💵 NYC is Owed $573M in Penalties from Outstanding City Violations

🌟 Author’s Note

Hello to the 123 members of the Better Block Project 👋 Following last week’s update on the bus stop and successful removal of the construction 🥳 , we followed up with City Council to understand where they were with our other asks of the MTA (adding lighting, removing seating and adding security). We haven’t heard back yet, but are optimistic the positive momentum from removing the construction will continue so we can get the bus stop fully back in good shape 💪 

💵 NYC is Owed $573M in Penalties from Outstanding City Violations

Our 🐯 Tiger Team focused on holding negligent landlords accountable (Cristy, Andrew, Jenny and Omar) continues to go down the 🐇 rabbit hole of how city fine collection works in New York City. We want to better understand how we can hold landlords and developers more accountable for negligent behavior with their properties, and what we’ve learned so far is there is a clear opportunity in fines that go unpaid. This week, we uncovered the NYC Department of Finance’s annual report on how they collect judgements on city violations. The NYC Department of Finance is in charge of collecting judgments that come from city violations. As a quick refresher on how city violations in New York work:

• Agencies, such as DOB, DSNY and DOHMH, issue violations on properties in order to enforce NYC law. These violations range from cleaning dirty sidewalks to ensuring adequate safety equipment is on the property

• OATH serves as the central adjudication service for these fines. Individuals and property owners have hearings through OATH, can dispute or fix the violations, and then OATH issues a decision according to the law

• Once OATH issues a decision, the collection of the fine is passed off to the Department of Finance, who is ultimately responsible for collecting the debt. They work with collection agencies, Sheriff’s offices and sometimes put debt as tax liens on properties to ultimately attempt to get them paid

The report is a great 🎄 holiday read if you want to better understand how well New York City is actually collecting on open violations. Some highlights are:

• In FY25, ECB collected $68.9M in fines from violations that were outstanding

• While this number may seem large, it pales in comparison to the $573M in outstanding debt owed to the ECB. This doesn’t include an allowance for bad debt, adding an additional $744M in unpaid violations

• The Department of Buildings has by far the most outstanding debt, at $193M, followed by the Department of Sanitation (~$100M) and FDNY (~$30M). Note, this is a cumulative number of outstanding debt from the last 8 years. After 8 years, the debt expires

As we wrote in a prior update, it’s not news that the city has a large amount of outstanding violations. The IBO estimates the city is sitting on $2.1B of unpaid fines. It’s not unreasonable that the city wouldn’t be able to collect all of the fines for violations owed, but it’s clear there is an opportunity to improve how this works to make sure negligent property owners are held more accountable.

🔍️ Why is it So Hard to Collect Fines on Violations?

In the ECB report, the Department of Finance goes into some of the challenges they face in collecting debts on violations:

• 🏚️ ECB judgements are not always listed on property tax liens. Property tax liens are considered a more effective collection mechanism. Stricter criteria to do that and fines not being tied directly to property owners limits the city’s ability to do that. As an example, 26 Jefferson is now owned by “26 Jefferson Avenue Partners LLC”, but open fines are against “Rentals 4 You LLC” and “26 Jefferson Avenue LLC”, making it more difficult to add those fines to the property tax bill

• 🥷 Many properties, including 1105 Fulton, 26 Jefferson and 73 Macon are owned by LLCs, making it difficult to know the true owners to hold them accountable and limiting their liability. There is an upcoming LLC Transparency Act in New York that is awaiting signature from Kathy Hochul, which would require LLCs to indicate beneficial owners. If passed, this could help uncover who is behind LLCs to hold them more accountable for violations

• ⚙️ Technical challenges, such as how the fine was serviced, limit the DOF’s ability to enforce collections. If DOF issues the fine incorrectly, misspells a name, or makes a typo, the violation can be dismissed. There is also no unique identifier on all violations, such as the EIN or SSN of the respondent or Borough, Block, Lot of the property

As next steps, we are planning to engage directly with the Department of Finance and OATH to better understand these challenges, in order to develop the best policy solution to better enforce the violations on bad actors and ensure properties are better taken care of. Despite all of this information, it is still difficult to get to ground truth on why there are so many open violations and what would truly be the best lever to incentivize negligent property owners to take better care of their properties. Some open questions include:

1. Why aren’t docketed violations showing up on the property tax bill?

2. Does OATH forward all violations to the Department of Finance, or only a subset?

3. How do you reconcile the unpaid penalty data from OATH with the data from the Department of Finance?

4. Are all fines (e.g., DSNY, Dep. of Health) eligible to go on the property tax bill, or only a subset?

If you are curious about the ECB fine status of a specific address, the ECB ticket finder is a great resource. Just plug in the address and you can find all open violations and their ticket status. It’s worth noting, in many cases the statuses of fines on this site are different from what you may find on another DOB or DOF site. One clear opportunity our team has identified is New York consolidating all fine databases into a single location, to make it easier for residents to understand what’s happening and easier for the city to hold property owners accountable.

That’s all for this week’s update. As usual, if you like what we’re doing at the Better Block Project, please forward this to someone you know that is looking to get more engaged in the neighborhood.

See you next week,

David