Church back in the day, so fun facts.

Are you guys ready?

Hello, Commissioner Li Anyang Chinggu.

Okay, sorry.

Okay, so welcome to our third hearing of today.

I'm Councilmember Linda Lee.

And welcome to our familiar face.

Commissioner Richard Lee and your team.

Thank you all for joining us today to answer our questions.

And as a reminder, my usual PSA before each section of the hearings.

We're doing all day public day testimony tomorrow starting at 9 30, so make sure you sign up, have folks sign up.

Public testimonies all day tomorrow starting at 9 30.

So I think that's actually it on my part.

I'm just happy to see you here.

And we got two Lee's sharing.

Brother from another mother, so I'm very excited.

Okay, sorry.

That's right, yeah.

Okay, so I'm gonna pass it off to Brian Saufro, our amazing committee counsel to administer the oath.

Good afternoon.

Do you affirm to tell the truth, the whole truth, and nothing but the truth before this committee and to respond honestly to council member questions, Commissioner Lee.

I do.

Deputy Commissioner Sheer.

I do.

And Deputy Commissioner James.

You may begin.

Okay.

Good afternoon, uh Chair Lee, members of the Finance Committee and members of the City Council.

My name is Richard Lee.

I am the commissioner of the New York City Department of Finance.

Thank you for the opportunity to testify today on DOF's fiscal year 2027 executive budget.

I am joined today by First Deputy Commissioner Jeffrey Scheer to my left and Jacqueline James, our chief financial officer and deputy commissioner for administration and planning to my right.

I'm grateful for their leadership and their deep commitment to this agency.

This is my first opportunity to appear before you as commissioner.

I am honored to lead an agency that plays a central role in the life of the city.

The Department of Finance collects the revenue that makes the city government possible.

We assess more than one million properties, administer tax benefits and relief programs, collect taxes and other charges, adjudicate parking summonses, record property documents, and provide services that touch homeowners, renters, small businesses, and many others.

DOF collects more than 50 billion in taxes and other revenues in fiscal year 2025 alone.

Since joining DOF, I have been struck by the expertise and dedication of the people who work here.

I've also been clear with our agency staff about the people who work, about the values that I want to guide our work, fairness, uh customer service, clarity, and accuracy.

Most New Yorkers interact with DOF because they have an obligation, a question or problem that they might find unpleasant.

It is our duty to ensure that those interactions are as helpful and efficient as possible.

Since our preliminary budget testimony in March, DOF has advanced several important priorities for this administration.

First, we completed a comprehensive review of the city's collection of ECB debt.

So ECB debt in uh includes unresolved violations issued by several agencies that may have become judgments and have been referred to DOF for collection.

Following that review, the city successfully recovered more than 9 million dollars from Amazon for unpaid vehicle idling violations.

An important example of what it means to enforce the city's laws fairly and effectively.

Just as important, this review has given us a clear understanding of how we can strengthen collections going forward.

This includes improving coordination across agencies, using data more efficiently, and identifying cases where enforcement can produce meaningful results.

We'll continue to build on this work, including an ECB amnesty program in FY27 upon authorization by the council.

Second, DOF has identified and implemented both operational and tax expenditure savings totaling more than 22 million dollars in the current fiscal year and 29 million dollars in fiscal year 27.

At a time of significant fiscal pressure, the OFF remains focused on protecting the city's revenue base and ensuring that public dollars are used as intended.

Third, DOF issued the final property tax role, reflecting evaluation of more than 1.2 million properties and supporting the city's single largest source of revenue.

This work is highly technical, but underpins the property tax system and the services New Yorkers rely on every day.

We have also supported several major administration priorities since March.

Mayor Mamdani established the mayor's Office of deep theft Protection, led by Peter White, the city's first office dedicated to coordinating prevention, outreach, enforcement, and victim support related to deed theft.

The new office will coordinate work of the City Records Office, the Sheriff's Office, and various other DOF divisions, while also providing new services and resources to vulnerable homeowners.

We look forward to continuing our partnership with City Hall, law enforcement, the courts, elected officials, and community partners.

The administration has also brought on new DOF leadership.

Almar Kadir has been appointed to lead the mayor's office of pension investments, MOPI.

Mayor Mamdani has also appointed Edwin Raymond as the new sheriff of New York City.

The Sheriff's Office carries out critical civil and judicial enforcement responsibilities, and we're grateful for Sheriff Raymond as he assumes leadership of the office.

Looking ahead, we have several priorities for the coming year.

The first, as always, is the efficiency of our own operations.

The OS fiscal year 27 executive budget is 373.85 million.

This is a slight change from the preliminary budget and reflects the savings that are referenced earlier.

We are in the process of onboarding 50 auditors to strengthen tax enforcement and ensure that the city's laws are administered with fairness and accountability.

An effective tax audit and enforcement division is central to our mission, and this investment underscores the administration's commitment to efficient revenue collection.

As a result of this initiative, as well as better retention of existing auditors, the projection for the audit revenue has been increased by 50 million dollars for fiscal year 27.

We'll continue to work with the council on the creation of the land bank and a new shared vision for a property tax enforcement.

As the council knows, the mayor paused the tax lean CO for 2026 to allow for a comprehensive review of next steps.

That pause gives us an opportunity to think about uh think carefully about the tools the city should have to resolve delinquency, protect homeowners, and support neighborhood stability.

We'll also take the lead in implementing the proposed pay to tear surcharge, which was included in the recently passed New York State budget to close the city's budget gap while protecting core services.

And finally, we'll continue to improve how we communicate with and serve New Yorkers.

Whether someone's applying for a property tax exemption, making a payment, contesting a parking ticket, recording a deed, or trying to resolve debt.

They deserve a process that is clear, accurate, accessible, and respectful.

In closing, I want to thank the council for your partnership and oversight.

I know you share a commitment to administering the city's tax laws and revenues laws fairly, collecting what is owed, connecting New Yorkers to help when they need it, and improving the experience of every New Yorker who comes to their city government for assistance.

Thank you very much, and I'm happy to answer any questions that you might have.

Great.

I forgot to mention we've been joined by Deputy Speaker Williams, uh Majority Whip Hanks.

Oh, Councilmember Brewer, Councilmember Maloney, and Council Member Wong.

And sorry, I was getting a little teary-eyed hearing you testify.

I'm sorry, because um I'm very proud of you.

I just want to say that again.

So I'm getting a little emotional.

Sorry about that.

Um, but yes, very proud of you.

Okay, property tax reform.

With that, we'll get into questions.

Oh boy.

Okay.

Um, so property tax reform, and this is something we've all talked about before, um, has been promised by mayor after mayor, but nothing has happened.

And fundamentally, everyone believes that uh it needs to be reformed.

Um, and this obviously lies with your agency, and um you have a lot of the key data and expertise that will be required to develop a workable solution.

Um, months ago, this administration said it would form a plan that would be released within weeks.

Um, and so just wanted to know when we can expect uh property tax reform plan and what can you tell us uh what it may or may not look like.

Sure.

Um, so Mayor Ramdani has been long clear about the um importance of property tax reform and fixing the inequities in our system.

Um that's why we're busy at work right now to craft that proposal.

It's going to largely build off of the recommendations from the advisory commission on property tax reform, which clearly lays out a lot of the structural reforms that are needed to make the system more equitable, less regressive, and more transparent.

And this is looking at it from a holistic view, how the impacts of one class and changes to one class or one type of property are going to impact the building types and the property types in other classes.

How if we move the class two co-ops and condos to a different system, how that'll impact the small rentals, large rentals, commercial properties.

So we're looking at this very holistically, and we're hopefully be able to do this in the next uh state session.

In the next state session, okay, which is consistent with OMB had mentioned as well.

And as we know, it definitely impacts the outer boroughs and certain parts.

Like I know Count uh Deputy Speaker Williams talks about this a lot in Southeast Queens.

So do you believe that real tax reform can be done on the local level?

Or I'm assuming I know the answer, but or does it need state action?

So because you have to wait till the next state session.

Yeah, we believe that the uh reform uh the necessary steps to um get to final and the uh best status of reform will be uh state legislative changes.

