LIC Developer Swindled Rent-Stabilized Tenant, Lawsuit Says

LONG ISLAND CITY, QUEENS — A developer already accused of stiffing workers at its Long Island City high-rise now faces a new claim at the same building: that it illegally inflated a tenant's stabilized rent.

The latest allegation against developer Heatherwood centers on its 27-story rental tower on 27th Street and 42nd Road, known as "27 on 27th," for which the company received a tax break through the state's 421-a program.

In exchange for that tax break, Heatherwood had to keep the building's apartments rent-stabilized. But according to a new lawsuit, the developer used rent concessions to "hoodwink its tenants" by charging an extra-high first month of rent, thereby making subsequent renewals costlier than they should have been.

One tenant at 27 on 27th, for example, was given a free month of rent that supposedly lowered her net average rent to $3,477 per month, the suit says. Yet Heatherwood registered the apartment at its true cost, $3,794 — a violation of 421-a rules, which say the registered rent must be amount "charged and paid by the tenant, the suit says.

The lawsuit, filed on Oct. 12, was first reported by City Limits. Besides 27 on 27th, plaintiffs made similar claims against developers in Brooklyn and Queens, the publication reported.

Heatherwood did not respond to a request for comment.

The suit was filed just two days after state officials announced a $3 million settlement with Heatherwood for other violations of 421-a rules at the same Long Island City building.

In that case, Attorney General Letitia James's office says Heatherwood paid 24 building workers just $8.50 to $15 per hour, violating a promise through 421-a that it would pay "prevailing wages."

Had that promise been kept, workers would have received between $22 and $26 per hour, according to authorities.

Besides repaying the workers, the $3 million settlement requires Heatherwood to pay $1,146,196 in penalties to the city and $686,527 to the state, plus $446,952 to the union 32BJ SEIU, which served as a whistleblower

The 421-a program at the center of both disputes was allowed to expire last spring, as state lawmakers acknowledged longstanding critiques that the tax breaks did not produce much affordable housing, contrary to one of its stated goals.