The city’s tax lien sales program, which sells property tax debts to a private collection agency, has been closely monitored by activists concerned about its effect on tenants in large apartment buildings. Only recently, however, they are discovering that tax lien sales affects another set of New Yorkers–poor, often elderly outer-borough homeowners. Tough debt collection tactics have pushed many such residents down the road toward losing their modest homes.

A coalition of neighborhood and senior citizen groups hoped to convince the City Council that vulnerable homeowners deserved protection from tax lien sales before the program came up for renewal in October. So activists were shocked when the City Council quietly voted in early June to extend the tax lien sales program for two more years.

“It’s a slap in the face of community advocates,” said Eduardo Canedo of South Brooklyn Legal Services. “The Department of Finance and the council knew that more than a dozen community groups were extremely concerned about the lack of protection in this program for low-income homeowners.” Neither the Finance Department nor the council finance committee chair, Herb Berman, returned phone calls seeking comment.

The Giuliani Administration and the council created the tax lien sales program in 1996. Rather than take over buildings whose owners failed to pay taxes, the city began to sell outstanding tax, sewer and water debts to a private trust. The trust, in turn, hires collection agents to fetch the debts. If the debt is not collected, the trust sells the properties at auction.

According to a study done by South Brooklyn, low-income owners of one- and two-family homes often are unable to pay back their debts and suffer the wrath of the auction block–60 went to auction over a recent six-month period–or take out high-interest loans, which often lead to foreclosure.

Based on this evidence, the coalition argues that the city should exempt vulnerable homeowners from tax lien sales, as Philadelphia and Atlanta do with the homes of the elderly and disabled. Instead, the city could offer credit counseling and low-interest loans to help them hang on to their homes.

The coalition is considering suing the city for neglecting to hold a public hearing.

Meanwhile, the June vote did hold some good news for tenants of apartment buildings. Responding to protests from housing groups, the Council rejected a proposal made by the Finance Department last fall to increase the number of large buildings that go into tax lien sales. This would have reduced the well-regarded third party transfer program, in which the city fixes up troubled multi-family buildings and transfers them to qualified nonprofits and private landlords, rather than auctioning them off.

Praising the Council’s action on third party transfer, Joe Center, associate director of the Urban Homesteading Assistance Board, said, “These buildings need a housing solution, not a finance solution.”