Tenants Sue Shorewood Over Alleged 421a Violations

A developer of a Jamaica apartment building is bending the rules that enabled an affordable housing tax break, according to tenants of the Queens property.

Tenants at 1 Archer Avenue in Jamaica are suing Shorewood Real Estate Group and its chief executive officer, S. Lawrence Davis, Crain’s reported. The plaintiffs filed the lawsuit in New York County Supreme Court before the weekend.

The tenants are accusing Shorewood of receiving millions in benefits from the 421a affordable housing tax program without following the requirements. They claim Shorewood is manipulating rental concessions to sidestep requirements.

In 2023, one of the plaintiffs was charged $3 more than the maximum amount that would’ve entitled him to rent-stabilization benefits, according to the suit. But Shorewood didn’t calculate two months of free rent, which would’ve brought down the effective rent to a level that should’ve qualified the tenant for rent-stabilization, the suit reads.

Shorewood allegedly hid the tactic by having residents sign an early occupancy agreement, which also had them waive rights to rent stabilization upon occupancy. More than 100 units may have been impacted by Shorewood’s agreements, according to the suit.

The plaintiffs are seeking unspecified damages. The developer did not respond to a request for comment.

This isn’t the first time Shorewood and its chief have been under scrutiny for their approach to 421a regulations, according to both court documents and the nonprofit Housing Rights Initiative.

“By failing to hold up their end of the bargain, these unscrupulous landlords are defrauding not just their tenants, but every taxpayer in the state,” said HRI’s Michael Shank.

Shorewood purchased the site in 2018 for $19 million, going on to develop a 23-story, 318,000-square-foot building with 22,000 square feet of ground-floor retail. The 315 apartment units are divided between 220 market-rate units and 95 affordable units.

The 421a program expired nearly three years ago and has since been supplanted by 485x. The former, however, had its completion deadline extended as developers race to qualify for the tax abatement, which requires 30 percent of a property’s units to be affordable.

— Holden Walter-Warner