Tax lien sales by NYC threaten to worsen the affordable housing crisis

Alarm bells are only just starting to ring about a huge threat to the city’s housing stock: the growing crisis of older rent-regulated apartment buildings, especially the smaller ones largely owned by “mom and pop” landlords.Pre-1974 rent-stabilized units, mainly in the outer boroughs, now house about 1.7 million New Yorkers, but many of theses buildings are in deep financial distress water: The rental income doesn’t cover their ongoing expenses, or soon won’t if the Rent Guidelines Board keeps holding increases to below the rate that those expenses are rising.A good number of landlords have only made ends meet by delaying payments on property taxes and/or water and sewer bills, and city Department of Finance efforts to collect on that debt stand poised to trigger a wave of foreclosures likely to spark a disastrous downward spiral.After putting tax-lien sales on hold early in the pandemic, the department was set to hold the first one in years on May 20, only to postpone it to June 3 as it began to realize how bad things may be.In these sales, the city gets cash upfront while the lien purchasers gain rights to collect on the debt; they can start charging high interest rates plus penalties.Owners struggling to pay that, along with all their other bills, wind up deferring even vital building maintenance; some eventually just walk away, abandoning the property and all its debts; others lose the building to foreclosure.Tenants suffer as everything falls into disrepair, and can suffer more if the building winds up owned by unscrupulous and predatory speculators.Meanwhile, the entire structure can deteriorate so badly that full repairs start to cost more than replacing the whole building.As Sean Campion of the Citizens Budget Commission noted in testimony to the Rent Guidelines Board last week, market prices for these pre-’74 buildings are now falling as the net income (rents minus expenses) collapses.This crisis is exacerbated by destructive city and state ho...