Campaigning to Replace the Predatory Lien Sale

TakeRoot is a founding member and counsel to the Abolish the NYC Tax Lien Sale Coalition which was initiated in summer 2020 by the East New York CLT.

As a result of the work of the Coalition, authorization for the sale of liens to an investment-backed trust has expired. The Coalition is now working with elected advocates and the administration on the design and implementation of a new debt collection system for New York City.

On February 2, 2023, the Abolish the Tax Lien Sale Coalition released a framework for municipal debt collection that prioritizes neighborhood stabilization and provides options for homeowners and tenants to remain in their neighborhoods.

The framework generally asks the Department of Finance to take the following steps for properties in arrears:

  • The first step of this process would fully fund robust and comprehensive services to property owners through the Department of Finance and local community-based organizations. These services would include connecting property owners to eligible exemptions or abatements, payment plans, as well as reviewing their debt to determine its legitimacy. This review and outreach would be preventative, preemptive, and encourage compliance.
  • If an owner is not eligible for relief or exemptions, the City would offer some form of debt forgiveness and put the land into a community land trust while the owner retains ownership of the property itself. This ensures that homeowners can preserve some of their equity and stay in their homes, guarantees long-term stability, and insulates them from the predatory market.
  • If an owner does not accept this option and their debt exceeds a certain limit over an extended period of time, the City would proceed with foreclosure and offer the property to either tenants in those related buildings, a community land trust, or local nonprofits. After paying the debt off, any remaining funds would go to the previous owner. This ensures the owner can regain some equity while the city simultaneously preserves the property for long term affordability and neighborhood stability.

For vacant buildings and lots, or occupied buildings in high levels of distress, the City would streamline foreclosure proceedings, partner with local CLTs or nonprofits, and help preserve the property as permanently affordable, community-controlled housing. This step utilizes City leverage to preserve land and housing that would otherwise go to for-profit, speculative actors.

Read a report in support of the campaign here: Commodifying our Communities: The case for abolishing NYC’s tax lien sale and prioritizing community land trusts in a new tax collection and property disposition system (December 2020).

Selected Press

The City: Pushback Grows as Council and Mayor Hash Out Deal to Revive Property Debt Sell-Off | April 11, 2024

Gothamist: NYC’s debt collection program is being replaced. Advocates hope its flaws can be fixed. | April 11, 2024

The Real Deal: One year later, city hasn’t renewed or fixed lien sale | Feb. 22, 2023

Gotham Gazette: Majority of City Council Declares Opposition to Reauthorizing NYC Tax Lien Sale | May 31, 2022

Brooklyn Paper: Controversial Tax Lien Sale Comes to a Bitter End, For Now | March 1, 2022

City Limits: As NYC Considers Scrapping Tax Lien Sale, Land Trust Plan Gains Steam | Feb. 28, 2022

Harlem World: Activists And Electeds Cheer End Of The Rudy Giuliani Created NYC Tax Lien Sale | Feb. 28, 2022

BK Reader: Housing Rights Activists Put Tax Lien Sale on Trial for Displacing Families of Color in Brooklyn | Feb. 16, 2022

The Baffler: Lien on Me | Feb. 10, 2022

NYS Focus: Tenants Suffer As City Sells Landlords’ Tax Debt to Speculators | Oct. 15, 2021

BK Reader: A Tax Lien Sale Is Happening in Dec and BK Organizers Are Rushing to Support Homeowners | Sept. 13, 2021

Kings County Politics: Tax Lien Sale Bill Asks for Reform Taskforce | Feb. 3, 2021

Politico: Council rankles de Blasio administration after pulling tax lien bill | Dec. 21, 2020

The City: Council Considers Killing the Tax-Collection Machine Rudy Giuliani Built | Oct. 22, 2020

Bklyner: Activists And Lawmakers Call To Abolish City’s Tax Lien Sale | Oct. 14, 2020

Testimony

Testimony to the NYC Council Committees on Housing and Buildings and on Government Operations (6/6/2023, updated 6/7/2023): Worse, the lien trust system is based on the existence of a “graveyard” trust (established in 1998 and called “1998-2”) which accepts liens on properties that would pose a risk to bond offering. Unlike the trusts created in each sale year, this one does not expire when investors have been paid and bonds satisfied; it continues to this day and currently holds nearly 6,000 liens that have not been redeemed or defected, accumulated during the quarter century of lien sales and assignments from trusts that were closed down after investors were paid.

Testimony to the NYC Council Committee on Finance on FY24 Budget (3/6/2023): I am here to draw attention to the need to adjust the preliminary budget to reflect the fact that the City does not have authority to sell tax liens and to add support for a new collection system for municipal arrears; the preliminary budget’s inclusion of $80 million revenue from the lien sale in the budget is misplaced. On the expenditures side of the budget, the amount allocated to the Department of Housing Preservation and Development for Community Land Trust (CLT) contracts must be increased to reflect the expanding capacity of community land trust organizations and the expanded opportunities for the City to partner with CLTs on crucial preservation and development projects that stabilize housing and other key types of real estate across New York City Neighborhoods.

Testimony to the NYC Council Committee on Finance at Oversight Hearing on Tax Reform (11/15/2022): The tax lien sale is the definition of bad policy that prioritizes private investors over homeowners, tenants and the future of our City. We ask that this committee ensure that the tax lien stays in our past. We urge you not to support ANY legislation that involves selling property tax debt to an unaccountable third-party entity. We also ask that this committee work with us to institute a new system of enforcement with the following goals: 1) re-municipalizing public debt collection, 2) preventing displacement of homeowners and tenants, 3) promoting long term affordability through community land trusts and partnerships with trusted non-profit developers, and 4) creating a pathway for productive use for vacant lots and unoccupied buildings.

Testimony to the NYC Council Committee on Finance on FY23 Budget (3/2/2022): We must make sure that the Department of Finance has the resources to bring debt collection into the ambit of the City in this and coming years. We would like to see a system that both incentivizes timely payments and allows owners who simply cannot pay to resolve their debt in a manner that increases the City’s supply of affordable housing. The City’s growing number of Community Land Trusts (“CLTs”), located in nearly every neighborhood, would be ideal partners for such a system: the City could forgive the debts of owners who voluntarily transfer the land beneath their properties to CLTs. This would allow them and their tenants to stay while preserving some equity.

Testimony to the NYC Council Committee on Finance on Tax Lien Sale Reauthorization (December 9, 2020): TakeRoot called on the City Council to abolish the lien sale and expand the pipeline of properties headed for transformation to social housing and community ownership.

Testimony to the NYC City Council Oversight Hearing: Examining the City’s Deed Theft and Deed Fraud Crisis (October 13, 2020): TakeRoot testified to connect the dots between the deed fraud crisis and the NYC Tax Lien Sale.