You make updates and renovations to your New York City property. Then you slap your tenants with appreciably higher rents.
That’s not the way that New York City’s J-51 tax abatement program is intended to work. Rather, the tax breaks passed along to participating landlords are supposed to be responded to in turn by the maintaining rent-regulated status for all apartments in the building for the duration of the tax break.
Anyone considering whether the J-51 program is working properly – and many people might reasonably want to know, given the program’s estimated annual cost of $250 million to taxpayers – might merely consider this: HMGDJ has filed five class action suits to recover refunds and return apartments to rent-stabilization. The suits affect thousands of current and past tenants. The tenants’ advocacy group Housing Rights Initiative (HRI) has also filed six class-action lawsuits against alleged wrongdoing landlords since last year.
And that is just the tip of the proverbial iceberg. Governor Andrew Cuomo implemented a so-called “J-51 initiative” in 2016, its aim being to identify apartments wrongly taken out of rent regulation and return them to their proper status. Despite some gains being made on that front, myriad landlords reportedly continue to flout the process and abuse the spirit and intent of J-51. The J-51 initiative was not followed up be effective enforcement by the State – and so it is left to tenant attorneys, like HMGDJ, to see that the law is enforced and tenants protected and compensated.
The HMGDJ and HRI class action claims are just a ripple amidst a virtual tsunami of similar claims commenced since the Roberts J-51 decision. In fact, a whopping 40-plus class action lawsuit have targeted alleged bad-faith landlords and management groups.
These class action suits and other litigation will result in affected tenants being returned to rent-stabilization status, and having their rents reduced and both current and former tenants obtaining refunds.