SOUTHWEST HARBOR — Town officials are trying to decide how many chances a tax-delinquent property owner should get before the town takes ownership of their land.
The town has one ordinance on the subject and has also relied on the Maine Municipal Association’s (MMA) recommendations for best practices.
At the 2017 Annual Town Meeting, voters agreed to adopt an ordinance based on state law regarding the disbursement of excess funds from the sale of a tax-acquired property. Once all expenses owed to and incurred by the town for the sale of the property are collected from the sale amount, any excess beyond $150 can be given to the previous owner of the property, the ordinance states.
What the town lacks is a clear procedure, outside of MMA’s recommended practices, outlining the steps to take in acquiring a tax-delinquent property and deciding to dispose of it through a sale.
“What procedures do we need in place that we don’t have already?” selectman Kristin Hutchins asked during the Nov. 13 meeting. “I think we need to be rigorous in fairness to others who are paying their taxes.”
At that same meeting, a packet of tax-delinquent properties was shared with the board. According to what was listed, there is about $160,000 in tax money not paid to the town over last six years, or more.
“The list from the last meeting was a much bigger list than I’ve ever seen before,” selectman Lydia Goetze at this Tuesday’s meeting.
Typically, the town files liens against a property for each year taxes are not paid. After three years, the town becomes the owner.
“Should we be selling these properties?” selectman Ryan Donahue asked Tuesday. “We have homes that people are living in that owe taxes and … the town/municipality is the lien holder. What’s the next step?”
Without a procedure in place for what happens at that point, in the past the town has entered into re-purchase agreements with the previous owner or allowed the property to sit on the books.
“This is another instance where this shouldn’t be accounted for the way it is.” Town Manager Justin VanDongen said to the board, during the Nov. 13 meeting, after pointing out that some of the properties had been on the books for ten years or more.
“We shouldn’t be taxing property that we own.”
VanDongen has also said he doesn’t believe a town should be in the business of selling property. Several of the selectmen voiced concern over becoming landlords for those who enter into re-purchase agreements with the town on property they previously owned in order to gain back the title.
“Once you enter into an agreement, you have to have very specific terms,” VanDongen said to the board during the Nov. 27 meeting.
In some cases, the town enters into a re-purchase agreement that doesn’t reach the point of clearing the land-owner’s debt. At that point, it isn’t unusual for the lien, foreclosure and re-purchase agreement process to happen more than once.
“Do we want to continue the practice of continuing to offer a re-purchase agreement?” VanDongen asked the board. “It that re-purchase agreement fails, do we then want to dispose of the property?”
“It has to go on a warrant, doesn’t it?” Selectman George Jellison asked, regarding voter approval of selling a tax-acquired, town-owned property.
VanDongen asked if a limit should be set on the number of times the town will enter re-purchase agreements for a given property.
“I think once,” said Chad Terry, who chairs the board of selectmen. “If it gets to that point.”
The MMA recommends not offering re-purchase agreements. Hutchins said she agrees with that recommendation.
“I think the process should always be the same, having Justin communicate with them,” said Donahue. “I think there needs to be that human interaction to figure out this property has no other action to take… All we want to do is get our money.”
VanDongen said the board of selectmen has the right to grant a delinquent land owner a poverty abatement, which excuses their tax payment or payments, according to the board’s discretion. Abatement must be offered prior to the foreclosure process, VanDongen pointed out.
“I don’t think the town has had a policy of taking people’s property and selling it for quite a few years,” said Jellison.