Schenectady probably never should have put a large number of tax-exempt churches, fraternal organizations and other nonprofits on the tax rolls several years ago when they didn’t obey an order by an overly ambitious assessor to re-file for tax-exempt status every year. Admittedly those groups didn’t follow the rules, but the mess that was subsequently created when the tax liens were accidentally sold by the city to a foreclosure-inclined private buyer — was certainly not what city officials had in mind when the campaign began in 2007.
Mayor Gary McCarthy, who wasn’t mayor when the liens were sold but was on the City Council that approved their sale, was rightfully concerned about losing organizations so integral to the city’s social framework, but not so concerned that he was willing to pay any price to buy the liens back from American Tax Funding. Besides, with the city itself holding liens on many of the same properties, the city had some leverage. But the matter was never properly resolved and ATF has been holding the tax-exempts hostage as a negotiating tool.
McCarthy kept his cool and, with the help of the state Legislature, may have trumped the company that bailed Brian Stratton out of the financial mess he inherited as mayor by buying tens of millions worth of liens. On Gov. Andrew Cuomo’s desk sits a bill that would essentially void the liens on nonprofits that ATF bought from the city. He should sign it, provided the city agrees to make ATF whole for what it paid.
McCarthy says the city will, but not with any interest; so it remains to be seen how ATF will react. Ideally, the city would use the new law as a bargaining chip of its own to restart talks on settling the other liens as well. The city could use the cash, and going to court is never cheap.