Tax sale yields $900k; other measures being explored

John Howell
Posted 12/9/14

All but a handful of the more than 300 properties listed in Friday’s tax sale for failure to pay utility bills and sewer assessments were sold to yield almost $900,000.

The sale had Council …

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Tax sale yields $900k; other measures being explored

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All but a handful of the more than 300 properties listed in Friday’s tax sale for failure to pay utility bills and sewer assessments were sold to yield almost $900,000.

The sale had Council Chambers almost filled with prospective buyers, a few spectators and even fewer property owners. It was the first for delinquent payments and assessments in more than two years. It may be just as long, if not longer, before there is another; if the administration and City Council come up with another plan to prod delinquents to pay up before they reach the point where they risk loss of their homes.

One property owner watching Friday’s proceeding may be symptomatic of others.

“I fell behind on my water bill,” he said.

The man, who did not identify himself, said he had not attempted to reach a payment plan with the city and, in fact, didn’t know that he could.

Asked if he was aware he could lose his property if he does not re-pay whoever buys it, plus about $300 in expenses and interest that could be as much as 16 percent for a year, he said, “We’ll have to see what happens…I have to stop talking now or I’ll vomit.”

Those acquiring liens on the properties cannot foreclose for a year, during which time the owner can pay off plus costs.

Councilman Ed Ladouceur (D-Ward 5) was one of the spectators. He was confounded by the sale process, where the address and the amount due is read off and more than 125 prospective buyers sat on the edge of their seats ready to raise the numbers they gripped. At random, a spotter selected a number. In some cases, that person indicated a percentage that started at 100 percent. If no one bid a lesser percentage – and many sales went for 1 percent – the sale proceeded to the next property. The bidding left many spectators confused.

City Treasurer David Olsen explained yesterday that the percentage represents what percentage of the property the bidder would own after foreclosure.

“At one percent in the property you’re not going to be able to foreclose on the whole property. It’s a gamble [that they’re going to get re-paid plus interest] they’re taking.”

The sale started at 10:10 a.m. and didn’t come to an end until about 1:30 that afternoon. When compiled three months ago, 2,500 properties were slated for sale to recover $3 million in outstanding bills and assessments. By Friday, all but 344 property owners had paid or made plans to pay. Rhode Island Housing was given first crack, and they acquired about 100 properties. There were no buyers for about 20 properties.

Ladouceur finds it remarkable that someone could lose their home for an unpaid water or sewer bill. He said he is working on something that could avoid so many being listed in the future.

William DePasquale, acting chief of staff, said the administration is looking to work “cooperatively” with the council on a procedure that would notify people sooner and that could include a water shutoff for non-payment.

“If we alert [them] early and often, then we should be able to minimize the enormity of the delinquency,” he said.

DePasquale said there have been some discussions relative to delinquencies before they become unmanageable.

Amounts due ranged from $700 to more than $5,000, according to Olsen. That number dropped to less than 900 after the properties were listed in the Beacon, as people either paid the amount due or worked out a payment plan. Plans require a minimum of 20 percent of the balance for water and sewer bills and 25 percent on sewer assessments.

DePasquale thought the new “lockbox” system for tax and utility payments would make it easier to stay on top of delinquents. Under that system, tax and utility payments are sent out of state and deposited to city accounts within a couple of days. Previously, it could be weeks and even longer for city workers to deposit all the checks and post accounts.

With the lockbox, the city should know sooner when people have missed payments and when to initiate action.

Olsen said the controversy over a contract to conduct title searches delayed the tax sale and was partly responsible for the size of the sale. He said he hopes to conduct future tax sales annually and that delinquent utility bills would be combined in the sale for unpaid taxes.

“As far as I’m concerned, no tax sale is good,” he said.

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