HSTPA Bars Deregulation of Stuyvesant Town Units After J-51 Tax Benefits Expire

Building complex tenants sued landlord in 2020, claiming that changes to the NYC Rent Stabilization Law made under the HSTPA in 2019 barred landlord from deregulating 6,200 apartments. Landlord argued in response that prior court settlements and agreements with the city permitted the apartments to be deregulated once the buildings stopped receiving J-51 tax benefits. In 2009, New York's highest court had ruled in Roberts v. Tishman Speyer Props, LP that the prior landlord of the building complex couldn't deregulate apartments while receiving J-51 tax benefits, despite DHCR guidance to the contrary.

In 2012, a subsequent settlement of tenant claims resulted in a court judgment (the Roberts Judgment) stating that, "A Unit shall not be subject to the RSL or RSC after the expiration of the lease for that Unit in effect when the Complex in which the Unit is located no longer receives benefits under the J-51 program (that is, June 30, 2020 or such earlier date as permitted by law) regardless of whether any prior lease or lease renewal pertaining to the Unit contained a notice pursuant to RSL Section 26-504(c), known as a 'J-51 Rider.'"

When current landlord bought the building complex in 2015, it signed a regulatory agreement with the NYC Housing Development Corporation (HDC) that established an "Affordable Housing Regime" to govern the rental of certain apartments and specified that apartments could be taken out of regulation after June 30, 2020, when the J-51 property tax benefits expired. 

The court ruled for tenants, finding that landlord misinterpreted the law. The Roberts Judgment was abrogated when HSTPA became effective on June 14, 2019, and high-rent deregulation was repealed. An agreement to waive the benefit of any provision of the RSL or RSC is void. And the Roberts Judgment included a "savings clause" where the parties acknowledged that future legislation could modify the terms or interpretation of the RSL or RSC that landlord and tenants relied on when settling the individual tenant claims. Because apartments in the building complex had been rent stabilized before the building received J-51 tax benefits, were then deregulated improperly, and were subject to rent stabilization when HSTPA repealed deregulation provisions in 2019, landlord couldn't charge market rents again after the tax break expired in 2020. And there was no carveout in the law governing rent stabilization based on J-51 status that could provide for deregulation after HSTPA when the J-51 benefits ended. 

Stuyvesant Town - Peter Cooper Vil. Tenants' Assn v. BPP St Owner LLC: Index No. 152397/2020, 2023 NY Slip Op 23003 (Sup. Ct. NY; 1/4/23; Reed, J)