City of Rochester
News Release
(Friday, March 22, 2013) – In 2009, the City instituted a bulk tax lien sale to American Tax Funding Services (ATFS) as a way of dealing with delinquent taxes, much the same as Monroe County and New York City had done. Prior to that time, the City conducted annual mass foreclosures. The City is in the fifth and final year of its agreement with ATFS.
Last year, we commissioned a study of this process and we now have the results of the review by the Center for Community Progress. The final report describes both positive and negative impacts resulting from the sale of tax liens. The study found:
- The bulk lien sale does not directly increase neighborhood destabilization and has generated a short term increase in the City’s cash flow;
- The process does not achieve enforcement of taxes or timely change in ownership for all tax delinquent properties; and
- A high volume of properties that remain tax delinquent for an extended period of time results in serious community impacts.
I will work closely with City Council and the consultant to obtain more information about their recommendations. We will have to determine if the report’s recommendations will prevent negative consequences and if a change in our current course is warranted.
Cities like ours across the country are struggling with the dilemma presented by a lack of demand for existing housing and the need to improve the quality of housing. We are a city built for more than 330,000 people and now have just over 210,000. As a result, we have too much housing and the consequence is a lack of demand for the poorer housing stock. Much of our city housing was built more than 60 years ago for a different era with small wooden structures on small lots, no driveways and interior layouts and systems that do not work today. These are often the properties that become abandoned and eventually demolished. To try to rebuild them is cost prohibitive and would be ineffective due to the lack of demand for such housing. In addition, we would be following a random pattern of failed properties that would dissipate our efforts.
Even though we have too much housing, we do not have enough good housing. We are actively engaged in developing new and rehabilitated housing that meets the needs of our citizens across the city. This includes subsidized and market-rate single-family homes owned and rented in neighborhoods, subsidized and market-rate apartments, special needs housing and condominiums in the Center City. These efforts are strongly impacting the quality of our neighborhoods and the people who live in them.
I believe the solution is to bring the supply of housing into balance with the demand over time while improving the quality of our housing at the same time. This requires what sometimes appears as a contradiction as we demolish some structures and build others. It also requires, in an environment of limited funding, that our efforts are focused enough to have a significant impact on the quality of our neighborhoods.
To a significant extent, the tax delinquency issue in cities is a result of this dilemma. The process by which we collect delinquent taxes impacts the dilemma, but we need to be careful not to claim that we can solve it exclusively through our collection process; to confuse cause and effect.
It is through tax foreclosure that the City gains control over many of the properties that impact the balance of demand and quality. As the Report suggests, the faster that properties are unsuccessfully caught in the collection process are moved to new, more stable ownership, the less the negative impact on the neighborhood. These are the so called “limbo” properties. However, to successfully make this change there must be sufficient demand for the property to create responsible ownership. As noted above, this does not always exist and if we move such property from the tax lien to the foreclosure process, we will need a program and funding to deal with them. This is a situation we should try to improve, before we decide how to respond, we need to be sure that we are not just moving the problem around.
The collection process is important to how the City funds its services not only in total, but in the equity of the individual burden. In either the sale of tax liens or the foreclosure process, we need to make sure that people respect the obligation to pay their fair share. To the extent that we provide the opportunity to pay under different terms, as we do with both tax liens and foreclosures, we need to determine that we are helping people who need it, rather than people who are trying to avoid their obligations.
If we speed up the foreclosure process, as suggested in the Report, we need to make sure that we are mindful of the impact on citizens who deserve our help and the impact on the neighborhood of not providing that help. This is particularly the case when more than 80 percent of the limbo properties are occupied. The Report suggests that we should further review the tax lien and foreclosure process to make sure we are achieving this equity and I support doing so.
The issue of delinquent taxes is a complex and difficult one – with no easy solution. I am looking forward to working through this matter with our partners in the months to come.
Read the full report.
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News Media: For further information please, contact City Treasurer Charles Benincasa at 428-6705.