North Adams Mulls Payment Plans for Tax ScofflawsBy Tammy Daniels, iBerkshires Staff
11:46PM / Thursday, August 09, 2012 | |
NORTH ADAMS, Mass. — The Finance Committee will consider ways to aid delinquent taxpayers in meeting their obligations and get more money into the city's coffers.
Administrative Officer Michael Canales is recommending a formal payment plan for property tax scofflaws that will allow them to catch up on their back taxes within a specified period and begin taking some $1.4 million in outstanding taxes dating back at least a decade off the city's books.
He updated the committee on Thursday was the third meeting of the committee in reviewing the tax collections process.
To help homeowners catch up, Canales said the City Council could authorize the treasurer to enter into formal payment plans ranging up to five years and waiving up to 50 percent of the interest as an incentive.
But, he said, the city would keep track of the interest because if owners don't fulfill the requirements, the penalties would be re-instituted.
The committee, made up of Chairman Alan Marden, Lisa Blackmer and David Bond, agreed to consider the proposal. Blackmer questioned if the General Government Committee should review any proposed ordinance; Canales thought Finance could refer it with a recommendation.
Councilor Jennifer Breen, who attended the meeting, asked if it was possible to garnish the wages of tax scofflaws or take them to court. Mayor Richard Alcombright said they would look into wage garnishing but cautioned that getting a court judgement didn't guarantee that payment would be made.
The city is currently collecting about 96 percent of its total billing, with the goal 98 percent that would put in line with state recommendations.
"We do want those as close as we can to 100 percent," Canales said. "We will never be 100; there's no community that hits a 100 percent of collections in the year ... There's always going to be people who don't pay, who pay late."
The city has seen collection efforts on excise and water and sewer rise from 96 percent to 100.4 percent of expected receipts.
Both Canales and Alcombright credited the treasurer's office for aggressively tracking and going after late payers. Canales said the office has tightened up its collections process to ensure it's alerting citizens when they've hit the 30-day mark, and then following up with calls and hand-delivered notices.
"Those are the ones that we have to give estimates to the state on how much we're going to collect and then we need to come in as close to that target as we can," said Canales of excise and water bills. "If not, the deficiencies get made up out of our free-cash calculation, so if you end up not taking in enough, it can affect your free cash the following year."
While failure to pay excise tax can lead to warnings and loss of license through the state Registry of Motor Vehicles, the closest the city could do to get water bills paid is shutting off the faucet.
But that has serious complications that the committee and administration said had to be taken into consideration, such as multi-tenant housing in which some tenants or landlords are paying and some not.
"I'm very soft when it comes to shutting off water ... it's a health issue, it's a safety issue," said the mayor. "It's a very difficult call."
Of more concern was clearing the books of more than a $1 million in back taxes and penalties — some of which is on properties that aren't worth collecting on.
"We've got all this stuff out there that's money on paper but it's not anything," said Alcombright. "It's like an uncollectible, it's like a bad debt."
Canales estimated some 170 properties were delinquent and accruing 14 percent in interest penalties. Among those were homeowners who had simply gotten behind, properties where structures no longer existed, properties that essentially had no owners because they had died or could not be found, and properties in tax title but not taken possession of yet by the city.
Alcombright said three vacant properties made up about $200,000 of the delinquencies; $83,000 alone was due on two apartment buildings on East Main Street that had been torn down two years ago. Even if the city took possession of that property, it was no longer worth anything.
Last year's tax sale involved some $660,000 in taxes and penalties and brought in a little over $100,000. The city's options are to take tax possession of more properties and sell them or sell the entire list to a company that would do the same thing.
Going forward, Canales said the city had to be consistent in its approach to reduce the backlog and prevent another from occurring.
"If we don't do something that number will be $2 million in a few years."
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