The tenants of Stuyvesant Town and Peter Cooper Village have finally settled their class action suit, winning $68.7 million in damages that will be awarded to tenants who were overcharged on their rent between January 2003 and December 2011 as a result of illegal rent deregulation.
The settlement means an end to the lengthy Roberts v. Tishman Speyer legal battle. Tishman Speyer defaulted on its loans in 2010 and the property is now owned by CW Capital Asset Management LLC. The damages, to be paid by CWCapital (on behalf of the
bondholders’ trust) and former owner MetLife Inc, will be divided among 21,250 tenants in 4,300 units.
The settlement, pending final court approval that could come as early as April 2013, will mean that damages of some $10,000 will be awarded to each of the 4,300 units deemed to have been affected by overcharging. It also means that tenants’ plans to buy the complex themselves in a bid to protect the buildings as a increasingly rare refuge for Manhattan’s middle class might finally move forward.
Tenants sought $215 million in compensation for the rent overcharges, which is far more than the current award, but the plaintiff’s attorneys say that the final agreement will bring the total recovery in the lawsuit to at least $146.8 million. In addition to compensating tenants for past rent overcharges, the agreement also includes savings in the form of future rents, which will be based on a formula that factors in market conditions and tenant turnover rates.
“We believe this settlement provides an extraordinary recovery for our clients and we couldn’t be happier for them,” said Ronald Aranoff of Bernstein Liebhard, one of the plaintiff’s lead attorneys, in a statement.
The agreement also guarantees rent stabilization through 2020, when the complex’s J-51 tax benefits expire, reinstating the benefit to a number of residents whose units had been erroneously deregulated. Tenants who signed market rate leases will be offered modified rents or their original rent grown by the yearly rent guidelines board increases.
The settlement comes after some 18 months of negotiations. The complex has been mired in drama ever since Tishman Speyer bought the complex for $5.4 billion in 2007 with plans to draw an upscale clientele in the market for luxury apartments.
CW Capital Partners took care to point out that they took over the complex almost four years after the suit was first filed.
“Since then we have worked hard to try to balance the interests of residents and bondholders, recognizing that our fiduciary responsibility to investors must respect the concerns of tenants who call Peter Cooper Village Stuyvesant Town home,” wrote CW managing director Andrew MacArthur in a release.
The settlement deals with less than half of the complex’s 11,229 units spread out across 56 buildings.
Rather than heralding the announcement, lifelong resident and council member Dan Garodnick issued a cautious statement.