Okay, we're holding you to that.

Okay, so for savings, there are a number of savings that were taken as part of the directed savings plan from executive order 12.

And this includes abatement compliance, OTPS savings, PS savings, start credit changes, and a vacancy reduction.

These all provide savings of 22 million in FY26 and 29.2 million in FY27.

Um there is a 4.9 million in PS savings for FY26.

Can you please explain where the savings are coming from?

Um sure.

So that reflects Department of Finance's uh 1.5 savings target related soon to the chief savings officers' targets for FY26.

A lot of it reflects the timing adjustments for when we were able to bring on new hires and implement some of the programs that were previously added.

I'm happy to um have our chief financial officer, Jackie James maybe add a little bit.

It's it had to do with some programs that we got funded for early in the beginning of the year, and it did not get implemented until like six months later.

So those were savings we were able to offer up to OMB.

Okay.

Okay, and there is a baseline reduction of 12 positions from DOF for savings of 1.2 million starting in FY26.

Uh, what are these positions and will DOF see any changes in services provided to the public?

Um so we work closely with um OMB to identify the vacancies that were reduced without impacting any operations on customer service or revenue collections.

Um these are all non-revenue generating managerial positions, and we're working internally to absorb the um the uh the workload.

Okay, and we're also gonna see 13 million per year in additional revenue from co-op condo mailings.

Can you please explain the source of the revenue and how it will impact co-op condo residents?

Yeah, so the co-op and condo abatement is limited to primary uh resident unit holders.

Um, and using the latest available income tax information, DOF tax policy, identified a certain subset of uh population of recipients that may not actually qualify as primary residents.

And so DOF sent out notices requesting proof of residency.

Um, the estimate that you mentioned the 13 million is the projected result of that notification, including anticipate owners who would work with us to you know re-establish approve residency status as a result of those mailings.

Um through this initiative, we are ensuring that the part the the program is targeting the owners as intended to assist.

Okay, and then moving on to ECB violations.

Uh we discussed ECB violations in outstanding debt at length, and we were happy to see one of the first act, one of your first actions as commissioner was to announce a 30-day review to increase collections of outstanding debt.

Um, and this has been an important issue for the council, as you know in recent years.

Um, and in your announcement, DOF identified that 573 million in outstanding debt is potentially collectible, and an additional 744 million is deemed uncollectible for a total outstanding debt of 1.3 billion.

Is that correct?

Yes, that is correct.

Um, this is uh as of beginning of fiscal year 2026.

Again, as you mentioned, we did identify 573 million and outstanding debt that is potentially collectible, an additional 744 million that is deemed uncollectible.

And then how did you break down the categories of what's collectible or not collectible?

Um, so when uh in some cases when debt is collected is categorized as uncollectible, it's because of the respondents that cannot be sufficiently identified or verified and limits DOF's ability to pursue outreach and any other enforcement action.

In other cases, it might be because the business that you know received it might have gone bankrupt and no longer exists, or they might just simply lack the financial ability to satisfy the outstanding debt.

So that's the largely the main reasons why we have an uncollectible category.

Okay, and then your announcement of 70.1 million in collections is just 12% of the collectible debt.

So would you be willing to set targets for additional collections of outstanding debt in the fiscal year and what would those targets be?

Um so the FY27 executive budget right now sets our ECB collection target at about 70.1 million, as you stated, with an additional 25 million dollars in collection driven by the ECB Amnesty Program, which was added at preliminary and as we implement a lot of the findings that we have from our review, we're hoping that the process will uh better target some of these violations.

And uh, should it uh be readjusted in the middle of the year, we're happy to do so.

Okay, and how much how much would you like to see collected in FY27?

Um again, we're reviewing some of the processes internally to improve some offer collections, and one of those examples is how we collected the Amazon $9 million.

We had a direct approach, a you know, sort of like a case management approach of working directly with Amazon logistics, walking them through the process, identifying issues that they might have to bring them into compliance.

So initiating us a lot of the strategies like that, plus others across the board internally.

Um we're hoping to better the ECB collection.

We're happy to update as we go along throughout the fiscal year.

Okay, um, and what was the rationale behind the 30 day review?

Oh, so our teams internally we collect you know outstanding debt all the time, like every day.

Right, that's what I was wondering.

That's the mission.

Essentially, the mission of our agency led by uh Deputy Sheriff Vanette Hill, who oversees our collections divisions.

The reason why we wanted to do a 30-day review is because we wanted to really encourage our entire agency who's impacted by collections and administration to think creatively on what we can do to really enhance and improve collections and improve compliance across the board.

So it's an internal sort of uh brainstorming of how we can better it.

Okay, and then what were some of those uh findings that in terms of how to improve?

So some of the findings do include things like bettering targets and bettering classification, um finding ways that we can tie and work with our sister agencies like DOB and other issuing agencies to tie to other programs or licensing that they might have, and it includes and looking at state legislation that might be needed in order to improve some of our collections.

Um it is uh reaching out for our exec account executive unit to again do a more closer uh and touch with some of our highest respondents and figure out ways that we can better target the timing of some of these violations.

The largest collection of violations come in within the first year of the issuance of the violation.

So we're trying to better time it so that we can target in the first year.

Okay, perfect.

Um sorry, just in case to cover myself, we've been joined by council member Narcisse because I wasn't sure if I mentioned you before.

Okay, airport revenue.

Uh preliminary budget included just 162.4 million in rental revenue from the port authority for the city's airports in FY26, and at the time, the council believed that this was underestimating actual rental payments.

So, as Cushmer, um you received the Port Authority's transmitter of rental payments and annual statements.

So, what was the amount of actual revenue that the city received from the Port Authority for FY26?

Um I can get back to you on that one.

We have the report, I just haven't I could pull it up in a little bit, um, but we're happy to work with OMB if any changes need to be made.

Um but we have received it.

I'll get back to you.

Let me just pull it up right now.

Okay.

Um, all right, so moving on to Section 1127 returns.

Um, as a condition of city employment, any employee who is not a resident of New York City is required to make a payment equivalent to what their New York City income tax would have been if they were a city resident.

Um it is the council's understanding that DOA DOF has been incorrectly calculating Section 1127 returns for 10 years, which has resulted in more than 100 million in lost revenue to the city.

Um this error was recently fixed, which has led to some city employees seeing a reduction in their tax refund or even charges to their account as a means for the city to take the missing revenue.

I feel like that impacts some folks here too.

Can you please explain how the 1127 bills were supposed to be calculated and what was wrong to lead to a 10-year miscalculation?

Yeah, so the 1127 waiver is essentially a contractual condition of employment for employees who live outside of New York City.

So each filing year, employees would then withhold a portion of the income.

And so if they with to cover this tax liability, so if they withhold greater than the tax liability, they'll get a refund.

If they withhold less, then they'll have to pay into it.

As part of that process, the school tax relief, the star benefit, was calculated against the city's personal income tax up until 2016.

After 2016, it was shifted to be a credit that's calculated against your state personal income tax.

So they were essentially receiving on the state side, but uh our systems uh kept continuing to provide this on the city side as well.

So essentially they're receiving the start credit from both the state and the city.

Um earlier this year we made the discovery that the city was still calculating this benefit off the 1127 return.

Um we notify City Hall and then we recalculated the refunds and balances owed this year for this tax year for 2025.

Um no other changes are going to be made on the section 1127 for tax years before 2025.

Okay, so they're not gonna be penalized for not having I mean for taking the Yeah, we we're only correcting it for this year, we're not um doing a callback for any previous years.

Okay, how is the mistake discovered?

I'm sorry, how was the mistake discovered?

Oh, so it was it was discovered while we were doing internal review of the 1127 way over 4.

Got it.

Okay.

Um what what's the exact amount of the lost revenue as a result?

Do you know?

Um it averages just about like 10 to 12 million dollars a year.

It's different per year.

Okay, and then does DOF or OMB have any plans?

No, you already answered that part.

So um who is responsible now for the administration of the 1127 waiver?

Um that still remains Department of Finance.

Yeah, DOF is the primary administrator of the 1127 waiver.

