Williamsburg Tenants Sue Spitzer Enterprises Over Alleged Rent Overcharges

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 Gov. and Attorney General Eliot Spitzer. Patch reported the suit was filed Wednesday. The building sits at the corner of Kent Avenue and South 8th Street and has 857 units.

The suit says the company broke state rent-stabilization law when it calculated renewal increases. Instead of applying increases to tenants' lower preferential rents, the company allegedly applied them to the higher legal rent. The Real Deal reported that the 2019 Housing Stability and Tenant Protection Act requires increases to be applied to the preferential rent. It also reported that the rent-stabilized units were developed using the since-lapsed 421a tax break. Patch noted that over the past decade, the Rent Guidelines Board has never approved an increase above 3.25 percent for a one-year lease.

The Housing Rights Initiative, a nonprofit led by founder and executive director Aaron Carr, estimates tenants could be owed $30 million. Patch reported the estimate covers alleged overcharges from 2020 through the filing of the suit. The Real Deal, citing the New York Times, reported that Spitzer said his company plans to "litigate the case hard" and that the complaint seemed to come out of the blue. The Real Deal also reported that Spitzer secured a $386 million refinancing from KKR for the building in 2019.

Both outlets tied the case to an earlier, similar suit, but they describe its timing differently. Patch described a suit filed last month that accused two Downtown Brooklyn properties of using temporary rent concessions to raise rents beyond legal limits. The Real Deal described a suit filed two months ago, also based on Housing Rights Initiative research. That suit alleges "net effective" rents were used to inflate base rents, producing renewal increases as high as 20 percent. It seeks class status for more than 3,500 tenants. Assemblymember Emily Gallagher said, "This is not the only building where this is happening."