A city-controlled land bank could soon take over tax-delinquent properties in New York City and convert some of them into affordable housing, following the approval of four City Council bills in late January. The legislation aims to overhaul the city’s tax lien sale system, which currently allows a private trust to buy liens, charge significant interest, and potentially foreclose on property owners.
The proposed New York City Land Trust would be able to acquire tax liens from the city and transfer those properties to partners for redevelopment into income-restricted housing while continuing to collect overdue municipal payments. However, before this can happen, the city must obtain authorization from the New York State Urban Development Corp. and establish rules for how the land bank will operate.
“We’re trying to add to our toolbox to maintain and produce affordable housing,” said Council member Gale Brewer, who sponsored one of the bills. “How can we be innovative about the lien sale, instead of having properties just go to the highest bidder?”
The new laws are expected to take effect by March and have support from Mayor Mamdani’s administration. Matt Rauschenbach, spokesperson for the mayor, stated: “to keep New Yorkers safe, stable and in their homes.”
Initially passed in December but vetoed by former Mayor Eric Adams due to concerns about reduced arrears collection, the package was enacted after a supermajority of council members overrode his vetoes on Jan. 29.
Brewer’s bill would create a seven-member board—including appointees from Mayor Mamdani, city housing and finance commissioners, and Council Speaker Julie Menin—to oversee the land bank. She noted that it would likely focus on rehabilitating “dozens not thousands” of properties.
Despite progress, there are still unresolved issues regarding how exactly a land bank would function or whether it would bring different outcomes for property owners. Rachel Geballe of Brooklyn Legal Services commented: “There’s still some uncertainty here about what the process will change… This is the first step in a longer journey.”
The process ahead involves appointing board members who must develop bylaws for acquiring and prioritizing properties—a process that includes public input—and submitting an application to the Urban Development Corp., which typically takes up to two months for review.
According to Emily Mijatovic of Empire State Development Corp., which oversees Urban Development Corp., only one previous application has been denied due to jurisdictional disputes between local governments.
Governor Kathy Hochul is also pushing for broader use of land banks statewide as part of her budget proposal. She seeks to raise New York’s cap on land banks from 35 to 45; currently there are 31 across cities like Albany, Rochester, and Syracuse but none yet in New York City. Over 13 years these entities have returned $135 million in assessed value through rehabilitating more than 3,200 properties.
Since 2023 Hochul’s administration has allocated $170 million for state land banks. Previous attempts by city lawmakers failed due lack of support.
In 2024 City Council allowed annual tax lien sales through 2028; however such auctions may be postponed at mayoral discretion. When held again they’ll include new protections under recent legislation.
Another bill by former Speaker Adrienne Adams authorizes future sales directly from city agencies or trusts—such as NYCTL 1998-2 Trust—and mandates waiting periods before foreclosure on owner-occupied homes with smaller liens.
Jennifer Polovetsky of Duane Morris welcomed homeowner protections: “To take people’s homes away for tax liens that are minimal… is unfair… It’s a very difficult balancing act.”
Council member Sandy Nurse sponsored additional measures requiring efforts to transfer qualifying liens into city control upon certain triggers—especially those managed by NYCTL Trusts holding nearly 4,000 risky liens as per Department of Finance data.
As reported by DOF spokesperson Ryan Lavis there are now over 7,200 active tax liens including thousands affecting residential homes; details on upcoming eligible properties remain undisclosed pending scheduling decisions.
Nurse also introduced requirements for annual reporting on chronically unresolved cases—those unpaid more than three years after sale.
The current system established under Giuliani in 1996 has long faced criticism over predatory debt collection practices and lack of transparency. Under this model debts owed for taxes or utilities were sold primarily through Bank of New York Mellon or its servicers (who did not comment), often resulting in foreclosure if owners failed repayment plus interest.
Under forthcoming changes some responsibilities could shift toward public management but questions remain around funding sources or oversight structure since council bills do not specify financing mechanisms despite potential state backing via Hochul’s budget proposals. Nonprofit community organizations may serve as redevelopment partners under consideration by lawmakers and advocacy groups alike.
Some real estate industry representatives have expressed concern about resource allocation given existing fiscal constraints facing city government budgets while others warn against unintended consequences resembling prior controversial initiatives such as COPA—the Community Opportunity to Purchase Act—which sought nonprofit-first purchase rights on distressed buildings with expiring affordability terms.
Ann Korchak from Small Property Owners group described plans as “very troubling,” adding: “We’re watching this very closely.”