Okay, and how many employees are currently under 1127?

Um, right now I think it's just about 40,000.

40,000.

Okay.

Perfect.

Um, and then the business tax refunds.

Uh DOF has been processing refunds for the general corporation tax and unincorporated business tax since the beginning of FY26, with some of these refunds occurring back to FY year 25.

Um, does DOF expect to continue issuing refunds for both sets of business taxes through the end of the fiscal year and into the next fiscal year?

If so, how much does DOF anticipate issuing in refunds for both taxes by the end of the fiscal year 26?

Um, so yes, um, we do expect to continue issuing refunds for both fiscal years 26 and 25 for many businesses is not actually that unusual to have pending refund requests, especially if tax filers are asking for an amendment or an extension or things like that.

Um, some of the taxpayers also may be under you know DOF audit, uh and we might not be issuing the tax um refund the refund until that is resolved.

Um, and so the um latest business collection tax system right now report shows that we have about 304 refunds that could potentially be issued by the end of this year, again, potential because it's really depending on timing.

Um, but these refunds total about 81 million dollars total.

Okay.

Um, and then moving on to the block by block housing plan and assessments.

Um, the administration's block by block housing plan says DOF recognized that 2019 changes to rent stabilization laws changed the economics of rent stabilized properties.

So in 2016, it made changes to the capitalization rates used in their valuation, reducing the property taxes of 15,000 properties by 1.3%.

So why did it take uh so long for DOF to reflect the economics of these buildings changed?

And the change, so because the change to the law was made in 27 2019.

So just wondering uh, you know, why why it why the gap?

Yeah, um, so DOF does share the concern um over properly valuing um these mostly rent regulated units.

Um so yes, the um laws did change in 2019, um, but the market factors that influences take a little bit of time to be reflected, um, and our valuations need to reflect actual changes rather than projections, right?

So that's a little bit of that.

Um, the uh assessment process also has a built-in um lag a little bit to give property owners sufficient time to provide their required documents, and so the US valuations uh as an example for FY27 that we used, these uh income and expense reports for um this uh FY27 were actually for the calendar year 2024, which we actually received in 25, right?

So it does take a little bit of time.

So there's a lag in the reporting system, and there is a little bit of uh market factors we have to sort of uh encapsulate.

Um but with that said, for the fiscal year 27 assessment, we did actually make a few changes.

Um one of those changes was to increase the capitalization rate by 50 basis points.

Um, and this higher capitalization rate just reduces the market value of the building.

I'm happy to have our first deputy commissioner add any additional um notes uh if there's any.

Um, no additional notes and unless you have further questions, Chair.

Um, just uh continue just a two more sort of follow-up questions.

So uh changes to market values are are phased in over five years for most rental buildings, which implies the 1.3 reduction in taxes this year will grow over to the next several several years.

So can you provide us with um how how more relief these buildings will get in future years because of these changes?

Sure.

So um just to just to kind of you know rehash the um higher capitalization rate that we utilize for this year's um role.

Um, you know, the rent regulated buildings had their market value reduced by 3.3% on average, uh and the taxes reduced by about 1.3%.

Um so the rent regulated buildings are a top priority for this administration, and we're gonna continue to evaluate um the evaluation methodologies that are used to ensure that all of these buildings are taxed fairly.

Um but you know, there are a lot of other factors that go into that calculation.

Um, and so I can't really say with certainty what percentage or what dollar amount you know will be attributed to this change in the future, but we're going to continue working on this.

We're going to ensure that the tax assessments are accurate and reflect the values to the best of our ability.

And we'll copy, you know, and we'll properly um manage and closely monitor um this sector of the rental market, you know, as the year goes.

Okay.

Um, and then one last area before I pass it off to colleagues is decline in class A office parcels on FY27 final role.

Uh so the final assessment role shows a roughly 4% decline in the number of class A office parcels, creating a loss of a little more than 7 million square feet of class A office space, which results in a 1.5% decrease in taxable assessed value for this property class.

And these declines are outpacing, the declines outpace declines seen in the Class B office category, a class of office space that has been particularly well suited for office to residential conversions over the last couple years.

Um so as we continue to see a flight to quality in the office market in Manhattan, does the reduction in class A office size, uh office space, sorry, reflect a new trend in the office to residential conversion pool?

Um I think it might be a little bit difficult to predict.

Like we can't really presume some of these trends based on sort of like one year's worth of data.

Um, and um across all these sort of you know, building categories, fewer than half of the conversions were actually to residential use.

Um most of these conversions were into other tax, you know, class four uses like retail, hotel warehouses, whatever might be.

Of the 30 office buildings that we do know that were converted to uh residential, only three were in the class A office buildings.

Three?

Yeah, only three were actually in the Class A office buildings of the 30 office buildings that we do know were converted to residential.

Okay, and so how much more square footage do you expect class A office space to lose in future assessment roles and how does this adjust to uh make up adjust the makeup of what each property tax class may uh pays of the levy each year?

Um so it is you know a little bit difficult to speculate um based on just one year.

Um, we'll continue to monitor um this um this market.

Um the overall market value of you know tax class four property has been growing over the last couple years.

So the loss of office buildings um that occurred, we don't really think there'll be a huge impact.

The impact will probably be minimal, uh minimal um to the class shares.

So um, but either way, we'll continue to monitor the conversions.

Okay, perfect.

Um, so I'm gonna pass it off to our deputy speaker, followed by the majority whip.

Hello.

Hi, Commissioner.

Um, I just want to follow up really quickly on Chair Lee's question about property taxes.

So I know a lot of it requires state action, but the mayor and the OMB director after the prelim budget briefing committed to submitting something to Albany?

Like when we've asked Albany, they say that it's the city that has to make recommendations and like literally out of speaker Hasty's mouth.

So has the administration made any formal submissions to the state regarding property taxes?

And if so, like status, anything you can add to that?

Yes.

So I would say that property tax reform does remain a priority for the administration and the mayor, highlighting again some of the inequities in our property tax system.

Uh I believe it was a priority at the onset of the year, but as we got through the budget process when we had to close a historic 12 billion dollar budget gap, a lot of discussions that happened in Albany shifted towards that.

Um we are uh constantly in the process of reviewing property tax reform and some of the proposals that we have to go through and building off of the tax commission's recommendations.

Um but to formally say we have not submitted.

Okay, great.

You haven't submitted.

I would love for you all to like re-prioritize this because as you know, they're gonna go home.

So you have to try again for our next session.

Um, okay.

Um moving to questions about racial equity.

So uh your agency's uh racial equity plan commits to ensuring that 100% of Department of Finance services become more in quotes if easily accessible and readily available to New Yorkers, particularly in historically underserved communities by the end of 2026.

How is your agency measuring whether that goal is actually being achieved and what benchmarks are currently being used to track progress?

And are there any budget implications?

Um, so um the Department of Finance is moving towards efforts to do outreach.

Um we're focusing a lot on our mayor's office of deep depth.

Um we're appreciative of core's recommendations and reviewing what steps um that we as an agency um have to take to better alignment.

Yes, your agency submitted this.

Yeah.

So again, I'll have um our CFO James, if you want to maybe um go a little bit.

So we just want to understand like how you all are tracking the progress set by the goal that you guys put forward.

So we're still working with the committee because the report has not been finalized yet.

I suppose we finalized like literally in a couple of weeks.

So and then you guys have a goal to be a hundred percent by 2026.

So we do have a community outreach program.

We do have um initiatives already that's in place for tracking.

We will once the once the report is completely final, we'll be able to work with the deep depth group that was just created.

It's still being established, and some of the other outreach opportunities that we have to meet the goals that we've put in the plan.

Okay.

Your plan also referenced expanding the use of technology to improve customer service.

How is your agency ensuring that increased reliance on digital systems do not unintentionally create additional barriers for seniors and residents with limited digital literacy or New Yorkers with limited internet access?

So I would say that for all of our systems, we ensure that all New Yorkers are able to reach our services, especially at our business centers.

Our business centers are a core piece of connectivity with the community and all of our business centers, we ensure that we provide things like language access services, services for the hearing impaired, vision impaired, and so we are actively ensuring that all of our services are going to be met by those in need.

