MAHONING COUNTY Treasurer plans tax lien sale for properties

The county could collect part of the debt and wipe the rest off the books.
By BOB JACKSON
VINDICATOR COURTHOUSE REPORTER
YOUNGSTOWN -- When it comes to delinquent property taxes, Mahoning County Treasurer John Reardon says it's better to collect a little than none at all.
He's planning the county's first negotiated tax lien certificate sale for Dec. 28. It's a project Reardon hopes will generate revenue for the county and get vacant land parcels into the hands of people who'll take care of them.
"This is a very ambitious goal," Reardon said. "I'm not sure we can pull it off with our current level of staffing, but we're going to try."
Ohio law allows the state's 12 largest counties to hold tax lien certificate sales to recover delinquent property taxes. The treasurer sells the county's tax lien against delinquent property to a private investor for the full amount of the back taxes plus an administrative fee.
Mahoning is included in that group of counties and has had about four such sales. The county sells only its lien against the property, not the property itself.
The buyer then collects the delinquent tax amount from the property owner, plus 18 percent interest. If the money isn't paid within a year, the buyer can foreclose on the property to recover the investment.
More debt than value
But Reardon said Mahoning County is chock full of parcels whose tax debt is far greater than the value of the land, which makes it nearly impossible to sell them.
He said there are about 18,000 delinquent, vacant, abandoned, "worthless" lots in the county, with the bulk of them in Youngstown.
"Those are parcels that are virtually uncollectible," Reardon said. "No one would buy them."
He said about $35 million of the county's total $40 million delinquent tax debt is uncollectible. It shows up on the county's delinquent tax records, but the county will likely never see that money. That's why he likes the negotiated lien sale concept.
Until recently, the law required counties to sell a tax lien for the full amount of back taxes. But a legislative change now allows them to sell to the highest bidder, even if the high bid is less than the full delinquency amount.
"It means that we might sell a lien and get only 10 cents on the dollar," Reardon said. "But the simple reality is that 10 cents on the dollar is much better than zero cents on the dollar."
If an investor buys the tax lien certificate for less than the total delinquency amount, and the property owner does not pay up within the 12-month period, the investor can foreclose and the balance of the delinquency is wiped off the books.
Parcels can be sold
Reardon said those parcels then can be sold at low cost to owners who want to use and maintain them, and who will pay the taxes on them. Over time, the county's tax delinquency could be sharply reduced.
He's specifically eyeing parcels in Youngstown's Smoky Hollow area, which he would like to see wind up in the hands of Youngstown State University and other North Side businesses who could use them for development.
"I think [Reardon's] vision is right on target," said YSU President Dr. David Sweet. "I applaud his initiative."
Hunter Morrison, director of YSU's Center for Urban and Regional Studies, also endorsed the plan.
"Land is key to redevelopment," Morrison said, noting that bundling parcels together into larger sections of land, rather than having individual parcels scattered here and there, improves the chances that the property can be developed.
"This is a critical step in that process," Morrison said of Reardon's plan.
He said one of the 10 top goals of the Youngstown 2010 project is to return vacant parcels to the county's tax rolls so they can be developed and the county can again receive tax revenue for them.
Reardon said he believes the high volume of abandoned parcels in the county is largely responsible for the county's stunted economic growth because of blight. Eliminating them should help promote growth, he said.
Reardon said he also would like to focus on parcels near St. Elizabeth Health Center. He hasn't spoken to anyone at the hospital yet, but would like to see those parcels end up in the hospital's hands.
"If nothing else, they could use the property as green space," Reardon said. "That would really help clean up that [U.S. Route] 422 corridor."
Other targeted areas would be Market Street and any place where there are several abandoned lots near an entrance to the city.
bjackson@vindy.com