On Roosevelt Island

Has Manhattan Park Collected Millions from Tenants with Unauthorized Electric Bills? Part I

Updated 2 years ago David Stone
Electric Meter Counting Kilowatt Hours
Electric Meter Counting Kilowatt Hours
Photo Credit: Wikimedia Commons, Creative Commons License

It seems inconceivable that a major Roosevelt Island leaseholder could get away with charging tenants for unauthorized utility bills for a quarter of a century, but what if nobody was watching closely, leading them to believe they could get away with it?

After more than a week of waiting, I got a cryptic email from Manhattan Park property manager Michael Kim at mid-afternoon on Friday:

“We have received your letter dated July 20, 2016 and a response letter to your inquiries will be forwarded shortly.”

I checked my thesaurus. The consensus on “shortly” is “at any moment,” “in a minute,” or “in next to no time.”

So, I asked a long time Manhattan Park employee, figuring he would be more familiar with the corporate lingo.

“At Manhattan Park,” he said, “it means ‘forever.’”

That’s where this multipart series starts, between “at any moment” and “forever.” It’s a story that needs to be told, with the potential to affect thousands of tenants who have paid electric bills to Manhattan Park for over a quarter of a century.

Editor’s note: the Daily thanks Frank Farance for his help in research and acknowledges past contributions by former State Assembly Member Micah Kellner and former Roosevelt Island resident Mark Lyon. 

Brief Look at the History

My first complaint to management at Manhattan Park about sub metering charges happened roughly 25 years ago. I never imagined I’d be writing an article about it now, although I’ve told the story many times. Here’s the version with all the drama and comedy lifted out, most the comedy anyway:

After leaving our apartment vacant while we enjoyed a two week vacation, my wife and I were surprised to receive utility charges that were the same as if we’d been home, consuming kilowatt hours as usual.

We made some predictable noise, and soon, John, a building manager, rang our bell. Maybe, he suggested, our meter malfunctioned. He hooked up a bulky gadget to our breaker panel. After a month, he’d compare the reading to what our meter showed.

Simple enough for trusting souls relatively new to the wiles of New York City. Alas, though, the test failed.

John, couldn’t explain why but asked if we wanted to leave this meter, almost big enough to demand its own room, hanging from our wall for another month.

“No,” my wife and I said simultaneously. “Let’s just forget about it for now.”

Why? Were we quitters, afraid to confront management?

No, John, like everyone associated with building management then, was a nice guy who did nothing to create fear. And we’d probably have confronted them anyway, as we would in the future, if the situation was different.

Our reason for stepping back was simple. Our next electric bill had arrived in the meantime. The bottom fell out. Even though we were present for the entire month, we were charged less than we ever had been, far less than during the month in which we were home only half the time.

To answer the obvious question, we made sure we were comparing the right dates, and more to the point, our rates remained low for the remainder of our years in that apartment.

Talking with other residents, including my fellow Manhattan Park Common Council Member, Chuck Finke, a bright guy who’d observed management’s tactics almost from the time our building opened, we arrived at an explanation that was consistent for all of us.

That is, if you complained about sub metering charges, an invisible “adjustment” would be made. That is, charges migrated elsewhere. With all the embassies housing personnel who rarely saw what they were being charged and were unlikely to be familiar with what to expect, we guessed at where the juice flowed. We guessed it was overseas.

Things changed once Manhattan Park outsourced meter reading to Quad Logic, taking away their ability to “correct” mistakes, and management has been further relieved of scrutiny by the conversion of many apartments into dormitories where residents move in and out with very short stays. About 70% of our floor has now been turned over to short term dormitory residents who are much less likely to complain or even see excess charges.

But that’s not the important part of this tale, although it’s embedded in it, at least partly obscured by a management obligation of which very few tenants are aware.

Manhattan Park is obligated in its ground lease with the Roosevelt Island Operating Corp. (RIOC) to have an approved  grievance procedure established for sub metering issues.

They say they do, but nobody we know has seen or experienced it. RIOC searched their files and could find no record of one.

Can there be an approved grievance procedure if no one gets to use it?

When we first raised an issue about sub metering, the grievance procedure would still have been fresh, but it was never mentioned. Neither did we know that one existed until 25 years later when a copy of the ground lease arrived by email. 

But Why Didn’t Anyone Catch It Before?

One of the dilemmas faced by science in its quest to explain nature is the likelihood that researchers will miss truths because they don’t know what they should be looking for. There’s a kind of blindness that comes from unintentional ignorance.

Or, as Susan Rosenthal, Acting President/CEO at RIOC, explained, “No one complained before. We have no record of anyone contacting us,” even though the ground lease is a legal agreement between RIOC and Manhattan Park.

At first taken aback, I quickly understood the reason. Without having seen the lease, all of us had been barking up the wrong tree.

Before transferring out of New York, Mark Lyon, a lawyer who was also active in the Community Coalition, began questioning the validity of electric charges during the harsh winter of 2014. He wasn’t alone. Tempers flared throughout the complex with rates that doubled or worse.

But Lyon took a lawyerly approach. His reward? If he was unhappy, Manhattan Park offered, he was free to break his lease without penalty and leave.

