Rye City: Tenant Protections Removed at 151 Purchase (Highland Hall)

Rye City and its interim legal boss Kristen Wilson announced the City has reached an agreement regarding the lawsuit around tenant protections and the Highland Hall Apartments. Here are the goods from Wilson, released this afternoon:

"From the Office of the Corporation Counsel – City of Rye

The City of Rye announced today it has reached agreement with the plaintiff 151 Purchase Street Associates in the lawsuit regarding the application of the Emergency Tenant Protection Act (ETPA) to the Highland Hall Apartments.

Background:  In 2006, the Rye City Council passed a resolution establishing ETPA rent controls for apartment buildings in the City of Rye with 50 units or more.  ETPA is not a permanent designation as it is based on building unit vacancy rates and can only be applied when the unit vacancy rates are at 5% or below the total unit supply. 

The Council resolution applied ETPA to the Highland Hall Apartment Complex which included buildings at both the 131 Purchase Street (99 units) and the 151 Purchase Street addresses (10 units). 

A lawsuit commenced at the end of 2007 and was served in January 2008 by Highland Hall Apartments LLC challenging the ETPA designation. 

The matter was initially dismissed in Supreme Court based on the fact that the plaintiff did not have standing to commence the action as it was not a proper party and because the Complaint failed to state a cause of action.  On appeal in 2009, the Appellate Division, Second Department sent the matter back to the Supreme Court and told the plaintiff to file an amended complaint with the corrected parties and wanted the proper party to "have their day in court."  151 Purchase Street Associates filed and served the amended complaint in late 2009 alleging, among other things, that the Resolution resulted in a  violation of equal protection for the 10-unit 151 Purchase Street building.

Under the advice of Counsel, the Rye City Council passed a resolution at its June 9, 2010 meeting to enter into a settlement with 151 Purchase Street Associates.

The basic terms of the agreement are as follows:

For 131 Purchase Street Tenants (99 Units):  The agreement re-affirms ETPA for 131 Purchase Street and provides certainty for the tenants in 131 Purchase Street as that building will remain protected under ETPA and cannot be challenged or lifted as vacancy rates change.

For 151 Purchase Street Tenants (10 Units):  The agreement includes a Memoranudum of Understanding (MOU) that mirrors the existing MOUs for other buildings in the City containing less than 50 units.  The MOU secures ETPA rates for the 7 remaining tenants in 151 Purchase Street through January 31, 2011 or for the duration of their lease (whichever is longer).  After January 31, 2011 or after the lease term ends, the tenants currently living in 151 Purchase Street will have the opportunity to move into 131  Purchase Street for ETPA protection based on unit availability.  Once a current tenant moves out of 151 Purchase Street, the landlord could then rent the apartment at market rate if he so chooses. 

No money was exchanged by either party as part of the agreement and general releases were executed by both 131 Purchase Street Associates and 151 Purchase Street Associates.  No parties, or any new owner that is related to the current owners, can commence another lawsuit regarding the application of the ETPA as it applies to these two buildings.

At the upcoming September 27, 2010 meeting of the Rye City Council, a resolution will be passed as required in by the agreement pertaining to the removal of ETPA at 151 Purchase Street.

For More Information
Contact Kristen Wilson, Interim Corporation Counsel at 967–7074"