In Roberts v. Tishman Speyer Props.,1 the Court of Appeals held in 2009 that high-rent and high-income luxury deregulation under the Rent Stabilization Law (RSL) are not available where a rent-stabilized building is receiving J-51 tax benefits. In Roberts, the dissenters in the Court of Appeals predicted that “[i]t will take years of litigation over many novel questions to deal with the fallout from today’s decision.”2 That prediction, as this article establishes, has proven true.
In the course of litigating Roberts, many tenant advocates argued that landlords who were benefiting from luxury deregulationand who were at the same time enjoying J-51 tax benefitswere in effect “double dipping” at the taxpayers’ expense. The Appellate Division in Roberts alluded to that argument in its March 5, 2009, opinion:
In 1992, Met Life applied for and began receiving property tax benefits under New York City’s J-51 tax abatement program…which provided incentives for owners to rehabilitate and improve their buildings. One of the caveats of the J-51 program was that rent deregulation of residential units and buildings receiving J-51 abatements was prohibited. Met Life, and the successor owners of the Complex, have received approximately $24.5 million in real estate tax benefits since entering the program and are scheduled to remain in the program, and to continue to receive additional tax benefits, until 2017.
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Administrative Code §11-243(i)(1) provides that the benefits of the J-51 program are limited to the owners of buildings that are subject to rent stabilization, rent control or the PHFL [Private Housing Finance Law]. The Rules of the City of New York likewise require a building receiving J-51 benefits to be subject to rent regulation for the duration of the period in which such benefits are received….3
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