Watchdog bugged by slimy landlords

While New York reels from budget shortfalls caused by the coronavirus pandemic, the city and state are leaving money on the table by failing to investigate shady landlords taking advantage of tax credits, a housing rights watchdog will argue Wednesday, announcing three new lawsuits.

Aaron Carr of the Housing Rights Initiative says the state loses $1.5 billion each year through the 421-a tax benefit program for landlords with rent stabilized buildings.

Carr (inset) said he’s identified more than 1,500 landlords who accepted the benefits while not complying with rent stabilization rules, which could just be the tip of the fraudulent iceberg.

His group filed lawsuits in State Supreme Court regarding three properties that allegedly received over $20 million in undeserved tax benefits.

“Everyone is being screwed here — the tenants who are being defrauded and the taxpayers who are paying into these fraudulent schemes. Taxpayers are not only being forced to subsidize bad tax policy, they’re being forced to subsidize tax fraud,” Carr said.

The alleged accounting trickery at the center of the suits is shockingly widespread, according to attorneys at the law firm Newman Ferrara. Landlords give rent-stabilized tenants one month of free rent when they sign a lease, but then register the full annual rent with the state, the suits claim. The tactic, according to Carr, gives landlords “a back-door method to illegally raise rents.” When used throughout a large building, the move can result in huge tax credits for the landlord and unfairly high rents for tenants.

The three buildings, which have 427 units total, illegally overcharged thousands of former and current tenants an estimated $10 million in rent, Carr says. He called on the state to better enforce compliance with the 421-a program.

One of the buildings named in the lawsuits, 12-15 Broadway in Queens (above), saves roughly $2 million annually in property taxes through the tactic, attorney Roger Sachar said.

A message left with a lawyer for the building was not returned. The other two buildings are in Brooklyn.

“Almost every building we see has this problem or some variation of this problem,” said attorney Lucas Ferrara, who filed the suit. The city was missing out on vast amounts of property tax revenue, he added.

“They should certainly be seeking to get money back, especially from the miscreants who fail to comply with the programs requisites,” Ferrara said.