MetLife Inc. and tenants have reached an agreement in principal to settle part of the lawsuit over rent deregulation in the sprawling Stuyvesant Town/Peter Cooper Village residential complex that caused a firestorm in the real estate industry.
In a regulatory filing earlier this week, the insurer said that it has reached a settlement with the plaintiff tenants in the case. That pact still must be finalized and then approved by the court. No details were released.
In 2007, tenants at the rent-regulated complex sued MetLife and a Tishman Speyer-led investor group, alleging that both companies had illegally deregulated units while receiving tax benefits known as J-51s. MetLife built the complex decades ago and sold it to the Tishman Speyer group in 2006 for a record $5.4 billion. In 2009, the appellate division of the New York State Supreme Court reversed a lower court decision and found in favor of the tenants.
Landlords were shocked by the ruling and complained that the owners were following standard procedure and that the decision against them could limit investor demand for rent-regulated housing. Dozens of similar cases were filed in the wake of the decision.
While tenant activists were pleased to hear that there has been a settlement with MetLife, they said the more important issues for the industry will only be clarified in the deal still to be finalized with CW Capital, which took over Stuy Town after the Tishman Speyer group failed to make payments on a huge loan. That’s because the Tishman Speyer group deregulated far more apartments than MetLife did. A total of 4,300 units were deregulated, but the number of people in the class has not been made public. What’s more, a deal with CW will include a formula outlining how to reset rents on units that were illegally deregulated.
Sources have said there is an agreement with CW, but an executive for the company didn’t return calls and the tenants’ attorney, Alex Schmidt, declined to comment.
“Landlords have been afraid to settle because they don’t want to look like they are giving away too much,” said William Gribben, an attorney handling about a dozen J-51 cases. “A deal with CW would give a framework of reasonableness.”
In 2007, tenant lawyers in the Stuy Town case said that they thought clients could be owed a total of around $200 million from rent over-charges. That figure has not since been updated.
However, sources said that MetLife has agreed tentatively to pay only a tiny fraction of that amount. MetLife lawyer Daniel Ansell declined to comment. A company spokesman said, “We are pleased with the settlement and look forward to finalizing it.”
Mr. Schmidt, the tenants’ lawyer, declined to comment on the deal’s specifics. However, he said the plaintiff tenants are pleased with the settlement, which he described as a “very fair and reasonable outcome as to the claims against MetLife.'”
“I don’t know whether I should be optimistic or pessimistic,” said City Councilman Dan Garodnick, who lives in the complex. “The key is, what are the terms?”