For years, 39 Pearl Street in Dumbo was the embodiment of Brooklyn’s bohemian renaissance. The rock band Sonic Youth got its start on the fifth floor, while the band Blue Öyster Cult used to rehearse downstairs. Many of the residents have been artists, teachers and filmmakers whose apartments were rent-controlled before they pooled resources and bought the building in 1998.

Now a city clerical error threatens to take it away.

The error — which classified the building as having 11 or more units instead of the eight it actually has — vaulted 39 Pearl Street into a different tax category, causing taxes to increase by more than $100,000 over the past five years. Some residents of the building have taken on roommates or are thinking of dropping health insurance in order to afford the bigger bill.

In addition to this building in Dumbo, the city could be overtaxing hundreds of other small buildings, a New York Times analysis found, while making it difficult for their owners to fix the problem. These taxpayers must navigate a confusing and opaque appeals process. When the cases land in court, the city fights to keep the taxes it has collected — even when they have been collected because of a mistake.

“We had a place that we could live, we had a place that we could make our art,” said Julia Loktev, a filmmaker who lives at 39 Pearl Street. “It’s the reason the city thrives.”

A spokeswoman for the Department of Finance, Sonia Alleyne, said the city was deeply concerned about overtaxation, noting that the de Blasio administration had instituted new rules to correct errors and had refunded more than $4 million to property owners in the past two fiscal years.

Even so, the city has continued to oppose taxpayers in court.

“It’s bewildering to us,” said YuhTyng Patka, a lawyer who has handled several claims of overtaxation, including those by residents of 39 Pearl Street. “We just don’t understand why they are fighting so hard against small property owners.”

The problem hinges on assessments, a value the city provides properties each year that can help determine how much they pay in taxes. In New York City, building exteriors must be inspected every three years to help determine the assessment. But these external inspections don’t always correctly identify how many units are in a building, a crucial factor in determining property taxes.

Under state law, the assessments of small buildings — those that have between four and 10 apartments — cannot rise more than 8 percent a year, or 30 percent over five years. The savings can be great, particularly in rapidly gentrifying neighborhoods where a building’s value can double or even triple over a short period. There is no similar cap on the assessments of larger buildings.

But the number of buildings that are entitled to these protections is up for debate. The city says that when it counts the number of units in a building, it includes commercial space, such as a street-level storefront. State law, however, says nothing about commercial space. Confounding the problem is that the city’s decision making has been uneven: In 2017, it agreed in court that a property with 10 residential units and one commercial space qualified for the cap, throwing into question the status of many other properties.

Even for those buildings whose total count falls below the threshold, fixing the mistake — and recouping the money — can be challenging.

In 2016 the city instituted an appeal process which it said fixed misclassifications and reduced assessments by more than $150 million. But when that process fails, some buildings have sued the city. While the city has admitted in court that properties have been misclassified, it has generally refused to return property taxes to where they would be if the errors had not happened, tax attorneys said, locking the buildings permanently into the higher assessment.

Manhattan and Brooklyn each has one judge hearing these cases, and they both have accepted the city’s argument that taxpayers, not the city, are responsible for making sure they are properly billed. Only one judge has sided with owners in recent years, but she was transferred out of that court, in Manhattan, in 2014.

When Ms. Loktev moved into her loft apartment on the Brooklyn waterfront in 1996, the neighborhood was desolate. There were no stores or cafes, and wild dogs were known to roam the streets at night.

Two years later, Ms. Loktev and her neighbors bought the industrial building from their landlady when she retired. Since then, they have been working to bring it into compliance with the building code and to transform the lofts into living spaces.

Early last year, 39 Pearl Street requested that the city recount the units in the building. An inspector came out to survey the building. But when the tax roll was released by the city in May 2018, it showed no change.

Marcia Hillis, a teacher and painter, raised her two sons in the building. Over the years she volunteered on neighborhood associations and sat on her local community board. One of her biggest victories was securing the building’s right to have municipal trash pickup. “For those of us who endured all those challenges, we really shouldn’t be kicked out by the city at this point,” she said.

A floor above, Anna Harper, a jewelry maker, lives with her husband, an artist. She’s been in the building since 1992. “The new roof was my retirement fund,” she says. “If we end up losing the building because of the taxes, we will have nothing.”

This year, 39 Pearl Street paid $133,000 in property taxes — instead of the $32,000 the building would have paid without the error.

In January, a full year after the building filed its request to correct the error, the city moved 39 Pearl Street into the correct category. But instead of lowering the assessment to where it would have been without the mistake, it went up — leaving the building in an even worse position than before.

“We’re not saying, please lower our property values, or give us special treatment,” Ms. Loktev said. “We are asking for the city not to profiteer off a mistake they have admitted.”

In response to questions from the Times, the city said that 39 Pearl Street is “under review.” Residents, who had up until that point heard nothing of any review, are hoping a determination could be made before next year’s tax bill, which they expect to be $220,000. Ms. Loktev calculated that by next year the building will have overpaid the city more than $400,000.

The Dumbo of today is not the frontier it was. Multimillion-dollar condominiums fill the skyline and tech start-ups occupy loft spaces where artists once lived.

The building at 39 Pearl Street is worth considerably more than its 1998 purchase price, but because it is still not up to code, the options for resale are limited. The owners don’t want to sell; they see themselves as part of the neighborhood’s history. But they say they can hold on for only so long.

“If we lose this space, we’ll have to leave New York,” said Ms. Harper, the jeweler, “because of a clerical error.”

Follow Grace Ashford on Twitter at @gr_ashford.

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