Selectmen Worried Tax Lien Auction Will Hurt Some

By: William F. Galvin

Topics: Property taxes , Municipal Finance


HARWICH — The town has taken steps to move forward with its plan to auction tax liens as a means of generating revenue from delinquent payments on property taxes. But selectmen on Monday night expressed concern that the initiative is moving too fast and questioned whether the necessary homework has been done.

The town has scheduled the auction for June 6 and a list of tax titles scheduled to be assigned and transferred can be found in the legal notices of this week's Chronicle. Treasurer/Tax Collector Amy Bullock said public notice of the town's plan to auction the tax titles for unpaid taxes has already been a productive exercise.

The Chronicle published a story on the town's plan to auction properties with tax liens in mid-April, and the treasurer/tax collector's office sent out notification letters to property owners with liens on April 26. Since that time, Bullock said, property owners have come forward and paid $115,893 in back taxes.

But Board of Selectmen Chairman Michael MacAskill said Monday night he has had emails and phone calls from people concerned about the tax lien auction; he wanted to know what homework has been done to protect the elderly and young people who are having trouble paying a mortgage.

“What is the rush to do this so quickly, have we provided enough communication?” MacAskill asked.

This would be the first time the town has conducted one of these auction, Bullock said. Bullock and William Cowin, representing Tallage, LLC, a municipal tax lien investment company from Boston, made a presentation to the selectmen a year ago on how the process works.

Town Administrator Christopher Clark explained this is the means provided under state statutes to address delinquent tax payments. He pointed out 98 percent of property owners pay their taxes, but 2 percent don't make the effort. The decision to conduct the auction rests with the treasurer/tax collector, not the selectmen, he added.

“We've got no desire to put anybody out on the street,” Clark told selectmen Monday night. “Many of these people have secondary homes or use them for summer rentals. We haven't targeted people, but we can guide them through the process and help them through financial stress. It's a way to be sure we collect taxes in the most efficient way possible.”

Selectman Julie Kavanagh expressed concern for the elderly, stating they often do not have a support system and may not understand the notification provided by the town or may not have received notification. “I'm not comfortable with this process at all,” Kavanagh said.

Selectman Angelo LaMantia agreed property owners who are delinquent by only a year should not be placed in the auction. He suggested those three to five years in behind are the ones that do not want to pay.

Selectman Peter Hughes said the 98 percent who are paying their taxes are carrying the 2 percent who are not. He does not like to be “coldhearted,” he added, but there has to be a mechanism for dealing with delinquent taxpayers.

Last month, Bullock said there were 306 parcels with tax liens totaling $5,750,286. Most of that money – $3,191,418 – is from accrued interest. Bullock said on Friday that the number of properties going to auction has been reduced by removing miscellaneous parcels from the list. Miscellaneous parcels which cannot be located on the ground. Those owners who have come forward and made payments or set up a payment plan have also been removed from the list, reducing the number of parcels to be auctioned to 167.

Under state statutes municipalities are allowed to sell tax liens to private investors. After the town identifies the parcel with delinquent taxes that are usually more than a year behind in payments, the town processes the tax lien and it is registered with the Barnstable County Registry of Deeds. The town can then advertise the sale of these tax liens to a private investor. The private investors can examine the liens and determine which ones they will bid on to purchase.

The town then examines the proposals, and at the June 6 auction will choose the best. Bullock said there are two companies so far which have expressed an interest in bidding. Participating companies must register with the town by May 23.

The winning bidder pays the town the total value of the liens they are purchasing. The company then attempts to collect the money owed on the liens, charging 16 percent interest annually, and eventually the company can foreclose, taking ownership on properties with unpaid liens, which they can then sell. Bullock has made it clear the town will get the money owed for each lien purchased.

Clark, citing the 16 percent interest rate, said it is much more cost effective for delinquent owners to either pay off or set up a payment plan to address the lien. He said the town likes to see all of the tax paid, but property owners can go into the treasurer/tax collector's office and set up a payment plan. “You do not need an attorney to do that,” Clark added.

Clark said some times the lien issues are not so straight forward. He's been contacted by two families who have inherited property which remains tied up in probate court. The individual family members do not want to pay the taxes until the matter is resolved in court. There are also a few parcels that are protected under bankruptcy filings.

“We're just trying to get caught up. We have a cash flow that depends heavily on taxes,” Clark said. “We're just trying to clear up the backlog. I did this in the last town I worked in and it had a big benefit.”

With bids due June 6, Bullock has said the town will receive the money before the end of the fiscal year on June 30. Clark has said the town can use the money to fund capital projects and pay down the town's $40 million Other Post-Employment Benefits liability.

Leo Cakounes recommended the issue be placed on an agenda once the new selectmen are elected and the treasurer's office should provide a seminar on tax lien auctions. Cakounes said he does not have a lot of sympathy for people who aren't paying their taxes.

Clark said he would speak to Bullock and set up a presentation, which would include the town's tax and assessing attorney James Coppola. That session would be provided before the auction scheduled for June 6. Clark said, if necessary, the auction could be canceled.