LIEN DAYS AHEAD: AUCTIONS START FOR TAX-BROKE BUILDINGS

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On with the auction. For the first time in decades, tax-delinquent buildings are on the auction block, and 105 foreclosed buildings–22 of them apartment houses or homes–will be sold off on November 2. But the second part of the city’s tax lien program, a plan to rehabilitate broken-down buildings in low-income neighborhoods by transferring them to private groups, has yet to begin.

Before Rudolph Giuliani took office, the city used to take over buildings with serious tax delinquencies, a policy that left the government in charge of some of the worst–and least profitable–buildings in the city. But in 1994, the mayor ordered the city’s housing department to stop taking buildings, and sell off the back stock to private landlords, community groups and tenants’ associations.

Without the threat of foreclosure, though, the city had no muscle to get payments out of deadbeat landlords.

Two-and-a-half years ago the administration hit on a novel plan to get what they were owed: tax lien sales. To force owners to pay up, the city decided to sell off some 15,000 property, water and sewer tax liens to a private trust. The trust, in turn, hired two white-shoe collection agents to fetch the $500 million worth of tax liens, plus 18% interest and penalties. The program, now widely copied, is the biggest of its kind in the country.

But although distressed buildings in poor neighborhoods are removed from the auction block under this plan, advocates point out that the process is not well supervised, a chilling reminder of the disastrous housing policies of the 1970s.

“A lot of questions are raised by this by auction issue,” says Anne Pasmanick of the Community Training and Resource Center. “There’s a lot of unknowns. It would be helpful to see how they evaluated success–they’ve had success in getting revenue in, but don’t know if other measures of success are being evaluated.”

“To a certain extent, its a good thing this is happening,” adds New York University law school Professor Michael Schill. “It makes owners of tax delinquent buildings understand that they have to begin paying taxes, or else there will be real consequences. A longstanding threat is becoming reality. But we need to be tracking the buildings, making sure some responsible owner takes them, manages them.”

Part of the concern is that the program is being managed by the city’s revenue-generating finance department, instead of the Department of Housing Preservation and Development, whose mission is to preserve housing.

And while the auctions are underway, there is no indication that the city is moving ahead with its plans to deal with distressed tax-delinquent buildings. That project, written into the same local law that created the tax lien sale scheme, would temporarily transfer ownership of buildings to private agencies who would then hand them off to responsible owners. A pilot version of the program is scheduled to start up in the South Bronx, but, according to Celia Irvine of the Association of Neighborhood Housing Developers, it remains bogged down in technicalities.