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West Village tenants sue landlord for illegally deregulating rent-stabilized apartments

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Tenants claim that property owners are benefitting from J-51 tax cuts but not honoring the program

28 Bedford Street
Via PropertyShark.

Residents of the six-story rental building at 28 Bedford Street in the West Village have filed a lawsuit against Rudd Realty Management and Creative Industries Corporation, the property’s landlords, for allegedly failing to abide by the city’s J-51 tax abatement program—and, the suit claims, illegally raising rents and deregulating apartments that should be rent-stabilized.

According to The Real Deal, both current and former tenants filed a suit in New York State Supreme Court on Thursday, claiming that building owners refused to offer rent-stabilized leases on apartments, despite benefitting from the tax abatement. If a landlord benefits from the J-51 abatement, the apartments in that building must all be rent-regulated. But city records indicate that of 28 Bedford’s 32 apartments, only three are registered as rent-stabilized.

The lawsuit also alleges that property owners ignored the city-imposed rent freeze for stabilized apartments and wouldn’t offer tenants a new lease unless they accepted rent increases of up to $150/month.

Many landlords are benefitting from the J-51 tax abatement, though not all are following the program’s rules, in large part because no one is holding them accountable. “If you want a window into the shortcomings of our enforcement system, consider that hundreds of landlords have been submitting property tax statements to government that show illegal misconduct on its face,” Housing Rights Initiative founder Aaron Carr said in a statement. Per HRI, the city has lost as $250 million because of landlords skirting the rules.

In January 2016, Governor Andrew Cuomo announced plans to ramp up enforcement of the J-51 tax abatement and its rent-stabilization requirements. His intentions were to bring 50,000 apartments back into regulation, but per TRD, an investigation from ProPublica revealed that the state has only been successful at bringing slightly less than half back into rent-stabilization.