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From the New York Times:

The Court of Appeals dealt a financial blow on Thursday morning to the already beleaguered owners of the sprawling Stuyvesant Town and Peter Cooper Village complexes in Manhattan when it ruled that they improperly began charging market rents on thousands of apartments... The ruling by the state's highest court may mean that the current owner, a partnership of Tishman Speyer Properties and BlackRock Realty, and the former owner, Metropolitan Life, may have to pay an estimated $200 million in rent overcharges and damages to tenants of some 4,000 apartments.

The more important aspect of this decision is the effect it could have on thousands of tenants throughout the City whose rents were increased following deregulation. The Court held that because the developer received a J-51 tax break, it was not entitled to charge market-rate rents. The Court based its decision on its interpretation of the applicable statute; it held that the clear reading of the statute supports the conclusion that the tax break restricts the owner's ability to charge market-rate rents.

The Court was not persuaded by the developer's argument that this reading of the statute would result in economic calamity:

Defendants predict dire financial consequences from our ruling, for themselves and the New York City real estate industry generally. These predictions may not come true; they depend, among other things, on issues yet to be decided, including retroactivity, class certification, the statute of limitations, and other defenses that may be applicable to particular tenants. If the statute imposes unacceptable burdens, defendants' remedy is to seek legislative relief.

This is a strong statement by the Court that the law - and not financial interests - is what guides its decisions.

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