The law authorizing the sale of tax liens to investors in Brooklyn, New York, is up for renewal in December. Some analysts and housing advocates are arguing that it should be eliminated rather than renewed for 2020.
“It’s a Wall Street entity making money off the backs of communities of color during a pandemic. They are commodifying our communities,” said Al Scott, a local homeowner and community organizer, of the tax lien sales, which provide much-needed revenue for municipal coffers when residents do not pay their property taxes. Once private investors purchase the tax liens, often for pennies on the dollar, homeowners may owe interest as high as 18 percent on the debt. Critics of the program say that the cost is simply too high for Brooklyn communities in 2020.
“In communities like ours, we are equity-rich, but cash-poor,” explained Scott. He said that in his area of the city, real estate investors will approach homeowners before the tax sales and make cash offers that would enable the homeowner to avoid the loss of the home and the sale completely. Oddly, this is not considered a positive role played by investors in the community, but rather a “product of a bygone era” when, apparently, property taxes had to be paid.
The city’s Department of Finance will often set up payment plans with homeowners who reach out, and there are many exemptions available for homeowners in financial distress in 2020. However, Brooklyn also uses the sales to force ownership changes in multifamily developments where landlords have permitted living conditions to deteriorate. Housing coalitions argue that this is nothing short of a “missed opportunity” in the pursuit of Mayor de Blasio’s goal to preserve 300,000 affordable apartments in the area.
“If there was no lien sale, then there is the potential for the city to do what it did historically before [Rudy] Giuliani changed the policy and just collect its own taxes,” said another community organizer, Julia Duranti-Martinez with the New Economy Project. She suggested the city “use the leverage that it has, especially over multifamily buildings that are really distressed, to help preserve affordable housing.”
Not surprisingly, numerous politicians have made the elimination of the tax sales a rallying cry for 2020. State attorney general Letitia James supports the elimination of the lien sales, as do multiple city council members and mayoral hopefuls. “The lien sale doesn’t bring the city that much money,” said homeowner advocate Ivy Perez. In 2019, the tax sales brought in nearly $89 million in delinquent taxes and utility bills in the form of payments from homeowners and proceeds from the tax sales.
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