Owners denounce NYC tax collection plan - real estate owners; New York City plan for delinquent real estate taxes

Real Estate Weekly, March 11, 1992 by Lois Weiss

Still, many of the top delinquent have mortgages which are held by large banks and, Mann said, it seems to make poor business sense for the banks not to step in and pay up the taxes instead of allowing the interest to accumulate at 18 percent.

Stuart M. Saft, a partner and head of the real estate department at Wolf Haldenstein Adler Freeman & Herz said banks do not pay because they are afraid of adding value to the building. "It expedites their ability to get it out of the bankruptcy court," he said. Saft represents CitySpire, which is the top delinquent, owing $10.95 million. The owner of the unsold condominium units is Bruce Eichner, who is in bankruptcy and would be untouched by the new Finance Department policy. Saft believes the city should get the money any way they can and did not see a reason why they should not go after owners personally.

All the large buildings have mortgages, Mann noted, "But the banks hate to write a check when they are in the middle of the workout," he agreed, "even though its irrational." He said ultimately the banks will pay when the owner gives the deed to the bank.

"You can't force somebody to pay the taxes," one banker said. "They are in default on the loan and you can force them into a position to foreclose and accelerate the loan, but you cannot for non-payment of taxes. You have to do it in a gentle way."

While New York does not take over the property for some years after taxes are overdue, in other jurisdictions, such as St. Louis, "if a bill isn't paid in six months they take the property," the banker added.

Anfang's Collect group has been trying to have the city to hold tax lien sales, such as held by Chicago, to speed up the collection of taxes but his efforts have been basically stonewalled by the city.