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Blackstone Drops Appeal of Rent Stabilization at StuyTown

Blackstone is dropping its appeal of a state court ruling last year that upheld rent stabilization at Stuyvesant Town-Peter Cooper Village, Manhattan's largest apartment complex.

As a result, all 11,200 units at the apartment complex, known as StuyTown, will remain permanently rent-stabilized.

The landlord's decision comes a week after the U.S. Supreme Court declined to hear an appeal of a lower court's ruling upholding NYC's 2019 rent stabilization law.

In a statement provided to GlobeSt.com, Blackstone indicated that its appeal of the state court decision was filed to keep its options open in the event of future court rulings.

"We were simply preserving our options in the event future Court decisions were made that would impact this case," a Blackstone spokesperson said. "However, we did not ever have plans to change how we treat rent stabilized apartments at StuyTown."

The Blackstone spokesperson added, "Blackstone has consistently displayed an unwavering commitment to the StuyTown community. In 2015, we voluntarily preserved 5,000 units as affordable housing, and since then have invested more than $375M into the property and materially improved resident satisfaction."

Blackstone bought the 110-building apartment complex for $5.4B in 2015. Under a deal brokered by the city with the previous owner, the landlord would have been able to lift half of the apartments in the complex out of rent-stabilization.

In 2020, the Stuyvesant Town-Peter Cooper Tenants Association filed a lawsuit asking the court to declare that the apartment complex is protected under the state's 2019 Housing Stability & Tenant Protection Act, which expanded rent control protections.

Blackstone, named as a defendant in the lawsuit, argued in court that the expiration of a 2012 settlement between tenants and the property's previous owners permitted the firm to deregulate the units.

The company also cited agreements with the city which it said permitted the units to be taken out of regulation once the owner stopped receiving J-51 tax benefits.

The J-51 incentive-which expired in June 2022-provided NYC landlords with a tax exemption for making building-wide improvements, with the stipulation that the renovated units be placed in rent stabilization for the period the benefits were received.

Under a city-negotiated agreement with landlords that was reached before the 2019 law was enacted, NYC reportedly was willing to lift the rent regulation from units covered by J-51 when the benefits expired, but it was unclear whether the 2019 law would permit that to happen.

In January 2023, New York State Supreme Court Justice Robert Reed ruled that the 2019 rent stabilization law prevents the deregulation of units at StuyTown. Reed also rejected the argument that the expiration of J-51 tax benefits opened the way for deregulation.

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Reprinted with permission from the Wed, 28 Feb 2024 05:55:21 EST online edition of GlobeSt © 2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.