Are primarily offline, and so we're working to improve that across the board and have more opportunities for people who might not have access to technology to be able to apply and get these benefits.

Okay, your plan also referenced identifying barriers to access and underserved communities.

What barriers has the agency identified so far, and what policy or operational changes have been implemented in response?

So I could I I could answer that a little bit.

Information equity is a really big thing.

If a person receives their NLPV, their notice of property value is really difficult to understand.

And for even myself, when I bought my first home, I looked at the thing, I didn't really know what it said, right?

And so one of the core priorities that I have right now is in all of our uh information, whether it's through mailings or our website, that we're properly informing and bettering the equity of information so that people are able to better understand what their situation is, what opportunities they have, or what other pathways they might have in order to absolve any of the situations or be in a better position, you know, accessing you know abatement programs and whatever it might be.

So I would say over the next year, I'm hoping to improve upon that so that our information equity outwards to communities who don't typically have that access are going to be in a better position.

Thank you.

Um, so the agency acknowledges the historic impacts of redlining and inequitable property assessment practices.

How is your agency incorporating that historical context into current assessment policies, outreach efforts, and homeowner protections?

Okay, so I'll um pass it to our uh first deputy in a second, but um our assessments, you know, we utilize a very specific formula and we look at properties in a very specific area in order to determine our assessments.

So for a class one properties, we'll look at sales and comparable areas to determine what their market value is.

From there, we calculate the assessed value, uh, based upon the assessment ratio target, and then apply the caps.

So it is a very sort of formal Laic way that we do all of our assessments, um, whether you live in Southeast Queens or Northeast Queens, right?

So the formula is the same in that it's all sales-based.

Um, for our co-op and condo market, again, that is in our class two, which goes back to reform a little bit, and that we have to utilize comparable uh rents and utilize their income and expense and information to determine um what their uh market rate and their sense values are.

Um, but you know, we have a you know fairly consistent valuation methodology across the board.

Um, whether you live in Queens or Brooklyn, I'll let our first deputy maybe um expand a little bit on our methodology.

Well, uh I would like to just emphasize what the commissioner was saying that property tax reforms really a key component here because while we have the same methodology, for example, for assessing class one homes throughout the city, the caps that limit how quickly uh a home can have its assess value increase have a disproportionate impact on neighborhoods that are um have not been gentrifying.

So those neighborhoods have um assessment ratios that are relatively high, and so they have higher effective tax rates compared to neighborhoods that have been gentrifying, they have the values have been going up, but because of the caps, their values have not been keeping pace.

So that's why we think the conversation about property tax reform is so important, and that's why it's so important for us to do a comprehensive review and to get the um property tax reform right before we propose something formally to the legislature.

Okay, last question.

Um, I passed a bill requiring notifications when deeds or mortgages are recorded against um someone's property in your racial equity plan.

You included a long-term goal of increasing participation in the notice of recorded document program to protect homeowners from deed fraud.

Um given the prevalence of deed theft.

Obviously, this administration takes that seriously and concerns the communities of color and among elderly homeowners.

What additional protections or outreach initiatives is the Department of Finance considering beyond the current program?

I just wanted to understand how that notice differs from the bill that I passed if it's the same thing, if it's something different, um, just wanted to understand.

Um I'm happy to look at the bill one more time just to see if there's any differences.

But I would say one of the key components of the theft uh prevention office is to look at a lot of these linkages, right?

How are properties being recorded?

Um, uh, what happens during that process, what legislative uh changes need to be made in order to pause these recordings if we think that there is some sort of fraud going on?

Um, and how do we improve upon the processes internally working with investigations in the sheriff's office, plus other divisions within the department of finance?

Um I have to look at the bill that you are proposing one more time to see if there's something that we can include, but the recording of these is something that we are um you know highly.

Last year when we passed all our bills, to make sure that package of bills that passed through departments, not department, but goes to your department passed through the finance division last year.

Then I'm happy to take a look at the legislation.

Okay, majority with Hanks, followed by uh Narcis.

Thank you, Chair.

What's up?

Hello.

Did you miss us?

I did.

Okay, always.

So true.

So did we talk about lien sale cancellation a little bit?

Okay, I'm not.

I'm gonna ask it anyway.

Uh the administration uh canceled lien sale this year, pending a six-month review and potential reform to how the city enforces property taxes and water bills.

Can you provide a timeline of when we can expect to hear what the new tax enforcement um would look like?

Um so the mayor has uh made it clear that this administration's priority is to stabilize and protect housing and to minimize displacement.

Um we are taking this commitment seriously as we consider how to enforce the collection of outstanding property taxes.

Um while making sure that we're holding accountable for those individuals to make sure they're paying and doing everything that we can to you know address and reach out to those um homeowners that are at risk, you know, ahead of a lien sale.

Um right now we are undergoing a comprehensive review.

It is a six-month review on the current lien sale outreach and sale process as a whole in order to evaluate how to um how essentially like how it's enforcement could look like in this new era.

Um, it's a six-month review that ends this summer, and we're looking forward to discussions with the council and other partners as we move forward.

Um, I will say that uh with the reform package that um passed earlier this year, um, we're ready to work with the council on the creation of the land bank, and we're getting prepared to put in our nominees for the working group for this new land bank board, which I believe is due on July 28.

Let's hope that that's a five-borough uh task force.

I hope so too.

Yeah, me too.

So has this pause impacted activities of the current tax lien trusts?

Um, for the current tax lien, no.

Um, the current tax lien in the current liens in the trust right now are subject to the previous contracts, and the authority has not been impacted by the pause in the lien sale for this year.

But with that said, we're reviewing the entire you know enforcement ecosystem right now, including previously sold liens as part of our review.

So that leads me to my next question.

So with the postponement, do you believe that we'll make up that revenue shortfall next year?

We as an administration really need time to ensure that we're enforcing these taxes, property charges and water bills in an equitable and you know sustainable way that's aligned with the mayor's vision.

Generally, change in behavior from like taxpayers are due to enforcement, and it takes time to show up in our collections data.

But we'll monitor the situation and keep working with the budget office and the city council throughout the process and keep everyone abreast of any changes in valuation that we might see.

Thank you.

So I'm gonna move on to operation padlock to protect.

So operation padlock to protect was an initiative during the previous administration to lock up illegal marijuana shops on a large scale.

Will the new administration continue this operation or will it be altering its approach to illegal marijuana stores?

Well, the city is committed right now to continuing the enforcement on unlicensed cannabis sales, and this is you know in order to support the legal industry's growth and to ensure that we're fighting against dangerous products that are sold in our communities.

Um, relating to all judiciary and civil law.

We are undergoing a review of the operations across the entire sheriff's office and our new sheriff, Sheriff Raymond, and we'll be reassessing sort of steps as we go forward.

Thank you so much.

It's good to see you.

Good to see you too.

Thank you, Chair.

Awesome.

Uh Councilmember Narcy is followed by Wong.

Thank you, Chair Lee, and thank you, Commissioner Lee.

And I'm happy to see you.

But one thing I'm going to tell you honestly, I miss you because I cannot come and bother you all the time.

You can still bother the vision.

It's no problem.

To tell you my vision.

So Nathan got it.

So in the preliminary plan, uh DOF received the new position to create the Office of the Death Prevention.

Can you please provide an update on how many positions have you fulfilled so far in the new office?

What specific work will be done with other city agencies?

And is there any need to increase the size of this office or is five position enough?

Um so far.

So it's for five positions within the Office of the Death Prevention that sits at the Department of Finance.

We have only filled one position so far, which is the director, Peter White.

We are in the midst of appointing the D theft Ombudsperson, so that should be coming soon.

And we'll be posting shortly for two more positions, the deputy director, which is pending, as well as a community coordinator.

In terms of the work of the Office of D-Theft, the office will primarily serve as a liaison across our agency, across all our divisions and working with uh enforcement entities and advocacy and legal groups as well as other agencies to tie together a lot of the a lot of the incoming that we have related to the theft prevention.

