Council Republicans propose tax lien sales

Real Estate Weekly, May 26, 1993 by Lois Weiss

New York City Council Republicans have proposed a sale of city tax liens and an overhaul of the in rem bureaucracy in order to generate an estimated $100 million annually.

Currently, there is no way for the city to tap the millions of dollars in uncollectible delinquent property tax payments, and it often becomes the owner of buildings in disrepair.

The proposal is based on similar tax lien auctions that are already held in Chicago and was first suggested to the Council members by COLLECT, led by developer Stephen Anfang.

The measure would speed up the current in rem process by one year to two years for residential property and one year for commercial property. It would also mandate that notice be given by mail to owners at least three times during a three month period prior to the sale.

Owners have often complained that these notices are mailed everywhere but to them because an owner registration card is not required to be filed and succeeding cards filed by mortgagees and lessors are sometimes considered the "owners" by the city computer while the real owner is never notified until his tenants inform him they now pay rent to the city.

The Council proposal would shield eligible Class I and Class II owners who could apply for an owner occupant exemption. That won't relieve them of the responsibility to pay the taxes," noted Marc Wurzel, counsel to Minority Leader Alfred C. Cerullo, III.

According to figures provided in its "blueprint," the city anticipates a delinquency rate of 4.1 percent or $324 million in FY93 and 3.8 percent or $291 million in FY94.

Mayor David N. Dinkin has already proposed borrowing S215 million on anticipated property tax receivables. The city currently collects 18 percent interest on late payments from owners, an amount that officials believe relieves them of becoming the "bank" while at the same time generating extra revenue.

When properties are taken, however, rather than selling them at auction immediately, the city invests money to manage and maintain and rehab these properties. $1.6 billion is slated to be invested in these properties over the next 10 years on 37,400 in rem units. The Department of Housing Preservation and Development will invest $270 million in FY94 alone to manage about 40,000 in rem units.

Other members who we backing the revolutionary plan include Michael J. Abel of Bayside, Andrew S. Eristoff of Manhattan, John A. Fun of Staten Island and Brooklyn, Charles Millard of Manhattan, Thomas V. Ognibene of Queens and Sheldon S. Leffler of Queens.