June 18, 2013

Manhattan’s Biggest Apartment Complex Agrees to Drop Some Rent Increases

By CHARLES V. BAGLI

The notices of a sudden rent increase came like a phantom in the night, slipped under the doors of 1,100 tenants on May 14 at the largest apartment complex in Manhattan, Stuyvesant Town and Peter Cooper Village.

With two weeks’ notice, Thomas Beaudoin learned the rent for his two-bedroom apartment would jump by 49 percent, to $4,365 a month. He and others said they could not afford the extra payments, raising the prospect of an exodus from a historically middle-class complex that has been in turmoil for years. Although the leases contain a clause warning of the possibility of a mid-lease change, Mr. Beaudoin and other tenants say they had received assurances — sometimes in writing — from leasing agents that midterm increases would never happen.

“We were misled by the agent,” Mr. Beaudoin said. “We have proof.”

The June 1 start of the rent increase was postponed, and on Tuesday State Attorney General Eric T. Schneiderman announced that the company that controls the complex, CW Capital, would rescind the mid-lease increases for tenants whom had been told by agents that they would never occur. The company is requiring the tenants to submit affidavits stating what happened.

“I’m hoping that this will end the tenants’ latest struggle to keep Stuyvesant Town and Peter Cooper Village a haven for the middle class,” Mr. Schneiderman said on Tuesday. “The agreement we reached ensures that tenants are treated fairly, provided they can describe how they were misled by leasing agents.”

Even before the agreement, CW Capital said on Tuesday, it had offered to rescind increases in cases where tenants could prove they had been misled.

It is unclear how many people will submit claims. CW Capital played down the significance of the agreement, saying it had received “only 10 complaints from affected residents.” (The company said the average mid-lease increase was $340.)

But Daniel Garodnick, a city councilman who lives in Peter Cooper Village, said t his office had collected about 40 claims by tenants who said they were misled. Mr. Garodnick, who asked CW Capital in January not to impose the increases, called them “crass and unnecessary.”

The president of the tenants’ association, John Marsh, accused the company of “serious and numerous” misrepresentations. He estimated last week that 60 residents had already terminated their leases as a result of the increase. He urged CW Capital to “rescind all destabilizing mid-lease increases and find more humane ways to meet its revenue goals.”

The rent increases came after a court decision that found that the former owners of the complex had illegally deregulated 4,300 apartments. That led to a settlement, which provided $173 million in rent rebates for tenants but also established higher rents for certain apartments. CW Capital insisted that the settlement superseded any statements by leasing agents.

The dispute was only the latest bit of conflict at the complex, which has been in an uproar since 2006, when Tishman Speyer and Black Rock bought the property for a record $5.4 billion. Unable in 2010 to pay the crushing debt on it, the new owners defaulted, turning over the property to the bondholders and CW Capital.

Since then, CW Capital has pushed hard to improve revenue by renovating apartments and raising rents. That alarmed residents of the complex, which has been a refuge for middle-class renters for more than 60 years in an increasingly unaffordable Manhattan. Two-bedroom apartments in Stuyvesant Town today rent for $4,500 a month.

Liz Griggs, who moved into her apartment in 2009, said she and her husband, Andrew, would have to move unless the increase is rescinded. She said she had been orally assured by the leasing agent that there would be no mid-lease increase. Her rent is scheduled to go to $3,535 a month, up 19 percent from what it is now.

“I’m going to send in an affidavit,” she said. “I think they want us out of here. They want to turn over as many apartments as possible.”

Some tenants are still sorting through their options.

Andrew and Elizabeth Sweeney said they had not decided what they were going to do, though they cannot afford the increase. . Eager to start a family and set down roots, they moved into a two-bedroom apartment there in 2009. But the notice they received in May announced that their monthly rent would rise by $705.63, or 22 percent, to $3,926.89.

“I’ve shed tears over this decision,” Ms. Sweeney said, holding her 18-month-old daughter in her lap. “This is where we dreamed of raising our kids. The city seems to be for the extremely wealthy, or students.”