Tenants Given Reduced Rents But Sue NYS, NYC, Landlord

Something struck me about the Rutland Plaza tenants’ protest and lawsuit that my colleague Ben Miller covered in New York Dirt.

It was this quote from Patricia Walters, a 42-year Rutland Plaza tenant, referring to state funding announced in 2016 for the Brooklyn apartment complex:

“What did you do with $96 million that you couldn’t fix our building thoroughly, so we wouldn’t be going through sewage issues, broken elevators, everything they were supposed to take care of?” she said.

I divided $96 million by Rutland Plaza’s 438 units and got $219,000 per unit — enough for a fairly comprehensive overhaul.

But Walters had her facts wrong. Of the $96 million, just $19.4 million was budgeted for renovations. That’s $44,000 per unit, which doesn’t go very far.

It turns out that the rest of the money went to … Patricia Walters and her fellow tenants! To subsidize their rent.

I don’t think Patricia was being deceptive. The subsidies are beyond tenants’ view, not cash slid under their doors in fat envelopes.

Protest organizers likely did not remind them of facts that would have sapped their outrage before the demonstration.

If told that taxpayers had shelled out $76.6 million to extend their below-market rents for 40 years, which the government and landlord had no obligation to do, perhaps they wouldn’t have been so upset.

But instead, they are biting the hand that fed them, suing the Mamdani and Hochul administrations — for “failing to properly oversee repairs” — and the landlord, Robyn Lucas-Cora, who extended their below-market rents rather than replace them with gentrifiers.

When this Mitchell-Lama (then called Rutland Road Houses) was built in 1976, young professionals earning six figures didn’t want to live in Crown Heights, but now they do. The landlord could have marketed the building to them, but chose the Cuomo administration’s affordability offer.

A day after the protest, its organizers at Legal Services NYC, UHAB and Housing Organizers for People Empowerment sent a press release. I noticed a link about the $96 million. It took me to the Cuomo administration’s 2016 announcement.

Crucially, it explained where the money went.

Some $49.5 million was for fixed-rate, tax-exempt bonds and a loan from the state. Another $2.3 million went to Low Income Housing Tax Credits. Millions more went to at least 310 tenants in the form of project-based Section 8 rental vouchers, which were used to help finance operations of the complex.

Sorry, Patricia. There’s no missing money.

Beyond the funding used to preserve below-market rents at the five buildings, only $19.4 million was left for upgrades.

It was budgeted for interior painting, bathroom and kitchen renovations, new vestibule and lobby floors, security cameras, electric baseboard heating replacement, water heaters, common area lighting, trash compactors, some new windows, roofing, roof fans, façade work, water pipe insulation, landscaping and structural repairs to parking garages.

That’s a long list for a $19.4 million job, actually, and I’m not too surprised that 10 years later, tenants don’t feel like they live in a renovated building. But new elevators and sewage pipes would have cost much more.

Did tenants really want more upgrades instead of rent subsidies? No. They wanted both.

“Tenants expect their landlord to keep their building safe and habitable as is the legal obligation of all landlords in New York City, which includes working elevators and functional plumbing,” a Legal Services NYC spokesperson said.

They might be right that property management at Rutland Plaza is incompetent. Perhaps their lawsuit will be effective as a squeaky-wheel strategy.

But it’s also possible that the underwriting from 2016 underestimated future maintenance costs and overestimated revenues, given recent inflation and some tenants’ withholding rent.

If rents are not high enough to keep the buildings in good condition, insured and current on their mortgage, a lawsuit won’t help.