(The Center Square) — New York Attorney General Letitia James is throwing her political weight behind New York City Mayor Zohran Mamdani in a simmering court battle over the bankruptcy sale of more than 5,000 rent-subsidized apartments in the city.
In a filing in the U.S. Bankruptcy Court for the Southern District of New York Tuesday, the AG’s Office of Housing Protection declared its support for the Mamdani administration’s efforts to block the $450 million sale to a new owner, Summit Gold Inc., raising major concerns about the company’s ability to manage the properties and improve conditions in the buildings.
“The OAG has significant concerns about Summit Gold Inc. and its ability to manage the buildings due to its track record as owner of poorly maintained and dangerous residential buildings in New York evidenced by its buildings having thousands of Housing Maintenance Code violations for hazardous conditions,” Brent Meltzer, chief of the AG’s housing unit wrote in the 8-page declaration.
The AG’s office pointed out that the prospective buyers have a laundry list of alleged violations at properties they currently own in New York City and the housing unit has filed several lawsuits against the owners over conditions in its buildings, including lead paint removal violations.
“Even if the Court is not inclined to outright reject Summit’s bid, which the OAG believes is the appropriate course, it should at the least require Summit to provide a much more detailed explanation about how it intends to reverse its history of purchasing buildings that accrue high levels of violations, its plan to address the capital needs of the Pinnacle portfolio, and what management firm will accomplish this on their behalf,” Meltzer wrote in the court filing.
A representative for Summit couldn’t be reached for comment.
The move comes after U.S. Bankruptcy Court judge David Jones rejected the city’s motion to intervene in the legal fight in a ruling that paved the way for the bankruptcy sale to proceed.
Shortly after he was sworn into office on Jan. 1 Mamdani directed the city’s Law Department to intervene in the bankruptcy proceedings of more than 90 buildings with apartments all owned by Pinnacle, a real estate group. City Hall says the company owes the city $12.7 million in unpaid fines for housing violations. The company declared bankruptcy in May after defaulting on more than $560 million in loans.
Pinnacle Group, which is owned by billionaire Joel Wiener, is one of the largest landlords in New York City with roughly 140 buildings and 9,000 apartments, according to the court filings. After the company filed for bankruptcy last year, Summit Real Estate Holdings made a $450 million offer to buy dozens of buildings in Brooklyn, Manhattan, Bronx and Queens. The sale must be finalized by the court before it can proceed.
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Tenants, who have formed a group to oppose the sale, say the current landlord has neglected maintenance, failed to pay its utility bills and allowed apartments to deteriorate and have expressed concerns that the next owner won’t improve conditions.
New York has some of the highest housing costs in the nation and the lack of affordable housing in New York City was a key issue in the mayoral campaign, with Mamdani campaigning on protecting rent-subsidized apartments. He visited one of Pinnacle’s properties in Brooklyn on inauguration day to meet with tenants and criticize living conditions in the buildings.