After its first tax sale in six years recouped more than $300,000 in back taxes, the town of Essex plans to increase the threshold that triggers the home-selling process to avoid making it an annual occurrence.
“We don’t really want to go to tax sale every year. It’s a large process, it’s time and resource consuming and it’s disruptive for the taxpayers,” finance director Sarah Macy told the selectboard last week. “We want to give everyone as much opportunity as possible to get current, to work with us before we go into this process.”
Tax sales are auction-style transactions in which municipalities can sell a person’s home to recover owed property taxes. The selectboard adopted a new tax sale policy last year at the recommendation of Macy, and shortly after authorized the town’s first sale since 2012.
Thirty-four delinquent accounts received demand letters from the town, and all but two of those properties either paid in full or hopped on a payment plan prior to the sale date last September. Of the two remaining properties, one redeemed – or paid the amount the property sold for plus interest – while the other account has until September 2019 until the sale becomes final.
At the time of the tax sale’s initiation, the town was owed just short of $1 million in back taxes, or about eight percent of its general fund budget. A year later, the town is owed about $630,000, or under five percent of the budget, Macy said, with much of that balance coming from taxpayers on active payment plans.
The drop shows the new policy was successful, Macy said. But she asked members to consider several revisions that would limit the policy’s scope. Headlining her request: A change to the policy’s trigger point, or the percent threshold at which the town can initiate a tax sale.
Currently, the policy says staff must ask the selectboard authorize a tax sale whenever the delinquent tax total is greater than 3 percent of the general fund budget as of May 1. But Macy believes 3 percent to be an unrealistic goal – under the guidelines, the town would be preparing for another tax sale this year, with about 12 accounts in its sights – and instead recommended raising it to 5 percent.
Macy also suggested limiting who’s eligible for tax sales. The current policy says properties without payment plans that are delinquent for multiple years or for a single year while owing more than $10,000 will be included in the process.
But without a minimum on the multi-year delinquencies, the policy could theoretically allow the town to send properties with miniscule amounts of taxes off to tax sale; Macy used discretion this year when electing not to send a handful of properties to tax sale this year that owed less than $1,000 because she said the cost in attorney fees to pursue such small amounts wouldn’t make financial sense.
To avoid such scenarios, she recommended the board place a $2,500 threshold.
Macy’s final recommendation centered on the tax abatement process. She proposed adding language to the policy that says taxpayers have a right to request an abatement hearing before the Board of Civil Authority. While that change isn’t substantive – the right to abatement hearings are codified in state law – Macy said she included the language at the request of some selectboard members, who wanted the policy to include all the necessary information.
The selectboard concurred with the changes by formally accepting the revisions and now plans to adopt the new policy at its next regular meeting.