Intro 1063: Third Party Transfer

My name is Howard Slatkin, and I am Executive Director of Citizens Housing and Planning Council. Thank you for the opportunity to submit testimony today. We appreciate the Council’s efforts to reauthorize the Third Party Transfer program, and offer these comments in an effort to improve the programs effectiveness, with an eye on the experience of residents of distressed buildings.

First off, between TPT and reauthorization of the lien sale, this Council deserves credit for taking on the challenges of property tax enforcement. While these programs do involve financial pain, sometimes for people of limited means, the experience of several years without these programs shows that walking away from the responsibility for enforcement primarily empowers bad actors and ultimately hurts the people of New York City even more.

The Citys approach to reauthorization of TPT should be guided by concern for the residents of buildings that are experiencing severely deteriorating conditions and inadequate services. The cost of deferring or delaying remedies falls most severely on them. TPT is essentially the only program able to take on these severe problem buildings, maintain them until they can be rehabilitated, and provide protection for tenants while this process is going on. HPD and its partners under the program have a strong record of accomplishment in addressing these extremely challenging situations.

While the overall direction of the legislation is laudable, as currently drafted the bill would not achieve the desired beneficial outcomes in several ways:

• While the impulse to accommodate struggling property owners who are acting in good faith is well-intentioned, efforts to do so are likely to provide greater benefit to owners who are acting in bad faith, delaying enforcement so they may continue to extract value from distressed buildings. To a bad actor, the option to enter into a compliance agreement upon partial payment of delinquent taxes presents itself as a fee for the privilege of continuing to decrease services and squeeze remaining value out of buildings. Any alternative enforcement plan must aim to make disinvestment a bad business proposition for the owner.
• The legislation assigns HPD the responsibility of administering compliance agreements, without any additional tools of enforcement. This will add significant administrative costs for the agency and burdens that may diminish its ability to discharge its many other important responsibilities. In addition, prior agency experience in administering similar improvement plans suggests that successful outcomes will be rare, making this a poor investment of agency resources.
• The bill contains extensive and impractical notice requirements. While these may be well-intended, they provide a bountiful buffet of options for building owners wishing to delay enforcement by litigating claims of defective notice that are difficult and time-consuming to evaluate. The existence of such litigation, whatever its resolution, severely impairs the ability of agencies to carry buildings through the TPT process. This too rewards determined bad actors.
• Overly prescriptive legislation impairs the ability of agencies to adapt to lessons learned from implementing a new program or needed to respond to a changing environment. This is a particularly important consideration when a programs parameters could so easily impede rather than advance its purpose. The Council should put key elements of the program into the law while authorizing HPD to address further programmatic details through the rulemaking process. This does not mean the Council should not take an interest in these details or how they influence program outcomes, however. The Council could, for instance, include in the legislation a five-year progress report on implementation, and use its oversight authority to review the programs effectiveness in achieving its goals under this legislation.

The universe of buildings affected by TPT are by definition in deep distress, and every day of delay in remedying this distress subjects residents to another day in unacceptable living conditions, with attendant risks to their security and well-being. Enforcement of property tax collection and housing maintenance standards will no doubt present challenges to property owners. But the financial needs of property owners who have failed to meet their obligations cannot be prioritized above the fundamental housing needs of residents.

I would like to thank the Chair of Housing and Buildings and the bills other sponsors for taking on this challenging set of issues, and appreciate the opportunity to provide the committee with our perspective. We urge the Council to modify this bill to enable the TPT program to bring desperately needed improvements to residents of distressed buildings in a timely way.

Download CHPC’s full written testimony.