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Developers Make Millions Flouting Rent Stabilization Laws

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Developers and landlords are openly flouting the city's rent stabilization laws and making serious bank, a ProPublica investigation has revealed. The investigation focuses on high-end rentals where the misconception persists that the rentals aren't governed by rent-stabilization laws. For the most part, ProPublica focused on the Rabsky Group-owned building The Driggs, a relatively new luxury building in Williamsburg.

The investigation revealed that a number of developers have opted to use the 421-a tax break program for new luxury buildings. It allows developers to receive massive tax cuts—in the case of the Rabsky Group—they only paid $47,000 in what would otherwise have been a $678,000 bill for The Driggs. In exchange developers have to enforce strict limits on increasing rents for the first set of tenants in those buildings. That has, however, not been the case.

ProPublica interviewed The Driggs resident Julie Renwick, who has lived there for the past three years. When she moved in, she was quoted a rent of $2,875 per month. Next year, her rent increased by nine percent and most recently it increased by seven percent despite the city capping rent increases to four percent last year and one percent this year for rent stabilized buildings.

The 421-a program, which generates over $1 billion in tax breaks for developers in the city, according to the investigation, has been a point of contention for some time, particularly with Mayor de Blasio. However most of the criticism has focused on the fact that the program only requires 20 percent of the building's units to be set aside for affordable housing. The fact that developers are openly flouting rent stabilization laws has gone completely under the radar.

A large part of this has to do with the fact that there are a myriad of city agencies entangled in ensuring rent stabilization laws are followed. The Department of Finance gives tax breaks to developers, but doesn't have the authority to rescind them. That is the purview of the Department of Housing Preservation and Development, but that department has no control over enforcing rent stabilization laws. That responsibility then falls to the Division of Housing and Community Renewal, a state agency, which handles tenant complaints and is supposed to collect data on rent, but rarely does so, according to ProPublica.

Further complicating the matter is the fact that such information is hard or virtually impossible to access either by the tenants or an independent agency. The state's Freedom of Information Act exempts the state from providing information on what rents the landlords originally agreed to for a particular rent stabilized building.

In the case of The Driggs, ProPublica was able to find out that information through the initial rent roll in court documents.

Now ProPublica is working with WNYC and is calling on New Yorkers to come forward with similar stories to get a better understanding of how many developers are ignoring the law.
· N.Y.C. Landlords Flout Rent Limits — But Still Rake In Lucrative Tax Breaks [ProPublica]
· 'Burg Case Reveals the Complicated World of Preferential Rent [Curbed]
· Bushwick Brewery Redevelopment May Lose Affordable Units [Curbed]

The Driggs

205 N 9th St, Brooklyn, NY, Brooklyn, New York 11211