Letters deliver each side’s case at I.P.N.
By Julie Shapiro
The lawyers dueling over the future of rent protections at Independence Plaza North sent a flurry of letters over the past two weeks to the judge who is hearing their case.
The letters followed a state court’s recent decision that the owner of Stuyvesant Town, another rent-protected apartment complex, wrongly deregulated thousands of apartments that should have been rent-stabilized.
Seth Miller, lawyer for the I.P.N. tenants, thinks the Stuyvesant Town decision helps his case because both Stuyvesant Town and Independence Plaza have received J-51 tax breaks from the city. Immediately after the Stuyvesant decision, Miller wrote to Judge Marcy Friedman, who is hearing I.P.N.’s case, to say that I.P.N., too, should be rent-stabilized.
Stephen Meister, who is representing Independence Plaza owner Laurence Gluck, wrote a reply to Judge Friedman saying he disagreed with the Stuyvesant decision and expected it to be reversed (in fact, the Real Estate Board of New York just hired Meister to try to do just that). But even if the Stuyvesant decision holds, “it nevertheless has no application to the [Independence Plaza] case,” Meister wrote.
Landlords who are renovating their buildings can apply for a J-51, which reduces their property tax but also puts the building under rent-stabilization. Meister said Independence Plaza’s abatement was only $7,550 a year, a relative drop in the bucket of property taxes that now run about $8 million a year. In contrast, Tishman Speyer Properties, Stuyvesant’s owner, received $24.5 million in J-51 tax breaks.
Tishman Speyer is also still receiving the J-51 tax breaks, while Gluck has stopped receiving them for Independence Plaza in Tribeca.
Independence Plaza’s prior owner started receiving the J-51 in 1998, while the building’s rents were still protected under the Mitchell-Lama middle class housing program. Meister said the building was supposed to stop receiving the tax break when Gluck, the new owner, removed the building from Mitchell-Lama in 2004. But the city accidentally continued giving Gluck the tax break until the error came to light in 2006, Meister said. Then, Gluck repaid the city all of the benefits he had received since the building exited Mitchell-Lama, plus interest.
Meister said that since Gluck repaid the benefits, he does not owe the tenants any additional rent protections. Meister also said Gluck did not know he was receiving the J-51 when he bought the building in 2003.
“Sometimes small things get overlooked and that’s what happened here,” Meister said in a phone interview.
Tenants say they doubt Gluck could have overlooked the J-51.
Miller, the tenants’ lawyer, added in another letter that there was no reason to discontinue the J-51 tax breaks just because the building left Mitchell-Lama. Other buildings have kept their J-51 tax breaks after exiting Mitchell Lama, including Janel Towers in the Bronx, Miller wrote.
But Meister said Janel Towers was built before 1974, which means different rules apply to it than to Independence Plaza, which was built later.
The tenants at Independence Plaza negotiated some rent protections in 2004 when Gluck removed the building from Mitchell-Lama, though they say they would have gotten stronger protections if they’d known about the J-51 back then.
Meister said tenants could lose the negotiated protections from 2004 if they prevail in the lawsuit, and the protections they won would not be as enduring as the ones in place now.
“I think it is foolhardy from the tenants’ perspective to be pursing this case,” Meister said.
But Ed Rosner, a vice president of I.P.N.’s tenant association and an attorney, said the tenants have nothing to lose and everything to gain by litigating. Nothing can weaken the 2004 agreement the tenants signed with Gluck, which ensured that longtime tenants received either federal Section 8 housing vouchers or a version of rent-stabilization, Rosner said. But at the same time, winning the case would give all tenants rent-stabilization, which is stronger than either of the programs currently in place, Rosner said.
“The tenants have the best of both worlds,” Rosner said.