Entrapped Charities

Foreclosures due to tricky tax lien sales need to be stopped.

Devoe Bpt Cch 002c — Devoe Baptist Church, a 78-year old neighborhood institution, nearly had their church purchased out from under them due to an unknown need to renew their annual property tax exemption, which was put into effect in 2012 without proper notice.

The Devoe Street Baptist Church, a Williamsburg, Brooklyn congregation founded in 1904, discovered the City has sold a $203,000 lien against their property in 2016 and planned to sell another one in 2017. This happened because in 2012 the NYC introduced an annual renewal requirement to its property exemption system. A public hearing was not held on this change nor was the church leadership notified. Once the exemption was removed massive debt from these hidden taxes accumulated quickly.

The church sought help from St. Nicks Alliance, who joined with Paula Segal of the Urban Justice Center Community Development Project, Council Member Antonio Reynoso’s office, and the Office of the Taxpayer Advocate. They guided the leaders to file a new application for exemption. The property was finally removed from the 2017 and the lien sold in 2016 was discharged. The church was saved.

This isn’t a one-time fluke. Many community charities have had their property sold out from under them. These nonprofits can be unaware of property tax revocations until foreclosure has begun. They may not have been notified to be in court to defend against these foreclosure proceedings. Then this perceived debt owed to NYC can be converted into liens, which then are sold to a private trust managed by a bank. The trust can collect 18% interest (compounded daily) and initiate collection actions and foreclosure proceedings in court, which end in the auction of property to the highest bidder. The property can then be used for any purpose allowed by zoning including market-rate housing or commercial business enterprises.

Twenty-five council members, including local officials Antonio Reynoso and Stephen Levin, have sponsored Bill Int 0245-2018. If passed, it would help protect not-for-profit organizations from the City lien sale. Hopefully this will happen before the Department of Finance starts preparing for another season of tax lien sales that may continue to unfairly ensnare charities.