I have recently seen some odd and ill-informed anonymous discussion on social media regarding how the city manages overdue property tax situations. For general information about how Saratoga Springs collects taxes, levies, and assessments, and when, why, and how the city places liens on property, etc., please see section 4.1, Tax Collector, of our City Charter.
First, on a positive note, the vast majority of Saratoga Springs city taxpayers pay their property taxes in full and on time. In a typical year 95% to 98% of property taxes due are paid on time. Most property taxpayers pay their full annual bill in the 1st quarter of the year (rather than the allowable quarterly installments), due in part to the discount the Charter provides for doing so. Full payment during the first quarter provides the city with the benefit of excellent cash-flow year-in and year-out, and also helps us maintain our excellent AA+ Bond Rating. Non-payment of property taxes or certain other property-related fees due to the city results in monetary penalties and the placement of a lien or liens on the delinquent property or properties. Once this occurs the city becomes the primary lienholder on such property, ensuring that the city and its taxpayers will eventually receive all monies due from those parcels. For example, sale of such a parcel cannot close until the city has received payment of all back taxes, fees, and or penalties. Furthermore, the city can foreclose a parcel on which we have placed municipal liens through an In Rem process.
Historically Saratoga Springs has undertaken In Rem proceedings about once per decade. The last one was completed in 2012, during my first year in office. As a result, the city was made whole on all back taxes, expenses, and fees associated with the complex In Rem proceedings, and at my recommendation the city held aside 2 parcels to build 3 affordable homes (a duplex on Cherry Street and a single-family home on Division Street) with Habitat for Humanity and Saratoga Builders.
The city is currently evaluating when to begin our next In Rem foreclosure as a result of the number of zombie properties we now have in our city (the anonymous writers of the “IOU” post on social media would have discovered this had they bothered to call me or my office, or filed a simple Freedom of Information request). There are ongoing meetings with the Legal Department, the Department of Public Safety, and the Finance Department. The first step, which is currently ongoing, is to determine if there are enough delinquent parcels to justify the cost and resources required for a complex, expensive, time-consuming In Rem foreclosure action. Given our high compliance rate and speedy collection of property taxes, doing this annually is not cost effective – an annual process would likely cost the city’s taxpayers more than what is owed and would be collected, making us all worse off. Furthermore, the law requires that the city allow taxpayers a reasonable amount of time to pay overdue taxes before taking possession of their property. Most of us would find this more than appropriate, as we don’t want to allow the government to prematurely take property from people experiencing short-term financial difficulties. Every reasonable opportunity must be given to allow property owners to meet their legal obligations before taking drastic action against them.
Under the current processes required by our City Charter and managed by the Finance Department, the city always collects all property related taxes and fees that are due. Eventually those monies and associated penalties find their way into the city’s coffers, but we shouldn’t and can’t act too precipitously or we risk taking away someone’s home when other solutions can be pursued. Balancing the interests of the City and its taxpayers in the aggregate with the interests of the individual’s subject to foreclosure proceedings in a cost-effective and compassionate manner is a challenge. In fact, during the 2012 In Rem process the City foreclosed on a home that was worth much more than the owner’s unpaid tax liability. We worked with the owner to find a solution, suggesting several options that would have allowed him to stay in his home and pay the city what was owed. Unfortunately he did not seem to comprehend the situation, and despite our repeated attempts to help him he did not pay his taxes and the city was forced to foreclose on his home, leaving him homeless. This was one of the most difficult things I have had to do since taking office, and not something I want to ever have to do again. Notwithstanding that, I will continue to do all that I can to protect the interests of this city and its taxpayers while striving to be both humane and efficient.