It’s time to stop tax lien sales from snaring New York City's nonprofits

An unpaid tax bill should not be the end of community-based nonprofits which are so critical to the health and vitality of our city.

Every year hundreds of nonprofit organizations find themselves included in the city’s tax lien sale and are placed at risk of foreclosure and bankruptcy. In response to this issue, I recently introduced a bill that would remove eligible nonprofits from the list and establish transparency measures to help them stay off in the future.

Nonprofit organizations serve as the lifeblood of many New York City communities: Houses of worship offer a quiet space to reflect, community gardens provide solace from the hustle and bustle of city life and community development organizations provide social services and develop affordable housing.

How do these properties end up with tax liens in the first place? Most often as a result of unpaid tax and water bills. This debt is then sold to third-party collectors. However, according to state law, nonprofit, charitable, and certain other social service organizations qualify for tax exempt status – and many should never have ended up with these tax bills in the first place. Opaque and complicated tax exemption policies leave many nonprofits unaware that they need to register for an exemption and come into compliance. Eventually, they can end up among the list of properties up for grabs at the city’s annual tax lien sale without even knowing it.

The Al-Muneer Foundation of Jamaica, Queens was erroneously denied tax-exempt status from 2011 to 2105. During that time, they were charged tax bills they could not afford to pay. Their debt was included in the tax lien sale and the tax lien trust initiated foreclosure. To stave off foreclosure, the foundation had to pay $26,000 in legal fees. Thanks to assistance from 596 Acres and other nonprofits, they were able to avoid foreclosure and obtain a refund for their taxes and legal fees.

A nonprofit’s value to our communities goes far beyond dollars and cents. They fill gaps in government services and are our eyes and ears on the ground. They provide an incredible return on investment for the dollars we put into them. So why are we using such heavy-handed tactics to collect money that most of these properties shouldn’t even have had to pay? Nonprofits are already strapped for cash and resources. The city should not be turning our nonprofit partners over to banks and private equity firms so they can try to squeeze blood from a stone.

It is time that we fix the current system. Our laws should encourage and enable nonprofit organizations rather than penalize them for incorrectly navigating arcane tax laws. I have taken the first step toward reform by introducing legislation that would remove from the tax lien list those properties that are eligible for a tax exemption or are in the process of securing one. Additionally, this bill would require the city to better inform nonprofits about how to stay off of the tax lien sales list going forward.

I have been working alongside the Protect Your Places Coalition, a conglomerate of community groups and institutions spearheaded by 596 Acres, to advocate for the passage of this bill. Thanks to our collective efforts, it has garnered widespread support from the New York City Council Progressive Caucus, my fellow New York City Council colleagues, and city-wide nonprofit organizations. Tomorrow, May 17, we will hold a rally on the steps of City Hall to bring awareness to this issue and emphasize the necessity of passing Intro 245.

An unpaid tax bill should not be the end of community-based nonprofits which are so critical to the health and vitality of our city. We believe this bill offers comprehensive reform to protect these organizations from unnecessary financial burdens and provides them with the information needed to avoid ending up on the tax lien sales list in the first place.