State agency hits I.P.N. with a ‘punch in the stomach'

By Julie Shapiro

In a blow to Independence Plaza North tenants, the state Division of Housing and Community Renewal decided last week that the Tribeca complex should not be rent-stabilized.

The D.H.C.R. issued the advisory opinion to State Supreme Court Justice Marcy Friedman, who has been hearing the battle between I.P.N.’s tenants and owner for the past five years. Last year, rather than decide the case herself, Friedman asked the D.H.C.R. for advice. She can now either affirm or contradict the D.H.C.R.’s pro-landlord recommendation.

Diane Lapson, president of the I.P.N. tenant association, said the state’s decision felt “like a punch in the stomach.”

“It’s a big disappointment,” Lapson said. “But I believe we’re correct and we will fight for it.”

The central issue is whether Independence Plaza’s 1,339 units should have become rent-stabilized when I.P.N. owner Laurence Gluck removed the complex from the Mitchell-Lama affordability program in 2004. For two years after Gluck took the building private, he continued to receive a J-51 tax break from the city, which generally requires apartments to be rent-stabilized. But Gluck argues that he only continued receiving the tax break by mistake, and since he discontinued the benefit and repaid his taxes, he does not owe the tenants anything.

In her March 5 decision, D.H.C.R. Deputy Commissioner Leslie Torres did not examine the question of whether the city Dept. of Housing Preservation and Development should have allowed Gluck to repay the tax benefit.

“It is not within the purview of D.H.C.R. to second guess or overrule that decision,” Torres wrote.

Torres appeared particularly cautious about offering any interpretation of the laws, saying that was the purview of judges, not state agencies.

Instead, Torres said that given H.P.D.’s decision to allow Gluck to repay the tax break, it was as though he had never received it. And that, in turn, means that I.P.N. is not subject to rent-stabilization, she said.

“I am gratified that the D.H.C.R. made the correct decision — ruling that Independence Plaza is not rent stabilized,” Stephen Meister, Gluck’s lawyer, said in a statement. “In the end, this is a win for the tenants as well.”

Meister said the tenants are already benefiting from the 2004 agreement they negotiated with Gluck before he removed the building from Mitchell-Lama, which offers them some rent protections. Meister has said that the tenants would lose those protections if they won their case, though the tenants dispute that.

Lapson, the tenant association president, said it is worth fighting for rent-stabilization, because the 2004 agreement provides fewer benefits than rent-stabilization would, and she knows of many people who have been forced to leave I.P.N. because their rent got too high.

Seth Miller, the tenants’ lawyer, said the D.H.C.R.’s decision “does not stand the test of logic.” He thinks H.P.D. should not have allowed Gluck to repay the tax benefit a few years ago, and even though Gluck repaid it, I.P.N. should still be rent-stabilized, Miller said.

It is unclear how soon Justice Friedman could take up the I.P.N. case again and issue her decision. Even after that decision, the losing side will likely appeal to the state’s Appellate Division. After that, either side could petition the state’s Court of Appeals to consider the case.

“A quick decision would be in everybody’s interest,” Miller said. “As time goes on, the stakes get higher and higher.”

The U.S. Attorney in Manhattan last year concluded that I.P.N. should have been rent-stabilized and filed suit seeking millions the federal government says it overpaid Gluck in rent subsidies.

Lapson just found out about the D.H.C.R.’s decision on Tuesday, and on Wednesday she was busy preparing flyers to plaster the apartment complex. The bold-faced headline on the notice reads “DHCR PASSES THE BUCK,” and the text below asks tenants for help in paying for the continued legal expenses.

In a phone interview Wednesday, Lapson said she and others are still adjusting to D.H.C.R.’s decision.

“The reason I was stunned is because I’m usually a very optimistic person, and I always think that in the end truth and righteousness will come forward,” Lapson said. “And I just don’t see it yet.”

Julie@DowntownExpress.com