The “owner-use” eviction controversy comes to Prospect Heights

As property values skyrocket in New York, the cheapest—though perhaps not the least risky—route to a substantial living space may be the use (or exploitation) of the “owner-use” clause in state rent regulations, which allows landlords of rent-stabilized buildings to take “one or more apartments” for personal use.
(Photos by Jonathan Barkey except as marked.)

And that’s the issue on Bergen Street in Prospect Heights, where dozens of neighbors, along with some elected officials, on Sunday protested plans by the new owners of 533 Bergen to use five of eight apartments for their family, thus evicting rent-stabilized tenants from four railroad apartments, each averaging not much more than 800 square feet.

“I have no problem with them having a big house,” commented lawyer Brent Meltzer of South Brooklyn Legal Services (SBLS), who represents 28-year tenant Evelyn Suarez, who faces eviction. “But why develop on the backs of these tenants?”
(Pictured are Suarez (l.) and fellow tenant Sillather Bullock, who calls her neighbor "a second mom." Bullock does not face eviction. Photo by Adrian Kinloch.)

Because, apparently, it’s cheaper--and follows the letter, if perhaps not the spirit, of the law. The four-story building cost owners Deanne Cheuk, Andre Wiesmayr, Felicity Loughrey, and Dan Bailey $860,000 in 2006, a jump from the $470,000 sales price in 2004, according to city records, but still a relative bargain in today’s real estate market. One rent-stabilized tenant, apparently without much legal counsel, already departed on payment of a pittance. Of the three apartments not targeted, according to Meltzer, tenants pay $2000, $700, and $800 a month.

Indeed, while rent-stabilization laws have kept the rent for Suarez, who lives in her apartment (right) with two children and a grandson, at $402, the estimated market value of the building, according to city records, has skyrocketed.
2003: $232,000
2004: $544,000
2005: $555,000
2006: $666,000
2007: $799,000

Bailey and Loughrey, who live in the building, were out of town, and messages left for them and their lawyer were not answered. But attorney Jeffrey Goldman told the Brooklyn Paper earlier this year that, while Suarez wouldn’t likely find a similar rent, she’s long enjoyed a “very good government deal” and like many others, will face the market. “I don’t think that’s unfair,” Goldman said. “It may be unfortunate. But I don’t think it’s unfair.”

“Do they wish there was some other way?” Goldman said. “Yes, but in today’s market, it’s just not possible.” Suarez, whose apartment has a bunk bed in the main bedroom, says she fears going to a shelter.

"It's a very difficult situation," said tenant Carlos Martinez (right) at the protest, speaking through a translator. He and his family have lived in the building for 17 years.

Meanwhile, Bailey and Loughrey, who have one child so far, seek the same amount of space some other families—wealthier, luckier, more frugal?—have gained elsewhere in the city or country: a first floor with a living room, dining room, kitchen, laundry room, storage room, and bathroom; a second floor with four bedrooms and two bathroom; and a third floor with a guest bedroom and den.

Comments on Brownstoner yesterday ran the gamut, with defenders of the owners calling rent-stabilized units “an incredible perk” and pointing to the disconnection, in some cases, between actual need and access to such units and the difficulty of evicting illegal subletters. Defenders of the tenants, however, pointed out that the price of the building factored in the presence of rent-stabilized tenants.

The protest was organized by the Fifth Avenue Committee, along with SBLS. A letter to Bailey and Loughrey handed out at the block party stated, “Your intent to evict our neighbors is nothing less than an affront to this community and to the character which it embodies.” And promotional material referred to Cheuk as an “international design favorite” and Loughrey as a “celebrity journalist,” questioning whether “good artists” could be “good neighbors.” In other words, without the law on their side, the tenants and their advocates must try moral suasion--and beyond, as the snake on the balloon indicates.

The law evolves

Also attending the protest were several tenants from 47 East Third Street in the East Village, where an even more dramatic owner-use eviction case is unfolding, and has led so far to a state court decision denounced by tenants and tenant advocates, including a good number of elected officials in Manhattan.

Catherine and Alistair Economakis, who own the building, live in a floor-through apartment on Pacific Street with two children but want a larger space for their family. They initially filed plans to evict all tenants from the 15 apartments at the six-story building, turning an 11,600 square foot, 60-room building into a home with five bedrooms, six bathrooms, a den, a playroom, a gym, a library, and a two-floor living room. (Next door is a Catholic Worker soup kitchen and down the block is the Hell's Angels clubhouse.)

While a trial court ruled that allowing a landlord to recover all the remaining units in a tenement building for owner-occupancy purposes would be incompatible with the Rent Stabilization code’s intent to provide affordable and stable housing to city residents, the New York State Appellate Division February 15 unanimously overruled that decision.

