State Sen. Thomas Duane talks with tenants of One Bank St., who asked not to be photographed for fear of retaliation for speaking out against their landlord.
Duane takes on state in Bank St. battle
By Chris Lombardi
This week, the offices of State Sen. Thomas Duane have been busy drafting new emergency legislation intended, they say, to clean up a mess left by the administration of the former governor.
The legislation would restate a law that Duane says is pretty clear in the first place: the statutes that allow building owners to receive generous tax abatements for fixing up their apartment buildings, as long as they agree to treat their tenants decently for the term of the abatement.
But thanks to two legacies from the administration of former governor George Pataki, Duane said many of his constituents are in danger of losing rent protections that their landlords had long agreed to provide. This week, the state’s top housing agency told Duane that under existing state law, building owners who receive tax abatements under the city’s 50-year-old J-51 program are not obligated to extend rent protections to market-rate tenants.
The letter also prompted howls of protest from tenants at One Bank Street and their attorneys, who renewed their campaign to get both the state Division of Housing and Community Renewal and the city Department of Housing Preservation and Development to stall eviction proceedings.
Duane had asked top officials at both agencies to intervene on behalf of tenants at One Bank Street, whose leases had not been renewed despite numerous tax abatements obtained by their landlord, Marolda Properties. The letter this week from the policy director of DHCR’s Rent Enforcement Unit in Queens echoed similar communications from HPD: that two recent court decisions had limited DHCR’ s power to change the previous administration’s course on this issue.
Now, the tenants are trying to sort out whether to file their own lawsuit, while Duane’s staff keeps busy accompanying them to housing court, and writing corrective legislation to try to prevent the same from happening to hundreds of thousands of tenants living in similar situations.
For nearly 60 years, the J-51 program has rewarded owners of multiple dwellings who upgrade their buildings while protecting their tenants from sharp rent increases, even if their apartments were otherwise deregulated. When the City Council and Mayor Bloomberg agreed in December to extend J-51 until December 2011, City Council Speaker Christine Quinn said that the measure would “maintain the quality of affordable housing by reducing potential rent increases for tenants, [and] will help preserve existing housing and neighborhood character by encouraging building owners to make improvements to their property.”
According to the New York City Department of Finance’s Website, 40,517 New York City buildings are currently receiving J-51 tax abatements—a number that does not include the many receiving benefits under the 421-a program, which operates under similar rules.
But as Chelsea Now reported last month, when tenants at Stuyvesant Town and Peter Cooper Village sued in Jan. 2007 to stop Tishman/Speyer from deregulating their apartments, a judge dismissed the case, quoting 1993 and 2001 vacancy decontrol legislation and a Pataki-era opinion from DHCR to rule that J-51 could not regulate units otherwise subject to “luxury decontrol.” While that case is under appeal, the judge in Diaz v. Metroteam Realty—a similar lawsuit brought by tenants at the former Mitchell-Lama complex Independence Plaza North—said exactly the opposite, noting while rejecting the owner’s motion to dismiss: “[The law] requires a building receiving J-51 benefits to be subject to rent regulation.”
On Jan. 18, Duane convened a meeting with staff from both HPD and DHCR, asking them to discuss the situation at One Bank Street, whose tenants have been working since October to stop landlord Lucky Bhalla from turning their building into a hotel for short-term transient visitors. Last fall, when Duane’s office discovered that the tenants, many with eviction notices, had five years left before Bhalla’s tax abatement under J51 expired, they thought they had discovered a short-term reprieve. But Bhalla’s managing agency, Marolda Properties, ignored a letter from Duane’s office reminding them about the abatement, telling the Village Voice that they saw no need to act “until a tenant contacts us.”
At the Jan. 18 meeting, Duane asked the agencies to consider making their own statements about a policy that both of their commissioners had long taken for granted—that, as HPD commissioner Shaun Donovan told Congress last July, J-51 benefits received by the complex’s owner “requires [the apartments] to remain at affordable Mitchell-Lama rents or under rent stabilization.”
Staff from both agencies replied, at some length, that the decision in the Tishman case overruled anything they could do—and that until both cases had run through all available appeals, their hands were tied.
Within a week of the meeting, Duane received a call from DHCR deputy commissioner Michael Robinson, telling Duane that until both cases were complete, it would be inappropriate for HPD to weigh in on the issue. And just last week, DHCR policy director Greg Fewer replied to Duane in a long letter, sent to one of the Bank Street tenants to tell her why they couldn’t possibly intervene.
Fewer’s letter was addressed individually to the tenant, who has been trying to remain low-profile for fear of retaliation, because that particular tenant had also written letters to various statewide offices asking for help, including a constituent letter to Governor Eliot Spitzer.“Your e-mail to Governor Spitzer has been forwarded to me for a response,” Fewer began. Then, after summarizing what her letter had said, he explained patiently why she was wrong: “Re Stabilization Code Subsections 2520.11(r)(5)(i) and 2520.11 (s) (2) (i)” meant that her apartment was not exempt from what Fewer called “luxury deregulation.” He then attached copies of both of the relevant court decisions, “for your information.”
The tenant was both mystified by Fewer’s legalese and insulted by the implication that the tenants at One Bank just didn’t understand. “What no one wants to address is the oft-stated intent of these regulations,” the tenant said in an e-mail. “The intent of the J-51 stabilization regulation is that property owner’s be obliged to extend stabilization as a concession in return for their receipt of taxpayer funds.”
But it was Duane who replied—not to Fewer, but to DHCR commissioner Deborah Van Amerongen. Describing both the legal landscape and the situation at One Bank Street, he told Van Amerongen that the two subsections of the Rent Stabilization Code identified had become law only recently. “In 2000, DHCR changed the Rent Stabilization Code to read that deregulation is only prohibited in buildings where stabilization occurred ‘solely by virtue of’ the acceptance of tax abatements.” Thus the decision in Roberts v. Tishman, he wrote, was based solely on executive decisions made by her agency’s predecessor under Pataki, which had in 1996 issued an “opinion letter” stating the same thing.
Nonetheless, the senator said, “I believe it is clear that the legislative intent of the law was to subject all buildings receiving tax abatements under the J-51 and 421-a programs to rent stabilization, regardless of prior stabilization status. The interpretation that Judge Lowe (the judge in the Tishman case) and the DHCR have made of this law renders it almost meaningless.”
He asked DHCR to revisit its current policy on such buildings, warning that “even if up to half of [the city’s list of J-51 buildings]… are not impacted by DHCR’s policy decision and Judge Lowe’s ruling, those determinations still likely affect at least tens of thousands of tenants across New York City.”
When asked by Chelsea Now about the responses from HPD and DHCR, Duane said Tuesday, “I do still put most of the blame on the Pataki administration.” It might be easy for advocates to state that DHCR should just reverse course, but in practice “it’s hard to reverse what’s already been put into regulation.”
The new legislation being drafted by Duane and his staff is quite simple, he said—to remove clauses like “solely due to” and “by virtue of,” and state without ambiguity that tax benefits like J-51 create a commitment on the part of building owners to treat their tenants fairly.
“We actually want landlords to take the benefit,” Duane said, “but we also want their tenants to get the benefits of rent regulation—not just reasonable rent, but the right to renew your lease without fear of eviction.”
Duane also asked Van Amerongen to take the other action requested by the Bank Street tenants, and request a stay of all eviction proceedings until after the court cases are decided.
“These tenants are in a hard situation,” Duane said. “If they exercise their rights, get in a fighting mode, then suddenly they become a problem—that they’re difficult tenants.
“They’re not difficult tenants,” Duane sighed. “They just want what’s right.”
