Persistence brings relief to tax-delinquency issue

Something is better than nothing -- especially if that something has to do with delinquent property taxes that Mahoning County government never dreamed it could collect. For years, county officials had bemoaned the fact that while the tax debt continued to grow -- it was at $40 million last summer -- there was little they could do to recover even a small portion of the money.
Indeed, $35 million of the $40 million was deemed uncollectible.
Add to this the reality of 18,000 vacant lots in Mahoning County that carried delinquent taxes last year, and what you had was a problem with no clear solution.
What about foreclosing on the properties? The legal costs associated with each foreclosure are about $700, while often the value of the properties with long-standing debt -- they're mostly in Youngstown -- is less than that.
Against this backdrop, Mahoning County Treasurer John Reardon decided it was time for the county to get creative. His thinking went thus: Getting 10 cents on the dollar is better than getting zero.
The treasurer and his staff came up with a program that will result in the first negotiated tax lien certificate sale April 16. Bids were solicited, and the highest bid to buy more than 22,000 liens was submitted by American Tax Funding of North Palm Beach, Fla. The company has paid the county a 10-percent deposit on its total bid of $6,671,348.
Highest bidder
In a negotiated lien sale, the treasurer sells the county's lien against delinquent property to the highest bidder, who in turn can earn up to 18 percent annual interest on the investment.
If the property owner does not pay the investor back, the lien holder has the legal right to foreclose on the property to recoup the investment plus interest.
Until recently, the law required the treasurer to accept only the full amount of taxes due for any lien. Reardon has held three such sales, getting rid of almost 1,500 liens from which the county collected more than $5 million in delinquent taxes.
"We had no problem selling a lien for the full amount, so long as the property had reasonable market value and a relatively low delinquency," he explains. "But bidders were not interested in buying liens where the cost was greater than the value of the property."
And considering that 18,000 or so lots are vacant and abandoned and have little value but thousands of dollars owed in taxes, there were no bidders for the full face value of the liens.
Reardon and his staff lobbied the General Assembly to change state law to permit the treasurer to negotiate lien sales to the highest bidder.
That enabled Mahoning County to bundle the liens, which means the bidders had to take the bad with the good. They didn't have the ability to pick and choose which liens they wanted.
Affected property owners will be notified next month that they can avoid the lien sale by paying their tax delinquency or contracting for a payment plan. The deadline is April 15.
On April 16, the liens left in the bundle will be sold to American Tax Funding. The county will then get the rest of the $6.67 million. That money will go to schools and taxing districts.
"The elimination of long-standing delinquent taxes will allow churches, schools, nonprofit agencies and many other interested parties to acquire old, abandoned properties for development purposes," Reardon says. "This process will definitely address much of the blight in our inner cities."
The problem of abandoned property has stymied the development of Youngstown. The treasurer's program should solve that problem.