Brooklyn Landlord Cheated Tenants With Rent 'Sleight-Of-Hand': Lawyers

PROSPECT LEFFERTS GARDENS, NY — There's no such thing as a free month's rent, say a group of Prospect Lefferts Gardens tenants suing their landlord.

Four tenants of a building at 626 Flatbush Ave. — a massive multi-use off Fenimore Street that also houses Edie Jo's and the Maple Street School — accused their landlord of using free month deals to dodge regulation and increase rents unfairly, court records show.

Owner Hudson CBD Flatbush LLC used a "sleight-of-hand" to dodge the now-defunct 421-a property tax relief program, which offered tax cuts to developers who offered stabilized and affordable units, the tenants say.

Owners did not notify the state of the deals, then raised rents based on the higher monthly cost, according to the claim filed in New York County.

"Rather than give a discount each month, the landlord engaged in sleight-of-hand, and combined the discount into one or more months’ rent," the claim alleges.

The NYC Rent Guidelines Board sets caps on allowable increases in stabilized units, according to the department of housing preservation.

"By manipulating the way it assessed a unit’s rent, [Hudson Flatbush CBD LLC] was able to register a unit with at initial rent higher than what was actually charged, and all subsequent increases, such as vacancy increases and Rent Guidelines Board increases, were based off of that higher, impermissible figure."

Meanwhile, owners saved about $1.8 million in taxes in just 2022, according to CityLimits.

The renters also say owners violated the Housing Stability and Tenant Protection Act’s, which prohibits owners from increasing a discounted rate at the time of renewal.

The tenants suspect similar tactics were used on most — if not all — residents who moved in since 2019, according to the claim.

Just last year, three lawsuits in Brooklyn, Manhattan and Queens took aim at similar 421-a violations, according to City Limits — in part inspired by investigations spearheaded by Housing Rights Initiative.

In January, Bed-Stuy tenants filed a class action lawsuit accusing their landlord of offering similar discounts and hiking rent prices, Patch reported.

"We think we’ve identified over 1,500 421-a buildings that are out of compliance with the rent stabilization laws,” Housing Rights Initiative's Executive Director Aaron Carr told City Limits. “Whether you’re a tenant or a taxpayer you should be up in arms about this.”

The 421-a tax incentive program was created in the 1970s and expired in 2022 after the NYC Advisory Commission called the program "opaque" "arcane" and "inequitable," according to a 2022 report from NYC Comptroller Brad Lander.

"Each time 421-a has expired, there have been calls for structural reform to the City’s property tax system," Lander said in 2022. "The 421-a program is not fair, simple, or transparent – it was never designed to be."

The program failed to create actually affordable housing, Lander said. The state should instead embark on a broader property tax reform to address affordable development, he said.