Pittsfield considers incentive to collect back taxes
PITTSFIELD -- The city wants to offer a lower-interest incentive to property owners with back taxes owed who enter a repayment plan agreement.
City Solicitor Kathleen Degnan and Finance Director/Treasurer Susan Carmel described the proposed new ordinance this week, prior to its unanimous approval by the City Council's Ordinance and Rules Committee.
The incentive, which will go before the full council on Aug. 12, provides for a 50 percent reduction in interest owed on back taxes, and it allows the city to enter into five-year payback agreements with property owners -- up from the current three years.
"We are really hoping people will take advantage of this," Mayor Daniel L. Bianchi said Tuesday. "We hope to generate some payment of back taxes."
The mayor added that officials are considering other methods of whittling down the amount of taxes owed on approximately 500 properties. He declined to discuss further initiatives at this time.
"We are working on a couple of options," Bianchi said. "You can't stand still when you have back taxes owed."
Carmel said that, as of the end of the 2014 fiscal year, June 30, there were about $6 million in taxes owed on properties now in the tax title process. With interest added, she said, the total owed is about $9.8 million.
Tax Collector Marilyn Sheehan said she turned $1.5 million in overdue bills for fiscal 2014 over to the finance director's office in June. Interest on bills overdue during the current fiscal year are charged 14 percent interest, while those still overdue at the end of the fiscal year -- and entering the tax title process -- are assessed 16 percent interest.
The tax title phase, in which the city places a lien on the property for the taxes or water or sewer fees owed, could ultimately result in the city taking the property in Massachusetts Land Court.
Carmel said the new incentive program, if approved by the council, would require the property owner to pay 25 percent of the outstanding bill and agree to a repayment schedule of up to five years -- and also keep up with current fiscal year tax bills.
The owner would then qualify for a 50 percent reduction in the interest penalty.
Of about 500 accounts with overdue bills, 38 owners are in repayment agreements, Carmel said, including five entering over the past month.
Sheehan said it is difficult to determine if there is a general trend in the total amounts overdue at the end of a fiscal year. While the total bill amount she turned over for tax title in June 2013 was $324,160, compared to $1.5 million this June, Sheehan said the 2013 figure included several large payments that were made on industrial parcels.
The total owed the city has been going up, she said, but so has the total amount billed by the city each year as taxes rose.
Sheehan said late last year that nearly 17,000 tax bills are sent out by the city, and money typically is owed on up to 600 or 700 by the end of the fiscal year. About 90 percent of the properties involved are single homes, she said, but there also are rental and business properties and undeveloped land.
More information on the tax title process is available on the city's website at www.cityofpittsfield.org/city_hall/tax_title.php
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