Finkelstein Timberger, Morgan Group sue city over slow J-51 approvals, seek $250M

Finkelstein Timberger East Real Estate and Morgan Group through 33 entities that own multifamily buildings in the Bronx, allege the city has not approved J-51 applications which has cost the owners millions of dollars through below-market sales, reduced mortgage proceeds and lost investment opportunities because overpayments made for taxes which they allege are not owed.

The owner companies, who are not named in the complaint but are the property owners, according to a PincusCo review of city records, are asking a judge to compel the city to approve the J-51 applications. In addition, the real estate companies are seeking $250 million in damages. The plaintiffs filed the case on

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The complaint says the city has not abided by a settlement agreement related to an earlier, related action Steven Finkelstein of  Finkelstein Timberger East Real Estate filed in 2022, 802194/2022E, that made similar allegations. That case was discontinued following a settlement agreement, but the new case alleges the city did not abide by the settlement agreement.

The complaint alleges the city has not given the full J-51 tax benefit to the buildings and in many cases increased the stated tax due on the properties, as it began the ministerial process of implementing the J-51 benefits. That increase has been harmful to the companies, the complaint alleges.

That increase of the tax bills harmed the property owners in multiple ways, including reducing the value of the properties in nine recent sales including 1226 and 1240 Sherman  Avenue totaling $72.9 million that the complaint says sold for a combined $10.27 million under the actual value.

In other instances, the owners have had to pay the additional taxes, which incurs an opportunity cost, or the lender will provide lower proceeds on a loan.

The properties involved in this complaint include 104 West 190th Street, 111 East 167th Street, 229 East 167 Street and 30 additional properties.

According to the complaint, “owing to market conditions caused by recently enacted rent limits, Plaintiffs’ mortgage debt cannot be serviced and the Mortgage Lenders are in negotiations with owners of real properties in the City of New York to adjust mortgage debts to take into account said rent limits; (iii) Plaintiffs are viewed by said Mortgage Lenders as unreliable borrowers in breach of their real property tax obligations even though the artificially inflated amounts for real property taxes claimed by Defendant City of New York are not justly due; (iv) said Mortgage Lenders resultantly refuse to enter into negotiations with Plaintiffs to adjust mortgage debts to take into account said rent limit… but for Defendant City of New York’s breach of the Settlement Agreement by failing to process applications and grant the exemptions, Plaintiffs would not be viewed by the Mortgage Lenders as unreliable borrowers in breach of their real property tax obligations and the Mortgage Lenders would enter into negotiations with Plaintiffs to adjust mortgage debts to take into account said rent limits.”