North Adams To Tighten Delinquent Tax Policy
 Administrative Officer Michael Canales said the biggest issue with back taxes is collecting them in the desired year. Mayor Richard Alcombright, to the right, added that he does not want to see more properties go into tax title. |
The bad news is that there is about $1.4 million worth of tax liens that may never be collected.
The city could go after those overdue payments but officials believe that they'll never recoup all of the losses because of demolition fees, resale values and legal fees through land court.
Instead, officials are looking to implement stronger policies to get new taxes paid in the same fiscal year and prevent people from falling too far behind.
"There are some [properties] that the city would never want to touch," Administrative Officer Michael Canales said during a Finance Committee meeting on Thursday. "Yes, they are following procedures in the treasurer's office but let's formalize some of the time frames."
Canales gave an overview of the current policies for collecting back taxes. The procedures for water and sewer bills seems to be working well, Canales said, but excise and property taxes are not being paid quick enough. The city should strengthen its procedures to reduce the payment time frames and increase the number of notices in a fiscal year, he said.
"We do collections at City Hall but the consistency probably isn't what it needs to be," Mayor Richard Alcombright said. "We've seen more properties go into tax title in the last couple years and what we don't want to do is see that number increase. And with the properties that we do have in tax title, what do we do with them in the next year or so and how do we get those things into the city's hands through Land Court if we choose? But just because something is in tax title doesn't mean we want it."
Excise taxes, for example, can fall behind and interest rates can rack up the bill. While most of the bills are being paid in the window between car registrations, which can be around three years at times, that doesn't provide consistency in the budgets, Canales said. The budgets are based on 100 percent payments and while it is nice to get the extra money a year or so later, there is still a shortfall in the previous year, he said.
"We still need to collect as much as we can in the fiscal year we need it," Canales said.
.jpg) Committee members David Bond and Alan Marden questioned Canales about different ways the city can improve its efficiency in collecting the taxes. |
Additionally, the notices are not always being mailed on the 10th day of being overdue, which pushes the timeline of collection back, Canales said. He suggested sending the demand notice immediately on the 10th day and issuing the warrant notice on the 30th day.
Real estate taxes are also facing a timeliness issue that is coupled with a lack of standard procedures for payment plans. Payment plans are currently being set up on case-by-case basis and the collection is going toward the principle rather than the interest and fees, Canales said.
He suggested the city implement a standard payment plan procedure and gave the committee an example ordinance. The measure would cut interest payments in half and prevent additional interest from adding up to allow the owner to catch up.
However, the ordinance is strict and carries a "one-strike" clause. If the owner misses one payment, the city would immediately go to tax title.
The committee questioned Canales about upgrading the tax software and the impacts of recent billing changes. The software is being eyed for upgrade, Canales said. Alcombright said the first year of billing biannually instead of quarterly did create problems but is better now that residents are used to it.
Committee member Lisa Blackmer also asked to see a breakdown of the different categories of properties in tax title. Canales said he has been piecing the information together and hoped to have a document soon.
Canales will continue to work with new Treasurer Beverly Cooper to develop recommendations for the committee. Officials hope to have updated policies by 2013.
"This is the first time we've met on this and I find it very informative. I am surprised that in the last four fiscal years we're running around 96 percent up to 98 percent collection rate," Finance Committee Chairman Alan Marden said. "This is the first part of the whole process."
The issue came before the committee per Marden's request. Marden said he did not have an "agenda" in mind for the meeting and intended it to be informational.
Canales' report is available below.
North Adams Delinquent Tax Report 2012
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