Court defeat for tenants

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Tenants at 50 Murray St. were dealt a blow by Appellate Division judges, who overturned a lower court ruling in their favor.

BY COLIN MIXSON

New York State’s Appellate Division reversed a Supreme Court ruling that granted residents of 50 Murray St. in Lower Manhattan rent stabilization under a state program that provides landlords millions in tax exemptions.

The decision comes as a huge win for landlords, but could result in the state’s highest court issuing a final ruling on the contentious legal issue that has split the lower courts, according to the tenants’ attorney.

“It needs a higher court decision to give clarity, certainty, and finality,” said Serge Joseph, who has represented tenants at 50 Murray St., and numerous other Downtown apartment buildings.

State legislators cooked up the 421-g program back in 1995, which promised developers millions worth of tax exemptions in exchange for revitalizing a then stagnant Lower Manhattan with the construction of new residential buildings — where tenants would be entitled to rent stabilization, which places a low cap on annual rent hikes.

Rent stabilization is typically governed by luxury deregulation rules, which see benefits for tenants evaporate once their rent hits a certain threshold — currently about $2,700.

But tenants argue that language in the 421-g law is clear in exempting Downtown residents of 421-g buildings — whose tony Fidi and Tribeca rentals seldom fall below the luxury cap — from deregulation, and renters from buildings including 90 West St. and 89 John St., in addition to 50 Murray St., have filed civil suits claiming their landlords’ illegally increased rates while raking in huge tax bonuses.

So far, the state’s Supreme Court has been split on the issue.

Tenants at 50 Murray St. and 90 West St. have both scored Supreme Court victories, but those wins were undermined last May by Supreme Court Justice Shlomo Hagler, who ruled for the landlord of 89 John St., citing a letter sent to the state Senate when it was debating the 421-g bill by former Mayor Rudy Giuliani, who wrote that the buildings would be subject to luxury deregulation — though that language is nowhere in the law.

Joseph said he’s confident the case will find its way to the Court of Appeals, the state’s last stop for legal quandaries, claiming the issue’s wide-ranging impact, coupled with it’s muddled legal history in the lower courts make it ripe for a definitive judgment.

But the Court of Appeals rarely hears cases that don’t feature split decisions between two different Appellate Division courts, which — in the case of 421-g — could never happen because of the geographically narrow reach of the law, which only applies to Lower Manhattan, according to lawyer Louise Barracks, who represented the Real Estate Board of New York, also a party to the 50 Murray St. case.

If that’s the case, and the Court of Appeals declined to take up the case, the Appellate Division’s unanimous decision favoring landlords is the whole ball game, and the end of tenants’ hopes of lower rents and reparations, according to Barracks.

“Unless this goes up to the Court of Appeals, this is the law of the land in New York,” she said. “The highest court will have opined on it, and there’s no one else who can decide to the contrary.”

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