Scott Creates Tax Sale Reform Workgroup, Says City Will Purchase Liens Of 454 Homeowners
Mayor Brandon Scott announced Thursday the creation of a tax sale task force, which he said will study short- and long-term strategies to reform the annual event, in which Baltimore sells outstanding property tax liens to third-party investors who may charge homeowners steep interest rates and eventually could pursue foreclose on their homes.
The Democrat also announced plans to purchase the tax liens of 454 owner-occupied homes this fall. Such homes are slated for the tax sale when liens exceed $750.
“The tax sale has not been fair to many of our city's low income homeowners,” Scott said at a news conference. “This is an interim action my administration is taking while this tax work group works towards comprehensive reform.”
The mayor said the 454 homes have liens that outweigh the value of the properties they are attached to. “This will effectively satisfy the standing liens on those properties, taking them out of the tax sale process and allow those homeowners to start fresh with a clean slate,” he said.
The city will buy the liens using general funds and federal grants. A spokeswoman for Scott did not immediately answer how much they will cost.
Tax sales allow Baltimore to collect unpaid revenue: this year’s netted the city $18.8 million. Housing advocates have decried the practice, saying it strips legacy residents of wealth and equity.
The city does not collect data on those who end up on the tax sale list, but the Maryland Volunteer Lawyers Service has said that the demographics of those that attended their 2020 free tax sale clinics paint a grim picture of inequity: 72% were seniors, 48% were disabled and 85% were Black. Nearly three-fourths reported annual household incomes of less than $30,000. Attendees owned their homes for an average of 24 years; nearly 75% of them did not have a mortgage.
The mayor removed about 2,500 owner-occupied homes from 2021’s tax sale, after significant pressure from housing advocates — some of whom now sit on the task force, such as Fight Blight Bmore executive director N'neka Nnamdi and Margaret Henn, Director of the Home Preservation Project at the Maryland Volunteer Lawyers Service.
“There really hasn't been an effort made to look at the whole system and how we might be able to really transform it to make it work for the citizens of Baltimore,” Henn said. “I think that's what this group is designed to do and I'm really excited to be a part of it.”
Henn said she will push for measures that will prevent people from entering tax sale to begin with, such as creating payment plans for property taxes and strengthening outreach to homeowners eligible for property tax credits. Many people who qualify for such credits are unaware of them, she said.
The workgroup will have its first meeting later this fall; Scott said a timeline for recommendations will be developed then. The city notifies property owners who are slated for tax sale in February. The sale usually takes place the third week of May.
Henn said that many of the group’s likely recommendations must be approved by the General Assembly, meaning that the city’s tax sale will probably not undergo substantial reform before next spring.
The group will be chaired by Deputy Chief Administrative Officer Daniel Ramos and Daniel Ellis, Executive Director of Neighborhood Housing Services of Baltimore. Other members include Owen Davis of the St. Ambrose Housing Aid Center, Shana Roth-Gormley of the Community Law Center and Claudia Wilson Randall of the Community Development Network of Maryland. Scott also tapped Heidi Kenny of the Kenny Law Group, a tax sale investor who has purchased liens.
“In more than 20 years of working in Baltimore, tax sale is one of the most unjust systems that I've encountered,” Ellis said at the news conference.
The workgroup will find creative solutions that work “both for the city, generating the needed revenue, and for the residents ensuring that they are protected from high cost predatory practices,” he added.
Yet-to-be identified representatives of the Departments of Finance, Housing and Community Development, Public Works and Information Technology also will serve on the board.
Councilwoman Odette Ramos, who called for this year’s sale to be cancelled altogether, called the workgroup “a really big step for our city and frankly for our state.” She has introduced bills to create a property tax payment plan and bolster oversight by mandating regular public reports of the tax sale process.
“If one of the things that comes out of this is a way that we opt out of a lot of the things that we're obligated to at the state level, then that is a major, major win,” she said.
The Democrat praised Scott for naming grassroots advocate to the workgroup but said she is vehemently opposed to the mayor’s inclusion of Kenny, the tax sale investor.
“She makes her money off of homeowner-owned properties,” Ramos said. “But because the mayor has certainly outnumbered the purchaser with advocates and experts on reform, I am hopeful.”
Henn echoed those concerns.
“The investors do stand to financially gain from the current tax sale system, so I do think that that is going to shape how they’re viewing this effort at reform,” she said.