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Two Decades Later, Democrats Say Giuliani Was Wrong About Rent Limits

Since 1995, developers in lower Manhattan have relied on a letter written by former Mayor Giuliani to justify receiving tax breaks without rent restrictions. Former lawmakers who wrote and voted for the law say the practice violates the intent and clear meaning of the statute.

Two former state lawmakers are squaring off against former Mayor Rudy Giuliani as part of a lawsuit over whether rent limits should apply to high-end Manhattan apartments whose landlords get a lucrative property tax break.

Edward Sullivan, a former Democratic Assembly member, and ex-Sen. Martin Connor, also a Democrat, filed affidavits Monday in the case arguing that they always intended for the rent restrictions to apply to all apartments receiving tax relief. Connor was the main sponsor of the program, a 1995 bill meant to revitalize a then-depressed neighborhood in lower Manhattan near Wall Street.

Giuliani, who was the mayor at the time, filed an affidavit last year backing developers’ arguments that rent stabilization apply only to apartments renting for less than $2,000 monthly. Giuliani’s affidavit mirrored a letter he wrote in 1995 that became the final word on the law — even though the Mayor had no formal role in the legislative process.

At issue in the case is whether lawmakers intended that apartments benefitting from hundreds of millions of dollars in tax relief be subject to rent-stabilization laws in the same manner as other similar tax breaks.

ProPublica reported last week that in 1995 Giuliani worked behind the scenes with fellow Republicans to create a legislative record that said rent limits would not apply to apartments renting for more than $2,000 a month. This interpretation was read into the Senate record after the Assembly approved a bill that included no such language for the program, known as 421-g.

Giuliani’s letter was also at odds with the text of similar statutes in which developers received tax breaks in return for accepting rent stabilization. Nonetheless, the state adopted Giuliani’s view. In the years that followed, most of the nearly 10,000 apartments developed under the program, which was widely credited for revitalizing lower Manhattan and turning it into a desirable residential neighborhood, have not been subject to rent limits.

Connor, who was Senate minority leader when his bill passed, said in his affidavit that there was no question that lawmakers assumed rent limits would apply for the duration of the tax break, no matter how high the rents got.

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“With all due respect … correspondence between the City’s Mayor and the Senate Leader does not establish ‘legislative intent’ for a law that requires passage by both houses,” Connor wrote in his affidavit. “More especially when the other house (the Assembly) has already passed the legislation unenlightened by the Mayor’s musings about its intent.”

Sullivan questioned the legitimacy of Giuliani’s involvement.

“The correspondence appear to be, at best, private letters … or worst, improper and misguided maneuverings to usurp the Assembly’s vested constitution power to enact laws,” he wrote.

Both Connor and Sullivan have argued that the language of the tax break is clear and requires that all units be rent-stabilized. Any other interpretation contradicts “the basic principle underlying all of these types of tax abatement programs — that apartments would remain rent stabilized as long as the landlord was receiving the tax benefit,” Sullivan wrote.

Kibel Companies, a developer, is suing tenants Joel Roodman and Jill Tafrate in an attempt to force a judge to decide whether their $9,000-a-month apartment should be subject to rent stabilization. Kibel also owns a separate 421-g building and is facing a lawsuit by 46 tenants who are demanding stabilized leases. The developer enlisted Giuliani last year to support its position in court.

Kibel declined comment.

Several lawyers noted that it might be hard to persuade the judge hearing the case to rely on the lawmakers’ testimony. While Giuliani’s letter was submitted at the time the bill was under discussion, Connor and Sullivan are only writing today.

“The post facto intent of a legislator is not relevant,” said Eric Lane, dean of Hofsra University’s law school and an expert in New York’s legislative process. “They are inherently unreliable because they are not happening in the context of a bill being passed. They are free comments.”

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