Some of the other agencies that we do currently, or we have already reached out to as part of this office has been HBD, DIFTA, the mayor's office of mass engagement, as well as beginning the stages to forge relationships and alliances with the district attorneys offices across the five boroughs as well as the state attorney general.

Your last question was if it's enough, right?

It was enough.

So right now we are budgeted for five.

We're in the process of onboarding an additional three.

Um we're going to keep working within our agency.

Uh a lot of the work that we're doing for this office is really uplifting it from internal, utilizing all the resources that we have at DOF in our land records, Office of Taxpayer Advocate, and across the board to work within Department of Finance to help out with it.

If we do feel that there is an additional need, we're happy to get to that conclusion and reach out to the budget office, should there be a need to do so.

Thank you.

And when a homeowner believes the assessment is wrong, what can it do?

Especially the seniors.

So is kind of like do they have the staff in there to help them out to handle the situation?

Yeah, so there is a full process for individuals once they receive their notice of property value to us to contest any market value assessed value.

I'll let our first deputy commissioner kind of walk us through that process.

Yes.

So all property owners receive a notice of property value in January of each year.

That is at the same time we issue the tentative role.

And property owners can use that information to either come to us for what we call clerical errors or can appeal to the tax commission if they disagree with their valuation.

With regard to how fast that's the process.

I'm sorry?

How fast?

It's just like something that takes long spatial.

We're talking about the seniors that complain.

Sometimes we try to help in my office, but sometimes I end up in your office.

So I want to know how fast they can get a result.

I'll have to get back to you with um how quickly we turn around the clerical errors, but we will we will get back to you on that.

Okay.

You know, I heard my uh um deputy uh speaker was talking about the DTEF, right?

Homeowner has specifically the seniors.

What role does finance play in flagging like suspicious ownership transfer?

And is it enough?

What do you what do you do from your office, like if you realize it's a suspicious transfer?

Um so statutorily um right now we don't have an ability to, if a person is recording a deed, um if they are meeting all the um legal requirements, then they um we actually can't prevent that from happening.

This is one of the um legislative fixes that we're hoping to see um in the state level to give us a little bit more authority in those cases.

Thank you.

Um we share one more time.

I'm sorry, we we also urge property owners to sign up for our notification program, so that way um they come to us, they give us their um their mailing address or their um email address, and if there's a deed recorded against their property, we will notify them.

And I want to say thank you to you too because you your team been coming to my office to help me out because and thank you for the work you're doing.

But whatever new, I want to know about it because I want to help because Canarsi area happened to be having the highest of foreclosure and deep their following, so I just want to make sure I help out on that one.

Um my time is limited.

If there is a pied a tear surcharge moves ahead, um is finance uh ready to administer it, and what does it expect it to collect from your time?

And how does finance um through I mean treat a senior in a fixed income whose home value has soared on paper, but whose income has not uh moved at all?

So the um we are currently in the implementation implementation stages of the Peter Terror surcharge, and we are confident that we will um we'll be able to meet the um revenue um target of 500 million dollars as a part uh that was included as part of the executive plan.

Um, sorry, your second part of that question was what do you do?

How you move like you're talking about the last one I'm interested in the income whose home value soared, but now the income is fixed.

They don't have no budget increase.

So, how you work with that?

Yeah, so just to outline the contours of the program.

Um right now, the program is specifically designed so that for class one properties, um, those at a value between five and fifteen million, um, we'll see a surcharge rate of about 0.8% for 15 to 25 million and 1.05 and 25 million plus on their um class one market value.

Um we receive a 1.3% surcharge.

Um for those who are in co-ops and condos, um, we have a similar sort of structure of one to three at 4%, 3 to 5 at 5.25, and 5 million at 6.5.

We don't necessarily directly look at personal income.

Our first deputy commissioner is going to oversee the implementation phases of the Peter Tear tax.

I'm happy to have him maybe elaborate on some of the implementation that we have to do and the case of this.

Yes, so the two other points that I want to make is first just to emphasize the nature of the Pierre Tear surcharge.

So this is on people who own two or more homes.

Yes.

So second home.

Right, second home.

So if it's someone and they are cash poor and their home has soared in value, we understand that we do want to make sure people understand that it would need to be their second home where they are now the resident.

The other point that I would like to make on this is that we do offer payment plans.

So if we have someone in that situation and they have a surcharge and they are having difficulty paying it, we can offer a payment plan to them.

But at Pierre Tier, but regular seniors, I want y'all to pay attention to that because a lot of them having difficulty holding their home.

And if there's anything, that flag, if it's in my district, I want to know because I want to help.

We're happy if there if there's any instances or that are coming up that you see where we have secondary homeowners, yeah, um, in this situation, we're happy to work with them on any um sort of programs that we might have and assist in any way.

Um, so just feel free to reach out to our office.

Thank you, Mr.

Commissioner.

You can still bother him.

You can still go bother him.

Um okay.

Uh council member wrongfell right brewer.

Thank you, Chair.

Um Commissioner, um, I have two two questions.

One regarding the trash bin reimbursement and notice, and another regarding the co-op and condo abatement compliance.

Uh, my first question is that uh small property owners had to comply with the official bin rule in June 2026, which was later extended to after Labor Day.

Now, some star recipients were eligible for reimbursement support, but uh my office would get phone calls that many of them are still waiting for these reimbursements.

So, my question is uh how many Queens homeowners actually received the uh that relief and uh uh was their uh outreach strong enough because it seemed to me that uh uh the people don't know about there's still people don't know about this reimbursement program, and can we extend this past Labor Day?

Please answer that.

So I'll have to get back to you on the exact number.

Okay, I'll have to provide that.

Um we have extended the program to September 7th, September 8th after holiday.

So we have extended the program.

Um we're working closely with the sanitation department, um, but September 8th is the new deadline, and so we have extended it as per your advocacy though.

Thank you for letting us know.

Okay, thank you.

My second question is the co-op and condo abatement.

The executive plan assumes a baseline of 13 million annually from the cooperative condo condominium abatement compliance revenue.

Now, how much of that is like true anti-fraud enforcement, and how much comes from more aggressive compliance actions against ordinary property owners?

So I would say it's um sort of neither of the two.

Um, what we did was we went through the qualifications and we went through um the list, and we noticed that uh several of the population um wouldn't actually qualify for it.

Um, and so we sent out those notices to those homeowners.

There is an opportunity for them to uh then prove their compliance, and we're happy to then reinstate them into the program.

But it is because we found a certain subset of the population that we felt that they actually didn't qualify, and we want to make sure that we're providing this benefit to the people that actually qualify.

Okay, thank you.

I think I have time for the squeeze one more question.

The peer tier collection, the executive plan books 500 million from this uh peer-to-tier tax.

Um, what is your enforcement and compliance plan, especially for properties uh held through LLCs or trusts?

So the Pierre-Tear surcharge right now.

Um we have to we are in the process of promulgating a lot of those rules.

Um the legislation does provide us a wide range of uh enforcement actions that we can utilize.

So as we get towards the rulemaking process, we're going to um develop a lot of those enforcement actions a little bit more closely.

Um, again, our first deputy commissioner is overseeing the liens, uh, the Peter Tear surcharge implementation process.

Um, if there's anything that I've missed.

Uh I would just add that the surcharge will be appearing on the property tax bills of the homeowners who are subject.

We think that alone is going to drive voluntary compliance.

Okay, thank you.

Thank you, Chair.

Thanks, Councilman.

Thank you.

Good luck.

Good luck with that.

Thank you.

I know them all.

They put their uncle, the brother, the sister in there pretty regularly.

I know most of the buildings.

Um, I have a question about screen.

First of all, thank you to Rita Jen, who comes to our office often and helps with that issue, as well as other staff.

So screw obviously, thank you to the state 75,000 up from 50.

So, how it goes to the council, goes to you.

How is that going to be implemented?

How are people going to know about it, etc.?

On the screen injury increase, yeah.

Um, so I'll actually refer to City Hall and OMB on that action.

Um we are going to um be monitoring it, but this is a budget largely a budget action, and so we'll have to defer a little bit to one B.

Okay, so in other words, one you won't have anything to it until you actually have to implement it.

