THIRD STREET LANDLORDS TEST LOOPHOLE IN RENT CONTROL LAWS:
Tenants Fight Evictions Over Building Conversion to Landlord "Mansion"
By Honey West
 

[Editor's Note: Since the end of World War II, New York has had rent control and rent stabilization laws on the books that protect tenants from arbitrary eviction and that set maximum percentages on rent increases. The original laws were enacted in the time of Mayor Fiorello La Guardia as an acknowledgment that rents spiraling out of control destroy communities, and that society needs to keep some kind of lid on the price of housing.

Once covering a wide category of buildings, these laws have now been gutted to the extent that they now cover only a fraction of the housing stock that they once did. Co-op and condo conversions and the exemption of recently constructed buildings from the rent protection laws have pushed more of New York's rental housing into a free market inaccessible to the city's middle class and working class majorities. With the over-valuation of Manhattan real estate now at record highs, landlords continue to look for gaps in the laws, enabling them to attack whichever tenants prove most vulnerable.

Changes in the rent laws enacted by a series of Republican New York state administrations, including that of Governor George Pataki, in conjunction with Republicans in the New York State Legislature led by Senate Majority Leader Joseph Bruno, helped enlarge these loopholes and empower landlords to evict even more tenants formerly protected by rent regulations. They have also packed State courts with judges subservient to their friends and supporters in the real estate industry, who lack any commitment to the original intent of New York's rent regulations and who dispense the kind of junk justice described below, in cases where tenants are involved.

The following report was written by a resident of 47 East Third Street, a building housing a group of Lower East Side tenants who have not given up under fire.]

[July 2007] Our story at 47 East Third Street is sadly not a unique one, though our fear is that it has the potential to destroy the homes and lives of our community and of those across all 5 boroughs. In August 2003, one of the tenants in our building, living there since 1981, received a "Notice of Non-Renewal" from our landlords, Alistair and Catherine (Yatrakis) Economakis. The Notice said that his rent stabilized lease would not be renewed because they not only needed his apartment, but the entire six story, 11,575 square foot tenement building containing 15 apartments for their own "personal use."

Their landmark district Cobble Hill 4 story brownstone, which they are "forced" to share with other members of the family--among them landlord and real estate investor Peter Yatrakis and his wife Kathryn Yatrakis, Dean of Academic Life and Professor of Urban Studies at Columbia University--was just too small for them. Alistair Economakis, the son of Greek shipping magnate Alexander Economakis, no doubt shared his wife's sense of entitlement.

Their grand plan was to turn our building into a mansion with "5 bedrooms, 6 bath-rooms, a private gym, a library, a utility room, a playroom, a study, a two floor living room/kitchen area with a walkway overlooking the living room, and an entire floor for use as a "nanny's suite." (The Economakis' self-serving rationale for needing all of this space is viewable on their website at: <http://www.economakis.com > -- the landlords' claims on their site are debunked on the tenants' website at: <http://47e3.org>)

We all got together immediately to decide how we were going to fight this. Most of the tenants in the building have been there at least a decade and half of them have lived there since the late 1970s, when East Third Street, as well as the rest of the neighborhood, was "undesirable." Several children had been born in our building–two of them were now young adults. Everyone had been active in the community through the years--in the schools, the gardens, political causes, art, theater, music, church. Contrary to the popular rent stabilization myth force-fed to the public by the real estate industry, no one was a millionaire with a second home, no one was illegally living somewhere else, no one was paying $50 a month, no one had the money to buy an apartment. Yes, we were "hanging on" to our apartments, because this is our COMMUNITY and our HOME.

A lot of things we had assumed about rent stabilization were wrong, or not quite as they seemed, and the law was certainly not "tenant friendly," as touted by the greed estate industry. Eight years of [NY Governor] Pataki, [NY State Senator] Bruno and company acting as landlord lapdogs have left the rent regulations that were supposed to protect low and moderate income tenants gutted and the system almost impossible for the average person to negotiate. This would become another full time job for all of us.

In our case, we found that the "Owner Occupancy" section of the Rent Stabilization Law was being abused to evict the whole building. The language here is purposely vague, to the benefit of the landlords. It says that an owner can take "one or more units" in a rent stabilized building for "personal use,' meaning him/herself or an immediate family member. It doesn't matter if there are other vacant apartments in the building. If he decides he wants the apartment of a long-term tenant, no problem and no obligation to offer the tenant another apartment. The only "protection" is for tenants over the age of 62, who must be offered a comparable apartment at the same rent in the same neighborhood. But, good luck to the tenant who does not know that, or who cannot afford a lawyer.

The landlord also does not have to prove that he actually needs the apartment--he just has to want it, like a spoiled child. All he has to do is claim in "good faith" that he or his family will use it as their primary residence for only three years. After that, it can be de-regulated and re-rented at "whatever the market will bear." Is there any penalty for a landlord who lies? A landlord who evicts a tenant, claiming "good faith," only to rent to a complete stranger the next month? No. The slap on the wrist is that IF the landlord is caught doing it and IF the judge decides to enforce it, the landlord is not allowed to raise the rent on the rent stabilized apartments in the building for three years, if there are any such apartments left. Does the original evicted tenant get his or her apartment back? No.

This, of course, all depends on the evict-ed tenant hiring a lawyer and taking the landlord to court, which is a prohibitive expense. Landlords count on that fact, so this has been a popular means of eviction. Even a tenant whose landlord evicted her recently because the landlord wanted the apartment for a "sewing room" lost, al-though the landlord admitted in court that she hadn't sewn anything in years, She just had to claim in "good faith" that someday the mood would strike her to start sewing again. Screw the tenant who had been living in that apartment for years.