Note: no grievance procedure, just a rebuke for having the nerve to complain.

Lyon began a dialogue with then State Assembly Member Micah Kellner who, with his staff, starting digging into the details. Some months after Lyon transferred out of New York, I picked up the ball with Kellner, who was eager to get back at an important constituent issue.

An exhilarating moment from our first meeting came when I showed Kellner a document Manhattan Park management distributed to tenants, attempting to rationalize the extraordinarily high electricity bills they were distributing.

Halfway down the page, Kellner placed his finger firmly on the page.

“That’s a lie!” he declared.

But fate again intervened in an unfortunate way. Kellner soon ran afoul of sexual harassment charges and was unceremoniously jettisoned from his office by the also soon to be disgraced Sheldon Silver. Although Silver could not remove Kellner from the Assembly, he for all intents and purposes deprived him of the ability to serve his constituents.

Kellner was a lame duck, and the issue died until Rebecca Seawright was elected to represent his district.

But there was serendipity too. Kellner’s “That’s a lie!” lead to further research, and then, one day this spring, Frank Farance sent me a copy of the ground lease. He even pointed me in the direction of the relevant sections.

Color me and my predecessors in this effort somewhat ignorant. As Rosenthal pointed out, RIOC always had a copy of the ground lease and would have been happy to share it.

RIOC has been helpful, but until Farance did the spade work, none of us realized that the ground lease was where we needed to look. Instead, Lyon, Kellner and I had all been sweating over whatever we could find about laws regarding sub metering.

And there’s another uglier reality in play, the Main Street WIRE, subsidized in kind by Rivercross and managed by Maple Tree Group founding member Dick Lutz, strove hard for years to demonize RIOC. The Maple Tree Group’s drive for Roosevelt Island self-governance required that it make an enemy of RIOC.

RIOC, a large number of residents were conditioned to believe, was not a resource that could or would help them, an effect that has resonance across a broad range of local issues. 

What Does the Ground Lease Require?

When you take a look at the ground lease, the facts are simple. Keeping in mind that, in this instance, Manhattan Park is the tenant and RIOC the landlord, here is the relevant extract:

Section 23.07. Charges for Electricity. In the event that Tenant seeks to charge Subtenants for electricity Tenant shall

(a) Prior to billing any Subtenants therefor, have established a grievance procedure that is either

(i) approved and administered by the New York State Public Services Commission, or

(ii) approved by Landlord and if there is a failure to approve Tenant may seek arbitration in accordance with Article 35.

(b) Not make any profit from such charges.

(c) Charge Subtenants of Market Rate Rental Units or any Subtenants of non-residential space for actual usage determined by submetering and actual billing charges received by Tenant, plus an allocated portion of Tenant's administrative charge for meter reading and billing permitted by the New York State Public Services Commission, and for no other charges.

My letter to Michael Kim, dated July 20, questioned where Manhattan Park ever “established a grievance procedure,” a requirement upon which the approval to ever charge for electricity rests.

Manhattan Park has previously claimed they have a procedure approved by the Public Service Commission. Even if that is true, it’s not the same as establishing it for tenants to use.

In my own experience, I have raised sub metering charge issues multiple times and have never been told about any grievance procedure. A friend who received a whopping $1,000+ utility bill and went to the trouble of doing the math to show that, in his estimation, the kilowatt hours with which he was being charged exceeded physical laws, also was not offered a grievance procedure.

This was true up and down our hallway and all the others in the complex.

Subsection (b) means, in practice, that Manhattan Park is obliged to pass along discounted sub metering charges without any mark up. My research shows that our charges were the same or higher than rates charged for private residents without sub metering discounts in Manhattan and Queens.

When electricity rates skyrocketed in early 2014, numerous newspaper articles cited New Yorkers suffering with rate increases “as high as 35%.” In Manhattan Park, our increase was about 100%.

That might have been perfectly legal and defensible, although I doubt it, but without a grievance procedure and with management hiding behind a wall of denial, how would we know?

Finally and more subtly, Manhattan Park is allowed to charge only for “actual usage determined by submetering.” That seems clear enough, but what if the sub metering system is so flawed that Manhattan Park cannot guarantee that they know what your “actual usage” is?

For example, a friend of ours grew so distressed by huge electric charges that she resorted to the extreme practice of shutting off all the switches in her breaker panel. Guess what happened?

Her next door neighbor went dark.

We are aware of multiple situations where individual apartment usage appears to be combined with other apartments. Having confronted Kim and others in management at Manhattan Park with this concern in the past, we expect the same response. That is, they will pretend the question was never asked.

How Shortly?

48 hours after being promised answers “shortly,” we are closer to the “forever” estimate.

RIOC and our elected officials, Senator José Serrano, Assembly Member Rebecca Seawright and City Council Member Ben Kallos have each received a copy of my letter to Michael Kim and have agreed to take a look at Manhattan Park’s response.

The potential repercussions of violation of the ground lease, stretching back more than 25 years are enormous. As a resident and the editor of this online news source, I intend to stick with it until there is a resolution.

Click here for Part II.

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