City’s sale of landlord debts is harming tenants: officials

Housing advocates and city officials are pushing for changes to the city’s lien sale program that could include foreclosing on properties or selling debts to nonprofits.

Each year since 1998, the city has sold off landlords’ unpaid fines and bills to private investors, who then collect payments and can seize properties if the owners don’t pay.

But when the debt is sold off the inflating interest can becoming a crushing burden, and residents often feel the brunt of the pain as landlords cut costs on crucial services, according to a new report expected to be released Friday by Public Advocate Letitia James.

Between 2010 and 2015, more than 15,000 properties spanning some 43,600 units were affected by the lien sales, the New York Times reported, and housing advocates along with city officials are urging the city to rethink how the program is formulated.

New York City Comptroller Scott Stringer wants the city to foreclose on the delinquent landlords’ properties and use the land to construct affordable housing. James floated the idea of selling the debt through a housing preservation trust to nonprofits, which would compel owners to fix up their buildings.

The city first implemented the program as a way to recoup some of the unpaid charges it levies.

“We have found that the lien sale program is an effective tool to collect delinquent municipal charges,” said Freddi Goldstein, a spokesman for Mayor Bill de Blasio.

He added that the city will “continue to look at how all available tools can be used to create affordable housing.”

The public advocate’s report found dangerous conditions at 22 buildings that gone through the lien sale program many times, and code violations grew by 528 percent over the past six years. All of the buildings had rent-stabilized apartments.

The report also found that the program may incentivize owners to de-regulate units.

“Without a doubt, the city is missing an opportunity to preserve affordable housing and protect tenants,” James said. [NYT] – Rich Bockmann