Well, um, yeah, well, local law is required for the implementation.

I know that goes to council, I know.

But I'm just thinking in the end, it's your you're the one that does it.

Yes, um, so implementation wise, yes.

Um, but we're again going to look as how long that's gonna take or in terms of implementation.

I mean, the implementation.

Well, anxious, very anxious, they love it.

The internal implementation uh can sort of you know get back to you on what that'll entail.

Um we already run the program, so I can't imagine it'll be that much more of a change.

Um, so I'm less worried about the implementation.

Um, it's really a matter of uh local law uh at adoption, and so once uh a decision is made, um we will simply go ahead and administer it.

And I'm pretty confident that we'll be able to administer it very quickly.

I'm glad you talked about the land bank.

Thank you.

That was my bill.

How long do you think it's gonna take to put the committee together?

Obviously, it feeds off of the um individuals who are uh not paying their taxes, etc.

In other words, it has to do with liens and figuring out how to deal with positive so people don't lose their homes, etc.

Sort of alternatives to um people losing their homes.

But I just what's the timing on that?

So we're going through the um reform process internally um with City Hall about what lien sale could look like into the future.

Um in terms of the land bank legislation.

We are preparing our uh nominees for the working group.

Um the deadline should be July 28th, and we're happy to work immediately thereafter um to formulate the working group, promulgate the um the rules related to um the uh land banks submitted to the state.

Uh I can't really give a timeline as per se, um, because we don't know what how long that process would take.

Just the resolution of the board alone might take a few.

Um, but we're happy to be a constant partner with the city council um as we go through the bylaw generation process, the application process with the state, and then you know the process of implementation as we get to future iterations of a new and improved lien sale.

Okay.

I was happy to hear 573 as a possible collection because in the past it was often nothing.

I couldn't get anywhere having worked with IBO, gotten a report that said two and a half billion dollars was just sitting there.

So, my question is uh I think you were use the word amnesty, or maybe you said we're not gonna do amnesty.

I wanted to understand if that is possible, and then just going forward, even though hopefully you'll collect the 573.

What are the ideas?

Are you continuing to use collection agencies?

Are they do they come through with what they promise?

How are we gonna keep?

I mean, there's a guy in my area, he puts up something I swear on every single lamppost, right?

And it's really hard to get off.

You can't get it off.

He shouldn't be doing that, and he should be fined and he should pay you fines, that kind of thing.

Um so we did do the 30 day review internally just to see if we could improve any uh processes so that we can better collect.

Um one of those things that we have identified is that um most of the the majority of ECB collections are most responsive when we're able to reach out to them directly uh within the first year.

So uh one of the priorities for us is for our account executive unit to do that.

Yeah, to first try to try to uh increase the first year outreach as much as possible.

Um we do still utilize the collection agencies, uh, and that's you know primarily through mail and phone calls, but it's important that for us internally we start and try to target the first year.

Um with the uncollected, uncollectible um population.

Um we are right now trying to re-review it.

Um there are a couple of data strategies that we're trying to implement.

The 744 that you talked about just to see if there are any additional information coming in that would then allow us to you know release restart enforcement on them.

So when you did the great work with Amazon, the 10 million, was that something that had been sitting around for a while, or was that something that was like the first year type of situation?

So that has been a violation that's been sitting around for a while, and that was the largest ECB single ECB um violation um source.

Um so they were the largest.

Um and in that instance we you know directly reached out to Amazon and and their you know fully wholly owned subsidiary uh Amazon Logistics, and then did the one-to-one, you know, so sort of like how you do with like any other constituent actually.

Right.

Um we did one-to-one one-on-one review of their idoling violations.

We connected it to any questions they might have, any challenges they might have, and work them, you know, through the entire process, and that was really an example of how we can work sort of in tandem when we think some of the other other carriers, so quite a few of them have similar uh violations that could be handled in the same way.

I know the project, I guess it's under parking violations, but the issue is you know you I'm making this up, you get, you know, a hundred uh violations, you can put them in a pot and you only pay a percentage.

I don't think that's terrible.

Some people do, but the point is are they paying it?

I mean it's one thing to get a discount, it's another thing not to even pay the discount.

Um so I do have the list of the um highest, the next highest um violations, um, by category.

Uh I don't have them with me right now, but I'm happy to sort of you know reconnect.

I'd love to hear that because I do think they need to pay.

Some of them are getting discounts, it's not like they're paying their full share.

Yeah, so right now, the strategies that we utilize for Amazon, we're just now going down the list, right?

We're going down the list right number two, three, four, five, six, just focusing on them right now to do that one-on-one personality.

I would like to see that list.

Yeah, so we're happy to um talk to you more about that uh and the strategies that we utilizing.

Thank you.

And then just finally with the sheriff.

I heard earlier, I worked a lot close 93 with the previous sheriff of the undoc un illegal cannabis.

What are some other roles?

I know you're working out the office issues.

I know them extremely well.

Um, that the sheriff might play vis-a-vis the marshals or on his own, or you know, are there different roles that that person might play from what you can see?

Um, the sheriff.

No, a lot of people don't know this, but the sheriff's office and all about the sheriff's office, much more than I wanted to do.

They actually do quite uh quite a lot.

And it's been uh something that I've been sort of learning more and more every single day.

They execute child support payments, they execute all civil law judgments.

Correct.

You have to execute evictions when necessary.

Yes.

Um right now, uh Sheriff Raymond is currently in his second week, and we are working together to fully conceptualize history.

And do they have vacancies?

Do you know?

Vacancies, vacancies.

There are vacancies.

Um CFO, James?

Oh, I have that too.

I think there are.

I think I know the number, but go ahead.

Um, they're currently in the sheriffs.

Oh, total.

I'm sorry, and they'm gonna let the CFO.

Total vacancy for the entire division is fifty-two.

Our deputy commissioners.

Deputy Sheriffs.

Right.

And how many people were there?

What's the full head count if it's fully operational?

320.

320?

Okay.

That's quite a few vacancies.

But active head count is two sixty.

Thank you.

Thank you.

Just one last question on the Peditary.

So uh now that we have the true outline of the new tax, can you tell us how much money that you think it'll raise next year?

Um we're confident they will uh meet the $500 million target as outlined in the executive budget.

Okay, more or less, but right around five.

We're confident on the $500 million.

Okay.

Um and how many properties will this impact?

Um, as we it's gonna impact about 8,000 properties.

Um so we're we're confident in our analysis, um, but with that said, we're going to start the engagement process with the owners to verify their residences and make any other adjustments as per the legislation.

Um our models right now do account for some of these, but you know, there might be some changes here and there as we go through the process.

Okay, perfect.

And then just lastly about the section eleven twenty-seven returns.

Um so when you sent out the letters to folks that were impacted, um, was it clearly outlined and explained uh what this letter was and how the amounts were calculated only because I think we've been hearing feedback from folks that it just didn't seem clear and they weren't sure how the amounts were calculated.

Um I can go back to you on exactly the you know whether or not the exact calculations were uh indicated, but we have uh reached out through uh multiple um ways uh to ensure that individuals do know that this was a errant calculation.

Um that it was an inerrant benefit um for the past couple years.

Uh we have notified it through our website um and our contestation um process um and our calculation process, sorry.

Um and uh we provide letters and we also work closely with OLR to uh address it with their uh impacted labor unions.

Um, happy to have our first deputy commissioner if I missed any specifics.

Well, I would just say that if um anyone feels the leather was unclear or they want more information, um we manage this through our um business tax and collection system, and there's a um it provides a platform for people to contact us directly.

There's a a way for folks to get back to you.

Okay.

Yes, there is.

Okay.

Um I think that's it.

All right, yeah, okay.

So we are done with this portion with Department of Finance.

Thank you, Commissioner Lee, for being here with us and for your team.

Thank you so much for having us.

Thank you.

Okay, we're gonna move right into IBO.

Okay.

Hello.

Oh, sorry.

Okay.

So good afternoon and welcome to the final portion of today's last day of our executive budget hearings.

I'm Council Member Linda Lee.

And welcome to our director of what?

Oh, I don't know what happened.

Okay.

