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TriBeCa Tenants Lose Long Legal Fight for Rent Stabilization

By Jeanmarie Evelly | November 30, 2012 10:40am

TRIBECA — Tenants at Independence Plaza North have lost their longtime legal fight for rent-stabilization after the state's highest court denied their request for an appeal late last month.

The 1,331-unit complex, once an affordable housing development under the Mitchell-Lama program, is now marketed as a luxury rental complex where a one-bedroom apartment costs $3,650 a month or more.

The tenants have been locked in a legal battle with landlord Laurence Gluck since 2005, arguing their apartments should be subject to rent stabilization because of tax breaks Gluck received after exiting the Mitchell-Lama program in 2004.

The tenants were granted a victory in the case in 2010 when a judge sided with them, but the state's Appellate Division reversed that ruling last spring. The tenants requested an appeal with the state's highest court, the Court of Appeals, but it was ultimately denied on Oct. 30, bringing the ongoing legal fight to an end.

"Legally, we cannot do anything else with that case," said Diane Lapson, president of the IPN Tenant Association, who added that she was stunned by the court's denial.

"We're just really disappointed in how the judicial system handled this," she said. "To not give us our day in court is just kind of amazing to me."

The central issue in the case was whether Independence Plaza's apartments should have been rent-stabilized because Gluck received J-51 tax breaks from the city that require landlords to offer limited rents. 

But Stephen Meister, Gluck's attorney, said the J-51 tax breaks — totaling $7,550 a year — were given to Stellar Management, Gluck's company, without Gluck's knowledge due to an error by the city, He added that the tax breaks should have ended when the complex left the Mitchell-Lama affordability program.

"The J-51 benefits should have ended on that day. It was a mistake," Meister said, noting the city's Department of Housing, Preservation and Development acknowledged the error and allowed Gluck to pay back the benefits.

Meister says the tenants' lawsuit was "never necessary," because the IPN residents who lived there prior to 2004 have "very generous" rent protections already, negotiated as part of a deal when Gluck took over and privatized the building.

Longtime tenants who qualified are enrolled in a federal voucher program where they pay 30 percent of their income in rent, and the market-rate difference is covered by the government. Other tenants are part of the city's Landlord Assistance Program (LAP), which regulates yearly rent increases in a way similar to rent stabilization.

"I always thought that this lawsuit was ill-considered," Meister said.

But Seth Miller, the attorney for the IPN tenants, said the existing protections are no replacement for rent stabilization.

"It means that the federal government is paying millions of dollars to this landlord so that the landlord gets market rents — market rents at TriBeCa levels," Miller said, referring to the federal Section 8 vouchers many residents receive to pay their rent. "It's not good government, in my opinion."

Last year, the federal government sued Gluck, claiming he wrongly deregulated the apartments and collected millions in taxpayer subsidies. The court, however, ruled in Gluck's favor that the complex had been rightfully removed from stabilization.

Though the tenants' state lawsuit has hit a wall, one IPN resident has a pending legal motion in federal court alleging that Gluck violated federal law by collecting housing vouchers when the apartments should have been subject to rent stabilization. The tenant, Ed Rosner, says it's not clear yet what the end result of the action — called a qui tam action — will be, but hopes it'll have positive implications for tenants.

Rosner, a retired lawyer who moved into the complex in 1978, estimates that he pays $750 to $1,000 more a month than he would if his apartment were rent stabilized. Even with the federal vouchers and the LAP program in place, many longtime tenants have been priced out of IPN.

"What [Meister] describes as the 'generous' deal that tenants got from the landlord is not as generous a deal as the tenants would have were the place rent stabilized," Rosner said. "It's better than nothing, but its not as good as it should be."