New York City is inching closer to scrapping its controversial tax lien sale process with the creation of a new body tasked with overhauling the way the city deals with properties that have accumulated large tax debts or have otherwise fallen into disrepair.
Mayor Zohran Mamdani has tapped his top housing adviser to help with the revamp, alongside agency commissioners, a councilmember and a pair of veteran policy experts.
Instead of selling the liens to a private debt collector, as the city did for decades, the administration and City Council have proposed a “land bank” that will acquire tax and water liens, work on payment plans with homeowners to make it easier to hold onto their homes, and take control of some buildings.
Mamdani campaigned on transferring properties from negligent landlords to nonprofits and tenant groups, and city housing officials have pursued ways to steer sales of dilapidated buildings to owners they deem more responsible.
The effort to develop a land bank program with the power to take over properties comes as the city attempts to settle a 2019 lawsuit filed by homeowners whose properties were seized through an earlier tax debt program. The City Council is also proposing a new program intended to transfer apartment buildings rife with hazards to new owners.
Mamdani named his director of the Office to Protect Tenants, Cea Weaver, as his designee to the land bank board, a City Hall spokesperson said. Weaver, an advocate for the land bank model, has helped shape the administration’s efforts to steer sales of apartment buildings facing bankruptcy or foreclosure or exposing tenants to dangerous living conditions.
His other nominee, Department of Environmental Protection Commissioner Lisa Garcia, required the City Council's approval following a hearing earlier this month. She was officially appointed on Monday.
They join Housing Commissioner Dina Levy and Finance Commissioner Richard Lee, both of whom are required to serve or name a designee to the board under a law passed by the City Council in January.
City Hall spokesperson Matt Rauschenbach said the four officials are “experienced leaders who will each bring a valuable perspective to the land bank working group.”
The seven-member group will also include Councilmember Linda Lee, who chairs the Council's finance committee, and two other veteran housing experts appointed by the Council: Christie Peale, executive director of Center for NYC Neighborhoods, and Ted Houghton, principal at the affordable development consulting firm Terra Linda Housing Services.
“Their combined experience and knowledge will be invaluable as the City charts a path away from the current tax lien process,” said Council spokesperson Rendy Desamours.
In a written statement, Peale said homeowner advocates had been pushing for a municipal land bank for “nearly two decades.”
“Together, we will implement this historic transition from the previous municipal debt collection system to a powerful new tool for preserving affordable housing and preventing the displacement of long-time New Yorkers, tenants and homeowners alike,” she said.
Revising a final enforcement tool
Legislation approved by the Council last year paved the way for the land bank, which would have the power to acquire municipal debts, like unpaid water and property tax bills, negotiate payment plans with property owners, and turn properties into affordable housing.
The Council also passed legislation that would end the current lien sale system by 2028. Then-Mayor Eric Adams initially vetoed both the land bank and tax lien elimination bills before the Council overrode the decision.
Mamdani suspended the sale in March, calling it “predatory” and vowing to enact an alternative.
Councilmember Pierina Sanchez
The tax lien sale is a final enforcement tool for the city to collect some portion of its delinquent debts from unpaid property taxes or water and sewer bills. For the past 30 years, the city has sold the liens at a discount to a private investment trust that then moves to collect the debt from property owners. The trust imposes additional fees and interest, multiplying owners’ debts and potentially leading to foreclosure.
At least 1,000 properties subject to tax lien sales have been sold at foreclosure auctions since 2015, according to an April analysis by the Independent Budget Office. More than 200 of those properties were one- to three-family homes. Another roughly 600 one- to three-family homes are currently in the foreclosure process.
Opponents of the system, including Mamdani, have long criticized it for taking a disproportionate toll on homeowners of color in neighborhoods of Central Brooklyn, Southeast Queens and the Bronx. Nearly three-quarters of one- to three-family homes in the lien sale last year were located in majority Black or Latino neighborhoods, the Independent Budget Office found.
The city suspended the program in 2020 and 2022 before reinstating it in 2024 with reforms meant to notify property owners of the lien placed on their property and help them create a payment plan or apply for an exemption from the sale. That year, delinquent property tax debt reached $883 million, up from $560 million in 2022 according to the Independent Budget Office.
The city sold $220 million worth of debt during last year’s sale, the budget watchdog group reported — up from $145 million at the prior sale in 2021.
