Williamsburg tenants sue Spitzer over rent hikes at 420 Kent Avenue

What happened

Tenants at 420 Kent Avenue in Williamsburg have filed a class-action lawsuit against Spitzer Enterprises, the real estate company run by former New York Governor and Attorney General Eliot Spitzer. They claim the company overcharged rent-stabilized tenants. Patch reported the suit was filed Wednesday. The Real Deal, citing The New York Times, reported that Housing Rights Initiative founder and executive director Aaron Carr led the tenant effort. These are allegations in a lawsuit, not findings by a court.

The tenants say the company calculated lease renewal increases on the full legal rent instead of the lower preferential rent tenants actually paid. The Real Deal reported that the Housing Stability and Tenant Protection Act of 2019 requires increases to be applied to the preferential rent. It also reported that the preferential rent at this building reflects concessions such as free months when a lease is first signed. Spitzer built the rent-stabilized units at 420 Kent using the since-lapsed 421a tax abatement program.

The Housing Rights Initiative estimates tenants could be owed $30 million. Patch reported that this figure covers alleged overcharges from 2020 through the filing of the lawsuit. Spitzer told the Times his company planned to "litigate the case hard" and said the complaint seemed to come out of the blue. The Real Deal reported that Spitzer got a $386 million refinancing package from KKR for the 857-unit building in 2019.

Both outlets tied the case to an earlier, similar lawsuit, but they describe it differently. The Real Deal said a suit filed two months ago also relied on Carr's group's research. It said that suit alleges a landlord used "net effective" rents to set high base rents, which led to renewal increases as high as 20 percent, and that it seeks class status for over 3,500 tenants. Patch said a similar suit filed last month in Downtown Brooklyn accused two properties of using temporary concessions to raise rents beyond legal limits. Separately, The Real Deal reported that state housing regulators (HCR) granted Spitzer's application not to renew rent-stabilized leases at 985 Fifth Avenue. He had sued the agency over delays. He plans to demolish that building and put up a 20-story, 26-unit condominium.