BY Aline Reynolds
Dwellers in one Downtown residence are battling free-market rents well before the New York State rent regulation laws potentially expire in June.
Sky Filippi, 48, moved into a one-bedroom apartment in Independence Plaza North in 2008. Though $3,600 per month was “exorbitant,” he was willing to pay the price to live across the street from his 15-year-old daughter.
His lease misleadingly indicates that his apartment is free market, and not rent regulated, as it should be until 2012, he says. So he decided to take his Tribeca landlord to court for rent overcharges.
“I was in sticker shock — it was gruesomely painful,” he said. “I didn’t know how long I’d be staying here, but once I realized the wrongfulness of it, I just became like a lightening rod for doing some justice.”
Filippi recently filed a class-action lawsuit against I.P.N. landlord Laurence Gluck for receiving J-51 tax benefits without adhering to the required rent-regulation laws, which Filippi claims should be effective through 2012. I.P.N. paid back the money it received in J-51 tax credits since exiting the Mitchell-Lama program in 2004 so as to avoid the rent stabilization mandate.
In doing so, Gluck is violating a state law that prohibits landlords from deregulating the rental apartments while being granted the tax exemption, according to Filippi. “I.P.N is continuing to operate as if J-51 did not, nor ever existed,” according to the lawsuit, “and plaintiff and other tenants are being victimized and overcharged as a result.”
“Nowhere in the law,” it continues, “is a landlord permitted or authorized to engage in a scheme like I.P.N. has attempted here in order to avoid rent regulation by paying back benefits.”
Gluck also neglected to register Filippi’s apartment and others at I.P.N. with the New York State Division of Housing and Community Renewal (D.H.C.R.), according to a State document citing that the apartment has not been registered since 1984.
The suit charges that Gluck engaged “in a scheme to escape from rent stabilization status by intentionally avoiding being on the city’s radar.”
In a N.Y. State Supreme Court ruling made last August, Gluck was forced to stabilize rents for tenants who moved into I.P.N. prior to March 2006. Tenants had filed a suit against Gluck for deregulating hundreds of apartments in the 1,331-unit complex in 2006.
Sharon Atias, Filippi’s attorney, said that the courts, the City and the State had addressed the entitlements of I.P.N. residents who moved in after 2006.
“Our interest is in bringing justice to tenants who have been victimized by unscrupulous landlords who have intentionally engaged in a scheme to improperly avoid rent regulation in New York City,” she said. “We won’t stop until we achieve victory.”
Buildings actively receiving J-51 benefits are not permitted to charge market-rate rents while receiving the subsidies that accompany the tax abatements, according to a New York Court of Appeals decision made last year. D.C.H.R. and the courts are now determining whether it’s illegal for landlords such as Gluck to return J-51 funds so they can charge tenants market-rate rents.
“There is no reason,” Filippi continued, “that I.P.N. should be allowed to continue to use its frivolous and fictitious waiver while landlords all over New York city are barred from doing such a thing.”
Both Gluck and the N.Y.C. Department of Housing Preservation and Development declined to comment due to the pending litigation.
An official familiar with the claims said that it’s common for landlords to acquire benefits without complying with the statutes. He requested anonymity due to the sensitivity of the case.
I.P.N., he noted, could conceivably not have known about the rent regulation provision of the J-51 tax benefits when applying for them. “I think it was kind of confusing. I believe they were operating under the assumption that, once they were out [of Mitchell-Lama], they no longer had to conform to statutes and rent regulations, and would not have to file… destabilized apartments,” said the official.
The official predicts that the court will end up siding with Filippi and other tenants who bring similar cases to trial.
Andy O’Rourke, a spokesperson for the D.H.C.R., said the Department will “bend over backwards” to ensure justice. “We don’t want people to be overcharged,” he said. “If they’re receiving J-51 benefits, they need to conform to the statutes of that.”
Overcharging a tenant, O’Rourke explained, translates into treble damages, which means that Gluck would be required to pay each tenant three times the amount they overpaid.
The Department, he said, has received similar non-legal tenant overcharge claims on a regular basis, and is following the court cases “very closely” to enforce the law.
“For landlords and tenants, we’ll do what the court determines,” he said.
Filippi is awaiting a March 23 court response to his latest filing, when he expects to receive a subsequent court date from the N.Y.C. Supreme Court. Gluck, meanwhile, would be eligible to charge market rates to the tenants beginning in 2012.
Ed Rosner, vice president of I.P.N.’s Tenants Association, said that a group of I.P.N. tenants intends to file a separate lawsuit requesting that tenants like Filippi who moved into the building after the spring of 2006 receive stabilized rents. In March of that year, Gluck reportedly received the tax abatement money that, according to the tenants, should have required him to keep the apartments rent-regulated.
However, since he has returned the J-51 funds, Gluck has argued for the right to charge market-rate prices.
“[Gluck’s] plan is to maximize his income in any way he can,” said Rosner. “You can’t make a contract, and then when market conditions change, you say, ‘I’m going to return the money and I’m out.’”
