Stuyvesant Town-Peter Cooper Village Tenants Association

Council Member Daniel Garodnick:
Thanks to all of our neighbors and to you John Marsh and the Tenants Association for your advocacy on this and all the issues affecting our community in Peter Cooper Village and Stuyvesant Town. We have a lot of questions about the implications of last week’s decision so we want to get right into it. Before we start I just want to disclose that I am myself a market rate tenant of Peter Cooper Village and like many of you listening today I am part of the potential class that could be affected by this decision. We have already gotten many questions, thank you to those of you who already submitted them via email. Questions that range from lease renewals to calculating rents, who is a member in the class and other subjects. We have consolidated the questions that we have already received and we hope to make it through as many questions as possible in one hour. We are joined today by Alex Schmidt, a partner at Wolf Haldenstein, who argued the Roberts versus Tishman Speyer case before the Court of Appeals. We are also joined by Jimmy Yan, Counsel to [Manhattan] Borough President Scott Stringer. This call is also co-sponsored by our Assemblyman Brian Kavanagh, State Senator Tom Dwayne and Congresswoman Carolyn Maloney. So thanks to everyone for joining us. Lets get right on into the questions and we are going to try to keep this moving so lets start with the big picture and Alex, tell us exactly what the Court of Appeals did last week. What did they decide?

Alexander Schmidt:
Hello everybody, the Court of Appeals last week in a 4-2 decision ruled that Tishman Speyer and its predecessor MetLife improperly deregulated apartments because they were contemporaneously receiving J51 tax abatements from the city.

Council Member Daniel Garodnick:
Okay so is this the end of the line here? Can Tishman Speyer appeal this decision?

Alexander Schmidt:
Tishman Speyer can not appeal this decision. This was a matter of state law, purely of state law and there is no further appeal or recourse to the United States Supreme Court from the Court of Appeals decision.


Council Member Daniel Garodnick:
So what happens now?

Alexander Schmidt:
Well what happens now is a technical matter. The case is remitted or remanded or returned to the lowest court, the trial court, the State Supreme Court, and its going back before the judge who originally dismissed the case, which doesn’t mean that that’s a bad thing. The lower court will in the initial instance resolve the immediately pressing issues that we have in connection with the case and the immediate pressing issues are, one, we are going to require answers to the complaint from MetLife and Tishman Speyer. Two, we have to resolve issues pertaining to the escrows that as many of you know have been funded by what we call the rent differentials between the legal regulated rents and market rate rents of the 4,400 apartments at issue. And the other thing that we have to deal with is the issue that the Court of Appeals declined to rule upon, which has to do with the issue with retroactivity. And that was not an unsurprising decision by the Court of Appeals to not reach that question because that question had not been decided by the lower courts had not been previously ruled upon by the lower courts and it is very common for the Court of Appeals as a procedural matter not to reach questions that the lower courts have not already ruled upon.


Council Member Daniel Garodnick:
Okay so we are going to get into those questions in a little more depth and we will try to make it real easy for people to understand the implications of escrows and retroactivity and all that stuff.

Let’s start with the escrow issue. This is a question from one of our e-mailers who says that they understand that the Appellate Court ruled in favor of the plaintiffs in March and that the additional rents or excess rents were deposited into an interest-bearing escrow account starting on April 1. So help us understand Alex what is the status of that account? Does this decision mean that those monies are going to be refunded regardless of any of those other issues about retroactivity and things, or are these deposits subject to a further court action here?

Alexander Schmidt:
The answer to the first part of that question is that the monies have been put into an escrow account, an interest bearing escrow account since April 1. We have been monitoring that account periodically and we are confident that the monies have indeed been put in, when they were required to be put in the amounts that were required to be put in.

Our position with respect to the escrow on behalf of the tenants is that we have a court order in place that is dated March 13, the week after the Appellant Division ruled in the tenants’ favor, that compels Tishman to negotiate an agreement with us that ultimately will be reduced to a court order that provides for the escrowed funds to be returned. However, there is the possibility that the issue that the court did not decide considering retroactivity may impact, at least from Tishman’s perspective, this escrow agreement and order that is already in place. We are hopeful that we are going to try to talk to Tishman if they want to talk to us about this to try to resolve it without the need to litigate over it. But again our position is and I think that the Court of Appeals ruling is clear on this that the rents that have been paid above the rent stabilized levels are illegal rents and therefore that the monies in the escrow account are rents that should be returned to the tenants as soon as possible. Although, as I said, there maybe some practical impediments to that given Tishman’s current position.

Council Member Daniel Garodnick:

Okay, so let us understand this for a second, let me first note that our Assemblyman Brian Kavanagh has joined us, thank you Brian for being here and for your work on this issue, and I think there were a couple of questions coming for you in a moment. So what was put into escrow was the difference between the legal rent stabilized rent and what people were actually paying, is that correct?


Alexander Schmidt:
That is correct.

Council Member Daniel Garodnick:

Ok, so one of our questioners wants to know how that escrow figure would be calculated, how does that get sorted out and do you have that information in your possession with respect to each individual apartment and how do we insure that the landlord was complying with whatever calculation was suggested or agreed to?

Alexander Schmidt:
What we did with the landlord back in March was arrive at a mutually agreeable formula for calculating the difference between the legal stabilized rent and the market rent for each of the apartments. And again we call that difference the rate differential; it’s also been referred to as excessive rents. It’s the amount that is put into the escrow, which I will refer to as the rent differential. Now to calculate that there is a formula that is derivable from the rules and regulations governing rents stabilized rents,