A tenant at a Tishman Speyer development in Long Island City is suing the developer, claiming it violated rent stabilization regulations tied to the now-defunct 421a tax break.
Housing Rights Initiative filed the lawsuit alongside the 28-10 Jackson Avenue tenant, the Commercial Observer reported. Only one tenant was involved at the time of filing, but a judge class certified the lawsuit this week, potentially clearing the way for more tenants to join the lawsuit.
The watchdog group said up to 3,000 current and former tenants could score reimbursements or rent reductions if the lawsuit succeeds.
According to the suit, the tenant faced a 58 percent rent hike from 2021 to 2022. The complaint said the building’s rent hikes should be capped at 1.5 percent, due to the millions in tax breaks Tishman received through 421a.
Tishman was able to skirt the rent regulations by giving tenants licensee contracts, the lawsuit alleges, rather than lease agreements. The move essentially declared residents to be the developer’s “roommates,” according to the lawyers representing the tenant.
Tishman claimed in a response to the suit that it followed rent regulations, and the increases were permissible because renewals at the building accounted for a free month of rent granted as a concession during the pandemic.
“This was a routine procedural ruling on class-action status, not a decision on the merits of the case,” a spokesperson for Tishman told the Observer on the judge’s decision this week.
The property is part of Jackson Park, which features nearly 1,900 apartments across three buildings, a one-and-a-half acre private park and a 50,000-square-foot clubhouse. The developer started construction in 2015 and landed $1 billion in permanent financing from Bank of America and Wells Fargo in 2019, replacing an earlier $640 million construction loan from the same companies.
Jackson Park is directly across from The Jacx, a 1.2 million-square-foot office and retail complex Tishman opened fully leased in 2019 after spending $650 million developing the project. Bank of America last year originated a $425 million CMBS loan to refinance the property.
— Holden Walter-Warner