One of New York City’s largest landlords will pay $3.1 million in penalties to refund rent-stabilized tenants who were forced to pay water fees on top of their rent in violation of housing law, state officials said Friday.
New York state’s housing agency announced a settlement with the LeFrak Organization 14 months after Gothamist uncovered the water surcharges while reporting on a rash of evictions at the company’s sprawling LeFrak City apartment complex in Queens in August 2024. New York state rules prohibit landlords from charging tenants for water or other “essential services” in rent-stabilized apartments.
In a written statement, Gov. Kathy Hochul said the state “will not allow illegal fees to drive up costs for millions of rent-regulated tenants.”
Under the terms of the settlement, the LeFrak Organization will pay back nearly 2,000 tenants who it illegally billed for water at 59 buildings across the city. The reimbursement will come in the form of future rent credits and includes 9% interest.
The 20-building LeFrak City complex in Corona features 4,605 units, nearly all of them rent-regulated.
A company spokesperson declined to comment on the settlement Friday.
LeFrak City Tenant Association President Julianne Williams hailed the settlement in an interview.
“This is really great news,” Williams said. “Our rent is already sky-high. Food, bills, children. This is something tenants really should not have paid into.”
A Gothamist investigation found the LeFrak Organization began imposing the fees on new tenants as early as 2019, the same year that stricter tenant protections took effect that limited landlords’ ability to raise rents.
Gothamist reviewed court records for the 121 households evicted from LeFrak City apartments between the start of 2023 and August 2024 and found that at least 35 of them were being charged for water in addition to their rent. Their monthly fees topped $250 in some cases, according to documents submitted to the court.
In response to questions at the time, a spokesperson from the state’s Division of Homes and Community Renewal declined to say whether the LeFrak Organization was allowed to charge fees that seemed to violate state law. A LeFrak spokesperson had pointed to a previous state ruling to justify the surcharges.
Following Gothamist’s reporting, Williams and the nonprofit group Met Council on Housing organized tenants to determine how many people were affected. State housing officials said investigators later contacted the LeFrak Organization, which agreed to halt the fees in October 2024.
The LeFrak Organization faced another legal rebuke in January of this year, when a top official with the state’s Office of Rent Administration ruled that the company had violated state regulations by charging water usage fees after a tenant filed a complaint about the additional costs.
The company told Gothamist it planned to appeal the decision, but later dropped the case and agreed to repay tenants. LeFrak will also hire an independent auditor to ensure it does not reinstitute the fees, state officials said Friday.
“This is a good day for tenants and for the LeFrak Organization, which chose to swiftly engage in resolving this regulatory dispute and ensure that relief extended well beyond the original complaining tenants,” Homes and Community Renewal Commissioner RuthAnne Visnauskas said in a written statement.