Real estate firm alleges city taxes ‘squeezed’ hotel out of business
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GCP is represented by the law firm Marcus & Pollack, while the Department of Finance is represented by the city corporation counsel at the trial at Queens Supreme Court. Photo by H.L.I.T./Flickr.
By Victoria Merlino
A real estate company is having its day in court amid a tax assessment dispute.
GCP Realty II is suing the New York City Department of Finance, claiming that the department allegedly overvalued a now-shuttered East Elmhurst Courtyard Marriott hotel in the company’s portfolio across multiple years.
Queens Supreme Court Justice Joseph Risi presided at the trial, which took place on Nov. 14 and 15.
“The crushing amount of the repairs and maintenance, the cost of staffing the hotel … and the real estate taxes squeezed the hotel so badly that that was the reason that they had to close,” Joel Marcus, an attorney representing GCP, told the Eagle.
GCP is represented by the law firm Marcus & Pollack, while the Department of Finance is represented by attorneys from the city’s Law Department. Attorney Jeffrey Lebowitz, a retired judge, served as Marcus’ co-counsel for the trial.
Marcus said the Department of Finance over-appraised the hotel between 2014 and 2018, determining that the property was worth between $22 million and $25 million. GCP, meanwhile, appraised its value through an outside hotel appraiser between $3 million to $5 million. The hotel closed in March 2018.
“Our case was based on the true, actual performance of the property, and their appraisal was based entirely on broad, regional and national statistics on income and expenses,” Marcus said, noting that the city based the hotel’s appraisal on similar hotels in the Mid-Atlantic area, ranging from Washington, D.C. to Connecticut, and on hotels near airports — the Marriott was located near LaGuardia.
Marcus noted that different areas in the country have different union agreements and operating costs, leading to discrepancies.
“Real estate taxes fund vital city services and property owners must pay their share based on the market value of their properties,” New York City Law Department spokesperson Nick Paolucci told the Eagle. “In this case, the owner was afforded due process to challenge his assessment and the city presented its case to support its calculations. Now the court will decide.”
If GCP wins the case, Marcus said they would likely receive $12 to $14 million in compensation. The case could set a precedent, Marcus said.
“This is not a case of ‘we want money back from the city,’ this is a case of the city overtaxing this property for years and driving it out of business,” he said.
