City accuses its landlord of gaming property taxes

Adams administration wants its own tax breaks kicked back via rent discount

34-24 Hunters Point Ave
34-24 Hunters Point Ave (Law, Getty, Loopnet)

So that’s how it feels.

The city alleges its landlord at a Queens warehouse overcharged it on real estate taxes for years.

In a lawsuit filed Tuesday, the city charges that it erroneously paid its landlord over $270,000 in real estate taxes between 2014 and 2022. Property taxes are the responsibility of owners, but are often passed on to tenants through lease agreements.

In this case, the Adams administration claims the landlord wrongly calculated what the city owed for those taxes, leading to “an impermissible windfall” for the owner.

The Fire Department uses the building, at 34-24 Hunters Point Avenue in Long Island City, for storage and accessory office space.

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The warehouse is eligible for the city’s Industrial and Commercial Abatement Program, better known as ICAP. The city asserts in its lawsuit that according to its lease, the landlord is supposed to take the abatement amount into account when calculating the amount due.

But the landlord did not pass the abatement back to its source, City Hall, leading to a higher charge for the city for at least eight years. ICAP incentivizes commercial construction and renovation, especially in the outer boroughs.

The city has been a tenant in the Queens building since 2012, but the lawsuit refers to audits of the years dating back to 2014.

The rent went to three limited liability companies: Crest Housing, Better Housing and HPA Holding. A contact linked to the companies did not immediately respond to a request for comment.

According to the lawsuit, the landlord responded to the city’s repeated requests for reimbursement by claiming that the city had actually underpaid since 2016 and owed the landlord more than $300,000.