Commentary in support of Tax Sale reform - Ken Strong
My friend and retired Deputy Housing Commissioner Ken Strong wrote this commentary about tax sale, based on his experiences. Please read all of this to understand the complexity of the issue, and also a preliminary list of reforms:
As Baltimore City’s Deputy Housing Commissioner, Division Of Green Healthy And Sustainable Homes (DOGHASH) from 2013 to 2016, I insinuated myself into the void of tax sale reform, the gaping chasm between City officials and non-profit advocates. Baltimore City had a tradition of selling City debts, primarily delinquent property taxes and water bills, to tax sale investors. The investors acted like debt collectors, with increasing penalties and fees added to the original debt, too often ending in tax sale foreclosure and a family becoming homeless. The City reaped millions of dollars in immediate gratification through this heartless tax sale system. It cried out for reform and for assistance to families behind in their taxes, water bills, and other city charges. City agencies highly invested in the tax sale’s annual income initially turned largely deaf ears to the advocates for seniors and low-income families caught in the crosshairs. As Deputy Housing Commissioner, I made the argument that the costs of this tunnel vision on tax sale proceeds in terms of homelessness, vacant housing, and displaced people was too great for a purportedly compassionate City.
During those years, we hired a tax sale service consultant to act as a bridge between City agencies and non-profit agencies. Ken Gelula did a great job in that role. Subsequently it became a City position housed at HCD and Michael O’Leary has been serving in that role since, and also doing a great job. Much better communications resulted and a variety of approaches to households regarding this arcane system of tax sales took place. Water bill delinquencies were a particular focus since the City’s water billing system was, and continues to be, notoriously inaccurate. State legislation has since removed from tax sales delinquencies for water bills alone. On the service front, non-profits provided tax sale clinics, legal services, loan programs and a variety of tax sale prevention strategies. Even with enhanced communications and services, tax sales still came crashing down on seniors, low-income families, and even churches. More reform was needed then and now.
My approach to being Deputy Housing Commissioner included personally visiting seniors in distress and organizing comprehensive responses to complex problems. A senior living near Pennsylvania and Baker could not afford her property taxes, she did not have a working furnace and she was sleeping on her living room couch surrounded by space heaters. Her limited social security check was not enough and she needed the charity of a local soup kitchen for food. DOGHASH provided a new economical furnace, removed the old furnace encrusted with asbestos, and weatherized her home. The new non-profit HUBS (Housing Upgrades Benefitting Seniors), funded by the Stulman and Weinberg Foundations, facilitated an application to the State for reduced property taxes and a refund on overpaid property taxes in three prior years. She received a $1,200 refund check. In the end this senior could afford her taxes, utilities, food and basic needs, tax sale was averted, and she began volunteering at the church she used to rely upon for food.
Another senior in the Belair Edison community received weatherization, new windows and solar heating panels through Civic Works. At a public meeting she later came up and said look at this. Her monthly BG&E bill was under $65, she was so happy. Her house did not go into tax sale.
Ms. M. was 90 years old and could not longer maintain the home she and her late husband worked so hard to buy. She could not afford her property taxes or utility bills. In addition to receiving a new roof, electrical upgrades, furnace, and wall stabilization, her home was made lead safe by the Green and Healthy Homes Initiative. Her grandchildren could visit again. Civic Works built a community garden in the vacant lot next to her home. Ms. M. stayed in her home, with her daughter’s assistance, she did not go into a nursing home. The now affordable and safe home eventually passed on to her daughter. Ms. M.’s house was not sold to a heartless tax sale investor; she was not put out on the street.
These are just three of many human-interest stories about how tax sale prevention, and comprehensive City/non-profit services were transformative for seniors and low-income families.
The Baltimore Sun has recently published two excellent op-ed commentaries: “Mayor should cancel tax sale” by Allison Harris of the Pro Bono Resource Center of Maryland (3/26/21) and “Building progress with transparency, accountability, and integrity” by Mayor Brandon Scott (3/29/21). I enthusiastically agree with the main appeal by Ms. Harris to cancel the 2021 City tax sale until further reforms are instituted, the most dire impacts of Covid pass, and Covid federal relief arrives. The tax sale should only proceed once owner-occupied houses are fully removed from the tax sale. Once that is successfully accomplished, and comprehensive services provided to homeowners and tenants, the tax sale could be held and the City would still reap several million dollars in revenue.
I applaud Mayor Scott for the values and the passion he brings to leading city government, eloquently expressed in his Sun Commentary. Cancelling this year’s tax sale, currently scheduled for May 17th, and assertively aiding low-income families to preserve homeownership and senior independence as overarching goals, is completely consistent with Mayor Scott’s approach to City leadership.
So, what can and should be done for mostly low-income families, and predominantly senior citizens, behind on their property taxes and other city bills?
1. Help low-income families to apply for the grossly underutilized Home Owners Tax Credit (HOTC) Program which makes low-income families in Maryland eligible for substantially reduced state and local property taxes. A family with a total household income of $20,000 should not be paying more than $780 in property taxes; a household with less than $8,000 should owe no property taxes at all. Families with incomes up to $60,000 are eligible for reduced property taxes. More than half of the families eligible for the HOTC program do not know about it or how to apply. Seniors 70 and above can even receive refunds for overpaid property taxes for some prior years.
Learn more at https://dat.maryland.gov/realproperty/Pages/Homeowners%27-Property-Tax-Credit-Program.aspx, or call 410-767-4433 or 443-961-6220. Also contact Maryland Consumer Rights Coalition for application assistance, 410-220-0494.
