Attorney General James and HCR Return Over 300 Affordable Housing Units to New York City

September 17, 2024

NEW YORK - New York Attorney General Letitia James and New York State Homes and Community Renewal (HCR) Commissioner RuthAnne Visnauskas today announced the return of 263 apartments to rent stabilization and reduction of rent for an additional 43 apartments throughout New York City. The apartments, located in 21 buildings in Central Brooklyn, Upper Manhattan, and Queens, were either illegally deregulated or were subjected to illegal rent increases by the former owners, who were landlords affiliated with the Sentinel Real Estate Corporation (Sentinel). Following an investigation, Attorney General James secured $4 million to preserve and expand affordable housing in New York City from the Sentinel-affiliated owners in August 2022. Before the settlement was reached, the former owners had sold some of their buildings to new owners after illegally deregulating units and increasing rents. In order to return these units to affordability, OAG and HCR developed a compliance program and worked with the new owners to reduce rents in more than 300 apartments, including 263 reregulated units.

"Rent-regulated apartments make it possible for countless New York families to find a safe and affordable place to live," said Attorney General James. "The previous owners of these buildings broke the law to pad their pockets and denied hardworking families a rightful home. Because we were able to return these units to the rent regulation program, more than 300 families will be able to access the affordable housing they deserve. I thank the new owners for their cooperation and will continue to work with our partners at HCR to protect affordable housing across New York."

"Thanks to the strong partnership between Attorney General James and our Tenant Protection Unit, we are recovering illegal profits and securing the rights of hundreds of New Yorkers whose homes were illegally deregulated by predatory landlords," said Commissioner RuthAnne Visnauskas. "This case demonstrates very clearly that we will do everything in our power to protect New York's rent-regulated housing stock and the rights of tenants everywhere as we support Governor Hochul's efforts to make the state more affordable and more livable for all New Yorkers."

Prior to June 2019, if landlords made improvements to rent-stabilized apartments, they could increase the regulated rents of those units. Increases were calculated based on the cost of those improvements through a system known as Individual Apartment Improvements (IAIs). Some property owners and landlords used IAIs to increase rents enough to bring them over the rent deregulation threshold and convert them to market-rate units in an attempt to increase the buildings' profits.

Before the 27 affected buildings were purchased by the current owners, they were owned by landlords affiliated with Sentinel. These affiliates employed two now-defunct property management firms - Newcastle Realty Services, LLC (Newcastle) and Highcastle Management, LLC (Highcastle) - which falsely inflated IAI renovation costs for some rent-stabilized apartments so that they could deregulate them and charge tenants the market rate.

In some cases, Newcastle and Highcastle intentionally set the cost of labor for a renovation project to be equivalent to the amount necessary to deregulate a particular unit, regardless of the amount spent by the contractor. For example, an apartment in one building required $38,000 in IAIs to get over the deregulation threshold, while another apartment in the same building required $52,500 to deregulate. Both units received nearly identical renovations, but Newcastle and Highcastle reported the renovation expenses at $52,500 and $38,000, respectively, so they could deregulate the units and rent them at the market rate.

In August 2022, OAG entered into an agreement with the affiliates, securing $4 million for Attorney General James' Affordable Housing Fund with the New York City Department of Housing Preservation and Development (HPD) and launching an audit of the rents of apartments still owned by the settling landlords. Following the settlement, OAG and HCR conducted their own audit of the apartments that were no longer owned by the settling affiliates but were nevertheless affected by the deregulation scheme. The OAG, in partnership with HCR, developed a program by which the new owners could work with OAG and HCR to move the units in the buildings they purchased from Sentinel back into compliance.

The 27 buildings involved in the OAG and HCR compliance program.

