Public Comments for 01/24/2023 Finance - Subcommittee #2
HB1402 - Personal property taxes; valuation.
HB1486 - Personal property tax; farm machinery and farm implements.
HB1677 - Retail Sales and Use Tax; diagnostic work for automotive repair and emergency roadside service.
HB1710 - Real property; additional tax on commercial and industrial property in certain localities.
HB1749 - Real property taxes; rate of increase procedure.
HB1942 - Real property tax; notice of rate and assessment changes.
HB2110 - Delinquent tax lands; extends maximum duration of an installment agrmt. between locality/landlord.
The following comments are addressed in opposition to House Bill 2110 proposing amendments to Virginia Code §§58.1-3965 and 58.1-3974 related to delinquent tax sales and redemptions. I am an attorney with the law firm Taxing Authority Consulting Services, PC (TACS). Our firm represents 95 Virginia cities, counties and town through their treasurers, finance directors, boards and councils in collecting delinquent tax accounts. I have significant concerns with the text of HB 2110 and the effect that it will have, not only in the collection of delinquent taxes, but the overall impact to communities that benefit from the restoration of delinquent properties to the active tax rolls and productive use. The prime concern with the proposed legislation is the adverse effect that adding a year-long redemption period to the end of the process will create in the neighborhoods where the delinquent tax parcels are located. Most properties do not qualify for a judicial sale until taxes are at least two years delinquent and then the legal process alone takes nearly an additional year with redemption possibilities throughout the sale process. Additionally, most properties moving into sale have severely delinquent taxes and, if any structure exists on the property, it is usually in a dilapidated state making a sale to productive use a benefit to the locality and the surrounding properties. The proposed year-long post-sale redemption period will render the property useless for the first year post-sale. This “stall period” will further depress any surrounding home value in the affected community while the high bidder is forced to bide her time until the forced redemption period passes. Furthermore, given that bidders will not be able to make active use of the property for a year, the bid prices achieved will be significantly diminished from what a would-be investor might pay. The irony of this last fact is palpable, in that the whole purpose of the proposed legislation appears to attempt to protect heirs, when a diminution in a sale price will lessen the amount that any heir might claim post-sale pursuant to Virginia Code §58.1-3967. The tax sale process is intended to afford due process notice to those who may have an interest in the real estate involved. The real estate litigation professionals at TACS employ a number of tools to locate heirs and individuals that may have an interest in the property prior to the sale of the real estate involved. In nearly every case, the heirs express interest only in appearing at the auction to receive good, clear and marketable title through the purchase of the property, which saves the effort and expense of attempting consolidation of the various familial interests to achieve the same result as a tax sale. In my twenty-three years of experience in this field, HB 2110 will not advance the interests of the heirs. In the event a property is redeemed, the heir would have to pay a significant premium over just bidding on the property at the auction and, even then, the real estate title is still clouded post-redemption. House Bill 2110 does not better the situation for heirs to property. The true effect would be negative for local governments attempting to maintain community standards and adequate finances for its operations and would diminish the funds that an heir might receive in excess proceeds from any such sale. For these reasons, I ask this Sub-Committee not to advance this Bill.
I am writing with regard to HB 2110. I am an attorney with Taxing Authority Consulting Services, P.C., a law firm that works with local governments to help collect delinquent taxes. My colleagues and I are concerned about this proposed legislation and particularly about the unintended consequences from imposing an additional 1 year redemption period after the sale. Currently, property owners and heirs are provided multiple notices from the local government and then from the tax sale attorney. Properties have to have at least 2 years of past due taxes to even qualify for a tax sale. The goal of the Treasurers and Finance Directors we work with is not the sale of the property but the collection of the taxes so they are always willing to entertain a reasonable payment arrangement. Only where no payments or arrangements are made does the property proceed to sale. Consequently, the owners of a property received numerous notices over several years concerning the outstanding taxes. The owners and heirs receive specific notices as part of the sale process and are then made parties to a lawsuit and served with court papers. It typically takes approximately a year before a property actually goes to sale. While the addition of the proposed 1 year redemption period adds additional time to this already lengthy process it would also have other consequences that are counter to the local government’s interests and public policy. This additional year would seriously undermine the ability of the locality to get the property back into productive hands. Many of these developed properties are in poor condition and often times tax sale actions are taken at the behest of local code enforcement agents or zoning officials. The additional redemption period that is proposed would limit the tax sale purchaser from taking actions to fix up the property or remediate borderline nuisances. Instead the property would remain in limbo until that redemption period lapsed. While the intent of this bill is to help heirs of property it does not really create any additional opportunities, just adds additional time, but does so at the expense of efficient operations of the local government. Thank you for the opportunity to comment on this bill.