Despite the continuously strong Covid-19 numbers, New York City still faces sluggish economic numbers and high unemployment. As such over 50 elected officials including New York State Attorney General Letitia James, NYC Council Speaker Corey Johnson, Brooklyn Borough President Eric Adams and NYC Comptroller Scott Stringer (the last three are the leading contenders to be the next mayor) have urged Mayor de Blasio to rethink the tax lien sale until the pandemic fully subsides. At the heart of their request is the removal of about 4,700 small homes (buildings that house one to three families) from the 9,000 plus auction list.
The lien sale is administered by the NYC Department of Finance (DOF), which sells overdue property taxes, water and sewer charges, and other property charges to a non-profit trust. Beginning three months prior to the sale the agency is supposed to send out multiple notices to the property owners alerting them that the property is at risk of being included on the lien sale list. Most owners then pay the full amount, enter payment plans, or present an exemption removing them from the at-risk pool. Outreach is also conducted via community groups and elected officials to reach as many owners as possible. The sale was originally scheduled to occur in May 2020, but it was previously postponed due to the pandemic and is now scheduled for September 4th. Property owners who face financial hardships may be able to take advantage of various programs offered by DOF.
Still, despite the payment plans and other assistance programs tax lien sales are a controversial bit of NYC business and that was true even before the pandemic. They set a foreclosure process in motion on homes that sometimes carry relatively small debts, potentially stripping homeowners of years of accumulated equity and the ability to pass wealth on to the next generation. Also, it is often the case that minority neighborhoods are disproportionately impacted. Once a lien is sold, homeowners not only have to pay down the debt but must add on 5% surcharges, legal fees, and sometimes double-digit interest rates that compound daily as well.
The city expects to raise about $57 million from the sale, which given the current state of finances is why Mayor de Blasio is forging ahead. Still, accounting for the pain and hardship so many New Yorkers have had to endure since March, this comes off as callous and cruel. Not only that, but given the extent to which lives have been uprooted, the pandemic completely changing the work of community groups and elected officials, and frankly even the issues with the USPS, can we even say for certain that the notification process went smoothly? Yes, the city needs revenue and yes property owners need to pay their taxes. Those facts are not in dispute. It just seems like there is a better way forward than proceeding with the tax lien sale as scheduled.