The 27 buildings involved in the OAG and HCR compliance program are:

• Brooklyn
  • 921 Washington Avenue
  • 941 Washington Avenue
  • 80 Woodruff Avenue
  • 2105 Foster Avenue
  • 70 Dahill Road
  • 230 Ocean Parkway
  • 483 Ocean Parkway
  • 100 Lefferts Avenue
  • 65 Ocean Avenue
  • 31 Ocean Parkway
• Manhattan
  • 351 W 125th Street
  • 612 W 144th Street
  • 676 Riverside Drive
  • 66 Ft. Washington Avenue
  • 828 Riverside Drive
  • 1090 Saint Nicholas Avenue
  • 974 Saint Nicholas Avenue
  • 80 Fort Washington Avenue
  • 86 Fort Washington Avenue
  • 651 W 188th Street
  • 336 Fort Washington Avenue
  • 130 Wadsworth Avenue
  • 220 Wadsworth Avenue
  • 854 West 180th Street
  • 643 West 171st Street
• Queens
  • 30-60 29th Street
  • 118-80 Metropolitan Avenue

"Housing has long been a significant challenge for both my district and the state. Year after year, escalating rents force residents from their homes, leaving families in precarious situations as they struggle to meet essential needs," said StateSenator Cordell Cleare. "Despite this, some property owners and landlords exploit this situation, engaging in illegal rent increases and prioritizing profits over the provision of affordable housing for individuals of all ages and backgrounds. I applaud the efforts of Attorney General James and Commissioner RuthAnne Visnauskas, who have returned 263 apartments to rent stabilization and reduced rents for an additional 43 apartments, including in three buildings within my district. It is imperative that we continue to fiercely preserve and protect affordable housing as we seek solutions to create additional units."

"Today marks a pivotal victory in the fight for housing justice," said State Senator Robert Jackson. "I commend Attorney General James and Commissioner RuthAnne Visnauskas for their steadfast leadership in defending tenants' rights and restoring affordability. This legal win returns hundreds of apartments to rent stabilization, easing rent burdens for countless New Yorkers, including my constituents in Northern Manhattan, and ensuring the security and stability they deserve."

"Thank you to Attorney General James for your hard work in prioritizing New Yorkers' fundamental right to affordable housing," said State Senator Kristen Gonzalez. "At a time when the cost of living is skyrocketing and our city faces an acute housing crisis, I am so proud to stand with the Attorney General and the HCR to secure more affordable housing units for our communities."

"I applaud Attorney General James and Commissioner RuthAnne Visnauskas for their efforts in restoring over 300 affordable housing units to rent stabilization throughout New York City. This win means that hundreds of New Yorkers, including many in Brooklyn, will be able to stay in their homes without threat of relocation as a result of illegal deregulation practices used by prior property owners," said State Senator Iwen Chu. "Ensuring affordable and safe housing for families is a top priority. I'm committed to standing up against those who seek to exploit loopholes and push for greater housing affordability."

"As the Assembly Member for the 71st District, I know firsthand how critical affordable housing is for the families in our community," said Assemblymember Al Taylor. "This initiative by Attorney General James and HCR is a powerful example of the steps we must take to correct the wrongs done to tenants who were forced out of rent-stabilized apartments. By returning these homes to affordability, we're ensuring that residents can continue to thrive in the neighborhoods they call home. Affordable housing is essential to maintaining the fabric of our city, and I fully support this vital work to protect it."

"This was an admirable commitment by the Attorney General and the Homes and Community Renewal Commissioner to right the wrongs of the previous landlords on behalf of tenants," said Assemblymember Manny De Los Santos. "The return of these buildings to rent stabilization shows a statewide commitment to protecting and expanding affordable housing, the same kind of commitment that allowed for initiatives like Good Cause Eviction to become law. I look forward to continuing our advocacy for affordable housing in Albany. My sincere gratitude to all those at OAG and HCR who dedicated themselves to this housing justice win."

"This announcement from Attorney General James and Commissioner Visnauskas is great news," said Assemblymember Inez Dickens. "We applaud their teams' meticulous work and dedication to preserving affordable housing in the five boroughs by holding responsible those who have sought to harm countless families by manipulating and outright ignoring the laws we put in place to protect the rights of residents and honest property owners. We know this is a tremendous undertaking by our Attorney General and HCR Commissioner, and the work is far from complete. There are others who have engaged in similar actions and they must be held accountable. On behalf of a community that has been aided by both Attorney General James and RuthAnne Visnauskas, we say thank you and keep up the fight."

