Developers to Pay More Than $613K for Flouting Rent Stabilization Requirements
New York Attorney General Letitia James recently announced agreements in four cases involving developers failing to comply with rent stabilization requirements. The 421-a program provides partial property tax exemptions to real estate developers that build qualifying new housing in New York City. Under New York state law, developers that apply for and receive 421-a tax benefits must register the apartments as rent stabilized and provide the tenants with rent-stabilized leases, rights, and protections, unless the properties are exempt from these requirements because they are operated as a condominium or cooperative.
The settlements involve four cases involving separate properties and developers. In one case, a developer submitted an application for 421-a tax benefits to the NYC Department of Housing Preservation and Development (HPD), indicating that the building would be a condominium and thus not subject to rent stabilization requirements. The Office of the Attorney General (OAG) subsequently discovered that all residential units in the building eventually became occupied by tenants, but the sponsor failed to treat the tenants as rent stabilized under the terms of the 421-a partial tax exemption.
In another case, the sponsor falsely represented to OAG that the building was vacant, even though it was occupied by residential tenants. The sponsor also received 421-a tax benefits for approximately 15 years, but failed to provide tenants with rent-stabilized leases and illegally overcharged tenants.