New York City’s controversial tax lien sales system for collecting unpaid property and water debts expires at the end of next month — without any clear path toward what comes next.
Mayor Eric Adams and City Council Speaker Adrienne Adams have both come out against the longtime practice of selling off tax liens to investors, which generates tens of millions of dollars each year and steps up pressure on property owners to pay their bills.
The city sold the liens from 2,841 properties in December 2021. It was the first sale since May 2019, after postponing the 2020 sale because of the pandemic.
The mayor campaigned on ending the sales, declaring they threaten “generational wealth in Black and Brown communities.”
But neither Adams nor Adams has unveiled specific plans.
Advocates for small property owners are pushing for significant reforms for how the city collects the unpaid debts, and they’re hopeful new city leaders will come up with a way that doesn’t further burden those already stretched thin financially.
And some grassroots activists want to get rid of the lien sale in favor of a community land trust model, in which nonprofits would take ownership of the property and maintain income-restricted units, in consultation with the indebted previous owners.
“There’s this opportunity to create the replacement system with the Council and with the mayor, and that’s an exciting prospect,” said Hannah Anousheh, a coordinator for the East New York Community Land Trust, which was created at the start of the pandemic.
Through the lien sale, which Mayor Rudy Giuliani created in 1996, the city sells debts of property tax and other municipal charges to a trust of investors at a discount. It was conceived as a way to address property abandonment and to collect unpaid taxes after City Hall had struggled for years with both.
Today, tax lien sales are a revenue-raiser for the city, with private investors responsible for collecting the debt. The liens sold this past December are valued at $145 million, according to the city Department of Finance.
Often, property owners late on their bills must pay more fees and interest on top of what they already owe, sending them further into debt, and sometimes resulting in foreclosures if debts remain outstanding.
The lien sale disproportionately impacts homeowners of color, a report from homeownership advocacy group Coalition for Affordable Homes found, as well as smaller property owners, and can lead to negative effects on tenants, too.
Landlord groups have been pressing for an end to lien sales.