HRI orchestrates 29-plaintiff class action lawsuit (The Real Deal)
Investigation by pro-tenant group says firm handed out market-rate leases in J-51 buildings, billed for false repairs
December 07, 2016 01:45PM By Rich Bockmann
Housing Rights Initiative's Aaron Carr, 535 West 155th Street and Lucas FerraraAaron Carr, 535 West 155th Street and Lucas Ferrara
Nearly 30 tenants at several Harlem rental buildings filed a lawsuit Tuesday against Big City Realty, claiming the landlord routinely flouted state rent-regulation laws.
Tenant-rights advocacy group Housing Rights Initiative said it conducted an investigation with help from the nonprofit BRUSH that found Big City Realty — which owns or operates about two dozen buildings in the city, primarily in Harlem — violated rent-stabilization laws by failing to register stabilized units, falsely inflating the costs of apartment improvements and failing to provide tenants in buildings receiving J-51 tax credits with rent stabilized leases.
The 29 Big City tenants filed a lawsuit in Manhattan Supreme Court Tuesday seeking class-action status for current tenants and those who lived in the landlord’s buildings dating back to December 2012. They’re asking the court to step in and remedy alleged violations and provide damages to those who were allegedly overcharged.
A representative for the landlord couldn’t be immediately reached for comment.
Aaron Carr, founder of the Housing Rights Initiative, said state officials haven’t done enough to proactively police programs like J-51.
“Landlords, like Big City Realty, are exploiting the reactive housing enforcement policies used by the Division of Housing and Community Renewal and placing countless families at risk of rent fraud and displacement,” he said. “Until the Division of Housing and Community Renewal starts functioning as a strong enforcement agency, predatory landlords will continue to make a mockery of our legal system.”
Carr and HRI aren’t the only ones who say the state should be doing more. A recent investigation by ProPublica found that the state relies on landlords to rectify a mistake officials made that allowed rent limits to be removed on tens of thousands of New York City apartments.
Among the most damning accusations leveled against Big City, which is headed by principal Kobi Zamir, is the claim that the real estate firm blatantly signed residents to market-rate leases in buildings that receive the J-51 tax abatement, even though state law requires that the landlord offer tenants rent-stabilized leases.
Kaitlin Campbell, for example, lives in an apartment at 535 West 155th Street, which receives the tax credit. Big City allegedly filed rental history paperwork with DHCR claiming she was provided with a rent-stabilized lease when her lease was actually market rate, according to the complaint.
Other tenants claimed that Big City falsely inflated rents by claiming it made individual apartment improvements (IAIs), which allows landlords to charge tenants 1/40th or 1/60th of the cost of repairs, depending on the number of units in a building.
“For instance, the legal regulated rent on Plaintiff Liam Cudmore’s apartment at 408 W. 129th Street, increased from $975.69 to $2030.58 between 2009 and 2010, which would have required over $32,000 in IAIs to be justifiable,” the lawsuit states, adding that there’s no evidence repairs close to that amount took place.
Tenants organized by HRI in October filed a similar lawsuit against Douglas Eisenberg’s multifamily giant A&E Real Estate, alleging the company misrepresented the costs of improvements to apartments, allowing A&E to raise rents and de-stabilize apartments. A&E denied the allegations.
HRI also sued the Parkoff Organization in October, claiming it illegally deregulated units despite collecting J-51 tax credits.
In August, tenants at 207 Central Park North sued Fairstead Capital, alleging that the landlord “engaged in a fraudulent” scheme by raising their rents to market-rates even though the building received the J-51 tax abatement. Fairstead called it a “shakedown” and denied any wrongdoing.
Newman Ferrara partner Lucas Ferrara, whose law firm filed both the A&E and Big City cases, said this type of litigation is on the rise thanks to active pro-tenant groups.
“Our lawsuit sends a clear message — to landlords large and small — that cheaters will be called to task,” he said.