Abbate withdrew a complaint against the developer of 180 Broome Street in Manhattan, according to court records. No reason for the withdrawal was given; the case closed last month. The plaintiff had sought class-action status for the case.

Last July, Abbate alleged L+M deceived both him and state housing authorities by instituting a rent increase beyond the regulated limit at his apartment, where L+M received tax benefits under the since-expired 421a program.

Ron Moelis’ L+M allegedly reported a higher rent for Abbate’s unit to the state than what the tenant was actually charged, according to the lawsuit. That was done so L+M could hike rents on his unit and 30 others in the building to market rate, the lawsuit alleged.

At the time the lawsuit was filed, L+M released a statement saying it was “completely without merit.”

The discrepancy appears related to a rent concession Abbate received in his initial lease. Tenant lawyers and developers have been at odds for years about whether concessions should be reflected in rents reported to state regulators, upon which future rent increases are based.

Sign Up for the undefined Newsletter

Roger Sachar of Newman Ferrara, who represented Abbate, did not respond to a request for comment. A representative for L+M declined to comment.

In the lawsuit, Abbate claimed he leased an apartment last spring at the 263-unit The Artisan for a net effective rent of $2,767 when factoring in a two-month concession. When asked to renew his lease, his monthly rent was allegedly hiked by 22 percent, beyond the 1.5 percent limit for regulated units during the same period, he claimed.

The 421a tax abatement has long since lapsed — without a replacement — but properties that received the benefit are subject to its rules. Rents reported by landlords to the state are used as the basis for future rent increases.

The Artisan is part of L+M’s broader Essex Crossing development in the Lower East Side. Half of the development’s 1,079 units are earmarked for affordable housing, designated for those earning between 40 and 165 percent of the area median income.

Newman Ferrara was also involved in a similar complaint against billionaire John Catsimatidis in 2020. A lower court judge decided for Catsimatidis and Newman Ferrara lost unanimously upon appeal.

Read more