A new solution to an old problem could prevent foreclosures on at least 10 small churches and temples in the city of Schenectady.
Tax liens sold in Schenectady between 2004 and 2009 included some placed on formerly tax-exempt churches and temples, which were mistakenly told to reapply for tax-exempt status, didn’t comply and then owed taxes they didn’t pay.
Those organizations have since faced the threat of foreclosure by American Tax Funding, a private company that bought the liens from the city.
Previous fixes by the state Legislature and Schenectady City Council had minimized the number of potential foreclosures, but continued efforts have stalled recently in the Assembly, where the chamber balked at fixing issues dating back more than three years.
A way around this procedural roadblock was spearheaded by freshman Assemblyman Phil Steck, D-Colonie. Working in conjunction with Assemblyman Angelo Santabarbara, D-Rotterdam, who represents the city with Steck, and Schenectady County Attorney Chris Gardner, Steck said they crafted legislation that would ensure the continued tax-exempt status of religious nonprofits that are still carrying out their religious mission.
It’s not exactly clear what would happen to the liens owned by ATF, but Gardner said “We believe their value would be discounted considerably.”
He noted the city had previously made efforts to buy the liens at face value and ATF was aware of other situations where liens had effectively been made worthless through actions by the state Legislature.
Last month, Steck introduced the bill in the Assembly and state Sen. Hugh Farley, R-Niskayuna, introduced it in the Senate. According to the bill memorandum, the First Unitarian Society of Schenectady, Hindi Temple and Community Services, Consecration Temple Church of God in Christ and Calvary Baptist Church are just some of the groups that could benefit.
Gardner said the Schenectady religious organizations whose tax liens were sold are in various stages of the foreclosure process. “It puts them in a precarious situation,” he said of the looming threat.
Steck said his legislation will ensure Schenectady’s nonprofit religious organizations are retroactively granted tax-exempt status, which would have made it impossible for tax liens to be placed on them.
“They were clearly tax-exempt,” he said of the initial mistake.
This effort is different from previous attempts to fix the problem because it doesn’t involve allowing a specific organization to file for property tax exemptions. This legislation, Steck said, instead deals with a class of properties that were tax-exempt and extends that status.
The city and county support this effort, according to the bill memorandum.
This is not a new battle for Farley, who has sponsored all the prior local fixes to this problem. Some of the initial fixes were successful, but since 2011, the state Legislature has been unable to move additional fixes because of the holdup in the Assembly.
“This is a new approach,” said Farley spokesman Peter Edman.
He said the list of remaining religious entities in need of help through this proposal includes mostly smaller religious organizations in the city.
As for the proposal’s chances this year, Steck said he has a “positive” feeling. He and Santabarbara met recently with Herman Farrell Jr., D-Manhattan, chairman of the Assembly’s Ways and Means Committee, where the bill is currently awaiting action.
“You can never be sure with these things,” Steck added as a warning, however.
The legislative session ends June 20.