By Kay Dervishi
Nov. 20, 2019
The New York City Council examined a slate of bills that would help nonprofits yesterday, with a focus on supporting access to property tax exemptions.
Nonprofits in the city must apply for these exemptions annually, but advocates have found that many organizations are unaware of these requirements and unknowingly end up with debt that the city often passes on to private investors in a tax lien sale. This can lead organizations to face foreclosure, property loss, and bankruptcy.
A bill proposed by Councilman Antonio Reynoso would exempt organizations that had received an exemption within the past two fiscal years from being caught up in the city’s tax lien sale, barring any change in property ownership, as well as those with pending applications. It would also create a role for an ombudsman to support nonprofits at the Department of Finance, which processes the applications.
The renewal rate for exemptions has been 99% for the past two years, testified Jeffrey Shear, deputy commissioner for treasury and payment services at the department. An average of 92 organizations do not respond each year, and those who are appealing denials and are found to have been exempt in the past year are removed from the tax lien sale list, he added.
But nonprofits have highlighted how burdensome the process can be for those groups, particularly for those with smaller capacity and that are heavily reliant on volunteers, such as religious institutions. One example of this is the Al-Muneer Foundation, which had its applications for exemptions repeatedly denied and had to fight back foreclosure. And for nonprofits with city contracts, such as the Mary Mitchell Family and Youth Center in the Bronx, difficulties with exemptions and debt can jeopardize their funding stream.
“Any time (organizations) get into any kind of administrative morass with the Department of Finance, that shows up in PASSPort,” said Paula Segal, senior staff attorney at TakeRoot Justice, referencing the city’s portal for procurement.
Other bills proposed would have the Department of Finance create a guide for nonprofits regarding taxes and exemptions, and would consolidate forms to apply for a property tax exemption as well as nonprofit exemptions for water and sewer charges.