Revived Third Party Transfer Program Could Expand Community Ownership in NYC, Supporters Say

By proactively targeting landlords who neglect their properties to turn a profit, a revamped Third Party Transfer program that prioritizes community ownership could help break the cycles of disinvestment, speculation, and displacement, supporters of the legislation say. 

While their landlord served out his second stint in jail for failing to make court mandated repairs, residents of 709 and 705 West 170th St. in Washington Heights continued to go without heat and other critical repairs this November, as the winter months set in and temperatures continue to drop. They say their building owner, Daniel Ohebshalom (infamously termed New York City’s “worst landlord”), would order “band-aid” repairs to satisfy the courts while leaving larger, more serious issues unaddressed.

“They have been doing the landlord’s job for years,” said Eva Santos Veloz, a tenant organizer with the Metropolitan Council on Housing who has been helping residents of 709 and 705 West 170th St., who would like to see ownership of the building transferred to its tenants. While the city’s Department of Housing Preservation and Development (HPD) is responsible for enforcing a minimum standard of living, their code enforcement laws and processes often fall short.

The City Council hopes to address situations like this by bringing back the now defunct Third Party Transfer program, which allowed the city to seize properties from landlords who failed to maintain them or pay taxes, and transfer them to new ownership.

Introduced by Councilmember and Housing and Buildings Committee Chair Pierina Ana Sanchez in late September, new legislation seeks to revamp the Third Party Transfer program by making several changes, including narrowing the pool of eligible properties and allowing the city to consider tenants and community land trusts as potential new owners.

It is the latter provision that many tenants, organizers, and activists hope will make Third Party Transfer a tool for expanding community ownership across New York City—but changes would need to be made to the legislation for that to become a reality, they say. 

Initially conceived in 1996 as a tool to address widespread blight by allowing the city to foreclose on distressed and indebted properties, later iterations of the Third Party Transfer program were found to disproportionately impact small homeowners of color, leading to its halt in 2019. 

A City Council review of the program that year found that a majority of the properties seized under the last iteration of the program were located in gentrifying neighborhoods in the Bronx and Central Brooklyn, and over a quarter were low- and moderate-income co-ops. 

The revamped version seeks to avoid mistakes of the past by narrowing the pool of eligible properties to just 500 of the “worst actors,” providing greater outreach and support for low- and moderate-income homeowners in financial distress, and eliminating a “block-pickup” provision which put properties into the program that were not seriously behind on taxes or maintenance. 

Those who wish to see expanded opportunities for community ownership contend that the legislation would need to include stronger language to give community land trusts and tenants priority over non- and for-profit developers. As currently written, the bill only states that HPD “shall consider” community ownership when disposing buildings through the program. Additionally, advocates for tenant ownership say more resources and support are needed for residents who want to use the program as a pathway to homeownership.   

Will Spisak is a senior program associate for the New Economy Project, a non-profit which advocates for democratic and community controlled initiatives like worker cooperatives and community land trusts. A revived Third Party Transfer program is key to such efforts, he says.

“There are several pathways to acquiring properties for community land trusts, but this legislation is the clearest way to have the biggest impact,” said Spisak. 

Advocates see land trusts as a crucial tool for keeping housing affordable, preventing displacement, and ensuring community control over land-use decisions in a city where many feel their homes and communities are at the whim of powerful real-estate interests, which see land and housing as commodities. 

Community land trusts do this by acquiring land and leasing the housing or buildings on that land. Separating ownership of the land from ownership of the buildings on it allows a land trust to ensure properties remain affordable in the long-term through resale restrictions and long-term leases.  

According to Spisak, explicitly prioritizing community land trusts in the new Third Party Transfer program would not only help this model of ownership grow, but serve to rectify a status quo where the city sells the majority of its public land to for-profit developers who build largely unaffordable housing. 

Edward Garcia is the co-director for organizing at the Northwest Bronx Community and Clergy Coalition, a non-profit which advocates for community-driven development in the Bronx. 

According to Garcia, the way that Third Party Transfer has been implemented in the past proved onerous for tenants who wished to gain ownership of their buildings. In the lifespan of the original program, which ran for over two decades and saw 520 properties transferred to new ownership, only 47 buildings were converted to tenant ownership. 

Tenants going through the previous version of the program had to organize themselves as a building, petition for ownership within a limited time frame, and secure a sponsoring organization, after which they had to successfully pass an evaluation period.

This process was often burdensome for tenants, many of whom were low-income and had already been battling years of owner neglect. While a pathway to tenant ownership is codified in the updated legislation, it maintains many of the same requirements as it did in the past. 

“What we need to emphasize is the need to fund outreach and education as part of the new version of Third Party Transfer,” said Garcia. “The efforts have to be paired with intensive outreach and intensive support.” 

Property owners who oppose the program contend that landlords struggle to maintain their buildings in part due to onerous regulations. Speaking at a public hearing for the legislation in September, Adam Roberts of the New York Apartment Association, a lobbying group which represents landlords, maintained that “structural reforms,” such as legalizing landlords’ ability to “recoup” the cost of renovations and allowing rents to keep pace with inflation, are the real solution to the problem of widespread disrepair.

While there are undoubtedly many struggling property owners who act in good faith, neglect is a systemic issue that requires systemic solutions: housing violations jumped 24 percent in the most recent fiscal year, and it is predominantly low-income communities of color that bear the brunt of poor conditions.

A high number of maintenance violations often point to landlords who seek to extract the maximum amount of profit from their buildings as part of a larger strategy of speculation, according to a report released by Local Initiatives Support Corporation. Researchers found that owners often took on large amounts of debt to secure low-cost capital for higher-return investments, and that buildings with higher levels of debt had more violations, as landlords prioritized debt service over physical maintenance.  

What’s more, neglect and displacement often go hand-in-hand, the report added. “The properties that generate this wealth and capital are more poorly maintained than comparable buildings, and evict a higher proportion of their tenants,” it found. 

By proactively targeting landlords who neglect their properties to turn a profit, a revamped Third Party Transfer program that prioritizes community ownership could serve to break these cycles of disinvestment, speculation, and displacement, supporters of the legislation say. 

“If this act had passed a long time ago, this situation would have been avoided,” said Veloz. “Not just the building I’m organizing, but citywide, because this is a citywide problem.”

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