The taxman, the most dogged of bureaucrats, retreated last week in the face of sensible housing policy. The City Department of Finance had approached the City Council with hopes of winning the unconditional right to extend the 1996 law that allows them to sell off blocks of city liens on buildings whose owners have failed to pay property taxes. The council, under pressure from housing groups, approved only a two-year extension.

Advocates also succeeded in getting City Council finance committee chairman, Herb Berman, a Brooklyn Democrat, to exempt low-income co-ops from the sales.

The sell-offs have netted the city some $600 million so far; the next lien sale is due to take place early next year.

“The Council saw the link between housing and tax policy in a way that they hadn’t earlier,” said Celia Irvine of the Association for Neighborhood and Housing Development. “It used its legislative role to place some checks and balances on the administration’s policy. In this climate, that’s a victory.”

Still, advocates sought a broader definition of “distressed housing” in order to exempt additional properties from tax lien sales, and suggested tightening DOF reporting to allow greater public scrutiny of sales and foreclosures. The bill is expected to win approval by the full council and to be signed by the mayor.