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The state's highest court heard arguments Tuesday on whether a coalition of tenants are owed rent reimbursement because the building owner received certain tax abatements more than a decade ago in exchange for converting the property to residential use.

An attorney representing the tenants in the case argued before the state Court of Appeals that the plain text of a section of the state's real property tax law guaranteed that their units be subject to rent stabilization, and should therefore justify a payout.

Robert Smith, a partner at Friedman Kaplan Seiler & Adelman in Manhattan, is representing the tenants in the litigation, which comprises two separate lawsuits. He argued that the statute is not ambiguous and clearly allows for rent stabilization of units created under the measure, Real Property Tax Law § 421-g.

A subdivision of that law appears to allow rent control as an option for units created under the statute, Smith argued.

That part of the law reads that “the rents of each dwelling unit in an eligible multiple dwelling shall be fully subject to control under such local law,” notwithstanding the provisions of any local law for the stabilization of rent.

Smith said that part of the law could not be read to mean anything other than that those units should be subject to rent stabilization.

“It's extremely hard to make those words say, as my adversaries argue they say, that those multiple dwellings would be fully subject to control, except for the large majority of them that can be rented for more than $2,000 a month,” Smith said.

The counterargument, which was not always well-received by the high court's judges, was that the state's laws on rent stabilization didn't apply to the units in those buildings because they were rented above the $2,000 statutory threshold.

Attorneys representing the building owners argued before the court that those units were subject to what's known as luxury vacancy decontrol. James McGuire, a partner at Holwell Shuster & Goldberg, and Magda Cruz, a partner at Belkin Burden Wenig & Goldman, represented the building owners.

McGuire pointed, especially, to the legislative history of the law, which was also used by the Appellate Division, First Department in a decision last year that rejected the tenants' claims.

The appellate court had said in its decision that lawmakers knew when they enacted 421-g in 2005 that many of the units would not be rent stabilized because the monthly rent would likely exceed the threshold at which they would be eligible for the benefit.

“Although courts should construe statutes to avoid 'objectionable, unreasonable or absurd consequences,' the legislative history in this case demonstrates that the legislature was aware of such consequences during debate on the bill that enacted Real Property Tax Law § 421-g,” the appellate division said.

McGuire made the same claim during arguments before the high court Tuesday. He said lawmakers didn't intend for apartments created through 421-g with high rents to be eligible for stabilization. When the law was created, some units were going for more than $6,000 a month in rent, for example, he said.

“Does it make any sense, whatsoever, to think that either house thought that people who were paying that kind of rent were deserving of the solicitude and the protections of the rent stabilization law?” McGuire said.

There are some types of units created through state tax abatement programs, like 421-a, that are exempt from luxury vacancy decontrol. But units created through 421-g don't have the same perk, McGuire argued.

Smith disagreed on the legislative history of the law. He argued that Republicans in the State Senate, who were cautious toward rent control in the early 1990s, had called for the bill to be amended because it didn't explicitly allow luxury vacancy decontrol.

“It goes particularly to [Senate] Majority Leader [Joseph] Bruno, who doesn't like rent control, and he doesn't like the bill,” Smith said. “He says he doesn't like it because it doesn't provide for high rent decontrol.”

Associate Judge Eugene Fahey chimed in at one point on the disagreement between legislative history, saying that it might be a stretch for them to fully consider those arguments if they haven't even made a decision on whether the language of the statute is open to misinterpretation.

“For the court to determine the authenticity of legislative history, it seems to me to be a long reach for us to be doing that when really, we haven't even decided the language itself is ambiguous,” Fahey said.

The court could hand down a decision in the case later this month.

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