City Bills Aim To Create Property Tax Payment Plans, Bolster Tax Sale Oversight
Two bills from Councilwoman Odette Ramos aim to reduce the number of Baltimoreans whose homes go to tax sale by creating a property tax payment plan and mandating that finance officials release a report outlining how they will address problems within the tax lien sale system.
At a hearing before the council’s Ways and Means committee Tuesday, housing advocates said that payment plans would prevent low-income residents from from falling behind on their taxes and seeing their homes go up for tax sale — an annual event in which Baltimore City attempts to recoup revenue by auctioning property liens to third party investors who can charge homeowners high interest rates and eventually foreclose on those properties if their debts remain unpaid.
The city does not collect demographic data on those who face tax sale, but of those who attended 2020 tax sale clinics run by the Maryland Volunteer Lawyers Service, 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.
“Anything that can make it easier to pay in increments. we believe will be extremely helpful to people who are living on a fixed income,” said Margaret Henn of the MVLS.
The bill would require residents to arrange for monthly payments ahead of the tax’s July due date. Payments in arrears would not be eligible for the program, as that would require amending state law, Ramos said. Only primary residences are eligible for the program, which disqualifies rental properties.
The payment plan would require the city to hire two full-time employees to manage the program, which would cost the city about $100,000, Finance Director Henry Raymond testified. The city would also need to acquire a software program to manage the payment system; Raymond said the finance department is working with the IT department to identify a vendor for such software.
Written testimony submitted by the Finance Department estimated that 26,900 residential properties are potentially eligible for the program, accounting for $72.9 million in property taxes.
“It is anticipated that the proposed legislation may positively impact property tax collections by allowing eligible taxpayers to pay their taxes in installments instead of lump-sum or semiannually,” the report said. “The legislation may also increase the cash flow of property taxes collected in advance of their billing year, which will have a direct impact on the monthly amount of cash available for investments.”
The bill originally called for the Finance Department to have the program up and running by January 2023; the Ways and Means committee passed an amendment to give the department six additional months — until July 1, 2023 — to procure the software program.
Ramos’ second bill would require the Department of Finance and the Office of the City Administrator to submit a report outlining both the problems within the tax sale system and how they plan to address those problems. Should the bill pass, the report must be published within 120 days.
Those problems range from payments not being accounted for, the Homeowner’s Property Tax Credit not being applied properly and the misclassification of occupied and vacant properties, as well as tangled titles and deeds, Ramos said.
City resident William Harris told the Ways and Means committee that he paid his property tax in time to avoid the 2020 tax sale, but ended up on the list anyway. It took multiple trips to the Abel Wolman Municipal Building to resolve the problem.
“With the system, the way it is right now, I've been victimized,” he said.
Margaret Henn of the Maryland Volunteer Lawyers Service, who assists city residents with navigating the complex tax sale process, said the system is ripe with a lack of transparency and testified in support of the bill.
“In an effort to further explain and further bring some light and transparency to how tax sale is working, I look forward to seeing this report,” she said.
Raymond said he believed the department will meet the 120 day deadline and that the bill would have a significant financial impact — but that “it's premature to state specifically the dollar amount.”
“We believe that additional staffing will be required, and that will be part of the in-depth study that will be provided as a result of this report,” he said.