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By: Benyamin Davidsons
More New Yorkers continue to shrug off paying their property taxes, since the pandemic when city officials nixed thetax-lien sales program which served to punish delinquency in the payments.
As reported by Crain’s NY, overdue property taxes are forecasted to hit the highest level ever in history, ballooning by more than 30% to over $880 million at the end of the fiscal year in June, compared to three years ago. The troubling forecast, provided last week by an offering document for a city general obligation bond sale, means New York could be raking in less revenue, since nearly half its tax revenue stems from property tax collections. “It’s not just the absolute dollar amount that I think should worry us all,” said Preston Niblack, the city’s Finance Commissioner, at a City Council finance committee hearing in March. “[It’s people realizing that] there are no consequences for not paying your property taxes. That just can’t be allowed to continue.”
The tax-lien sale program on unpaid property taxes was left to expire in March 2022 and wasn’t reauthorized by City Council. Under the program, the city was authorized to sell liens on single-family homes and condos after three years of nonpayment, and liens on other property types could be sold after one year. Officials say without the program, delinquent owners have no real incentive to pay their debts. This includes not only homeowners but also landlords and owners of rent-regulated apartment buildings, which have become limited in their ability to raise rents, as well as hard-hit owners of Manhattan office space, which have faced commercial vacancies of about 22.5% in November, the highest on record, per the city’s January financial plan.
The tax-lien program had been allowed to expire after community activists and some elected officials had slammed the program for burdening low-income property owners. The “additional fees can quickly turn a relatively small tax lien into an overwhelming financial burden, eventually pushing homeowners into foreclosure,” New York Attorney General Letitia James had argued in December 2020, referring to a mandatory 5% surcharge, legal fees and a 9% or 18% interest rate which compounded daily as part of the lien package.
New York is slated to collect $32.7 billion in property taxes in the current fiscal year, which would account for roughly 45 percent of city tax revenue and funds close to 30 percent of the current $114 billion budget, Crain’s reported. If the taxes aren’t paid, the governments will have trouble funding the budget. A third of the delinquencies stemmed from single-family and condo owners, while rentals accounted for 28.5% and commercial property delinquencies made up the remaining 38.2%, as of March 8, per the Department of Finance.
Per Crain’s, the city’s Department of Finance said it is now working to roll out legislation that would reauthorize tax-lien sales but be sensitive to keeping homeowners from going into foreclosure or eviction. “We look forward to working with the [City] Council on this important issue and look forward to a new, more equitable form of property tax enforcement.” said Ryan Lavis, a Department of Finance spokesman.
The City Council said in a statement it is working with the “Administration, advocates, impacted communities, and all stakeholders to advance policies that address outstanding charges while supporting the economic health of homeowners, our communities, and the City.”
