Vol. 19, No. 2 Jan. 26 - Feb. 8, 2006
Controversial Landlord Fined for Illegal Rent Hikes
By HEATHER HADDON
The state has found that a controversial management company intentionally overcharged some Bronx tenants after the buildings were purchased. The Pinnacle Group was caught flouting the legal limit for a rent increase in two cases, but advocates and tenants charge that the practice is rampant.
The state Division of Housing and Community Renewal (DHCR) ruled last year that Pinnacle had overcharged two tenants after purchasing three Olinville Avenue properties in 2003. In addition to a rent reduction, tenants received monetary damages from Pinnacle because the error was �willful,� according to DHCR documents obtained from an organization helping in the cases.
The two Olinville Avenue tenants were charged $110 and $258 a month over the legal limit for increases to a vacated rent controlled apartment. In both cases, Pinnacle issued a rent based on the number of bedrooms, not a percentage increase from the previous rate, according to Hazel Miura of the Neighborhood Initiatives Development Corporation, a Bronx organization assisting the tenants.
The Marino Organization, a public relations firm hired by Pinnacle, said they always follow rent guidelines. �The numbers are what dictates the rent,� said Frank Marino, the firm�s president, last week.
But after the rulings, other tenants suddenly received notices from Pinnacle stating that it had miscalculated their initial rent due to a �clerical error.� The Olinville Avenue residents received a credit and a new monthly rent.
Miura believes Pinnacle did this to avoid paying additional treble damages (fees levied by the state for willful overcharges). �What angers me is that it�s the same issue with all the other tenants,� she said about the overcharges.
Miura succeeded in reducing seven other tenants� rents in court, but they were not awarded further treble damages. When she brought up the issue with DHCR, Miura says she was told that since Pinnacle is handling the matter, they should not be further punished.
But tenants in other buildings bought by the company report similar issues. Pinnacle has quickly amassed a sprawling empire of apartments in low-income areas, including the northwest Bronx. As the Norwood News has documented in several previous articles, the company begins by making certain structural improvement to the properties. Pinnacle residents in the Bronx and Manhattan say, however, that the company then begins a campaign to drive them out.
Hundreds of Bronx tenants have been sued by Pinnacle for back rent or specious claims of false residency, according to housing court records. Some of the tenants were forced to pay. Other cases were dismissed after rent arrears were nullified or technicalities � like tenants paying rent with a married name instead of a maiden one � were thrown out.
Marino said that Pinnacle follows an appropriate timeline before resorting to a suit. He asserted that the total number of evictions is low.
Many tenants also feel that Pinnacle is breaking rules concerning Major Capital Improvements (MCIs), or large repairs that tenants help pay, to reap greater profits. Pinnacle requested MCIs for a new roof and elevator in one of its Riverside Drive properties in Manhattan, but neither was replaced � just refurbished, according to Rylona Watson, a tenant.
�It�s a recipe for fraud,� she said, during a building-wide meeting of Pinnacle tenants last week. �They have manufactured their documentation.�
Tenants also report questionable practices when the company renovates vacant apartments. Pinnacle claims to have done work ranging from $13,000 to $25,000 per unit, then passes a percentage on to the new resident, according to several tenants. But the work orders look fishy. A few obtained from Olinville Avenue apartments are not printed on company stationery. Some supply invoices are clearly from a store, but the bill totals don�t match the checks proving payment. None of the check stubs have identifying information on them.
�There is no way to determine what was actually paid with those checks,� Miura said.
In a particularly egregious example, a Riverside Drive resident�s bill listed six toilets and hundreds of drywall sheets. �They refused to acknowledge the fact that there were six toilets on it,� said Mark Gordon, who successfully reduced the costs in court.
DHCR oversees the MCI process. They are responsible for ensuring that fees passed on to tenants fall within the legal percentage, but the agency does not determine if the bills are legitimate or the work was necessary, according to Miura.
Peter Moses, a DHCR spokesperson, acknowledged that Pinnacle paid treble damages in the two cases. He would not say anything else about the matter or whether there were additional cases involving Pinnacle. �I�ve had very little luck in getting stats,� he said.
Marino said that DHCR wouldn�t approve inappropriate work. �These expenses are in line what they are seeing all over the city,� said Marino, who also represents Wal-Mart and BJ�s Wholesale Club, among other powerful companies, in their city real estate bids.
Some elected officials are starting to look into the issue. Council Member Robert Jackson and Bill Perkins, a former member also from Manhattan, pledged to further investigate during the tenants meeting last week.
�[Pinnacle] is not in it to be a long-term landlord. They are in it to purchase a building, bring it up, and then sell it for a huge profit,� Jackson said.
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