Um, so welcome to our to Director Louisa Chaffee and your team, and thank you all for joining us today to answer questions.

Um as a reminder, the last time I'll be saying this, we're having our public testimony all day tomorrow, starting at nine thirty AM.

So please make sure to sign up for the public testimony portion.

We'll be here all day tomorrow to make sure we listen to the feedback from the community and uh constituents.

So, uh, and with that, I will turn over to Brian Sarfo to uh swear in the witnesses.

Good afternoon.

Do you affirm to tell the truth the whole truth and nothing but the truth before this committee and to respond honestly to council member questions?

Director Chaffee?

I do.

Officer Subramani.

I do.

And Officer Parker.

Yes, I do.

Okay.

Uh, good afternoon.

Um, Council Finance Committee Chair Lee and members of the city council.

I'm Louisa Chafee, Director of the Independent Budget Office, and with me today are Sarah Parker and Sarita Subramanian, IBO's senior research and strategy officers.

And do you all hear the echo?

Okay, it's just me.

I think this room is just doesn't have the best acoustics.

No problem.

I just um, so thank you so much for the opportunity to testify on Mayor Zoram Kwame Mandami's fiscal year twenty twenty-seven executive budget.

This testimony is a condensed version of our submitted testimony.

The late state budget presented challenges to New York City, but the funding included in the state budget aligns quite closely with the administration's projective projections for the current fiscal year and for twenty twenty-seven.

For twenty twenty-seven, IBO's tax revenue forecast also aligns closely with the administration's projections.

Within the total a hundred and twenty-four point seven billion dollar budget, IBO projects a gap of $1.1 billion, a gap that can easily be addressed during the budget adoption process.

On the last day of session, a two-year extension of the deadline to implement the state bud state class size law was passed.

Um, including or thereafter, it became clear that there would be bonuses for up to 2,450 teachers whose classes exceeded the class size caps, which IBO estimates will require an additional $21 million.

Meanwhile, IBO notes that the administration's assumptions that it can achieve $149 million in annual savings in the area of due process cases also remains untested.

New York City provides means tested child care vouchers.

Generally, services are accessed through a portal.

Currently, close to $110,000 children receive such vouchers, and there are over $25,000 children on the wait list because the portal has been closed since June of 2025.

The executive budget contains an unexpected fiscal shortfall as funding drops from $1.8 billion in 2026 to $818 million annually starting in 2028.

IBO estimates the city needs an additional $78 million in 2027, rising to almost $1 billion annually in 2028 to address this shortfall.

And if the portal were to be reopened or the wait list addressed, even more funds would be needed.

The state did not provide any funds for the city FEPS program, which but instead set up its own separate housing voucher access program, which will yield about $33 million in funding for the city and support approximately $900 to $1,100 vouchers.

This is a year-to-year program.

IBO does not expect the administration to reduce City FEPS funding as a result of this new state program.

And as a reminder, City of FEPS is budgeted at $2 billion, and the executive budget reflects a plan to achieve $235 million annually in unspecified administrative streamlining.

Next on to city pensions, IBO projects, based on estimates from the Chief City Chief Actuary, that the state's new tier 6 enhancements will require additional funding above that that is in the executive budget, $41 million in 2027, growing to $69 million in 2030.

Based on the actuary's analysis of a prior proposal, IBO finds that the administration's proposed extending pension liability payments to be consistent with sound practices.

As the amount of revenue will depend on variables such as how are property values calculated, how will the city administer collections, and how will second property owners behave in relationship to the surcharge.

So finally, it is difficult to overstate the pressures and uncertainties weighing on the city during this budget process based on the federal administration's global actions and policies, as well as dramatic cutbacks and key programs.

For example, about $43,500 New Yorkers are at high risk of losing their such supplemental nutrition assistance program, their SNAP benefits in the near term, and the relatively modest increases included in the state and executive budget of millions are likely insufficient to address the rising food insecurity.

As many as 450,000 people statewide, half of them living in New York City, will lose health insurance due to federal changes undercutting the state's essential plan.

Neither the state budget nor the executive budget addressed this health care access loss.

Meanwhile, with the ongoing war in Iran, the resulting economic uncertainties and sharply rising energy costs, the executive budget increases funding for power and energy by $376 million in 2027, rising to $477 million in 2030.

This brings the total citywide budget for building energy costs up to $1.3 billion dollars.

So finally, IBO um again notes that the Mandami administration continues its practice of more accurately reflecting the city's expenses.

Given the challenges ahead, IBO also looks forward to being able to thoroughly analyze the proposals from the Chief Savings officers as well as the work of the Commission on Government Efficiency COGE, the new Charter Revision Commission.

Thank you very much, and we're happy to take your questions.

Great.

Thank you.

And we have been joined by council member Mercedes Narcisse.

Thank you for sticking through to the end.

Okay, so in terms of class size, I know that you had outlined in your testimony, you had mentioned some of the incentives that UFT announced, and how, you know, it it still is a bit difficult to sort of assess the true cost of this, but I know the administration planned 122 million in DOE to meet the 70% compliance next school year.

So do you think that are you in agreement with that number or yes?

Yes, okay.

Um and with the newly extended timeline, does IBO have a new cost estimate to meet 100% class size compliance by 2030?

Uh no, we haven't updated our estimate.

We plan to do that as we have uh when we get new data, but based on our current estimate and the funding in the budget, we do feel that that is in alignment with what we would anticipate.

Okay, perfect.

Um, and then the executive uh plan does include uh the funding for class size bonus payments, which you had mentioned, which is good to see.

But how many um how many?

Wait, actually, we'll move on to the next question.

I'm sorry.

Um moving on to fair fares.

On June 4th, 2026, um IBO released a report reviewing and estimating costs on multiple fair fares expansion scenarios, and we would like to learn more about how IBO reached these estimates, the assumptions used, and the feasibility of some of these scenarios.

So if you could walk us through your analysis and the factors and assumptions that you had considered.

Um so before I turn it to my colleague Sarah, I'd like to thank you for your attention to our Fair Fares report and also point out that on the same day we published a report on free buses uh to address all facets of potential transportation affordability.

That said, uh we are briefing the council, and we also have a webinar coming up on June 16th.

Okay, Sarah.

I'm gonna I'm gonna take that one.

Um, so yeah, so we did um, as you mentioned, estimate five different scenarios, and um two of those uh expanded the discount that's offered to uh eligible um participants, and then three scenarios um expand the eligibility criteria to um the federal poverty line.

So 200%, 300%, and 400% of the federal poverty line.

Uh and so in doing this analysis, we used uh a variety of data based on um current ridership uh trends and usage trends, as well as census data to estimate, particularly for those that the scenarios that would increase eligibility, what would be the expected increased use of transit?

Because uh those individuals uh tend to use tend to commute at higher rates than those that are currently eligible for the program.

And so uh as Louisa mentioned, we have um a lot of details in our report.

We have a briefing um that we're offering.

People can sign up on our website, um, but happy to um answer any more specific questions you might have.

Um I think so the complexity of estimating the cost of expanding fair fares is like you as you mentioned, it's it's tricky because it's related to and linked to client enrollment levels and the transit utilization, which are definitely factors that can make the amounts fluctuate quite a bit.

So um I know you had estimated a range of 19% to 32% for enrollment levels, and then um of eligible people and 19% to 63% for their transit utilization.

So, and you were just mentioned that they tend to utilize transportation more, and so how did you come to that finding?

Um, and as well as the wide range and uh which do you feel are most likely?

Uh yeah, so I, you know, I think we uh wanted to provide a broad range because there are a lot of different um options that are on the table and ideas that people have for expansion.

Uh so IBO doesn't take a position on any one of them, but uh, you know, we do note that we um you know very clearly lay out our assumptions for, for example, take up rates at each of those levels, as well as, you know, like I mentioned, uh, assuming an increased usage.

Um, I do want to note that we all in our report we also note that current usage is relatively low, and you know, largely because uh these uh those that are eligible are less likely to uh commute, and so you know, we take a variety of factors into account, as well as I think importantly, looking at those that are eligible for other MTA fair discount programs, and I know that this is something that on the council is very important, and one of the things that came up several times during throughout the budget hearings was the fact that um it seems like a lot of folks still don't know about this program or if they're eligible or where they can find out more or sign up.

