Council Updated on New Delinquent Tax Collection

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By Terry Rogers 

In 2017, the City of Milford updated several areas of the City Charter including sections related to how delinquent taxes were collected in the City. During Charter workshops, City Solicitor David Rutt explained that the State permits two methods for collection of delinquent taxes. The former method used by the City could take up to two years with significant court costs. Mr. Rutt explained that the second option, a monition sale, could be completed in six months, reducing costs to the City and encouraging property owners to resolve delinquency more quickly. City Council approved the changes of the Charter and City staff has implemented a more aggressive collection of delinquent taxes after the Charter was approved by the Delaware General Assembly.

“According to our City Solicitor, this was a very out of date procedure,” Mr. Norenberg said. “When procedures for state law changed, our Charter didn’t keep up and modernize, so this provision was finally updated in 2017. Now, we begin with a 30-day notice giving the owner an opportunity to make payment. If payment is not made, we then follow proper filings and additional notices which could lead to a monition, or Sheriff, sale. If the property sells at the Sheriff sale, the City would get the funds about 90 days later.”

On Monday, January 8, Suzannah Frederick of the City Finance Office, provided a report to City Council on the progress of the new munitions method. Frederick said that the City began with what they labeled the Top 10. These ten properties owed over $200,000 in delinquent property taxes. The first notices were sent In August and the first sales scheduled for December and January, a process that appears to be 10 to 12 months quicker than the old method.

“Of those Top 10, we have collected 26 percent of what was owed already,” Ms. Frederick said. “We have some properties who have paid in full, two that have sold and several that have intermittent payment contracts that, as long as they are paying and paid to date, the monition sale will not move forward.” Ms. Frederick said that, in December, they chose an additional 25 properties to work on. The total owed on those properties was around $157,000.

Of the 25 additional properties selected, Ms. Frederick said they had collected approximately 17 percent. Overall, they have collected around $80,000, or 22 percent, of the $358,000 in delinquent taxes owed to the City. Frederick said that she had a promise of an additional $5,000 that was to be paid on Tuesday, January 10. Councilman Archie Campbell asked if the City was also going after property owners who owed smaller balances.

“We are,” Ms. Frederick said. “The average owed in the Top 10 was between $16,000 and $25,000. In the next 25, the average was between $5,000 and $16,000. A lot of people are coming in because they hear we are going after back taxes.” Mr. Norenberg explained that as more delinquent taxes are paid up to date, amounts owed will be lower. He said that eventually people may only be behind one or two years which will mean lower amounts owed.

Councilwoman Katrina Wilson asked whether individual circumstances were taken into account when staff spoke to those who were behind in their taxes. “You’re a billing person, your talk is hard,” Ms. Wilson said. “I’m not saying your talk is hard on the phone, but when you are talking to people in hardship, you want to be able to find that comfort zone, but be stern that this must be addressed. Not everyone just doesn’t want to pay their taxes, there are different levels and different reasons.”

Frederick said that there were staff members who were very good at diffusing situations and talking to those who were behind in their property taxes. She said that staff has gotten through to many of the property owners simply by talking to them. When they first began the new process, staff was talking with property owners who had not paid property tax since 2010. Frederick pointed out that if the property tax was $450 per year, it may seem like a low number, but with taxes and fees added over seven years, it adds up.

“In 2016, the City offered a [interest] forgiveness policy and not too many people took it seriously,” Ms. Frederick said. “We are not giving forgiveness now. We are being firm and telling them that option is no longer available.”

Norenberg said that the positive thing about the new collection program is that people are responding immediately after receiving the first letter rather than waiting for legal notices posted on their door. “Our primary goal is to recover funds owed to the City, no to sell properties people are living in,” he said. “We now have people who are coming in to set up payment plans. If the property has already entered the monition process, we can stop it if the owner sets up a payment plan and pays as agreed. The process can be started fairly quickly if the owner stops paying.”

 

 

 

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