This archive report was first published on 30 August 2019.
Lower Manhattan's 421-g program, introduced in 1995, aimed to attract more residents by offering tax breaks to developers who converted office buildings into apartments. However, a 2016 report by Marcelo Rochabrun of ProPublica revealed that the program's rent regulation was misinterpreted, leading to rent increases for 75% of the apartments built under the program.
According to Rochabrun, the program included a letter from then-New York City Mayor Rudolph Giuliani stating that rent stabilization should only apply to those who paid less than $2,000 a month for an apartment. This letter was read into record and accepted as the common interpretation of the law.
Despite the program ending in 2006, many developers continue to benefit from it. In 2015, the city lost around $75 million in tax revenue due to the program. Lawyers and tenants are now arguing that the program was misinterpreted, and a recent court ruling has paved the way for tenants to claim back rent.
In June, the New York Court of Appeals ruled in favor of tenants from two Lower Manhattan buildings who argued that since the owners benefited from the 421-g tax breaks, the rents of their apartments should have been stabilized. This ruling could result in current or former tenants of the affected buildings being able to collect up to six years of back rent.
An analysis by The City found that 39 buildings received tax benefits from the program between 1995 and 2006. The fight for back rent is just one of several lawsuits that have loomed over New York's real-estate industry this year.
