Large Gulf Remains in Stuyvesant Town Rent Case

Landlords and tenants appear to be far apart on what the legal rents should be for thousands of apartments in the beleaguered Stuyvesant Town and Peter Cooper Village complexes on the East Side of Manhattan.

Lawyers for the tenants and the company that controls the massive complexes, CW Capital, acknowledged that after a year of talking they were unable to settle claims arising from a 2009 Court of Appeals ruling that the owners have wrongfully deregulated 4,400 apartments and raised rents while receiving special tax breaks from the city. While the court ruled in favor of the tenants on the principal issue of deregulation, it left it to a lower court to decide exactly how much each apartment’s rent should be, and how much each overcharged tenant should receive in rebates, if any.

The two sides had reached a temporary accord that lowered rents, but that agreement expired Wednesday. Although settlement discussions continue, Alexander Schmidt, a lawyer for the tenants, said in a statement, “We are not optimistic.”

The statement said it was unclear whether these tenants would face rent hikes when they renewed their leases.

The issue is very complicated for a complex as large as Stuyvesant and Peter Cooper Village, where every single apartment has a unique rent history. A very simplified explanation of the potential gap between the opposing views, based on arguments made in a few similar cases, goes something like this:

Tenant advocates generally take the position that the rent for a one-bedroom apartment renting for $3,500 in 2010 should be rolled back to 2006 levels to, for the sake of this example, $2,800 per month. The landlord also would be required to refund any money paid by a tenant above $2,800 a month, or as much as $9,000 a year.

But landlords are arguing that the rollback to 2006 is only the first step in arriving at what the legal rents should be today. They contend that they are entitled to every conceivable bump in rent allowed under the city’s Rent Guidelines Board.

If the apartment in the example was vacant twice during the intervening years, the landlord under this argument would be entitled to raise the rent by 40 percent — 20 percent each time — from $2,800 to $3,920.

During the four years, the landlord would also have been able to raise the rent by 6 percent, or $235.20, according to rent regulations, which would bring the legal rent in 2010 to $4,155.20 a month. Not only is that more than the rent charged today, but it is also a number that would absolve the landlord of having to pay a rebate.

“The landlords are looking to get immunized from rent overcharges using this methodology,” said William J. Gribben, a lawyer at Himmelstein, McConnell, Gribben, Donoghue & Joseph, which represents tenants at three complexes with circumstances similar to those at Stuyvesant Town. “That’s why they’re pushing for that methodology. I don’t think they seriously believe they can get anymore in rent than they’re getting now.”

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