Council Passes Legislation to Protect Not-For-Profits from Tax Lien Sales

Council Member Antonio Reynoso. Image credit: William Alatriste, New York City Council

Council backs not-for-profit sector with new legislation. On March 29, 2020, Local Law 42 of 2020 was adopted by the City without the Mayor signing it following unanimous City Council approval.  Local Law 42 was originally introduced as Int. No 245-of 2018 by Council Member Antonio Reynoso and was later amended twice. The new law creates an exemption for City tax lien sales of properties owned by not-for-profit organizations. The law also creates a not-for-profit ombudsperson within the City’s Department of Finance.

Local Law 42 exempts City tax lien sales where the organization received a not-for-profit property tax exemption in the prior two fiscal years. This law requires that the exemption was granted on or after the property was conveyed to the not-for-profit organization,  the property tax component of the lien arose on or after the date which the property was conveyed to the not-for-profit organization, and the not-for-profit organization was organized or conducted an eligible not-for-profit purpose. The law also provides the exemption to those organizations who, in good faith, submitted an application for the not-for profit tax exemption or where the owner is appealing a denial of the exemption. Additionally, the law requires the Department of Finance to include information about how to remove a property from the lien sale when denying an application for certain exemptions.

The February 27, 2020 Committee Report explains the expansive and growing not-for-profit sector throughout New York State and New York City—calling it the largest in the country. Accordingly, the sector generates over 1.4 million jobs with wages totaling over $78 billion. New York City reportedly had the highest number of not-for-profit employees in the state, with 662,025 people working in the sector in 2017. Despite employment growth, the Committee Report calls attention to a disparity in annual pay from workers in the private sector. Workers in the not-for-profit section generally make around $36,000 annually. Among the other services the City provides to not-for profit organizations, the bill is intended to ease the burden on a sector responsible for provide a wide array of services (i.e. health care, education, the arts).

The law was originally introduced on March 31, 2018, as Into. No. 245 by Council Member Reynoso, who represents District 34 in Brooklyn. The legislation was amended after a November 19, 2019, joint hearing with the Committee on Finance and the Committee on Governmental Operation. The legislation was again amended by the Committee but approved as Proposed Int. No 245-B on February 27, 2020. Council Members Rosenthal, Kallos, Rose, Ayala, Deutsch, Perkins, Rivera, Reyger, Richards, Torres, Levin, Brannan, Lander, Yeger, Menchaca, Ampry-Samuel, Miller, Chin, King, Levine, Cornegy, Barron, Adams, Van Bramer and Louis also sponsored the bill and so did Public Advocate Jumaane Williams.

Shortly after, on March 31, 2020, Mayor Bill de Blasio announced that the City would be postponing its annual tax lien sale. That suspension also applied to privately owned homes and condominiums. In his press release the Mayor suggested that private property owners facing hardships utilize the Department of Finance’s programs and payment plans intended to address the COVID-19 pandemic. To read CityLand’s prior coverage of the Department of Finance’s COVID-19 response click here.

Local Law 42, except for sections two, five and six went into effect immediately after its enactment on  March 29, 2020. Sections two, five and six take effect 180 days after it becomes law.

For New York City-specific COVID-19 updates, the City has established an information site with updates from all major administrative agencies. Agencies include the Department of Buildings, City Planning, Citywide Administrative Services, the Department of Finance and the Department of Transportation amongst others. You can find that page here.

By: Jason Rogovich (Jason Rogovich is the CityLaw Fellow and New York Law School Graduate, Class of 2019)



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