Pierina Ana Sanchez
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Today, I'm excited to talk about the 3rd party transfer program.
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The program was created almost 30 years ago in the context of a New York City with very different housing and market dynamics than today.
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Following World War 2, New York City's economy was in free fall, impacted by rising prices of fuel, high inflation, and other challenging conditions.
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Government and private sector policies, like redlining, devalued certain communities because they housed people of color, and investments like the GI bill and favorable mortgages for white families, fueled white flight, and abandonment in urban areas across the country.
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In New York City, there was a loss of approximately 350,000 private housing units to abandonment and disinvestment between the sixties and the seventies.
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For example, in 1975, 40,000 dwelling units per year or 3000 per month were being lost to abandon money.
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Many owners deferred maintenance and services in their buildings as operating costs increased, knowing that the city would soon foreclose on the property through the city's then in REM foreclosure power.
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As a result, the city had taken title to 5458 buildings, totaling in 51,672 units by 1994.
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The cost to the city of rehabilitating and maintaining these properties was on average $2,200,000 per building, approximately $4,24,000 a day.
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And the city was losing approximately $209,000 per building in tax revenue each year.
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It is in this context that New York City created the 3rd party transfer program to forestall further deterioration of the building stock and encourage tax compliance throughout the city.
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The program allowed the city to foreclose on properties with outstanding municipal debt, but rather than taking ownership and managing these distressed properties, as it had been doing, the city could transfer properties to a qualified third party to rehabilitate the building.
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Since the program was created in 1996, there have been ten rounds.
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However, the program was put on hold in 2019 following heightened media attention to the program administration and myriad calls from reform for reform by impacted persons, elected officials, and advocates.
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While the 3rd party transfer has had successes during its nearly 30 year history, its administration also proved extremely problematic.
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In 2019, the New York City Council found disproportionate impacts to communities of color and instances of apparent misadministration of the program.
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With HPD both leaving out or being overly lenient on certain properties that could have been included in transfers or for closing on properties that apparently should not have gone, through the rounds.
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Yet 6 years without a version of New York City using the power of municipal foreclosure has left our housing code enforcement apparatus, hamstrung.
