City asks legislators to curtail home loss because of tax liens

Council resolution seeks higher limit before lien can be sold to investors

July 02, 2010|By Fred Schulte and Ben Protess, Huffington Post Investigative Fund

Members of the Baltimore City Council, seeking to prevent property owners from losing their homes over relatively small unpaid water bills and other municipal debts, are urging state legislators to set new limits on sales of tax liens to investors.

A resolution, endorsed by 12 of 15 council members, seeks to restrict the sale of liens for less than $750 — triple the limit amount set by state law. Evicting people over small debts "is simply not in Baltimore's long-term interests," the resolution says.

In the city's most recent tax sale, in May, about 13 percent of the liens sold were for unpaid bills of less than $750, records show.

"It's a terrible thing to lose your home over a water bill — particularly a small water bill. This has been a problem with the tax sale," Councilwoman Belinda Conaway, the measure's chief sponsor, said Friday.

But a spokesman for Mayor Stephanie Rawlings-Blake said city officials are studying other options, noting that the mayor objects to a plan that allows homeowners to escape obligations.

"The administration does not support an amnesty for property owners that failed to pay taxes and fees," spokesman Ian Brennan said.

Under state law, tax collectors sell investors the right to collect unpaid property taxes and municipal debts — from utility bills to sidewalk repairs and other fees — of $250 or more. Homeowners often face thousands of dollars in interest and fees to redeem their homes after a lien is sold at tax sale. Investors can go to court to seize the property of those who fail to pay the fees.

The call for action in Baltimore comes about two months after the city held what is believed to be a record tax sale, in which more than 12,000 liens were sold to investors. That's more than twice the number sold in 2006 in the midst of Baltimore's housing bubble, an increase some city officials blamed at least partly on the poor economy.

The council resolution also comes after a report by the Huffington Post Investigative Fund detailing the plight of Vicki Valentine, who lost her West Baltimore home on McKean Avenue in February over what began with an unpaid water bill of $362. An investigation by The Baltimore Sun in 2007 found that at least 400 homes had been lost in the previous three years for debts other than property taxes, many of them for a few hundred dollars.

The tax sale auctions also are the subject of a continuing criminal investigation into bid-rigging by some investors. Federal prosecutors have alleged that the collusion compromised as many as two dozen of the sales in Baltimore and several Maryland counties.

Lester Davis, a spokesman for Council President Bernard C. "Jack" Young, said he believes the council "will grant serious consideration to Ms. Conaway's bill because of its potential positive impact on Baltimore families." But lawmakers in Annapolis may be unwilling to act on the issue without the support of the mayor. The General Assembly earlier this year failed to pass a similar bill amid opposition from city officials.

The City Council resolution said the city should deal with small debts in a "more individualized way that could prevent counterproductive evictions while still retaining a valuable tool to be used against the seriously delinquent property owners and vacant properties."

This article was reported by Fred Schulte and Ben Protess of the Huffington Post Investigative Fund (www.huffpostfund.org), an independent, nonprofit, nonpartisan 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.

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