Baltimore: Tax sale proceeds amid fairness concerns

Baltimore's annual sale of rights to collect back property taxes proceeded as usual Monday despite pending city legislation that would keep homes from being included in the process over unpaid water bills and Mayor Sheila Dixon's suggestion of amnesty for such debts.

Stanley Milesky, chief of the city's Bureau of Treasury Management, said he didn't yet have information on how many of the 7,699 liens sold to investors involved water bills or other small municipal liens. About 750 such liens changed hands in last year's tax sale.

Rather than trying to collect back taxes themselves, many Maryland jurisdictions sell the collection rights to investors in annual auctions. Those investors buy the right to charge interest and fees that often amount to thousands of dollars, and the right to sue to seize the homes through foreclosure if the debts aren't paid. Some jurisdictions include debts other than taxes in the lien sale process, though that is rare outside of Baltimore.

The Sun reported in March that 400 city homes have been lost to foreclosure over debts other than property taxes in the past three years. Most stemmed from unpaid water and sewer bills, though some also included alley repaving charges, sidewalk repairs and even fees to register rental property. About half involved unpaid charges of $500 or less.

Milesky said city officials have been meeting weekly to discuss tax sales and are expected to make recommendations to Dixon within the month on possible improvements to the system.

"All the other issues with tax sales notwithstanding, it still remains a really effective means for the city to collect the amounts due," Milesky said.

The status of the mayor's amnesty idea, which she brought up during an interview with The Sun for the March story, is unclear.

"That wasn't necessarily the course of action that she charged the work group with," said Demaune Millard, a spokesman for the mayor's office. "The mayor is looking for more than a short-term fix. She's looking at a long-term solution."

City Councilman Bernard C. "Jack" Young, the 12th District councilman who has twice proposed a bill to end tax sales stemming from water bills, is frustrated by the slow pace of reform. City officials have contended that many people would not pay their water bills without the threat of a tax sale and potential foreclosure.

"Working with the Finance Department to get a remedy is just not moving fast enough," he said yesterday. "They're talking about it hurting the bond rating, but I just don't buy that. I'm still concerned about people losing their homes over water bills and especially such low water bills."

Young said he also is considering proposing bills to reduce the amount of interest that can be charged by people purchasing tax liens.

City Councilwoman Mary Pat Clarke, of the 14th District, has introduced a bill to keep liens of less than $1,000 out of tax sales. She also has said that she does not think that water bills, alley pavings and other small bills belong in tax sales.

Yesterday, Circuit Court Clerk Frank M. Conaway Sr., an announced candidate for mayor, sent a letter to the attorney general's office asking him to look into what "seems to be a consumer rights problem." Conaway said that people whose homes are put into tax sale might not realize that they can receive the difference between taxes owed and the bid price minus interest and expenses.

"I think there are millions of dollars that have been taken away from people," Conaway said in an interview yesterday. "It bothers me that people might be getting ripped off - that they aren't getting proceeds they should be getting."

State Sen. George W. Della Jr., who has introduced legislation to reform tax sale law, said he does not know of any summer study planned. But he intends to introduce legislation next session.

"I don't get disappointed nor do I get discouraged," he said. "It's not a fair way for local government to do business. I understand they want to get paid, but let's do it in a fair and equitable way."

Della, too, is concerned about the inclusion of water bill liens in tax sale.

"I think it's ludicrous for residential properties," he said. "It shouldn't be. Is that going to break the back of the city of Baltimore, if they don't get paid their water bill? I don't think so." (baltimoresun.com)