So if one of the things I think that was proposed is putting some marketing money towards this to make sure that people are aware.

Um, and so wanted to know if you if IBO had done any sort of research in terms of like should there be additional funding put towards making sure that folks know about this program and marketing dollars, what would be appropriate amount?

That's a good question.

Um we do note in our report actually we looked at marketing costs relative to other HRA programs, and actually Fair Fairs has one of the larger budgets in terms of marketing.

Um we do also note um, and you mentioned um determining eligibility and some of the challenges in enrolling, and that's something that we also note in our report for those that are not autumn or it's a little bit easier for those that are in access NYC already, um, but there are a lot of reporting requirements for those that enter through the open enrollment process, uh, and so we note that those might be barriers to uh enrolling in the program.

Okay.

Um actually, just based off of what you just said, uh, what would be some natural partnerships that may be able to expand um, you know, eligibility or help folks know about it because we have a lot of municipal workers in the city, we have a lot of even just within our own city employees, I I wonder um, and as well as if they can help spread the word, if there's increased eligibility there, um, or if there is um, you know, a way to use nonprofit organizations and partnerships um to be able to spread the word on that.

Uh well, in terms of um you know, sort of interagency um data sharing, one thing that we thought might be helpful to look at is uh Department of Finance has access to income, I know that's uh a very challenging in terms of data shit from a data sharing perspective, but um that is something that we point to as a potential option that could reduce some of the barriers that people might face.

Okay, great.

We are particularly concerned about the um barriers of navigating access NYC, considering the changes with the reductions in SNAP eligibility and the lack of access to health care, there may be even fewer people using Access MYC and thus more people eligible for fair fares but not using the system, and as Fair Fares is a city tax levy program, and thus it is at the city's discretion how to administer it, there might be other models in the city as to how to distribute such a benefit.

And the example that came to mind is Sarita illuminated was when the Department of Finance did the earned income tax credit and um you know appropriately found the information via state law to inform people that they were eligible for an errant income tax credit.

People in filing their tax returns demonstrate their eligibility for fair fares.

It could be that people would be automatically notified.

Okay, that's a good idea.

Um and then the at the general welfare executive budget hearing, um, DSS Commissioner Dalton explained that um estimating expansion costs was very complicated and that additional overhead funding may be needed depending on enrollment and utilization rates.

So, given how challenging it is to forecast the impact of various program expansions, um, how does IBO advise that the administration should assess the budgetary needs for expansion?

You mean how much money should be put into Access MYC to assist in having Fairfares participants navigate the system?

I believe there was a request for 35 additional headcount to work access NYC and $800,000 for looking at Sarita because she's meant to say yes or no.

Memory serves, those may be the correct numbers.

I think that we would be really happy to talk with you at longer length about how a benefits calculator can be used to utilize technology and assist people and have the important humans do more outreach and less um assessment of paperwork.

Yeah.

Good answer.

Okay, and then just really quickly, this is my last question around uh the block by block, uh, which is the mayor's new housing plan.

Um it outlines several key objectives and tools for addressing the citywide housing shortage.

Uh the report discusses several key agencies, including HPD, DOB, NYCHA, and DCP.

Um so for NYCHA, for example, while the executive capital commitment plan includes 90 million of additional capital funding for section 9 vacant unit readiness, this amount is dwarfed by the additional 500 million for PACT conversions.

Has IBO identified other key capital investment areas that could drive down NYCH's total capital need?

So NITA receives capital funding from the federal government directly, and that's on an annual basis, and that is budgeted separately within NITA's capital budget.

Um so that's separate from what's in the city's capital budget.

But within the city's capital budget, there is funding for the vacant readiness.

Um it's currently budgeted through fiscal year 2028, um, and this is part of a larger, larger bucket of city capital subsidies for public housing, um, which has about 1.2 billion dollars in fiscal year 2026.

Um, 836 million in 2027 and 210 million in 2028.

Um so these funds are for capital work such as asbestos and lead abatement, elevator, boiler, and roof repairs.

Um one thing that we always note is that one of the things with NYCHS capital budget is that it is subject to both the ability to to hire up contractors to get construction projects started, um, and so with any capital budget, there's a certain amount of money that that is budgeted in one year that might be rolled into the next year, and that is quite typical.

Um I'm just gonna pass off to Councilmember Narcis that has a couple questions.

Quickly because we gotta run.

Thank you for being here.

Um, the homeless services budget now tops the migrant crisis peak even as arrivals fail.

What does IBO's analysis say explains it?

Can you explain that?

Public hospitals face federal cuts, right?

And the hundreds of million, while the city clause um back the pension saving.

Um does IBO see H's financial um plan holding up.

Sarita, why don't you speak to the asylum part?

Sure.

So you're, I'm sorry, your question was about the um Department of Homeless Services budget still remaining high despite the asylum seekers.

Yeah, so um that is something we've been tracking really closely and particularly think um tracking the um the daily rate that they are paying for shelter remains relatively high.

Um it was it was even more elevated during the asylum seeker crisis.

Uh there were expectations that that would decline, and I think even in IBO's projections, we had factored that in, and we have not seen the level of decline for that daily rate.

Um, and we're also seeing uh, you know, a large population of older uh of single adults uh and adult families.

That has um really contributed to the elevated costs.

And I believe the second part of your question had to do with the um changes in the federal funding and the impact on health and hospitals.

So uh the independent budget office does not directly receive health and hospitals financials, but we are aware of the city's contributions.

And as I outlined in our testimony, we are very concerned about the soon to be occurring circumstance of up to 450,000 people no longer being eligible for the state's essential plan and uh continuing to need legitimate health care and seeking services, and that this may have a very large impact on H.

And as we flagged, neither the state nor the city added any funding in their budgets for this circumstance.

And I do um agency that you realize that's on the budget, if you have to say right now from the budget plan.

Do you have any agency specifically that you can do that?

That we where we believe that the agency receives additional funding or should receive it.

We're concerned about Department of Corrections not having enough funding.

Right.

Yeah, that's um, um I would also add to what Louisa said we have a federal changes local impacts um report specifically focusing on um H.

And we do get access uh we coordinate with them to get their detailed financial statements so we have that information, um, but you know, we are pretty limited in the um amount of information we have.

But also in that report, we talk about you know there are a couple of different ways that the city um the state could fill that gap.

They could uh provide alternate insurance for individuals or they could expand uh the free clinic options that are available, and we fully recognize that those um are maybe at capacity and would require substantial additional funds, but that is an option that we point out in the report.

Thank you, it's how he's out for us.

Um and just really quickly back going back to block by block.

Um I know that you recently published a report, current state of rent stabilized housing, which provides an overview of the distressed housing stock in New York.

Um, so in your opinion, does the mayor's housing plan sufficiently address the rehabilitation and preservation of distressed housing in the city?

If not, what additional strategies should the city implement?

Uh so we did publish um uh two reports and we also testified to the rent guidelines board.

Um, and I'm gonna ask Sarah to speak to the details.

So specifically, IBO looked at multiple indicators of distress for buildings with rent stabilized apartments in them.

Um we looked at both signs of financial distress, looking at participation and eligibility for the lien sale and also physical distress.

So housing code violations and participation in the HPD alternative enforcement program and emergency repair program.

Um distressed properties are not a monolith, and different properties require different policy tools and interventions, whether they're facing financial distress or physical distress.

But one key takeaway from our analysis is that among rent stabilized apartments, rent stabilized buildings fare equal to or in some cases better than non-stabilized rental buildings across these multiple metrics of distress.

So it's not something specific to rent stabilization.

It is a small subset of housing more specifically citywide.

Okay, thank you for making that distinction.

Um okay, and we have several other questions, but I think we're gonna have to follow up with you guys and look forward to the answers.

And you guys are always super super thorough and helpful in your analysis.

So thank you so much, and thanks for being here with us till the very end.

And with that, I am going to conclude the formal agency budget hearings for the executive 27 budget.

Yay!

Yay.