Thursday October 18, 2012

PITTSFIELD -- The city wants to recoup back taxes totalling more than $3 million -- some amounts 20 years old -- by farming out the collections to private firms and investors.

City officials will soon notify owners of more than 300 properties in arrears about the plan to hold two tax title auctions in early 2013, whereby private firms and investors will bid on the amount of back taxes owed.

Winning bidders will pay the full amount of the tax liens -- principal and interest -- owed the city. The private firms and investors, in turn, will then pursue recovering their investment with the delinquent property-tax payers. Property owners who fail to pay the private collector could lose their property faster than through government channels.

In addition, the bidders can charge up to 16 percent interest on the amount that's due to them, which is allowed by state law, according to Assistant City Solicitor Darren Lee.

"The 16 percent allows [the bidders] a pretty good return on their investment," he said. "If it's a strategic piece of property, it's worth pursuing."

Lee said the planned tax title auctions only involves selling of the back taxes -- not the properties themselves. The sale of the tax liens won't involve property owners who've filed for bankruptcy or have a payment plan with the city's tax collector to settle up on the back taxes.

The city will publish a list of the properties with tax liens going up for auction.


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That list also will be posted in the City Solicitor's office at City Hall.

The first auction, yet to be scheduled, will attempt to sell the tax liens on a small number of properties scattered throughout the city, according to Lee. The tax liens on the remaining properties will be up for sale during the second auction.

City officials say farming out the collection of overdue taxes to private firms benefits the city and encourages delinquent taxpayers to avoid dealing with third-party collectors.

"Some of these properties have been in arrears for more than two decades," said Mayor Daniel L. Bianchi. "Other properties are in [state] Land Court, which is a long and expensive way for the city to try and recoup past taxes."

City officials say they are willing to work with delinquent taxpayers on a payment plan before the tax liens are auctioned.

The city's payment plan require a 25 percent down payment on what is owed, a payment plan that will pay the debt in three years, and keeping current on all city taxes.

"The city doesn't like putting a lien on people's property, but we need to let them know they need to pay their fair share of taxes," said Pittsfield Tax Collector Marilyn Sheehan.

Lee says he plans to further explain the tax title auction process during a City Council meeting before the end of the year.

To reach Dick Lindsay:
rlindsay@berkshireeagle.com,
or (413) 496-6233.