Tenants In Sandy-Damaged Buildings Protest Landlord-Friendly Rent Reduction Policy

Sandy is still causing headaches. Bureaucratic ones.

Sandy is still causing headaches. Bureaucratic ones.

After Hurricane Sandy, rent-stabilized tenants living in damaged buildings with diminished services were told—and believed—that they would be able to get rent reductions for the entire time they were without services.

The Rent Stabilization Code stipulates that reductions are given from the time the service is lost. But, as rent-stabilized residents at Peter Cooper Village and Stuyvesant Town have discovered, they might only be eligible for reductions starting in March—a four-month discrepancy that could be worth thousands of dollars per tenant.

According to a recent fact sheet from the state’s Division of Housing and Community Renewal, rent reductions will only be awarded from the month that the department notifies landlords of diminished services, rather than from the time when the services were lost. For the 1,200 tenants of Stuy Town and Peter Cooper Village who filed with their claims with the Department on Feb. 26, the difference is significant. Rather than receiving rent reductions starting in late October, when flooding damaged the building’s security systems, laundry rooms, elevators, building intercoms, bike and carriage room storage and trunk storage, reductions would only start applying in March, or even April.

Now, politicians are trying to untangle the mess.

“Unlike the Rent Stabilization Code this seems to be an administrative policy that doesn’t have a basis in law,” State Assemblymember Brian Kavanagh told The Observer. “We’re talking about a fact sheer versus a formally adopted code.”

Earlier this week Mr. Kavanagh, State Senator Brad Hoylman, Councilmember Dan Garodnick, U.S. Representative Carolyn Maloney and borough president Scott Stringer sent a letter to the Division of Housing asking for clarification on the discrepancy and an explanation on its basis. They have yet to receive a response and the Division has not yet returned a request for comment from The Observer.

Mr. Kavanagh said that tenants could be denied a significant amount of compensation to which they are entitled if the Division’s standard is applied rather than the Rent Stabilization Code’s. Moreover, the Divison is not even applying reductions from the date they were filed, but from the beginning of the month that notifications are served on the landlords. Meaning that in some cases, rent reductions could be delayed a number of additional weeks, or even months.

Tenants may also have reason to be concerned as it’s not the first time that the Division of Housing has shifted its policies and interpretations to be more landlord friendly. Incidentally, the last case also involved rent-stabilized tenants in Stuy-Town and Peter Cooper Village.

The tenants lived in apartments that had been removed from rent stabilization even though the landlords were receiving J-51 benefits. In 2000, the Division of Housing—which had earlier issued an opinion letter stating that J-51 units were exempt from deregulation—adopted a regulation that the exemption didn’t apply to buildings like Stuy Town, which would have been rent stabilized even if the landlords did not receive J-51 benefits. The regulation was eventually struck down in court as illegal.

As for the market-rate tenants living in the complex? Neither the Rent Stabilization Code nor the Division’s rules and regulations apply to them. But there’s a class action lawsuit that they could join.

kvelsey@observer.com