The Roberts v. Tishman Speyer case was settled last week, and the terms are somewhat complicated. The Roberts case was a historic win for tenants, and the settlement will result in considerable damages that will be paid to – or stay – in their pockets. The damage calculation and future rent formulas are extremely confusing, however, and this is an effort by my office to digest the information and make it as simple as possible.
Background: The Roberts case was filed in 2007 by Stuyvesant Town residents against Tishman Speyer and Met Life, claiming that units had been illegally deregulated while receiving the J-51 tax abatement. The case went up to the Court of Appeals, and the tenants won in October 2009 – but the court did not rule on what damages were owed to tenants who overpaid, or what the legal rents should be going forward. Since the Court of Appeals ruling, the parties have been working to settle these questions.
A class action lawsuit: When there are many people who have similar claims of damages, a court may allow them to be grouped together into one lawsuit. The class in this case includes current and former residents of the 4,311 apartments that were deregulated by Tishman Speyer and Met Life. Residents who lived in those apartments during the relevant time period are called "members of the class."
Who is in the class: The entire class—including current and former residents—is about 22,000 people.
The effect on the rest of the ST/PCV community: The historically rent-stabilized units that were never deregulated are not part of this lawsuit. Their rents continue to be set by the Rent Guidelines Board. Of note, there is no "high income deregulation" on these units until the year 2020 because the J-51 property tax abatement will continue until then.
The terms of the settlement: The settlement is broken down into two parts -- first, the damages (i.e. cash award) that go directly to Roberts class members for the amount they over-paid on their units; and second, the calculation for rent going forward.
The total amount of damages: The settlement allocates $68.75 million to tenants overcharged for rent between January 22, 2003 and December 31, 2011. The agreement also includes approximately $76 million in rent savings during the time since the Roberts case was won, when rents were rolled back as part of an "interim agreement." Many of those rents are less than the new legal rents set by this agreement, and CW Capital has waived the right to collect the difference of $76 million as part of this agreement.
Why your rent may go up. Approximately 90% of the Roberts apartments – the 4,311 apartments covered by this case – may see some form of rent increase from where they are today. The reason for this is that rents were rolled back after the case was won as part of the "interim agreement" on rents, but the new rents established by this settlement are higher than those interim rents.
For a detailed explanation of the rent calculation, with some examples, I encourage you to visit:
How will my rent be calculated? It depends on when you first signed a lease for your apartment. It also depends on whether you choose to accept the damages portion of the settlement rather than opt out. If you signed your first lease before November 1, 2009 at a market rate (rather than at the lower rate that frequently was referred to as the "interim rent"), the rent for your unit can go up to the newly-negotiated stabilized rent (referred to in the agreement as the "modified legal rent"), or the rent that you initially paid for your apartment (referred to generally as the initial lease rent) plus the increases allowed by the Rent Guidelines Board since then, whichever is lower.
When rents could go up: CW Capital has the right to raise rents in the middle of the lease term once this settlement is final. While this may become their legal right, any effort to raise rents on residents during their current leases will be met with sure and certain opposition from the entire community, the local elected officials, and the broader community of tenant activists.
For those who moved within the property: In some limited instances, tenants moved within the property while this case was being litigated. For those tenants, the new rent will be calculated by determining the "legal rent" for the old unit. Then, a per-foot cost of that unit will be determined based on the size of the old unit, and that per-foot cost will be applied to the size of the new unit. All permitted RGB increases will also be allowed.
Filing a claim for recovery: Members of the class are strongly encouraged to file a claim for recovery. That form will be available in early January, and must be submitted by May 15, 2013 to be eligible to receive any cash payments to which they are entitled.
Ongoing benefits of rent-stabilization: For each of these 4,311 units (and for all units in Stuyvesant Town and Peter Cooper for that matter), residents enjoy the benefits of rent-stabilization as long as the state continues to renew the law. Most importantly, it means that all rents have been capped, and may only go up by the amount set by the Rent Guidelines Board. It also confers certain other rights, such as succession – but succession rights are limited only to spouses who are on the lease as of the time this settlement becomes effective.
Update (5/30/14): As noted above, however, all of these benefits are at risk after 2020, when the J-51 tax benefit expires and the possibility of decontrol reemerges.
Objecting to or opting out of the settlement: Class members have a right to opt out of the settlement and to litigate the damages issues independent of this settlement. There is no right to opt out of the rent calculation in this agreement. Alternatively, class members who wish to participate in the class but want to object to the terms of the proposed settlement, must decide to do so by filing a notice with the Clerk of the Court by no later than February 18, 2013.
What's next: In early January, members of the class will be granted access to settlement details (i.e. the maximum legal rent for their unit and their maximum preferential rent). The calculation of damages owed to you, and one's rent calculation if applicable will be available at a later date. After a period of time for residents to opt out or object to the settlement, there will be a court conference to address outstanding issues on April 9, 2013. If approved, the settlement could become final sometime after that.