New York, NY - April 15, 2014 - Attorney General Eric T. Schneiderman today announced a settlement agreement with two owners of 42 rent-regulated buildings located in Brooklyn, the Bronx and Manhattan. The agreement with the buildings’ owners – a partnership of several private equity firms, including Normandy Real Estate Partners and Westbrook Partners – will provide more than $1 million in rent credits to tenants living in nearly 1,700 apartments. The agreement also requires that delayed maintenance projects be completed within a year and that the management company, Colonial Management, be terminated immediately. An investigation by the Attorney General’s office into alleged harassment of tenants by Colonial Management is ongoing.
“Over one million families live in rent-regulated housing in New York City. They have a right to decent and safe housing, and a right to organize without being harassed,” Attorney General Schneiderman said. “Today’s agreement with the owners will bring significant relief to thousands of tenants who have suffered and puts other owners on notice that my office will not tolerate harassment of tenants.”
In November, tenants at these buildings began filing complaints with the Attorney General’s office asserting that Colonial Management was engaged in an aggressive campaign to deny their legal right to organize, a protected activity under section 230 of New York’s Real Property Law. The tenants began organizing in response to news that the buildings’ owners were facing possible foreclosure.
According to complaints reviewed by the office, Colonial Management did not provide information to tenants regarding the possible foreclosure, posted misleading and false notices throughout the buildings stating that the buildings were not in foreclosure, blocked tenants and housing advocates from holding and attending tenant association meetings, retaliated against tenants who participated in these meetings, and, in several instances, resorted to intimidation tactics to break up peaceful meetings. Tenants also complained that Colonial Management had subjected them to illegal brokers’ fees when they moved into the buildings and other unlawful charges and fees during their tenancy.
During the investigation, the Attorney General’s office found that Colonial did not maintain the buildings, that the buildings have multiple outstanding code violations under New York City’s Housing Maintenance Code and that at least two of the buildings are in the city’s Alternative Enforcement Program -- a designation that indicates they are among the 200 most physically distressed properties in the city.
As part of the settlement, the owners of the buildings, which are operated under a real estate portfolio known as the “Three Borough Pool,” agreed to terminate Colonial as manager of the portfolio. The agreement also requires the owners to:
- Provide a one-time rent credit of $600 to tenants of every unit in the 42 buildings. That money will compensate tenants for illegal fees and overcharges and amounts to more than $1 million in overall rent credits. (Tenants will receive instructions within approximately 30 days for obtaining their rent credits.)
- Make outstanding repairs and correct all outstanding code violations across the building within one year;
- Forgo any rent increases for work required to bring the properties into compliance with the city's Housing Maintenance Code;
- Provide the Attorney General’s office with a financial underwriting analysis that demonstrates a capacity to adequately repair and maintain the portfolio without additional rent increases;
- Provide all tenants with notice of their right to organize and participate in tenant associations, and their right to use community spaces to facilitate their efforts; and
- Provide periodic reports to the Attorney General's office.
- In the real estate market downturn and mortgage crisis of the past several years, tenants across New York City have had to confront declining conditions as landlords have sought to maximize profits. According to the New Housing Market Place Plan, a report issued by the NYC Department of Housing Preservation and Development, as many as 100,000 units of multi-family rental housing were at risk due to excessive debt obligations in 2010.
City Councilmember Ritchie Torres, Chair of the Committee on Public Housing and a strong tenant advocate on this issue,said, “The deal negotiated by the Attorney General is a significant victory for tenants, affordable housing advocates, and community leaders. For too long, real-estate speculators and landlords have been preying on the vulnerability of low-income communities just to make a quick buck. Responsible property owners who respect tenants and support affordable housing are the only kind of property owners who should be operating in our city, period.”
Ed Josephson, of South Brooklyn Legal Services which represents some of the building tenant associations,said, “This groundbreaking agreement secured by the Attorney General vindicates the rights of more than a thousand tenants whose living conditions were undermined by their landlords' risky financing practices. The agreement sends an important signal to the real estate industry that multi-million dollar deals cannot be made at the expense of the tenants who live in the properties.”
Kerri White, Director of Organizing and Policy at the Urban Homesteading Assistance Board and who assisted tenants with their organizing efforts,said, “New York City can no longer afford to allow landlords to thwart the rules of rent regulation and the Housing Maintenance Code in order to fill their pocket books. We are so grateful to Attorney General Schneiderman for holding landlords' accountable and protecting the rights of thousands of New York families.”
Jose Maldonado, a tenant who lives at a Bronx building owned by the portfolio,said, “We are very relieved the management company is being replaced and that dangerous conditions in our homes will be fixed, and we are grateful to the Attorney General for requiring the owners of these buildings to do the right thing: Follow the law.”
Liza Ash, who lives in a second Bronx building owned by the portfolio,said, “We are very happy that the Attorney General took up this fight, and this agreement sends a message to all landlords who try to intimidate their tenants that someone is going to keep an eye on how they do their business.”
This matter is being handled by Assistant Attorney General Jessica Attie of the Attorney General's Civil Rights Bureau and Dina Levy, Special Assistant to the Attorney General. The Civil Rights Bureau Chief is Kristen Clarke. Executive Deputy Attorney General for Social Justice is Alvin Bragg.