See the decision at:
http://tenant.net/phpBB3/viewtopic.php?p=38986
NY Court Deals Landlords Huge Setback
By Theresa Agovino
Published: March 5, 2009 - 2:59 pm
http://www.crainsnewyork.com/article/20 ... 59976/1057
Tishman Speyer Properties and other owners of rent-regulated buildings suffered an enormous blow Thursday when the Appellate Division of New York’s Supreme Court unanimously ruled buildings receiving certain tax benefits could not deregulate apartments.
The decision is devastating because it derails the business plans of owners like Tishman Speyer, who purchased rent-regulated complexes with an eye towards deregulating units and boosting rents to market rents in order to pay off their mortgages. Tishman Speyer is already having major financial problems at Stuyvesant Town/Peter Cooper Village, the sprawling complexes which it purchased in 2006 for $5.4 billion, because it hasn’t been able to covert units fast enough. In January, Fitch Rating said the company had only six months of reserves remaining to cover the trust portion of the debt on the property.
Thursday's court decision stems from a 2007 case tenants brought against Tishman Speyer alleging that rents on their apartments had been improperly deregulated. A lower court judge had dismissed the case.
More importantly, the judges ruled that units must remain rent regulated as long as the building’s owner is receiving J-51 tax benefits. Sty Town and Peter Cooper Village are slated to receive such benefits until 2017.
In a statement, Tishman Speyer said it is convinced that the initial decision to dismiss was the correct one and that "we intend to continue to pursue all potential appeals and defenses."
“This is not just bad for Stu Town it is very bad for all New York City real estate,” said Frank Ricci, director of government affairs for the Rent Stabilization Association.
Mr. Ricci said the ruling will cause an administrative nightmare because landlords could be required to go back and regulate apartments. He noted the decision will also hurt the city’s finances because landlords’ taxes are based in part on rent rolls.
Tenant lawyers were ecstatic, however. Seth Miller said that even if the case is eventually throw out on some technical reasons, the ruling on the status of rent regulated units will hold.
Tishman Spyer can try to appeal the ruling but that won’t happen automatically because the decision was unanimous.