Tax lien sales are efficient, fair and rebuild communities: Column
Wednesday, October 3, 2018
Posted by: Carly Cahur
On Sept. 18th, the Poughkeepsie Journal ran an Op-Ed article on tax lien sales, ("Tax lien sales are inefficient, unjust and hurt Poughkeepsie community.") The article was passionate and thoughtful but lacked factual integrity of what tax lien sales do for communities.
Increasingly, America’s cities are turning to tax lien sales as a viable, efficient and humane way of dealing with property tax delinquencies. Left uncollected, delinquent taxes cause financial stress that adversely affects our schools, teachers, police officers, fire fighters and other essential services. To stabilize community budgets, over 2,000 communities around the country utilize these sales to recoup lost revenue. When structured properly, tax lien sales benefit delinquent taxpayers, current taxpayers, local governments and private investors.
Delinquent taxpayers benefit from a two-year time frame to resolve their tax obligations. Taxpayers with hardships may apply for payment assistance through a foundation, established by the National Tax Lien Association (NTLA). This foundation is a 501c3 non-profit, established to pay off elderly or disabled homeowners’ property taxes, to prevent tax foreclosure. Fortunately, 99.5 percent of taxpayers eventually pay. NTLA research shows most tax foreclosures occur on vacant land and abandoned property.
Current taxpayers benefit from tax lien sales because tax bill enforcement ensures their tax payment will cover their own obligations, without the threat of increased property tax rates to cover those not paying. Everyone pays their fair share. In Poughkeepsie, it should be noted that 97 percent of taxpayers pay on time which is 1 percent better than the national average.
Local governments like the City of Poughkeepsie benefit from tax lien sales when they recoup the lost revenue caused from the non-payment of property taxes.Through these sales, the city meets its financial obligations to pay for teachers, school construction, police and fire services, and maintenance of City parks. With the revenue from tax lien sales, the city also retains a favorable bond rating because it is not carrying significant debt in the form of unpaid taxes.
Investors participating in tax lien sales provide cash to the city in exchange for any fees associated with late tax payments. Some investors are only interested in offering cash while others are interested in renovating properties. Either approach benefits the City by providing either immediate cash flow, or by providing motivated parties focused on rehabilitating property. The largest segment of new members in the NTLA are investors interested in restoring vacant and abandoned properties.
When tax liens are offered to investors, but not sold, the cause is almost exclusively related to assessed values that are disproportionate to the market value of the property. If there is a local perception that the tax bill is too high, such a question should be addressed by the local government — specifically those assessing taxable value. Tax lien sales do not create injustice. They are only the mechanism by which the law is enforced. If there are demographic inequities in taxation, again, those should be addressed by the local government itself.
Brad Westover is executive director of the National Tax Lien Association. For more information visit: www.ntla.org or for NTLA Foundation visit: www.ntlafoundation.org.
Find the article here.