If managers of the Hudson Valley Senior Residence at 80 Washington Ave. are experiencing that sinking feeling these days, it’s not just from the street collapsing out front. The senior facility, next  to George Washington School on the border of Uptown and Midtown, is home to about 40 elderly clients. It is in what some board members have characterized as do-or-die negotiations with the city government regarding its taxable status.

Two years ago, the city revoked the facility’s not-for-profit tax exemption, resulting in an approximate $300,000 annual tax bill. Managers say the home is barely breaking even, and they can’t afford to pay the taxes.

Hudson Valley Senior Residence had been tax-exempt since opening in 1929. A non-profit operation, it is free from federal and state taxes. Its local tax status, however, is determined by the municipal assessor.

About two years ago then-city assessor Mary Ann Bahruth revoked the senior residence’s tax-exempt status. Protests to then-mayor James Sottile fell on deaf ears. Though both the assessor and the mayor have left office, their successors, Assessor Dan Baker and Mayor Shayne Gallo, have continued that policy.

Bahruth could not be reached. Baker said he could not comment on pending litigation and did not reply when asked to elaborate on the alleged pending litigation. Gallo offered only a brief summary in a phone message.

Established by a group of prominent citizens as “a nice place where you could take your maiden aunt,” in the words of one director, the home caters foremost to private-pay clients — those with the wherewithal to pay out of their own pocket. The current rate is $3,700 a month for a single room. Once a client’s money runs out, the home collects from Medicare, but at the substantially lower rate of about $1,200 a month, officials said. With residents living longer, their eventual shifts to Medicare have created financial issues, Administrator Lee Rasmussen said, adding, “Be that as it may, we have never asked anyone to leave.”

The upshot is that the home, currently assessed at $3,545,000 — an independent appraisal by the home placed the value at less than half the city’s assessment — is being charged some $300,000 a year in city, school and county taxes. Managers say the 48-room facility is running below the break-even occupancy level it needs to pay its bills.

Anna Mae Knowles, president of the home’s board of managers, said the board has not received clear answers on why the former assessor changed its status from non-profit. Its financial statements show it operating at an occasional slight surplus but at most times in the red. “Anything we make we put right back into the facility,” Rasmussen said.

Ward 2 Alderman Thomas Hoffay, a leading advocate for the home, said he was perplexed by the reasoning surrounding the change in tax status. “Anyone who has closely surveyed their books would conclude they have no capacity to make payments,” Hoffay said. “The options then come down to bankruptcy or sale.”

With bankruptcy, the home would go into foreclosure, with the city taking title to the property and its assets used for back taxes.

Knowles vows the home will endure current travails notwithstanding. “We are very much open and ready to serve our community as we have for more than 93 years,” she said.

Rejected by the city, managers appealed to Assemblyman Kevin Cahill and state Sen. Bill Larkin for special state legislation to restore the facility’s tax-exempt status. The city’s Common Council gave its unanimous support to the effort.

That initiative failed. “This is a home-rule issue,” explained Cahill. “The state legislature does not deal with local assessments. It’s not our responsibility, nor should it be.”

Though Cahill said he would continue to lobby for the senior residence, he doubted a resolution from the state night yet be forthcoming. What the experience clearly demonstrated, Cahill, an attorney, concluded, was that the tax status of the nursing home was strictly a city affair.

Meanwhile, the home is operating in a state of limbo. Because of uncertainty surrounding the residence’s future, marketing for new clients has become more difficult. “Would you put dad in a facility that might be closed in six months?” Hoffay asked.

Managers have noted increased anxiety among staff (26 people work at the 24/7 home) and its elderly clients.

Technically, the Common Council could change the tax status of the facility, but Hoffay, council majority leader, thought that unlikely. If Gallo and Baker stay their course, an override of a mayoral veto would require seven of nine votes of the Common Council. Despite the unanimous sense-of the-council votes of two separately elected councils, Hoffay predicted that would be no easy task.

The two sides, though reportedly far apart, are in negotiations. The city, which by law paid the home’s 2011 taxes to the school district and county, is seeking to at least recoup those payments, if not to secure future payments. The home says it can’t afford any payments and might have to close.

Long-time board member Vincent Van Bramer of Kingston has urged Gallo to reverse course. “Mr. Mayor,” he wrote in a recent letter to the editor, “no more closed buildings, no more job losses. Remove HVSR from your tax rolls.”

Gallo has not responded.