Wharton Properties, Jenel Real Estate, others sue city over assessments on 34th Street

Jeff Sutton’s Wharton Properties, the Dushey family’s Jenel Real Estate, and a group of investors including Raymond Levy, through their owner entities, sued the city’s Department of Finance yesterday alleging inflated and outdated assessments on four properties on West 34th Street that lead to property taxes that are many times higher than they should be.

The filing asserts the current assessed value for the four properties, 21 West 34th Street, 29 West 34th Street, 136 West 34th Street and 140 West 34th Street, is approximately $49.5 million but using a valuation method referred to as the two-year-old-income rule, should be assessed at about $8.8 million, or 82 percent less.

Court filings represent the position of one party and are not necessarily accurate or complete.

Case LINK

The case highlights the steep drop in revenue tenants see in property on this stretch, which in turn reduces the rent the landlords can charge. This drop in rental income, the landlords argue, should reduce their assessed value and therefore their tax burden. The high taxes, the parties assert, makes it more difficult to attract tenants who can pay current rents.

Lenders have filed pre-foreclosure actions at two of the four properties. First, in May 2024, a $30 million action at Jenel Real Estate’s 136-138 West 34th Street, which is scheduled for a foreclosure auction October 1, 2025; and earlier this month, a $50 million action at Wharton Properties’ 29 West 34th Street.

The plaintiffs allege the city is inflating property taxes by using outdated revenue and expense figures representing retail rents achieved several years ago but that on this strip of West 34th Street are no longer achievable. According to the complaint, “The Department of Finance (“DOF”) is disregarding the law and volitionally propping up assessed values of the Aggrieved Parcels by assessing them based upon pre-COVID market data and high rental income of past market conditions that is no longer obtainable. Furthermore, DOF is committing all of these unlawful actions against the Aggrieved Parcels while n possession of concrete evidence of their current market conditions in the form of yearly income and expense statements, and arms-length, recently signed commercial leases…”

Direct link to the property’s 21 West 34th Street ACRIS page.
Direct link to the property’s 29 West 34th Street ACRIS page.
Direct link to the property’s 136 West 34th Street ACRIS page.
Direct link to the property’s 138 West 34th Street ACRIS page.
Direct link to the property’s 140 West 34th Street ACRIS page.