In our case, our building was under a tax lien and ended up being bought by a corporation which operates under their real estate company called Granite International Management, located in Brooklyn. They buy buildings in the name of LLCs (Limited Liability Companies.) Many tenants are al-ready familiar with this company--Peter Yatrakis, the father of our landlord, has been buying buildings on the Lower East Side for years. His daughter, Catherine Economakis, her husband, and other family members, are partners owning at least 30 buildings on the Lower East Side, in Chelsea and in Hamilton Heights. A building they own at 11-13 Avenue D, having been emptied of most of its rent-stabilized ten-ants, is now up for sale for $7,750,000.

At the time of the attempted evictions against us, the Economakis' lawyer, Todd Rose, was already trying to evict a 23-unit apartment building on the Upper East Side of Manhattan for the "personal use" of his client Steven Croman of Croman Real Estate (known for his phony demolition at 345 East Fifth Street.) Rose's brother, fellow lawyer Peter Rose (with notorious landlord Robert Ohebshalom) was trying to evict an entire building on Jane Street for his "per-sonal use." Our landlords were the next ones who suddenly had to have a whole building for themselves.

Since a corporation cannot claim "owner occupancy," Catherine and Alistair Economakis had the deed to the building transfered from the corporate entity of which they are a part to themselves under their personal names, for $0.00. That same day, they sent the "Notice of Non-Renewal" to the first tenant, but not before they paid a visit to Wasim Lone at GOLES [Good Old Lower East Side, a neighborhood tenant advocacy group–Ed.], to inform him that they had "the right to do this." Wasim told them that he would help us fight them, not sure what they hoped to accomplish by coming to his office. When we called GOLES a few days later, they were ready to help us.

When they took over our building in their names, the landlords evicted two tenants right away. As of this writing, five tenants have either been evicted or have elected to leave as a result of deals with the landlords, and one tenant died before the end of his lease.. The tenants in the remaining nine rent-stabilized apartments are still hanging in there. The un-healthy conditions resulting from the Economakis' renovations and alternations to the building may have contributed to some of the families' willingness to accept landlord buy-outs.

The Economakis' claim that the six vacated apartments have been converted into a duplex and a triplex and that they are now living in the building. They have made certain tacky renovations to the exterior of their so-called mansion, including the addition of a fake cornice of molded plastic made in China. As we have documented graphically, sub-standard conditions now prevail in much of the interior of the building, with hallways and tenant mailboxes in disrepair.

We needed to hire a lawyer: the case rests on the premise of "good faith," which requires discovery evidence to be produced. The DHCR ["New York State Division of Housing and Community Renewal," which represents landlords' interests--Ed.] does not allow a tenant to get the rent history of a building, nor will they allow tenants to go back more than four years researching their own rent history–the lawyers have to request it. Most importantly, lawyers know the loopholes and tricks that the landlords are looking to exploit. No tenant is prepared for that. The housing court system has become increasingly unbalanced in favor of landlords, who consider hiring lawyers an operating expense. Tenants who cannot afford legal counsel are often being called to court on false charges, causing them to miss work and a day's pay to be there.

We took our case to the New York State Supreme Court, and were granted a temporary injunction against eviction. Our lawyer argued (basically) that the "owner occupancy" provision was not intended to take an entire building out of rent stabilization. Our landlords, as assumed, appealed the decision to the Pataki-appointed First Appellate Court, the same court that sided with landlord Gregg Singer over his destruction of the Charas community center on East Ninth Street and with the Archdiocese of New York over its destruction of the historic St. Brigids Church on East Eighth Street. This court ruled against us too. "One or more" apartments wasn't defined, so a whole building, hell, an entire block, was okay with them. All in the name of "property rights."

In April 2007, 28 State Legislators, initiated by State Senator Deborah Glick, signed on to a letter to State Attorney General Andrew Cuomo, describing the First Appellate Court ruling as "dreadful" and warning that it had the potential to "undermine the ability of state agencies to enforce the Rent Stabilization Law and Code."

Our next step is to file a Motion to appeal with the State Court of Appeals in Albany. Meanwhile, several cases have restarted in Housing Court (all housing court cases had been on hold while the Supreme Court case was being heard.) Landlords are already drooling at the possibility of us losing this case.

We have heard from other tenants on Bergen Street in Brooklyn, whose landlords are attempting to evict their entire buildings for the same reason as ours. So much for the people who looked in disgust at the Lower East Side ten years ago, who now say "you're in the hot neighborhood, get over it and move to Brooklyn." Tell that to the people in Bushwick who are now being told they are in "hip trendy East Williamsburg" and to get out. If you can stand it without vomiting, look at the website of Massey Knakal Real Estate, which claims Staten Island and the South Bronx are "top hot real estate markets.'

Our lawyers, Steve Dobkin & Seth Miller, only represent tenants. Still, it is not easy.  If the tenants in our building weren't splitting the legal bills, this would have been impossible. We have been holding stoop sales and benefits, and friends and neighbors, many in tight money situations themselves, have given donations to our tenants' association legal fund. We are hearing more horror stories from every part of our neighborhood--everyone who has lived and worked to make it a home, to whom community values are more important than property values.

The Lower East Side is living up to its reputation as a hotbed of tenant activism, and has rallied around the tenants of 47 East Third Street. On April 14, over 400 demonstrators clogged Third Street, expressing their support as tenants spoke from the steps of their building and pledged their intention of staying.

The attack on the tenants of 47 East Third Street is a back-door attempt to use a linguistic slip to legally evade the intent of New York City's rent regulations and drive us all out of here. All New York tenants need to keep a close eye on this situation and support the tenants of 47 East Third Street

Our tenants' association website (<http://47e3.org>) has the text of the court cases and other information about the building and our struggle to keep our apartments. Any support you can offer would be appreciated.