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Landlord plans to sue city over tax scandal.

Two weeks after 18 tax assessors were indicted on bribery charges, a landlord said he is planning to sue the city for damages stemming from his apparently over-taxed building.

According to attorney Jeffrey Golkin, Lori Realty Company is planning to sue the city for negligence and fraud.

356 W. 44th St., the property in question, is a small residential building with ground floor restaurant tenant. The small firm, says Golkin, petitioned for a tax decrease repeatedly over the years but was denied. It pays $36,000 a year in property taxes and consistently loses money, said Martin Appelbaum of Lori Realty.

At a press conference in Golkin's small midtown office last week, he said that his client's claim will likely be the first of many to be filed, suggesting that a class action suit is imminent.

"Every New Yorker has the right to an honest, fair and equitable system of taxation with appropriate checks and balances. The city (should) implement new procedures and safeguards to prevent illegal conduct in the future," he said.

Golkin claims that this fraud was carried out for years while the city did nothing to protect the public. A total of 545 buildings were involved in the scheme that lasted 35 years, according to federal prosecutors.

"This claim is the precursor to what is expected to be a significant number of consolidated lawsuits and/ or possible class actions," he said.

Lori Realty is seeking damages resulting from the city's apparent neglect to police the assessors. Several times during the press conference Golkin was asked to provide a dollar amount, but he refused to do so.

Also last week, the Department of Finance announced that 18 building owners will receive increased tax bills by April 30. According to a report from the New York Times, these 18 buildings benefited from the prolific scam. Another 24 properties are also being scrutinized by the DOF, which did not name the buildings or their owners.

Since the assessment process is tied into the budget, every year the city fixes its budget and then allocates between various property tax classes the overall burden of that budget. Thus, under-assessed properties force a greater burden on to other properties whose assessments were fair. Anyone who legitimately pays real estate taxes in New York City is a victim, says Golkin.

But one source familiar with the scandal derided the Lori suit for concerning itself "with pennies."

Since the overall tax burden was distributed between 955,500 other New York City properties, the average amount that some buildings may have overpaid to account for the $40 million that the city wasn't collecting could be a miniscule amount.

The president of the Real Estate Board of New York stood up for the city when asked about the suit.

"I believe the city did what it had to do. The city acted in a responsible way, this is just a very unfortunate thing," said Steven Spinola, who doesn't anticipate other owners filing similar suits against the city.

One real estate attorney agreed with Spinola.

"Most of the big landlords don't want this to linger. If they file a suit, it won't go away for some time. And they want it to go away," said the attorney, who asked not to be named.
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Title Annotation:Lori Realty Company
Author:Chapman, Parke
Publication:Real Estate Weekly
Article Type:Brief Article
Geographic Code:1USA
Date:Mar 20, 2002
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