"Attorney General James and New York State Homes and Community Renewal are to be commended for this work to bring several apartments, including 81 units in 4 buildings in my district, back into compliance with the state's rent laws," said Assemblymember Robert Carroll. "I was proud to join my colleagues in the legislature in 2019 to pass the Housing Stability and Tenant Protection Act and this year a version of the Good Cause Eviction Act and I am glad to see government partners working in concert to preserve affordable housing in New York City."

"I commend Attorney General James for her strong actions to protect tenants from landlords who illegally deregulate rent-stabilized apartments or raise rents beyond what's allowed," said Assemblymember Phara Souffrant. "Strong tenant protection against predatory landlords is critical to preserving the fabric of our communities. When landlords manipulate the system to push tenants out or make housing unaffordable, they threaten the stability and security of working-class families who have built their lives here. Housing is a human right, and we must ensure that no one is forced out of their home due to corporate greed or illegal practices. I am committed to strengthening tenant protections, holding bad actors accountable, and ensuring that everyone has access to safe, affordable, and stable housing, and I forward to partnering with the Attorney General to deliver for tenants in my district."

"I applaud Attorney General James, the OAG, and HCR for fighting to restore justice for hard-working New York tenants - including many in my Assembly District 42," said Assemblymember Rodneyse Bichotte Hermelyn. "By restoring illegally de-regulated rent stabilized apartments and ending illegal rent increases, the Attorney General is sending a clear message that unscrupulous landlords will not get away with ripping off renters, as we continue to protect housing rights for all."

"I want to thank Attorney General James and Commissioner Visnauskas for these crucial investigations into illegal rent increases, particularly in our Assembly district," said Assemblymember Andrew Hevesi. "We are fortunate to have such dedicated and collaborative government partners. As we strive to secure and expand affordable housing options, it is essential we preserve rent-stabilized units and enforce existing regulations, and that is exactly what the Attorney General and Commissioner have accomplished here."

"Today's announcement represents a powerful step in our fight for affordable housing and tenant rights," said Council Member Shaun Abreu. "By restoring rent stabilization, reducing rents, and adding more affordable units across the city, we are not only addressing past wrongs but also reaffirming our commitment to a fair and accessible housing market for all New Yorkers. This significant achievement, made possible through the collaboration between the Attorney General's office and the New York State Homes and Community Renewal, reflects our dedication to holding accountable those who undermine our housing laws. With leadership from Attorney General James, we are working to ensure that every New Yorker enjoys the stability and security they deserve, building a stronger and more equitable city for everyone."

"I am deeply outraged that unscrupulous landlords have unlawfully deregulated over 60 rent-stabilized apartments in my district," said Council Member Shahana Hanif. "NYC tenants deserve far better. It's crucial that our essential rent stabilization laws are not manipulated or abused. I am thankful to Attorney General James and the Housing and Community Renewal Department for holding these landlords accountable and for their efforts to ensure these apartments remain affordable for our community."

"I am grateful to Attorney General James and HCR Commissioner RuthAnne Visnauskas for their steadfast commitment to protecting tenants' rights and preserving affordable housing in our city," said Council Member Lynn Schulman. "The return of rent-stabilized units at 118-80 Metropolitan Avenue in my district is a huge win for Queens residents, ensuring that families can continue to live and thrive in their communities without fear of displacement."

This matter was handled by Senior Enforcement Counsel Rachel Hannaford with assistance from Legal Assistant 1 Cecily Mills of the Housing Protection Unit, led by Unit Chief Brent Meltzer. The Housing Protection Unit is part of the Division for Social Justice, which is led by Chief Deputy Attorney General Meghan Faux and overseen by First Deputy Attorney General Jennifer Levy.