City Seeks Registration Compliance from 421-a Building Owners
According to city officials, developers of 2,472 apartments spread across 194 buildings in New York City ignored the terms of the 421-a tax break by failing to register the apartments as rent stabilized. Under the 421-a tax incentive, developers are required to register apartments as rent stabilized, meaning their rents would be regulated by the city. Leases would also be renewable to tenants each year. Not enrolling apartments as rent stabilized means that building owners could convert the apartments back to condos should they choose to without being prohibited by rent-stabilized tenants.
The owners of the 194 buildings had originally intended to build condos, but changed their minds, possibly because of market conditions, and decided to rent the apartments rather than sell them. In letters recently sent by the state attorney general’s office, the state Division of Homes and Community Renewal’s Tenant Protection Unit, and the New York City Department of Housing Preservation and Development, the owners were offered a one-time amnesty deal. If the building owners properly register their apartments, and tenants receive stabilized leases at or below what they are presently paying, the owners will not face penalties. Tenants can file claims for reimbursement if they believe they were overcharged.
The nine-page letter tells owners that they have “a one-time, nonnegotiable opportunity to cure these violations” by meeting a series of deadlines to register the apartments and by notifying tenants of the new status of their units. Failure to comply, the letter said, may result in penalties of up to repayment of past tax benefits.