Senate Bill S1569A

                                 
BILL NUMBER: S1569A

SPONSOR: SALAZAR
 
TITLE OF BILL:

An act to amend the administrative code of the city of New York, in
relation to the imposition of tax on the transfer of certain properties
in the city of New York

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill seeks to stabilize communities and create more opportunity and
equity in the New York City housing market and curtail predatory housing
speculation by taxing predatory home flipping.

 
SUMMARY OF PROVISIONS:

Section 1 provides that the title of this Act is the "end toxic home
flipping act".

Section 2 amends the administrative code of the city of New York by
adding a new section 11-2120 establishing, in regard to residential
              

property of one to three units sold within two years of purchase, an
addition to the existing tax imposed by section 11-2102, of sixty-five
percent of the difference between the current sale price and the sale
price of the prior conveyance if the time since the prior conveyance is
less than one year, and fifty percent of the difference if the time
since the prior conveyance is greater than or equal to one year but less
than two years. No additional tax is imposed if the time since the prior
conveyance is two years or more.

This section further provides that the following persons shall be exempt
from the tax imposed by this section: (i) property owners conveying
property to a family member and (ii) property owners who can demonstrate
a financial hardship which justifies a conveyance of property in less
than or equal to two years. This section further provides that the
following properties shall be exempt from the tax imposed by this
section: (i) property conveyed following the death of the property
owner, (ii) property being sold as new housing, (iii) property for which
the consideration or value conveyed is less than or equal to ten percent
more than the value of the property conveyed at the time of the prior
conveyance, (iv) property conveyed to a mortgagee by a mortgagor by deed
in lieu of foreclosure or in satisfaction of the mortgage debt, (v)
property conveyed to a mortgagee pursuant to a foreclosure sale, (vi)
property otherwise exempt from payment of real property tax.

Section 3 is a severability provision.

Section 4 establishes the effective date of the act as 90 days after
enactment.

 
JUSTIFICATION:

New York City is facing an enormous housing crisis fueled primarily by
aggressive real estate speculation in working-class communities. and
communities of color. This crisis pre-dated the COVID-19 pandemic, but
the pandemic made it especially difficult for working, low and moder-
ate-income New Yorkers to maintain housing stability as hundreds of

thousands of workers lost income and struggled to pay their rent and
mortgages.

This bill seeks to create more opportunity and equity in the housing
market for first time homebuyers by creating a disincentive for predato-
ry real estate speculators to engage in the destabilizing conduct of
home flipping. This is accomplished by imposing additional taxes on
certain property sold within two years of purchase.  Property flipping,
where an investor purchases a home and resells it for a quick profit,
drives prices up for would-be homeowners, increases property taxes, and
provokes harassment of homeowners, who are overwhelmingly Black and
Latinx, in rapidly gentrifying neighborhoods.

Flipping is lucrative for investors, who target financially vulnerable
homeowners (often seniors) and seek to dislodge them from their valuable
homes at low prices. These unwanted and sometimes deceptive solicita-
tions of homeowners are an annoyance at best, but can also involve
outright fraud, and result in the displacement of longtime homeowners.
When low-income homeowners are bought out and leave the neighborhoods,
there is a ripple effect on renters as the often affordable rents in
these properties are increased by investors looking to maximize profit.

Urgent action is necessary to ensure that low and moderate-income New
Yorkers have a fighting chance to remain in NYC. This bill seeks to
level the playing field by taxing home flipping.  This bill is supported
by numerous community-based organizations and advocacy groups, includ-
ing: the Association for Neighborhood and Housing Development, Inc.,
Bedford Stuyvesant Restoration Corporation, Center for NYC Neighbor-
hoods, Cypress Hills Local Development Corporation, Neighborhood Housing
Services of Jamaica, Legal Aid Society, MFY Legal Services, Chinese-Am-
erican Planning Council, the Coalition for Community Advancement, and
others.

 
AMENDED BILL:

The "A" print of the bill simply changes the name to the "end toxic home
flipping act".

 
RACIAL AND SOCIAL JUSTICE IMPACT:

The detrimental impact of predatory speculation and home flipping is
particularly experienced by working-class communities and communities of
color. In some communities in NYC one-third of all homes purchased in
recent years were purchased by real estate investors, mostly for the
purpose of flipping. In addition, in the past decade, 40% of homes in
NYC were purchased by cash buyers.

 
PRIOR LEGISLATIVE HISTORY:

This bill contains the "flip-tax" provisions of 2021-2022 S 5376 (Sala-
zar) / A 6574 (Cruz) which was referred to the Cities I Committee in the
Senate and the Ways and Means Committee in the Assembly.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

This act will create revenue for the state and local governments.

 
EFFECTIVE DATE:
Ninetieth day after it becomes law.