A new way to take distressed property?
The board members named to the newly formed New York City Land Bank are responsible for completing an application with the New York State Urban Development Corporation to get the entity approved by January 2027. But advocates and city lawmakers say it’s still far from clear how the land bank would operate and enforce tax collection.
“There are as many questions as there are answers as to what the land bank is going to do,” said Jakob Kendall Schneider, a senior program manager at the nonprofit East New York Community Land Trust.
Kendall Schneider said the land bank should prioritize payment plans with property owners.
“We want to make sure there are programs that keep people in their homes if they want to stay, and still satisfy the requirements of collecting revenue,” he said.
But he said many of the properties are owned by investors who walk away from a piece of real estate rather than work to keep it.
Councilmember Gale Brewer
Councilmember Gale Brewer said the land bank could take over those buildings and turn them over to nonprofits, tenant groups and other developers.
Under state law, the new entity could take control of properties with large debts or other liens following a foreclosure process. The land bank could then transfer the properties to new owners.
“Lots of buildings are dealing with opportunities for alternate ownership,” said Brewer, who sponsored the land bank legislation. “It’s a new tool in the tool box. Every tool in the toolbox is needed.”
Houghton, one of the group’s Council appointees, said he hopes to “develop an effective mechanism to create more affordable housing.”
Since the start of his administration, Mamdani and city housing officials have pursued methods for transferring such distressed properties to nonprofit developers, private companies and the tenants themselves. Mamdani attempted to block a bankruptcy sale of roughly 5,000 rent-stabilized units on his first day in office and the city has stepped in to find a buyer for a portfolio of 40 buildings in and around East Harlem.
City housing officials say those efforts won’t change, even after the city reached a proposed $60 million settlement Monday with owners whose homes were seized and transferred several years ago.
Former property owners sued the city in 2019 after their homes were seized due to municipal debt and transferred to new owners under the city’s defunct Third-Party Transfer, or TPT, program. They claimed they were not fully compensated for the value of their homes minus the debt.
The U.S. Supreme Court ruled unanimously in 2023 that municipalities cannot keep more than the value of a debt after foreclosing on a property and selling or transferring it.
The City Council is now weighing a revised transfer program called SAFER Homes that would limit the number of eligible properties, target negligent owners with dangerous buildings and compensate them for the remaining value of their homes. Brewer, the councilmember who sponsored the land bank measure, said the SAFER Homes program could work in tandem with the land bank but that the final arrangement is yet to be determined.
Housing Preservation and Development spokesperson Andrew Stern said the city “is settling to resolve this longstanding litigation” but does not think it violated owners’ rights.
“The Mamdani administration and the City Council are working together closely to update and strengthen TPT in a way that addresses the concerns outlined in these suits and that better serves New Yorkers and our goal of creating and preserving safe, stable housing for tenants,” Stern said.
Attorneys for the homeowners who won the settlement criticized any further attempt to seize properties over unpaid municipal debts.
”Enforcement of tax charges and tax liens are supposed to be about the municipality getting paid, not about divesting people of their property,” said attorney Yolande Nicholson.
Matt Berman, another lawyer representing the homeowners, said the city already has an eminent domain process to take properties for a “public purpose,” including, potentially, affordable housing development.
“There's absolutely no need or purpose for this law to be resuscitated,” Berman said.
He said his firm would likely file another lawsuit on behalf of property owners if the city does enact programs for taking and transferring properties.
But the bill’s sponsor, Councilmember Pierina Sanchez, said the revised transfer program would target large apartment buildings with numerous housing code violations and eliminate previous problems. A provision in the earlier Third-Party Transfer Program allowed the city to seize homes with small tax debts because they were located on the same block as a property with a tax lien, a legacy of an earlier era in New York City when property owners abandoned entire swaths of neighborhoods and stopped paying taxes.
She said the city needs a way to enforce liens and unpaid fines against negligent landlords because buildings will fall into further disrepair.
“The past program was flawed, but this tool is important,” Sanchez said.
Advocates for the land bank and Sanchez’s proposed SAFER Homes transfer program say they hope the settlement marks a fresh start.
“I’m hoping it’s closing one chapter and opening the opportunity to do more with SAFER Homes and the land bank,” said Oksana Mironova, housing policy analyst with the Community Service Society.