The judges ruled:
We disagree because the Legislature has determined that an owner's need to recover units for personal use and occupancy as a primary residence is a legitimate exception to the rent stabilization scheme. Plaintiffs' argument that a restriction on the number of units that may be recovered for personal use is more consistent with the rent stabilization scheme is more appropriately directed to the State Legislature.

Assemblymember Deborah J. Glick called the landlords’ proposal “cruel” and said that, “along with more than 25 of my colleagues in the City and State Legislatures, I sent a letter to New York State Attorney General Andrew Cuomo about the dreadful Appellate Division ruling.”

A letter to Gov. Eliot Spitzer handed out at the protest said, “It is a cruel irony that the long term residents who fought to make our neighborhoods better places are now being displaced, ‘victims of their own success.’” The letter urged that the law be amended to limit the number of units a landlord may recover for his/her family to one and to enhance penalties for those who evict tenants and then, rather than use them for family as stated, rent the apartments at market rate.

(Tenant advocates in the New York Is Our Home! Affordable Rent Campaign request: Make the rules for NYC the same as those used in the suburban counties: restrict landlords two units for their own personal use, should have to show an immediate need for the unit, and seniors, disabled tenants and tenants in occupancy for 20 years or more should be protected against owner-use evictions.)

In The Villager, Economakis said that the building cost about $800,000 and noted, “The cost to renovate this property and convert it to a single-family home is significantly less than anything comparable on the market.” (A renovation would cost about $350,000).

The Villager reported:
Asked whether he felt turning a 11,600-square-foot tenement into a single-family dwelling was excessive, Economakis replied: “As long as an owner can prove he has a good-faith intent to occupy the space, no one should tell him whether he has the right to live in a certain size home.”

So far, the courts agree.

Economakis now says six of the remaining nine rent-stabilized tenants could stay, but, according to The Villager, would not say if that offer was still on the table.

A 6/26/05 New York Times article on the conflict, headlined Everybody Out?, quoted Andrew Scherer, who represents tenants and wrote Residential Landlord-Tenant Law in New York, "The size of the space that somebody claims they intend to live in must pass what lawyers call the 'giggle test' -- the notion that the claim is believable and will not cause a judge to start to giggle. The idea that someone would take 15 units with 60 rooms as a primary residence is absurd."

The case in Brooklyn is surely less “absurd,” but the principle is similar.

AY effect?

Both City Council Member Letitia James (right) and State Senator Velmanette Montgomery cited the looming effect of Atlantic Yards, as did advocates for the tenants. But Atlantic Yards may be more a symptom than a cause. Bergen Street between Carlton and Vanderbilt avenues is a diverse block in a less diverse district. The eastern segment is mostly row houses, several with "No Arena" signage.

The western segment, which includes 533 Bergen, is a mix of old tenements and industrial buildings; one of the latter houses a city Department of Housing Preservation and Development service center, another was torn down for new housing, while another houses Lava, an all-female troupe whose work combines dance, theater and acrobatics.
(Photo by Adrian Kinloch)

Nearly across the street from 533 Bergen is the Iglesia Evangelica Latina, a sign of the neighborhood’s Spanish speaking community. Next door to 533 Bergen is a home operated by Girls and Boys Town (right), where some two-thirds of the youth “have had formal court involvement for delinquent acts such as theft.” To the east, at Carlton and down one block to St. Marks, a bodega was supplanted in 2005 by Restaurant Sorrel.

Two doors to the west is the Dean Street playground, site of some stupendous renderings of Atlantic Yards, which would encroach on the north side of Dean Street. At the corner with Sixth Avenue is the 78th Precinct headquarters.

Census figures from 2000 place this block of Bergen Street smack in the middle of an upper-income district, suggesting it was a bit of an anomaly. (Click to enlarge; mark indicates location of 533 Bergen.)

Concerns about Atlantic Yards-related traffic may dampen, rather than enhance property values. The most dramatic changes are likely to come in outlying areas like Bedford-Stuyvesant, where tenants without rent regulation would see rents rise.

In other words, the most likely explanation for this conflict is that this building was a relative bargain in the midst of gentrification, Atlantic Yards or not.

And times certainly have changed. A search on “533 Bergen Street” turns up a 5/16/85 New York Times article, which reports that two Brooklyn men, one a resident of 533 Bergen, robbed a Brooklyn wholesale clothing and knitwear manufacturer in Gowanus. One of the gunmen died in the shootout. Not only has crime declined in 22 years, but so has manufacturing. Meanwhile, housing values have rocketed.