New York City Mayor Zohran Mamdani’s housing agenda is facing its first test as the city balks at housing. bankruptcy sale Residents have protested living conditions in thousands of rent-stabilized apartments owned by Pinnacle Group.
city hall monday ask A bankruptcy judge delayed a Chapter 11 auction scheduled for Thursday, saying they needed more time to evaluate the proposed $451 million deal with Summit Properties USA and “explore any potential alternatives.” After the buildings went bankrupt last year, Summit offered to buy dozens of buildings in Brooklyn, Manhattan, the Bronx and Queens in a “tracking horse bid,” meaning the deal would likely fetch better bids at auction.
The city’s corporate counsel said consultants representing the bankrupt estate have not yet provided the city with information about Summit’s ability to complete the proposed sale or whether it is willing and financially able to rehabilitate the buildings. Muriel Goode-Trufonte said in court documents. The city says Pinnacle-owned buildings owe the city $12.7 million for unpaid debts and housing violations.
“The completion of the bankruptcy auction process will bring financial stability and the opportunity to stabilize services, and we do not anticipate that the city will want to undermine those results,” Pinnacle attorney Ken Fisher said in an email. Summit did not immediately respond to a message seeking comment Tuesday.
The challenge came after Mamdani claimed the city would intervene in bankruptcy to protect tenants just hours after taking office as mayor. It foreshadows the 34-year-old president’s ambitious plan to focus relentlessly on affordability, especially housing, during his campaign before rising to become chief supervisor of the nation’s most populous city.
Residents face lack of heat, cockroaches and ‘the kind of conditions New Yorkers shouldn’t have to experience,’ Mamdani explain at a press conference after touring a building owned by Pinnacle in Brooklyn.
Some residents of the Pinnacle building organized in response to what they described in a letter as “years of mismanagement and neglect.” win support The request follows Monday’s court filing from other elected city officials. Pinnacle filed the buildings into Chapter 11 bankruptcy in May and assumed more than $500 million in mortgage debt.
“Our intervention in the Pinnacle case demonstrates that we are walking the talk and working to ensure that any outcome in this case improves living conditions for Pinnacle tenants and protects their affordability,” said Cea Weaver of the Mayor’s Office of Tenant Protection.
The city also expressed concerns Monday about the economics of the proposed deal, saying consultants overseeing the bankrupt Pinnacle buildings have not yet demonstrated that the properties can support the proposed sales price or ongoing maintenance costs, given that the apartments are rent-controlled. The city said the consultant has not yet provided New York City authorities with a comprehensive assessment of what repairs the building needs.
The city said in court documents that as long as the bankrupt properties have rent-stabilized or rent-controlled apartments, the proposed sale would also not generate a “supportable business” because current rents are “very low on average.” The city said that could mean the task of fixing emergency repair issues could fall on city authorities or tenants themselves, or force residents to move out.
Advisors blamed the bankruptcy on higher operating expenses and lower rents due to rising interest rates and inflation. Tenants of multiple Pinnacle properties Tell Bloomberg News said that over the years the company either failed to respond to repair requests or was slow to respond.
Summit owns numerous properties, including regional shopping centers as well as apartments in New York City and office buildings in Manhattan, according to the company’s website. The proposed sale of the Pinnacle building must be approved by Judge David Jones, who oversees the bankruptcy case.
“Continued losses and mounting expenses may result in the need for additional bankruptcies or restructurings, a state of financial and social dislocation that may be worse than the current situation for the debtors themselves,” the city said.
The case is Broadway Realty I Co. LLC, No. 25-11050, in the U.S. Bankruptcy Court for the Southern District of New York.