2. Enact state legislation requiring proactive agency cooperation to automatically enroll eligible families in the Home Owners Tax Credit (HOTC) Program. The Comptroller’s Office has everyone’s income tax records, which is most often total family income, and the State Department of Assessment and Taxation (SDAT) knows who among us are homeowners. The two agencies should cooperate to assertively enroll households eligible for HOTC based on the income tax filings of everyone living at that address. No onerous application process should be necessary. Furthermore, the State should give all low-income families, not just seniors, refunds on overpaid property taxes in the past three years. Those refunds could be credited toward property tax delinquencies or provided to families along with income tax refunds. The current burdensome application process ensures that the HOTC is consistently and grossly underutilized. This is wrong and State computer gurus can fix it; the State already has all the necessary information. There is a precedent for this kind of income tax data analysis and proactive alert to families about important program eligibility; it was done several years ago to let low-income families know about the benefits of the Child Health Insurance Program (CHIP).
Contact the Governor’s office your state legislators.
3. Assist families in applying for the Maryland Homestead Tax Credit. By applying for this credit Baltimore City homeowners of all incomes can protect themselves from large increases in property taxes. With this credit, annual increases in property taxes in Baltimore City are capped at 4%. Many low-income families facing tax sale do not know about this credit or how to apply. Retroactive eligibility and refunds should be considered in cases where low-income families have demonstrably overpaid property taxes due to lack of information or cumbersome application processes.
Learn more at https://dat.maryland.gov/realproperty/Pages/Maryland-Homestead-Tax-Credit.aspx, or call 410-767-4433 or 443-961-6220
4. The City Finance Department should provide a way for households, especially seniors, to pay their property taxes on a monthly basis. This would be particularly helpful to recipients of social security and seniors on fixed monthly incomes. The department should also provide for payment plans for back taxes just as DPW does for back water bills.
Contact the Mayor’s Office and your City Council representatives.
4. Promote participation in tax sale clinics sponsored in the spring by the Pro Bono Resources Center of Maryland. Volunteer lawyers and staff assist families facing tax sale, and potentially, tax sale foreclosure.
To register or learn more, please call the Pro Bono Resource Center at 443-703-3052.
5. The City should cap water bills based upon income levels regardless of age. Other cities and counties around the country do this. Fully implement the Water Accountability and Equity Act, which is planned to take effect in July. The City’s new Public Works Director should continue reforms of the water billing system that far too often overcharges customers. The opportunity to have the City adjust water bills, after water leaks and plumbing problems are fixed, should be more widely known and retroactive. Even though delinquent water bills alone are no longer included in the tax sale, more affordable and equitable water billing will help families manage their budgets and afford their property taxes.
To inquire about the latest water bill discount programs, energy assistance, and to be screened for additional benefits, or to find the closest Community Action Partnership office to you, please visit https://www.bmorechildren.com/cap, or call 410-545-0900.
6. The City should more assertively inform low-income families about the programs of the Department of Housing and Community Development and non-profits that can help maintain homes, reduce utility bills and balance household budgets: Weatherization, Housing Rehabilitation, and the non-profit HUBS (Housing Upgrades Benefitting Seniors) program are just a few examples. Helping eligible families gain access to the Office of Energy Assistance to reduce BG&E bills is also critically important.
To screen for these services, contact the LIGHT Program at 410-396-3023
SUMMARY
As described above, there a host of programs and benefits that can help low-income homeowners afford to pay their property taxes and manage other essential household expenses. We need more time to educate the public about these programs and for eligible homeowners to access them in order to prevent their inclusion in the annual tax sale and the possible loss of their homes. Allison Harris of the Pro Bono Resource Center, surmises that over half of her clients would not be in tax sale if they only knew about and received the benefits of just one of these programs, the Home Owners Tax Credit Program.
Ms. Harris also argues in her commentary, “Mayor Should Cancel Tax Sale” that the era of Covid exacerbates the financial challenges of low-income homeowners, so many of whom are unemployed through no fault of their own. I would add to her argument, that we need time for families to receive the $1,400 per person checks from the American Recovery Act of 2021. Only recently have holdovers from the Trump administration in the Social Security Administration turned over data to the IRS which will facilitate checks to seniors on social security. Let’s let these checks come in with funds that can help families pay their property taxes as well as other essential needs. The Child Tax Credit, which cuts child poverty in half, can also help families afford their property taxes
The State Department of Assessments and Taxation does not have a financial interest in helping low-income families reduce their property taxes. The Finance Department does not have a financial interest in removing owner occupied homes from the annual tax sale. We need the leadership of State elected officials and the Mayor to do the right thing in these regards. State Senator Mary Washington demonstrated that kind of leadership by securing state legislation that removed unpaid water bills alone from tax sale consideration.
I am heartened by the very progressive leadership already demonstrated by Mayor Brandon Scott in long overdue reforms of city government. In his recent commentary in the Baltimore Sun, Mayor Scott said, “I commit to regaining your confidence and trust and proving that local government can operate in your best interests. As Mayor, I have done just that, and I will not let anything distract me from my mission of addressing your most urgent needs.” Canceling the 2021 tax sale, fully withdrawing owner occupied households from future tax sales and providing comprehensive City and non-profit services to prevent tax sale foreclosure would most certainly meet an urgent need.
Ken Strong, retired,
formerly Deputy Commissioner of Housing, Baltimore City
3315 Beverly Road
Baltimore, Maryland 21214
410-426-4793