New York City officials predict that delinquent property taxes will reach a record $880 million this fiscal year because they no longer have the power to enforce penalties for delinquency.
The staggering numbers are expected for the fiscal year ending in June and represent a more than 30% increase from three years ago, according to offering documents for the city general obligation bond sale obtained Tuesday by city officials. There is. bloomberg.
“It’s not just the absolute dollar amount that we all have to worry about,” City Finance Commissioner Preston Niblack said at a City Council Finance Committee meeting earlier this month.
“People are realizing that there are no consequences to not paying property taxes,” he added, according to Bloomberg. “This cannot be allowed to continue.”
Among the highest debtors are the owner of a 16-unit rental building in Cobble Hill, Brooklyn, who owes $52.2 million, and the owner of a 49-unit apartment building in the Bronx, according to a list compiled by the City of Brooklyn. The owner of the property reportedly owes $24.7 million. Bloomberg Treasury.
According to Bloomberg, city officials blamed the increase in unpaid property taxes on the end of a tax lien sales program that punished delinquencies during the pandemic.
The program expired in March 2022 and was not reauthorized by the City Council, leaving delinquent owners with no incentive to repay their debts, Bloomberg reported. The city’s Treasury Department is reportedly working on a bill that would recapture tax lien sales so homeowners don’t face foreclosure or eviction.
Under the plan, if a homeowner of a single-family home or condominium falls behind on payments for more than three years, the city could seize the property and sell it to pay off the debt. For other types of real estate, liens can be sold after as little as a year, Bloomberg reported.
by New York City Housing Prevention and Development WebsiteIf the property owner refuses to collect taxes or other unpaid city fees, such as home maintenance, water, and sewer fees, the lien holder can foreclose and the building may be sold at auction. You will be asked to do so.
According to Bloomberg, the city plans to bundle its most marketable liens into securities and sell them at a discount to third-party trusts that borrow money from investors and advance payments to the city.
The trust would then be responsible for collecting the debt, plus additional fees and interest payments, and the city could continue to collect additional revenue from additional costs even after investors are repaid.
New York Attorney General Letitia James said in December 2020 that these fees “quickly turn a relatively small tax lien into an overwhelming financial burden, ultimately forcing homeowners into foreclosure.” There is a possibility.”
She cited a mandatory 5% surcharge, attorney fees, and interest rates of 9% or 18% compounded daily, according to Bloomberg.
The surge in real estate debt comes as owners of office buildings, some of New York’s most expensive real estate, struggle to attract tenants.
According to the city’s announcement, the overall office vacancy rate in Manhattan was 22.5% as of November 2023, a record high. January financial plan.
This delinquency means New York City is missing out on tax revenue, nearly 50% of which comes from property tax collections.
New York City expects to collect $32.7 billion in property taxes in the current fiscal year ending June 2024, about 45% of city tax revenue and nearly 30% of total funding for the city’s $114 billion budget. It is said that it will account for %. Bloomberg cited the January financial plan.
For reference, New York City collected $67.13 billion in property taxes in fiscal year 2023, down from $67.8 billion in 2022.
