NYC Offers $60M for 64 Seized Buildings, 500 Claims Remain

New York City has asked a federal judge to bless a class settlement covering 64 buildings it foreclosed on over municipal arrears and transferred, at no cost, to nonprofit owners under the Third Party Transfer program. The papers landed September 11 in Manhattan federal court as docket entry 535 in Dorce v. City of New York, 1:19-cv-02216 (S.D.N.Y.), an unopposed motion for preliminary approval before Judge Jennifer L. Rochon. The attached proposed order would approve a notice plan and set a hearing on final approval. Nothing is approved yet. We read the docket, not the agreement: the motion is not available through free public access, so we cannot say whether the roughly $60 million reported by amNewYork is a gross fund, a net payment or a valuation.

Why it matters

For the first time, the city is putting cash against buildings it took for tax debt and gave away. That is a price on a risk that owners of distressed small multifamily assets in the outer boroughs have carried as a zero. Equity above the lien had no recovery mechanism once title moved; the settled batch implies it has one now. The nonprofit transferees named as defendants, Neighborhood Restore Housing Development Fund Co. and BSDC Kings Covenant Housing Development Fund Company, are the same class of mission owner still absorbing distressed New York stock, as in the Bed-Stuy portfolio a bankruptcy court steered to a nonprofit this week.

The numbers

The 64 properties come from Round 10, the 2019 batch, the last the program produced. If $60 million is the entire fund, that is about $937,500 per property. Plaintiffs’ counsel put roughly 500 more properties from rounds one through nine outside this deal, close to eight times the number being settled, on a program that ran from 1996 to 2019. That forward exposure, not the $60 million, is the number to model. Yolande Nicholson, plaintiffs’ counsel, framed the principle: “if they violate the Constitution, there’s going to be somebody injured.”

What’s next

Two tracks. In court, preliminary approval, class notice, a fairness hearing and a final ruling all remain, and any can move the terms. In the Council, Int 0657-2026, the SAFER Homes Act, introduced in March 2026 by Housing and Buildings chair Pierina Ana Sanchez, would rewrite the program with a broader distress test and new notice duties. It is a bill, not a law. An owner behind on taxes should watch whether the class notice reaches rounds one through nine. A nonprofit holding a transferred building should watch whether the reform text carries a surplus-equity mechanism, because that omission is exactly what this settlement is paying for. More New York coverage.