By Juan Gonzalez
NY Daily News
Friday, May 26th, 2006
With evidence mounting that Pinnacle Group LLC has become a landlord run amok, state Attorney General Eliot Spitzer has finally taken notice.
Spitzer, who made a name for himself ferreting out crooks on Wall Street, has been virtually AWOL when it comes to policing state rent laws.
But his office has been peppered over the past few weeks with complaints against Pinnacle - one of the city's biggest owners of rent-regulated apartments - from elected officials, community leaders and hundreds of irate tenants, some of whose woes have been detailed in the Daily News.
"Our office is looking into this matter," Spitzer spokesman Brad Maione said this week.
Yesterday morning, the Mirabal Sisters Center, a West Harlem community group, gave Spitzer more reasons to get involved: a petition signed by more than 2,000 upper Manhattan residents claiming that Pinnacle is systematically forcing out longtime tenants and then illegally driving up rents to newcomers.
Company chief Joel Wiener says all of Pinnacle's actions are above board, and an independent survey he commissioned shows most tenants are satisfied.
"[Rent laws] are a convoluted and complicated system that at times are unfair to tenants and at times unfair to landlords," offered Ken Fisher, a lawyer and former city councilman who now represents Pinnacle.
For the past three weeks, this column has detailed how scores of tenants in up-and-coming neighborhoods - many of them elderly - have been victimized by Pinnacle.
Some are too poor or too overwhelmed to challenge Pinnacle's eviction mill, and have simply moved away.
Others have fought back.
This column reported last week that four tenants at 706 Riverside Drive in West Harlem won major reductions the past few years in their rents and thousands of dollars in refunds from Pinnacle after they filed successful overcharge complaints with state monitors or in the courts.
Lizette Gonzalez is another tenant who prevailed.
In November, the state's Department of Housing and Community Renewal directed Pinnacle to give her an $8,000 rent refund and reduce her $1,437 rent by nearly $400.
Back in March 2004, Gonzalez, who works for a big Manhattan law firm, moved with her husband and child into a Pinnacle building on Olinville Ave. in Allerton, the Bronx.
At the lease signing, a Pinnacle representative told her the rent was $1,350 for the two-bedroom unit, which had just been outfitted with a new kitchen and bathroom. That went up to $1,437 the following year.
One day, Gonzalez happened to meet a daughter of the previous tenant of the apartment.
"You're paying too much for rent," the woman warned her.
Gonzalez rushed to the local office of the state Division of Housing and Community Renewal and asked to see a rent history for her apartment.
She was stunned to discover that the previous occupant was paying just $594 a month. Pinnacle had more than doubled the rent - simply by claiming a major renovation for the vacant apartment.
Under state law, a landlord is permitted an automatic 20% vacancy increase for rent-stabilized units. If major renovations are done, the landlord can hike the rent by an additional 2.5% of the cost of the work.
Rent laws under Gov. Pataki have become so protective of landlords that owners don't even have to produce proof of those improvements until a new tenant files a formal challenge with DHCR.
If no challenge occurs within four years, the price set by landlord automatically becomes the legal rent.
Most tenants, of course, don't even know they can challenge a rent hike. Gonzalez did - forcing Pinnacle to produce invoices for $9,189 for the new kitchen and bathroom.
Even though the repair costs had not been inflated, Gonzalez's new rent still far exceeded what state law allowed.
DHCR monitors who reviewed Gonzalez's challenge quickly concluded that Pinnacle was overcharging her. In a Nov. 25 opinion, the agency reduced her rent to $1,088, and it directed Pinnacle to refund $8,070 to her.
Then there's the example of Department of Education employee Anthony Casasnovas.
Last June, he and two roommates signed a lease for an apartment at another Pinnacle building, 3657 Broadway in West Harlem. When they moved in, the apartment had not even been painted or cleaned, and mildew was sprouting all over the bathroom ceiling.
Pinnacle told them the apartment's legal rent was $2,200, which would have removed it from rent-stabilization rules.
But the company didn't charge them $2,200 - it offered what it called a "preferential" or discounted rent of $1,800 for the first year.
A few weeks ago, Pinnacle sent Casasnovas a lease renewal form for June 1 that would have increased the "preferential" rent to $1,900, but still claimed a legal rent of $2,200.
Sensing something wasn't right, Casasnovas went to DHCR to get a rent history. He learned the apartment's registered rent had been only $683 in 2002. That year, when a new tenant moved in, Pinnacle nearly tripled it, to $1,700.
Housing experts whom Casasnovas consulted told him the landlord would have to show more than $44,000 in renovations to justify that rent.
"There's no way they put that much money in this place," he said.
Pinnacle hasn't notified the state that it raised Casasnovas' "legal rent" to $2,200. As far as the state knows, the last registered rent for that apartment is $1,700 - still a stabilized unit.
But in Pinnacle's convoluted world, that apartment is already free of rent controls. This week, with the help of his tenant association, Casasnovas filed a rent overcharge claim with DHCR.