Blackstone Group will pay about $1.1 million in refunds to rent-stabilized tenants at Parker Towers, though the payout doesn’t signal an end to a lawsuit over illegal rent increases at the Queens complex.
The lawsuit was initially launched in March 2018 against the Jack Parker Corporation, which accused the real estate company of illegally deregulating apartments in the 1,327-unit Forest Hills rental complex despite receiving tax breaks under the J-51 program, which requires landlords to keep their apartments rent stabilized. Jack Parker then sold the towers to Blackstone in November for $500 million, after which the firm was named as a defendant in the suit.
Blackstone has been reviewing leases at the property with an independent auditing firm to figure out which rent-stabilized apartments have not been treated as such, and what the appropriate rents and refunds for tenants should be, according to court documents. So far, the firm has determined that approximately 110 units should receive rent and/or utility reductions, and about 82 units should be re-regulated. The average rent reduction per unit is about $230 per month, and the refunds total about $1.1 million overall.
“We are pleased that we were able to voluntarily address this issue quickly and fairly for our residents,” Blackstone spokesperson Jennifer Friedman said in a statement. “We will continue to review the prior owners’ lease files with the expectation of resolving any remaining issues expeditiously.”
Law firm Newman Ferrara is representing the tenants in the lawsuit. Founder Lucas Ferrara said his firm has not independently verified these numbers yet and maintained that Blackstone did not use the right formula to arrive at them, meaning a court could ultimately find that the tenants are owed more money. He also stressed that the lawsuit is still ongoing and in its initial stages.
However, Ferrara was still appreciative of the refunds the firm is already issuing.
“We appreciate that the new landlord is taking steps to recognize these tenants’ rent stabilization rights following the actions of the prior owner,” Ferrara said in a statement. “While we believe that these tenants are entitled to additional relief, we look forward to working with ownership to reach a fair and equitable solution for our clients.”
Aaron Carr of the Housing Rights Initiative, which performed the initial research that led to the lawsuit, sounded a similar note in his statement.
“The $1.1 million payout is likely a fraction of what is owed, but this is a significant first step in a series of steps to restoring the rights of hundreds of tenants.,” he said.
Daniel Ansell of the law firm Greenberg Traurig, the firm representing Blackstone in the suit, had no comment.
Earlier this year, Blackstone allegedly moved to evict two residents from Parker Towers using what the tenants’ attorney described as “incorrect and deliberately misleading” eviction notices. In response to this, a judge ruled that a state court would have to screen all future communications Blackstone had with tenants.
This temporary restraining order was lifted in an April 18 stipulation, court documents show. Ferrara said they consented to this because Blackstone has acknowledged the rent-stabilization status of tenants at Parker Towers. Management has also withdrawn the eviction notices.
Blackstone purchased Stuyvesant Town and Peter Cooper Village in 2015 with Canadian pension fund Ivanhoé Cambridge for $5.3 billion, one of the largest deals in recent history in New York. The companies have pledged to keep 5,000 apartments in the complex affordable for 20 years, and the city pledged to give them $220 million in financial aid.
Via • The Real Deal Miami
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