This week, the city is putting forth big changes to its celebrated property tax delinquency law–changes that would keep far fewer properties under the supervision of the city’s housing agency and its nonprofit partners, and instead leave them to the vicissitudes of the private real estate market.
The legal tweaks, as proposed by the Department of Finance, narrow the definition of a “distressed” building, meaning that far few buildings would wind up in the protection of the city’s third-party transfer program. That program was designed to ensure that run-down buildings with big tax debts are transferred to responsible owners, while being kept under the city’s watchful eye, in order to protect both buildings and tenants.
Under the old version of the law, originally passed in 1996, any building that had tax liens adding up to 15 percent of the building’s value and had five serious repair problems was deemed distressed and in need of close supervision. With the changes, which could go into effect as soon as November 1, only buildings with a whopping 50 percent tax debt would be automatically slated for the program.
What’s the impact? The city’s Department of Housing Preservation and Development would have less oversight over buildings with big debts in bad neighborhoods–exactly the buildings most likely to get mismanaged and neglected.
For example, 300 buildings were slated for third party transfer last fall. A back-of-the-envelope City Limits review of 30 of the Harlem properties shows that only about half would be eligible for third party transfer under the new rules. The rest would simply have had their debts auctioned off for cash; a few properties might eventually be auctioned themselves. (As of last December, more than 17,000 building liens and 62 buildings had been auctioned off under the city’s tax delinquency law.)
Since many of the buildings are in poor neighborhoods, tenant advocates worry that the buildings may fall into the hands of unscrupulous landlords or real estate speculators.
“I’m leery about the changes being proposed,” said Councilmember Bill Perkins, whose Harlem district includes many buildings in third-party transfer. “HPD and this administration have time and time again have signaled that they are not interested in planning and community development as much as real estate deals.”
In a written statement to City Limits, HPD supported the changes and said it would continue to monitor vulnerable buildings even if they aren’t considered legally distressed.
But the bigger question is why the city would want to slow down this inventive new program. HPD is very proud of third party transfer, which has also been recognized in the Ford Foundation’s “Innovations in American Government” awards.
The City Council plans to hold a hearing on the changes on Tuesday, October 10, at 9:30 am.