After a year and a half of negotiations, the owners of Stuyvesant Town/Peter Cooper Village have agreed to pay tenants there almost $70 million to settle a class-action lawsuit about illegal rent overcharges.
PCV ST Owner LP and ST Owner LP, the two limited partnerships that own the 11,250-unit complex, agreed Nov. 29 to pay $68.75 million in damages to current and former tenants in about 4,300 apartments that were illegally deregulated. The suit grew out of Roberts v. Tishman Speyer, the landmark 2009 case in which the state’s highest court ruled that it was illegal for an owner to deregulate an apartment while receiving tax breaks earmarked for rent-regulated buildings. The owners will also forgo about $78 million in rent increases that they would have collected if the court hadn’t ruled them illegal.
Under the settlement, the apartments in question will remain rent-stabilized until 2020, when the J-51 tax breaks that sparked the original lawsuit expire. The more than 21,000 tenants affected—those who lived in the deregulated apartments at any time between 2003 and 2011—will receive anywhere from $150 to more than $100,000, depending on how much they were overcharged. MetLife, which sold the complex in 2006 for a record $5.4 billion, will pay $10.5 million of those costs.
Tenants will be notified about the most their rent could be in early January, and learn what their actual rent will be and how much they will receive for damages sometime later. They will then have to decide whether to accept the settlement or try to negotiate a deal on their own. The court will hold a hearing on whether to approve it on April 9.
City Councilmember Daniel Garodnick, a Stuy-Town/PCV resident whose apartment was one of those deregulated, estimates that 90 percent of the affected tenants will face rent increases. The complex’s owners rolled back rents in market-rate apartments after the Roberts decision, such as by reducing a $5,000-a-month apartment to $4,000, explains Marina Metalios, a Stuy-Town resident and longtime tenant activist. (She was not a party to the suit, because her apartment is rent-stabilized.) Now, rents for those apartments will be set using a complex formula that takes the apartment’s rent in 2003 and calculates what it should be now based on the number of legal vacancy increases since then (up to a maximum of three), the Rent Guidelines Board’s increases for lease renewals, and any increases for major-capital improvements or individual apartment renovations.
Those increases must be calculated individually for every apartment affected. Metalios says she would be very surprised if any two-bedroom apartments among them came out costing less than $3,000.
Both Garodnick and Metalios say they will “reserve judgment” on the settlement. “Tenants had overpaid for years as a result of illegal rent deregulation, and they have been waiting a long time for relief,” Garodnick said in a statement after the deal was announced. On the other hand, he said he was “concerned that a significant number of tenants may be subject to rent increases.”
In the bigger picture, he added, the settlement removes a barrier to tenant ownership of the property.