Tenants at 50 Murray St. won a big court victory with implications across Lower Manhattan when a judge ruled that they are entitled to rent-stabilization protection under the state’s 421-g tax program — and even ordered the landlord to pay them back for overcharged rent.
BY COLIN MIXSON
A State Supreme Court judge ruled on Monday that a Murray Street landlord illegally revoked his tenants’ rent stabilization benefits — and then took the unusual step of ordering the property owner to pay back his renters for steep rent hikes that should never have occurred.
Justice Carol Edmead’s decision represents the most substantial judicial victory yet for tenants battling landlords over rent stabilization they claim is mandated through a state tax program that saves developers millions, according to the tenants’ lawyer.
“This is certainly the most comprehensive decision yet,” said Serge Joseph.
Back in 1995, the state legislature offered developers enviable tax breaks in exchange for renovating deteriorating Downtown office buildings for residential use in a program known as 421-g.
Written into the bill was a provision requiring landlords provide tenants rent stabilization, which caps annual rent increases at rates set by the city’s Rent Guidelines Board, and ensures tenants an opportunity to renew their leases.
But Downtown landlords have long argued the tax program is subject to luxury deregulation rules, which removes rental units costing more than $2,700-per month from rent stabilization, and tenants at various properties have been forced to duke it out with landlords in court.
Justice Edmead’s decision joins three other rulings the state’s courts on the matter, and brings tenants and landlords into an uneasy equilibrium with two victories each.
Most notably, Supreme Court Justice Shlomo Hagler ruled in favor of the landlord at 85 John St. in May, with Hagler relying heavily on a letter written by former Mayor Rudy Giuliani that was read into the legislative record by former Senate Republican Leader Joseph Bruno just before his colleagues voted on the 421-g bill, in which Giuliani claimed luxury-deregulation rules applied to the new tax law.
Tenants have argued that the courts’ interpretation of a state law shouldn’t be affected by the letter, but rather should only be informed by the actual language of the statute — which makes no mention of luxury deregulation.
Edmead appears to agree with that philosophy. In her decision, she stated the law’s intent was clear enough that the bill’s “legislative history” was altogether inconsequential to the issue of rent stabilization.
“The parties contend that the legislative history of RPTL 421-g supports their respective positions,” Edmead wrote in her decision. “Inasmuch as section 421-g is unambiguous, as both parties also assert, the court needs not enter into that discussion.”
Attorney Joseph Burden, who represented the developer in both the 85 John Street case and in the case of 50 Murray Street, disagreed with Edmead’s ruling, and said if the legislation had been less ambiguous, then the courts wouldn’t be so conflicted over the issue.
“If all these judges are going different ways, wouldn’t you think it was unclear?” Burden said.
And while Edmead’s is the first decision requiring a landlord to pay back his tenants, it’s the developer’s decision to appeal that could have the widest ranging effect — if the Appellate Division of the Supreme Court decides to hear the case, it would result in the highest decision yet and set precedent for a clearly conflicted lower court.
“This could have an impact on that and others who live in 421-g housing,” said Burden.
Public Advocate Letitia James, who filed an amicus brief in the case in support of the tenants earlier this year along with many Downtown elected officials, said Edmead’s decision should send a message to other Lower Manhattan landlords in the 421-g program.
“This ruling should serve as a clear message that landlords will not get away with manipulating the law to take advantage of tenants,” said James. “421(g) was created to incentivize developers to maintain critical affordable housing, not illegally charge increased rents to hardworking New Yorkers. We will never stop fighting for the rights of tenants to live in safe, affordable housing.”
