Tax Sale Working Group meeting -Ramos presentation.

The Mayor’s Tax Sale Working group met on Oct 28th to begin its work to reform our predatory tax sale system. I was asked to present to the Committee. I presented these slides to the committee.

My presentation included background on the work that has been done so far to make it easier for residents to stay out of tax sale - including legislation from the General Assembly and the City Council. I included my legislation that just passed recently, and the work I did as part of a larger coalition during my previous job as the Executive Director of the Community Development Network of Maryland. I have been working on this issue for almost 10 years.

Below are my recommendations for moving forward on complete and total reform of the system.

1. Actions needed by the General Assembly:

   1. Enable jurisdictions to not sell the liens. This would allow Baltimore City to create our own system of collecting property taxes so we could work with residents over time. Not every jurisdiction in Maryland would want to go this direction, so legislation would simply be enabling for jurisdictions to adopt. The City Council would then pass legislation to create this new system. The new system would include working with residents to pay their taxes over time, and also reforms to allow for vacant and abandoned properties to be used in a more transparent manner through the Land Bank we are building.

   2. Enable jurisdictions to create payment plans for homeowners in arrears. City Council would have to create legislation to allow this once authorization is given. I tried to do this in the beginning of my term, but the General Assembly needs to give us authorization to do this.

   3. Change the Excess Funds account to allow for unclaimed funds after 5 years to go to nonprofits who assist residents with avoiding tax sale. Excess funds are those extra funds that come from bids on tax liens. If someone bids over the amount of the liens, those funds go into Excess Funds account to be distributed to the former owner of the property. There are defunct LLCS and Corporations that have not collected those funds and so it sits there. These should be used to help organizations that help people avoid tax sale or into a fund to help residents. Also the City should do better about advertising the availability of those funds, especially for families who are struggling. With our new system, we may not need the Excess Funds account very much, but for now, let’s get those funds out.

   4. Change the final redemption payments to be to one payee - not two. This is so complex. Often a homeowner pays the lien balance and fees to the tax sale purchaser - but there is one remaining step they may not know about - which is paying the interest on the lien to the City. This should all be one payment.

   5. Change the Homeowners’ Property Tax Credit to be easier to apply for, removing the asset provisions and updating the income provisions. The HTC should be easier to apply for - meaning either the State Comptroller determines eligibility and the credit is automatically applied, or that applications are renewed every 5 years. The HTC changes should also include modification of the income determination (making it a percentage of AMI and not a flat $60,000), and the asset requirement needs to be removed. As home values are increasing, that does not mean that the homeowner’s income is increasing and so the asset value threshold should be removed.

   6. Shorten timeframe for redemption of vacant and abandoned properties. The current redemption period is 2 years for all properties - meaning the new owner of the lien has to wait two years to foreclose. For Vacant and Abandoned properties, this should be lowered to one year so that we can ensure properties are put back on line much faster - assisting the communities they are in and bringing in tax revenue.

   7. Allow for jurisdictions to cancel their tax sales in emergencies. Baltimore and the rest of the state should have been allowed to cancel our tax sales in light of COVID. State legislation must be passed in order to do this.

2. Actions needed by the Mayor/City Council. In addition to the four pieces of legislation we just passed (link to that blog here), the following actions must be taken:

   1. Create system to collect property taxes and liens that is fair and equitable, where we would not sell the liens. Instead we would work with the homeowner to pay down the debt and ensure they are not in this problem again. (after General Assembly allows us not to sell the tax liens.)

   2. As part of this new system, create a Tax Sale Services Office - working with homeowners to pay down their debt. (can be done now)

   3. Create payment plans system to help people pay down their debt. (after General Assembly passes enabling legislation)

   4. Create Baltimore’s Land Bank to address vacant properties so there is control over the outcome of the property. By not having to sell the liens, Baltimore can transfer the liens to the Land Bank to foreclose and make the properties available for best outcome. I have been leading a stakeholder group for almost a year to create this transformative model for disposing of vacant and abandoned properties, along with Councilman James Torrence. We plan to introduce this in the next few months.

I am grateful to be in a position now to continue this important work of transforming our city through ending predatory tax sale and adding reforms to ensure we have a transparent and efficient system for disposing vacant properties. This work is extremely important for our city and I am also grateful to the Mayor’s Office, Council President’s Office, and Comptroller who have been by our side throughout this process.