Jack Parker Corp. illegally de-regulated Parker Tower units: lawsuit
Parker Towers (Credit: parkertowers.nyc)
A group of Parker Towers tenants is suing the Jack Parker Corporation, alleging the company illegally deregulated numerous units at the Queens apartment complex. The lawsuit, filed Wednesday, is one of the largest J-51 lawsuits in the city’s history.
The 1,350-unit Forest Hills rental apartment complex received tax breaks under the J-51 program, which requires landlords to keep apartments rent-stabilized, through December 2010, the lawsuit says. Despite receiving those tax breaks, the landlord leased out apartments at market-rents, never provided stabilized leases to the tenants, and also failed to register them as rent-stabilized with the New York Department of Housing and Community Renewal, according to the complaint.
“At the time the J-51 Program tax benefits expired at Parker Towers, only 642 out of 1327 units were listed as rent-stabilized,” the complaint reads. “The aforesaid omissions are in violation of the rent stabilization laws and the J-51 Program rules, which rules required all 1327 units to be rent-stabilized.”
Newman Ferrara LLP filed the lawsuit, which is based on research by the nonprofit tenants rights group Housing Rights Initiative. The plaintiffs seek monetary damages and a return of their units to rent-stabilized status.
The lawsuit could prove a major complication for the landlord, which is looking to sell all of its real estate holdings across the U.S. Sources have said that the full portfolio is valued around $1.5 billion.
Jack Parker Corporation’s New York City multifamily holdings alone tally more than 2,000 units, and represent the most valuable portion of the portfolio. But that is also under the assumption that Parker Towers, with over 1,300 units, is market-rate. If the courts rule that a significant amount of the units should be governed by rent-stabilization laws, it would be far less valuable to a prospective buyer.
Marketing materials obtained by The Real Deal claim that the new owner has the option to convert 432 of the units at Parker Towers to condos, with a projected sellout of $202.5 million. Development costs were pegged at $77 million. It’s unclear if any of those units are being contested by the HRI lawsuit.
Calls to the Jack Parker Corporation were not returned.
Other landlords targeted by HRI for alleged J-51 violations include the Parkoff Organization, the Scharfman Organization, Rudd Realty and Fairstead Capital.
The nonprofit, along with Councilmember Ritchie Torres, recently announced an investigation into Kushner Companies for allegedly failing to register stabilized units with the Department of Buildings, which TRD first detailed last year.
In January 2016, Gov. Andrew Cuomo announced that landlords who had received J-51 benefits would have to return deregulated units to rent-stabilized status. But barring state enforcement, it’s been up to tenants to figure out if their building falls under the program and file a complaint.
Last year, Brooklyn State Senator Brad Hoylman proposed legislation that would require authorities to inform tenants if their apartments were suspected of illegally being removed from rent stabilization under J-51.