Testimony before the New York City Council Committee on Finance
“Resolution and enforcement of property tax collection and preservation of housing for certain properties.”
June 18, 2024
Good afternoon, Committee Chair Brannan and members of the Finance Committee, and thank you for the opportunity to testify about Introduction 2164, which would reauthorize New York City’s tax lien sale for a four year period. My name is Will Spisak and I am a Senior Program Associate at New Economy Project, a citywide organization that works with community groups to build a just economy based on cooperation, racial and neighborhood equity, and ecological sustainability. Through coalition organizing, legal and policy advocacy, and other strategies, we challenge systemic wealth extraction and advance policies and institutions that promote economic cooperation and community-led development.
New Economy Project co-founded and coordinates the NYC Community Land Initiative (NYCCLI), a citywide alliance launched in 2012 that has fostered the growth of more than 20 community land trusts (CLTs) across the city, as vehicles for securing deeply and permanently affordable housing and neighborhood-led development. New Economy Project and NYCCLI are active members of the Abolish the Tax Lien Sale Coalition, launched in 2020 to combat speculation and displacement fueled by New York City’s tax lien sale. The coalition has led the fight to end the lien sale, through which the City has privatized a core public function by transferring the management and collection of property tax arrears to private investors. As a result, these investors have extracted massive amounts of wealth from low-income Black and brown communities, pushed elderly and low-income homeowners and tenants into further distress, and left neighborhoods littered with tax distressed vacant lots.1 Through the lien sale, the City has also squandered powerful leverage it would otherwise have to develop and preserve tax-distressed properties as permanently affordable housing that New Yorkers urgently need, and for other community needs.
We commend the City Council for rightly refusing to reauthorize the lien sale in 2021, and for working with coalition members to devise sound, community-driven solutions. In early 2023, the Abolish the Lien Sale Coalition issued a comprehensive report outlining steps the City could take to enforce collection of property tax arrears while preventing the displacement of low-income homeowners and tenants.2
We are pleased to see some of the coalition’s recommendations incorporated into Intro 2164. Notably, the bill includes new protections for certain tax distressed homeowners – including as-ofright exemptions from the lien sale; and an option through which severely financially distressed homeowners could partner with qualified preservation purchasers such as CLTs to stay in their homes, extinguish tax debts, and preserve home equity. Intro 2164 also requires NYC’s Department of Housing Preservation and Development (HPD) to inspect certain multifamily buildings on the lien sale list for housing code violations and provide tenants with information about their rights; through these inspections, the City could identify buildings suitable for rehabilitation through a future third party transfer program. The bill establishes a task force composed of representatives from the administration and City Council, as well as a community representative, to evaluate the impact of the proposed renewed lien sale system and recommend alternative approaches that would better ensure equity and effectiveness.
Despite these crucial reforms, Intro 2164 reinstates the now-defunct lien sale and does not go far enough to ensure equitable outcomes for low-income tenants, homeowners and communities. The City Council must strengthen Intro 2164 – and view this bill as a first step toward permanent abolition of the lien sale.
To that end, we urge the City Council to:
1. Amend Intro 2164 to:
- Limit any reauthorization of the lien sale to three years. A four-year reauthorization of the lien sale through December 2028, as the bill currently provides, would delay the timely consideration and implementation of recommendations that the task force established by Intro 2164 will release in September 2025.
- Require an affirmative review of the 1998-2 “Graveyard Trust,” an entity the City set up to hold the liens on difficult properties, such as those in disrepair or with complicated title disputes, that would negatively impact the ratings of bond-backed lien sale trusts. Many landlords of neglected properties in the “graveyard trust” have continued to harm tenants without facing repercussions. Intro 2164 should prohibit the sale of any additional liens to 1998-2; and require the City to affirmatively review all liens currently in the trust and identify and remove properties suitable for community ownership based on landlord neglect.
- Require HPD inspections for tax class 1 rentals: Tenants, rather than homeowners, occupied a majority of tax class 1 (one-to-three unit) properties on previous lien sale lists. Tenants in tax class 1 homes have fewer rights and are more susceptible to eviction when the properties in which they live are foreclosed, flipped, or sold off in a fire sale. Intro 2164 should require HPD to inspect all tax distressed rental units – not only large multifamily buildings – and create mechanisms through which neglected properties could be transferred to CLTs or otherwise stabilized.
- Inform and engage tenants: Intro 2164 should require NYC’s Department of Finance to inform tenants if their landlord is not paying property taxes, and provide tools that tenants can use to hold landlords accountable for neglected conditions. Tenants should receive information about how to request a building inspection, at the same time their landlord receives a 90-day lien sale notice; and DOF should send these notices to every mailing address in the building.
2. Prioritize passage of Third Party Transfer legislation: The City Council must enact legislation creating an equitable Third Party Transfer (TPT) program through which neglected properties can be rehabilitated under community ownership. From a process standpoint, TPT should have been prioritized over reinstatement of the lien sale; the Council must now act expeditiously to ensure it can remediate tax distressed properties that would otherwise end up in the lien sale.
3. Establish a NYC Land Bank: New Economy Project encourages the City Council to swiftly pass Intro 570, sponsored by Council Member Gale Brewer, to establish a NYC land bank that can replace the fundamentally flawed investor-backed trusts that currently purchase tax liens. In cities across New York State and the country, land banks play a central role acquiring, rehabilitating, and transferring tax distressed properties to CLTs, community development corporations, and other partners for long-term preservation.3 We have submitted recommended edits to CM Brewer and hope to see the bill strengthened and passed by the Council this year.
Thank you again for the opportunity to testify.
1 See, e.g.: The Impact of the Tax Lien Sale on Rental Properties (2024), at rpubs.com/jakobks13/tls_rental; Commodifying Our Communities: The Case for Abolishing the Tax Lien Sale (2020), at nyccli.org/wpcontent/uploads/2020/12/commodifying-our-communites_-the-case-for-abolishing-nycs-tax-lien-sale.pdf; Compounding Debt: Race, Affordability, and NYC’s Tax Lien Sale (2016), at cnycn.org/report-compounding-debt-tax-lien/; New Analysis Shows NYC Set to Squander 3,600 Potential Units of Affordable Housing, in Friday’s Tax Lien Sale (2021), at www.neweconomynyc.org/2021/12/new-analysis-shows-nyc-set-to-squander-3600-potential-units-of-affordablehousing-in-fridays-tax-lien-sale/
2 Leaving the Speculators in the Rearview Mirror: Preserving Housing with Municipal Arrears (2023), available at nyccli.org/wp-content/uploads/2023/02/tax-lien-report.pdf.
3 See, e.g., Land Banks and Community Land Trusts: Partnering to Provide Equitable Housing Opportunities Now and for Future Generations (2021), at communityprogress.org/publications/land-banks-and-community-land-trusts/