NEW YORK CITY-Under an extended agreement announced Thursday, tenants at Peter Cooper Village and Stuyvesant Town will continue paying lower rents until year’s end. This marks the second extension for the agreement, which was set to originally expire at the end of January but was extended until June.
The agreement adjusts market-rate rents to estimated rent-stabilized levels for a group of tenants that successfully sued the massive complex’s ownership in a case that went all the way to the state’s highest court. The New York State Court of Appeals ruled last October that Stuy-Town’s ownership, a joint venture led by Tishman Speyer Properties and Blackrock Realty, illegally deregulated approximately 4,400 units at the 11,227-unit complex on Manhattan’s East Side after receiving J-51 tax benefits.
According to a joint statement from representatives of the complex’s current owners and counsel for the plaintiffs, Wolf Haldenstein Adler Freeman & Herz LLP and Bernstein Liebhard LLP, “affected tenants will continue to pay the lower of either their lease rent or an estimated rent-stabilized rent through the month of December 2010. Each affected tenant will also continue to be afforded certain rights as if pursuant to the Rent Stabilization Law, including renewal and succession rights.”
Additionally, the agreement also extends the stay of litigation between those parties through Dec. 15 of this year, “although either side will have the right to terminate the stay after Sept. 15, “according to the statement. It says the independent consultant that was retained in March will continue with an analysis over the next two-to-three months to recalculate rents for each of the 4,400 affected units. “The parties expect that the matter will be resolved through good faith negotiations before the end of this year.”
The agreement comes three weeks after the complex’s tenant association enlisted the aid of the California Public Employees’ Retirement System for a possible bid on the property. CalPERS had been one of the original investors in the $5.4-billion deal to buy Stuy-Town from its original owner, MetLife, and said in January that it had written off its entire $500-million investment in the 56-building complex.
Also last month, Gov. David Paterson introduced legislation that he said would resolve uncertainty over rent overcharges in all 40,000 of the rent-stabilized units statewide that are said to be affected by the Court of Appeals decision on Stuy-Town, Roberts vs. Tishman Speyer Properties. Part of a larger package of bills that would also extend rent regulation for eight years and increase the monthly legal rent threshold for luxury decontrol to $3,000 from $2,000, Paterson’s proposal would give landlords of rent-stabilized properties six months to refund any rent overcharges during the four years prior to the Roberts ruling.
In April, attorneys for Bank of America and CWCapital Asset Management filed a motion in US District Court in Manhattan that proposes selling the complex as either one property or two separate parcels. BofA and CWCapital had begun foreclosure proceedings in February after the JV defaulted on the $3-billion first mortgage. The rationale for selling the complex in two pieces stems from the fact that although it’s generally thought of as a single property, Peter Cooper Village and Stuyvesant Town are actually two separate parcels.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
