The private equity firm Blackstone is paying some New York City renters more than $100,000 each to resolve claims that they had been overcharged for their rent-stabilized apartments, according to court papers and an announcement from a housing watchdog group on Tuesday.
The total payout of nearly $15 million, which involves dozens of tenants who will receive thousands of dollars each, is one of the largest in state history, according to the lawyers representing the tenants.
It resolves a 2018 class-action lawsuit that residents of Parker Towers in Queens filed against the former property owner, the Jack Parker Corporation, and Blackstone, which purchased the complex that year. The building has more than 1,300 units, and the Jack Parker Corporation had received lucrative tax breaks through a city program to renovate the apartments but keep them rent-stabilized.
“This settlement is more than just a settlement for these families,” said Aaron Carr, the founder and executive director of the nonprofit watchdog group, the Housing Rights Initiative, which investigated the overcharges that led to the lawsuit. “It means more money for food, health care and housing in one of the most unaffordable cities on planet Earth.”
Blackstone, a major investor in real estate around the world, moved to settle the case soon after purchasing the complex but has spent years wrangling with Newman Ferrara, the law firm representing the renters.
Blackstone did not admit to any wrongdoing in the settlement but acknowledged in court papers that past overcharges occurred. The firm said in a statement that the firm was pleased to have resolved the case, which began before they owned the building. It said it has invested $70 million in the complex and is “focused on delivering an exceptional resident experience.”
The Jack Parker Corporation did not respond to a request for comment.
The settlement is one example of how the complex rules governing the rent-stabilization system in New York City can be frustrating for renters struggling to hold landlords accountable. The rent-stabilization system covers some one million apartments, or nearly half of the city’s rentals, and is an important source of affordable housing.
It can be hard for New Yorkers to understand how much their rent should be, what units are covered or what to do if they think their landlord is doing something wrong.
Advocates for tenants and city and state officials encourage residents to request the rent history of their apartments from the New York State Division of Housing and Community Renewal, which oversees the rent-stabilization system, to investigate irregularities. But even those can be difficult to understand, and the state does not guarantee the accuracy of the ledgers.
Mr. Carr said the state should be doing more to proactively investigate these types of cases, and that there are many more beyond Parker Towers.
“The burden is placed on everyday people who don’t have the time to study thousands of pages of real estate law,” Mr. Carr said.
The Division of Housing and Community Renewal said that over the past five years, it has returned nearly $13.2 million in overcharges to renters. In the fiscal year ending in 2023, the most recent data available, the division processed 800 complaints of rent overcharges, more than double the total from two years before that. The division’s tenant protection unit also began more than 2,800 investigations across the state, according to the department.
The division said renters who think they are being inappropriately charged should call its Office of Rent Administration at 833-499-0343.
Several cases, including a few that have resulted in criminal action, have helped shed light on how some landlords have sought to evade requirements.
In this case, the landlord received a property tax exemption, known as J-51, from 1998 to 2011 in exchange for making renovations to the complex, according to court papers. Mr. Carr said a Parker Towers tenant contacted his group, which examined property tax records and rent ledgers provided by tenants and found that many of the units were not properly rent-stabilized.
In 2019, Blackstone agreed to pay a total of more than $1 million to tenants who still live in the complex who claimed they were being charged too much.
An additional $14,750,000 is now being distributed to more than 100 households, including people who used to live in the complex, according to court papers. A judge approved the settlement in September.
The exact amount of money each household is getting through the settlement is confidential, Mr. Carr said, but it is based on how long they lived in the apartments and how much they were overcharged.
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