Wasting New Yorkers' Tax Dollars

As a New York City Council member, I know that my constituents pay the highest taxes in the country. That's why it drives me nuts to see bureaucrats waste money. City agencies owe it to the taxpayers to be as careful with their money as they would be with their own.

Recently, I discovered a government program that has wasted millions of tax dollars. But the worst part is that it is about to waste some more.

The program has two parts called "HomeWorks" and "StoreWorks." The idea behind them is to take dilapidated apartment buildings and storefronts that are owned by the government — usually as a result of foreclosure — and put them into private hands.

Of course, there is a simple way to do this. It is called an auction — that is how sellers usually make sure they are getting top dollar for their property.

But that would be way too straightforward for the bureaucrats. Instead, the city gives these properties to builders either for nothing or at nominal cost. The builders fix up the properties and then sell them at an "appraised value."

Every step in this process is wrong. First, builders are guaranteed to make a sizable profit because the renovation costs are always well below the appraised value of the finished product.

I have nothing against business people making a profit, but the problem here is that the builders are selected by the City Housing Department, not through competitive bidding. Programs like this, where the right to make a profit is awarded by the government — not earned in the marketplace — are an invitation to corruption.

Second, the buildings are sold for an "appraised value" that, while higher than the renovation cost, is also much lower than the buildings' true market value — meaning the city loses thousands of dollars on each building. These losses likely exceed $10 million to date.

The final bit of foolishness is that the city gives the new owners of these properties a 15-year exemption from property taxes. That adds up to millions more in foregone tax dollars and leaves other taxpayers to make up the difference.

This might all make sense if these programs were open only to low income families, police officers, or other targeted populations in need of subsidized affordable housing.

In fact, to afford many of the StoreWorks properties in Manhattan, people needed a minimum income of $233,776. In Brooklyn, some properties could only be bought by those who made $189,798 annually.

The sheer irrationality of HomeWorks and StoreWorks was illustrated a few months ago when the city gave away two townhouses in the Brooklyn neighborhood of Boerum Hill. Townhouses in this area routinely sell for an upwards of $1 million — but the city sold them for an "appraised value" of half of that price.

At a City Council hearing on March 6, the City Housing Commissioner said that he would discontinue the HomeWorks and StoreWorks programs next year. But, in the meantime, his agency is still putting properties through the program.

Housing Department bureaucrats should end this wasteful program immediately. That is the least they could do for the taxpayers who pay their salaries.

Mr. Yassky is a council member of New York City who represents the 33rd District in Brooklyn.