May 17, 2010|By Fred Schulte, Ben Protess and Lagan Sebert | Huffington Post Investigative Fund
Some legislators in Annapolis have tried for years, with modest success, to rein in the tax-sale fees that can steamroll low-income homeowners. They passed a bill in 2008 that raised the minimum lien sold from $100 to $250. But a bill to prohibit cities and counties from selling delinquent water bills to investors failed in the state Senate earlier this year by a single vote.
Legislators also rejected a bill that would have prevented the sale of any lien of less than $750, as is done in some other locales outside of the state.
Both bills failed, lawmakers said, largely due to fierce opposition from tax collectors and officials in Baltimore, which conducts the largest tax sale in the state.
Andrea Mansfield, of the Maryland Association of Counties, testified that the tax sale process provides "a much-needed device to ensure that property owners remit payment for their fair share of taxes and charges connected to public services."
Eliminating water bills from the tax sales would result in more "deficient accounts," and lead to "increased rates on citizens who properly pay," she wrote.
Sen. James Brochin, a Democrat from Baltimore County, who co-sponsored the legislation that would have banned the sale of delinquent water bills to investors, called the practice "highway robbery."
"It's dead wrong," he said. "It's immoral."
Mary Pat Fannon, a lobbyist for the mayor's office, said in testimony written for a Feb. 5 hearing that the city had begun offering repayment plans for water bills to help homeowners avoid tax sale.
She said that the 666 water bill liens sold by Baltimore City in 2009 were far fewer than the 1,129 sold to investors the previous year and credited the repayment plans for the reduction.
Fannon also said that without the tax sale, the city would need to file debt collection lawsuits against each delinquent property owner, which she said "would be very expensive, time-consuming and flood the courts."
Two days before Fannon's testimony at the state capital, Valentine stood watching as her belongings piled up on the sidewalk in Baltimore.
A neighborhood's decline
More than three years after Valentine's debt drew her into the tax sale, neither the city nor the investors seem to have won much. The property is unlikely to be fixed up any time soon. On Valentine's old block in the Sandtown neighborhood, all but a handful of houses, abandoned long ago, are boarded up.
Such decline has summoned other ills. "Drugs moved in and replaced the good with the bad," said Valentine, who is living temporarily with her mother. Many of her possessions are in storage.
De Laurentis and Reiff now hold a "writ of possession" for the property, which needs substantial repair. Though the home is assessed at $46,000, in such dilapidated condition the investors said they probably would have trouble selling it for more than $16,000.
In addition, investors could be on the hook for a $7,000 water bill of their own. Just how that happened is unclear; there may have been an undetected leak in Valentine's home. Last month, the city finally turned off the water.
If the investors take the final step to secure a deed to the property, they would have to pay the city roughly $6,300, which the city is then supposed to turn over to Valentine. The law entitles original property owners to receive at least some compensation.
De Laurentis and Reiff say they're still willing to work with Valentine to resolve the matter. Reiff said he gave her a key to the new lock so she could have more time to remove her belongings as a good faith gesture.
"We'll definitely work something out with her," Reiff said.
This article was reported by Fred Schulte, Ben Protess and Lagan Sebert of The Huffington Post Investigative Fund (www.huffpostfund.org), an independent, non-profit, non-partisan journalistic organization specializing in investigative reporting. Schulte, a former investigative reporter at The Baltimore Sun, detailed problems with the city's ground rent and tax sale systems in 2006 and 2007.
