November 8, 2021

Final report makes several recommendations to more effectively target this decades-old tax enforcement tool and provide additional support for owners

 

 

NEW YORK – The New York City Department of Housing Preservation and Development (HPD) joined Councilmember Robert Cornegy, Chair of the City Council Committee on Housing and Buildings to issue the final report of the Third Party Transfer (TPT) Program Working Group. A tax enforcement program created by the New York City Council in 1996, TPT was designed to also address crisis conditions in New York City properties that were creating risks to residents, communities, and the city as a whole. TPT brings in new ownership of properties with significant tax arrears, and in many cases, hazardous violations, for preservation as affordable housing.  

The Working Group, co-chaired by HPD Commissioner Louise Carroll and Councilmember Cornegy, was formed in response to calls for changes to the program and charged with developing recommendations to modify it to more effectively address key concerns identified by stakeholders. After extensive analysis and review over a two-year period, the Working Group completed a report summarizing its work and laying out several key programmatic proposals for enhanced outreach, assistance, and customer service for owners as well as potential changes to the TPT criteria and selection process to better meet not only the tax enforcement, but also the program’s property stabilization goals.

 

“More than ever, the City needs a robust set of tools to stabilize properties and protect tenants,” said HPD Commissioner Louise Carroll. “After extensive analysis and thoughtful discussion, the Working Group has identified a set of proposals that would provide more assistance to owners earlier in the process – before properties are in crisis – and tailor the program to reach the buildings with the most dire financial and physical challenges. I want to thank Councilmember Cornegy for his leadership and the members of the Working Group for their tireless dedication throughout this process to advance meaningful reforms to support owners and protect tenants.”

“The TPT Program, as designed in 1996, isn’t applicable to the NYC of today,” said Councilmember Robert Cornegy, Chair of the City Council Committee on Housing and Buildings. “That’s why the input of the Working Group has been essential. As we fundamentally reshape TPT, we have included ideas to provide assistance and offramps to transfer altogether by bolstering mechanisms to help those acting in good faith to repay arrears and maintain their buildings. I remain dedicated to making sure TPT reform works for the benefit of all New Yorkers, free from the failings we saw in Round X. Thanks to Commissioner Carroll and the team at HPD, the Working Group participants, and all the community advocates who lent their insights and expertise to this significant report. I look forward to taking these ideas forward and ensuring we produce the fair-minded, thoughtful policy our city needs.”

 

Administered by the NYC Department of Finance (DOF) and HPD, the TPT program was designed as a property tax enforcement tool, with the additional goal of creating and maintaining affordable housing by stabilizing properties’ physical and financial health, and keeping properties safe, habitable, and affordable for those who live there.

 

During and after the tenth round of the program which resulted in property transfers in 2018, elected officials, advocates, and community groups voiced concern that various components of the TPT Program should be updated and suggested certain key elements for potential re-examination, including the eligibility criteria and process for selecting properties for inclusion in the TPT Program; the outreach and communications to property owners and other support in navigating the process of resolving outstanding issues; and the availability of financial and technical assistance to help address municipal arrears and physical conditions before reaching crisis conditions.

 

The Working Group included elected officials, members of the HDFC Coalition, legal services providers, tenant advocates, M/WBE developers, property management firms, and community-based organizations, with information and support provided by HPD, DOF, the New York City Department of Environmental Protection, and the Law Department. Despite a delay as a result of the COVID-19 pandemic, the Working Group convened in four sessions, conducted by an outside facilitation team, between 2019 and 2021. The Working Group’s report summarizes much of this work, including an overview of the history of the TPT Program; data analysis on the current state of the New York City housing stock, and characteristics of properties in crisis; existing interventions and resources to assist owners (or HDFC co-op shareholders) of properties in crisis; and recommendations to develop or expand programs to support properties as well as potential changes to the TPT criteria and selection process.

