Kingston Apartment Complex Fails Rent Regulation Exemption Test

Background on Stony Run and Rent Regulations

The city of Kingston has made a significant decision regarding its largest privately owned apartment complex, Stony Run. The state Office of Rent Administration recently ruled that the complex will not be exempt from rent regulations. This ruling came after a case that many viewed as a test of tenant protections in upstate New York. The decision was issued on July 18, eight months after the property owner requested clarification about its status under Kingston's rent stabilization guidelines.

The official statement from the office indicated that the owner must now offer tenants rent-stabilized leases, renewals, and register the apartments with the agency according to the findings of the order. This decision has implications for both the tenants and the property management, setting a precedent for similar cases in the region.

Ownership Changes and Regulatory Agreements

Stony Run, which consists of 266 units located on the outskirts of the Uptown neighborhood, was purchased in December 2020 by Aker Companies, a for-profit real estate investment firm. Following this purchase, Aker entered into a regulatory agreement facilitated by Kingston Mayor Steven Noble. Under this agreement, ownership was transferred to a new nonprofit organization established for charitable purposes. This move was intended to align with the rent regulation law adopted by Kingston in 2022, which includes exemptions for nonprofits.

As part of the deal, Aker committed to renting the units within income thresholds of 81% to 100% of the area median income, a designation known as "workforce housing." Additionally, Aker agreed to maintain tenant protections for current renters. However, the protections would no longer apply if the tenants moved out.

Concerns Over Exemption and Tenant Advocacy

Many tenant advocates viewed the agreement as a strategy to avoid rent stabilization regulations. Marcie Kobak, director of Legal Services of the Hudson Valley, expressed skepticism about whether Stony Run was truly operated exclusively for charitable purposes. The exemption hinged on whether the state agency accepted that the for-profit apartment complex would be transferred to nonprofit ownership for reasons other than avoiding regulation.

Despite the ownership transfer, many aspects of Stony Run’s financial management, including setting and collecting rents and signing leases, remained under the control of the original limited liability corporation, Kingston Village PropCo, a shell company owned by Aker. This raised concerns about the legitimacy of the nonprofit status.

State Agency's Skepticism and Next Steps

In the Office of Rent Administration's rejection, administrator Christine Maniego expressed doubt about the division of labor being anything but a calculated effort to avoid regulation. She noted that there was no evidence to support the claim that Stony Run provides any charitable services to its tenants. Aker was given 35 days to challenge the decision, though the company did not immediately respond to requests for comment.

Impact on Tenants and Future Actions

While the status of Stony Run was uncertain, many tenants reported that management was already acting as if it were exempt from rent stabilization. This included issuing rent hikes and offering shorter-term leases than allowed under the Emergency Tenant Protection Act. April Gray-Huertas, deputy chief of the Property Management Bureau for the state Division of Housing and Community Renewal, mentioned that 81 cases have been opened for tenants filing complaints of rent overcharges, with 57 of them coming from Stony Run.

Following a recent state Court of Appeals decision upholding Kingston's rental vacancy study, the city was able to adopt the Emergency Tenant Protection Act. The Rent Guidelines Board Chair, Noah Kippley-Ogman, called for the Division of Housing and Community Renewal to open a field office in Kingston to enforce the law more effectively.

Looking Ahead

The duration of Kingston's Emergency Tenant Protection Act will depend on the city's next vacancy study, expected to be released in August. This development marks a critical moment for tenants and property owners alike, as the community continues to navigate the complexities of rent regulations and tenant protections.