Renters in Lower Manhattan may be able to collect up to 6 years worth of back rent, according to a court ruling in June
- A program that lasted from 1995 to 2006 offered tax breaks to developers in Lower Manhattan who in return would restrict rent increases, according to a 2016 report from the nonprofit newsroom ProPublica.
- However, the rent limits were interpreted, by developers and those who enforced the law, to apply only to apartments with monthly rents under $2,000.
- ProPublica found that 75% of all the apartments built under the program were subjected to rent increases.
- In June, the New York Court of Appeals ruled in favor of tenants from two Lower Manhattan buildings who argued that their apartments should have been rent-stabilized under the program.
- In light of the ruling, current or former tenants of buildings that benefited from the program may be eligible to receive up to six years of back rent.
- Visit Business Insider's homepage for more stories.
In 1995, a program called 421-g was put in place in an attempt to fill Lower Manhattan with more residents, according to a 2016 report from ProPublica's Marcelo Rochabrun.
The program issued multimillion-dollar tax breaks to developers who converted office buildings into apartments. In return, the developers would restrict rent increases.
According to Rochabrun, the approved program included a letter from the New York City mayor, Rudolph Giuliani, stating that rent stabilization should only apply to those who paid less than $2,000 a month for an apartment.
The letter was read into record and, according to Rochabrun, accepted as the common interpretation of the law. As a result, 75% of all the apartments built under the program have been subjected to rent increases, Rochabrun reported.
While the program ended in 2006, according to Rochabrun, many developers are still benefiting from it. In fact, he reported that the city lost around $75 million in tax revenue in 2015 as a result of the program.
Lawyers and tenants are now arguing that the program was misinterpreted. A program that was intended to pair tax benefits with rent regulation, according to reports, did the opposite in most cases.
Now, 0ver two decades later, tenants are fighting back.
According to the New York-based news outlet The City, in June, the New York Court of Appeals ruled in favor of tenants from two Lower Manhattan buildings who argued that since the owners benefited from the 421-g tax breaks, the rents of their apartments should have been stabilized.
In light of the ruling, current or former tenants of the Lower Manhattan buildings that received tax breaks because of the program may be able to collect up to six years of back rent, The City reported.
An analysis conducted by the news outlet found that 39 buildings received tax benefits from the program between 1995 and 2006.
But the fight for back rent isn't the only lawsuit that has loomed over New York's real-estate industry this year. As Business Insider previously reported, in January, a $21 million lawsuit was filed in New York accusing various real-estate brokers of using Airbnb to illegally rent over 250 listings to nearly 76,000 unknowing guests.