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The Daily Dirt: With $839M in delinquencies, City Council considers reviving lien sales
Bill would include reforms to the sale
Nearly three years after the last sale, the city is mulling bringing back a gentler lien sale.
The City Council is considering a bill that would allow the Department of Finance to hold lien sales until December 31, 2028.
When New Yorkers fall behind on their property taxes, water and sewer bills, the city can sell the debt to an investment trust, which begins charging hefty interest. If the trust cannot collect the balance, it can move to take control of the property. The city began selling liens this way in 1996, rather than foreclosing on properties itself.
The last sale was held in December 2021; since then, the city has seen a spike in delinquencies. Preston Niblack, commissioner of the Department of Finance, says the city is owed $839 million for this fiscal year.
The lien sale has long been criticized for disproportionately affecting low-income homeowners and communities of color.
The bill includes several reforms to the sale. In addition to ramping up required notifications sent to owners facing the lien sale, the bill would:
— Bar the inclusion of vacant land from the sale in cases where the mayor has determined that development “is economically impracticable or infeasible.”
— Create an “Easy Exit” program that allows certain owners of class 1 properties (one- to three-unit residential properties) and condo units to apply to have their property removed from the lien sale list up to three times within a 36-month period.
— Allow owners of class 1 properties to get rid of their debt by turning control of their building over to a “qualified preservation purchaser,” who would provide an affordable lease to the owner for 99 years and allow the owner to recoup equity in their property.
During a hearing on Tuesday, Niblack said the bill would “fundamentally change” how the city resolves overdue property tax bills.
“My hope is that a lot of people will not get into the lien sale,” he said.
The measure does not, however, take up some recommendations made by a city task force in October 2021 such as exempting one- to three-unit residential buildings, and condo units from the lien, sale or selling outstanding debt to a land bank rather than a trust.
This bill does, however, create ANOTHER task force to study further reforms and possible alternatives to the lien sale.
What we’re thinking about: When will the city attempt to revive and reform the third-party transfer program? Send a note to kathryn@therealdeal.com.
A thing we’ve learned: On Friday, the city released a registration form for 485x applicants. Attorney Alvin Schein says the registration looks less like the pre-certification available pre-2016 that gave developers more certainty that they would receive the tax break and more like a “one-way love letter.” Developers register with the city, but then wait until their projects are finished to learn if they will actually receive the tax break.
Elsewhere in New York…
— Jamie Torres-Springer, president of construction and development at the MTA, says the agency has halted work on extending the Second Avenue subway to East Harlem due to the governor’s decision to pause congestion pricing, Gothamist reports. Revenue from congestion pricing was expected to fund $15 billion in transit upgrades. On Tuesday, Hochul countered that her decision “does not mean that we will not find funding for the Second Avenue subway.”
— In 2012, the city’s Conflict of Interest Board ruled that elected officials could not accept free tickets to the U.S. Open. Mayor Eric Adams accepted free tickets to last year’s event, but because he spoke at the event, he is exempt from the board’s ban on elected officials accepting gifts worth more than $50 from entities doing business in the city, Politico New York reports.
— The state Court of Appeals on Tuesday declined to hear former President Trump’s appeal of the gag order issued in his hush money case, the New York Daily News reports. Sentencing in that case — where Trump was found guilty on 34 counts — is slated for July 11.
Closing Time
Residential: The priciest residential sale Tuesday was $6 million for a 6,430-square-foot, single-family house at 2230 East Third Street in Gravesend.
Commercial: The largest commercial sale of the day was $33.8 million for a 93,000-square-foot office building at 81 Prospect Street in Dumbo.
New to the Market: The highest price for a residential property hitting the market was $14 million for a 4,596-square-foot condominium unit at 560 West 24th Street in Chelsea. Andrew Azoulay of The Agency has the listing. — Matthew Elo