 

The Working Group explored a range of proposals that both build on existing programs and resources to enhance outreach and assistance to owners, and made the following recommendations:

 

• Include Community Based Organizations (CBOs), the offices of elected officials, and other partners in existing outreach programs; employ various engagement techniques, such as additional mailings, door-knocking, phone calls, and in-person engagement; and enhance interagency processes to make it easier for owners to navigate interactions with the various Agencies.
• Endeavor to make additional proactive outreach to each applicable owner before initiating a TPT round, and evaluate whether the amount of time provided to owners to address crisis conditions between initial outreach and foreclosure should be changed.
• Recommend that the City Council adjust payment plan terms to be the same throughout the in-rem process.
• Expand citywide the Homeowner Helpdesk in which CBOs will provide intensive on-the-ground outreach to homeowners of 1–4-unit homes, and provide one-on-one housing, financial, and legal counseling to homeowners on a variety of topics and assist homeowners in navigating and accessing available resources and services.  
• Create a new Owner Resource Center (ORC) for multi-family properties to provide and expand direct technical and financial support through CBOs to owners of multi-family properties citywide, including rentals and HDFC co-ops. Expanding on and modifying the City’s current successful Landlord Ambassador Program, the ORC would serve rental owners and HDFC co-ops citywide, providing technical assistance and training to address the physical, financial, and operation needs of buildings, and specifically to provide assistance tailored to HDFC co-ops with regard to governance, regulatory compliance, legal or estate planning.

 

The Working Group reviewed and weighed in on several options for selection methodology, the appropriate sources of data, and the criteria for selection and inclusion in the TPT Program. While there were different opinions on many of the options presented, the following recommendations garnered the most support by the Working Group members:

 

• Eliminate the current statutory “block pick-up” and replace it with a more refined selection methodology.  
• Employ a selection methodology that balances considerations related to the physical and financial crisis conditions of a building, with a focus on conditions of life and safety.  
• Include in the selection process all properties with debt in excess of 1-year (Tax Class 2) or 3-years (Tax Class 1/Co-ops) of their tax liability, with the threshold for inclusion based on a property’s individual annual tax liability and not a citywide threshold. 
• Change the selection and inclusion criteria to apply to 1-3 family properties (Tax Class 1), multifamily rentals (Tax Class 2), and co-ops, if such properties exhibit crisis conditions, and excluding 1-3 family properties (Tax Class 1) that have certain homeowner property tax benefits or exemptions (e.g., the Senior Citizen Homeowners’ Exemption) that require homeowner occupancy, as filed with DOF.
• Consider allowing HDFC coops to petition to have an opportunity to become an HDFC cooperative again upon meeting certain requirements after transfer.  
• Explore transferring properties, in particular Class 1 properties, to Community Land Trusts (CLTs), among other qualified organizations, as the ultimate owner (after the interim ownership stage). 

“We applaud Councilmember Cornegy, NYC HPD, and the Working Group for their commitment to protecting the interests and livelihoods of property owners and tenants across the five boroughs, particularly those most at-risk of housing vulnerability,” said Valerie White, Executive Director of LISC NYC. “These thoughtful reforms and proposals will not only help property owners remain diligent and meet their tax obligations but they will provide low-to-moderate income homeowners -- many of which are minority and elderly New Yorkers -- with equitable access to capital, resources, and services that keep their properties out of crisis in the first place.”

More on the full TPT Working Group report, including all recommendations and proposals, can be found here: Multifamily Disposition and Finance Programs - HPD (nyc.gov)

 

 

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The New York City Department of Housing Preservation and Development (HPD) is the nation’s largest municipal housing preservation and development agency. Its mission is to promote quality housing and diverse, thriving neighborhoods for New Yorkers through loan and development programs for new affordable housing, preservation of the affordability of the existing housing stock, enforcement of housing quality standards, and educational programs for tenants and building owners. HPD is tasked with advancing the goals of the City’s housing plan – a critical pillar of Your Home NYC, Mayor de Blasio’s comprehensive approach to helping New Yorkers get, afford, and keep housing in these challenging times. For full details visit www.nyc.gov/hpd and for regular updates on HPD news and services, connect with us on Facebook, Twitter, and Instagram @NYCHousing.