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Michigan Property Tax and Civil Tax Collection Suits

Civil suits to collect property taxes as an in personam debt are now limited to the person who owned the property when the tax became due, but the Michigan act does not completely prevent collection of property taxes as an in personam debt even after the properties returned to the County and sold.

The 2017 Amendment:

Public Act 189 of 2017, effective November 17, 2017, amends Sections 47 and 89a of the General Property Tax Act which permit a local treasurer to bring civil suits to collect property taxes as a debt of person to whom the tax is assessed. In 2016, one city filed hundreds of suits targeted at banks and investors, which were the party assessed, but not necessarily the owner of the property when the taxes became due. The new act limits such suits to persons who were assessed and the actual owner or occupant at the time of the assessment and any claim that the person sued was not the owner or occupant can be raised in the suit:

4) Notwithstanding any other provision in this act or charter to the contrary, a person is not subject to personal liability for any unpaid property tax levied on real property unless that person owned the real property on the tax day for the year in which the unpaid tax was levied. A person contesting personal liability under this subsection may raise the issue in an enforcement action in the trial court regardless of whether the person previously raised the issue with the local board of review. As used in this subsection, “trial court” means any district court, probate court, municipal court, small claims court, appellate court, or other tribunal in which the issue of personal liability is litigated.

(5) As used in this section, “person” means an individual, partnership, corporation, association, limited liability company, or any other legal entity.

The city referenced above essentially sought deficiency judgments when tax foreclosed properties were sold for less than the taxes due. The lender-defendants were generally not the owners when the taxes were levied. The new act should prevent suits unless the defendant is both the party assessed and the owner when the taxes at issue were assessed.

Further limitations should be considered.

The new act does not prevent local treasurers from pursuing in personam suits even after the delinquent taxes have been returned to the county for collection and the property has been foreclosed upon and sold. Perhaps it should.

Throughout most of the history of the Michigan property tax, the property tax was considered an in rem tax. If the taxpayer did not pay, it would lose the property, but nothing more. In 1929 – 30 OAG p 426, the attorney general opined that despite statutes that provided taxes as a debt and the distraint provision that allowed personal property to be seized and sold, the act did not provide for personal liability for taxes levied against real property. The distraint provision (MCL 211.47) specifically allowed the taxpayer to deliver a deed to the property which would stop the seizure and sale process. Thus, if the property were worth less than the taxes, one could limit the liability to the value of the property by deeding the property to the state. (See MCL 1979 211.47). In 1987, Section 47 was amended to remove the option of tendering the property and added Section 2 to specifically allow civil suits to collect the tax.

In 1999, the entire tax sale procedure of the act was rewritten, replacing the tax sale with a forfeiture, foreclosure and auction system generally run by the County. The 1999 amendments made the time from nonpayment to loss of the property shorter and eliminated the former tax sale, which afforded a measure of protection for the tax debtor’s equity in the property. Under the former system, a tax deed was auctioned to investors who would pay the amount of the taxes, interest and fees, for even lower share of the property. Thus, if the property were worth substantially more than the taxes, the taxpayer might come out of the tax sale with some remaining equity in the property. Since 1999, the tax foreclosure process does not return to the taxpayer his equity in the property. The County forecloses and sells the property. None of the sale price is returned to the taxpayer – even if the proceeds exceed the taxes, penalties and interest. Further, while many properties may sell for less than the tax, penalty and interest due, the present tax sale system allows some properties to be withheld from sale or sold in bundles or transferred to local government, making it difficult to compute how much deficiency should be charged to a taxpayer in an in personam suit.

Consider the possibility that a delinquent taxpayer who at the time of foreclosure owes substantial taxes, but the property’s value should more than pay them. The taxpayer dutifully moves out after the foreclosure and the property is promptly vandalized. It sells at the county auction for less than the taxes. Why should the taxpayer be liable for the deficiency when the property, at the time he ceased to be the owner, would have satisfied the taxes and the decrease in value occurred during someone else’ ownership – particularly when the subsequent owner is the government itself? Consider the situation in which the property is sold by the County in a bundle of many properties and whatever amount is allocated to the property is less than the taxes. Perhaps the taxpayer’s property would have sold for the full amount of the taxes or more if it were sold separately. Consider the situation in which the county sale is delayed or when the property is transferred to a local unit and may not be sold for many years. A price lower than the taxes due may be attributable to a downturn in the market after the foreclosure. There is a certain irony in the creation of a tax foreclosure and collection system which takes the property faster with no protection of the owner’s potential equity, keeps any profits while reserving the right to selectively seek deficiency judgments when the property sold does not satisfy the tax debt, even when the property would have been sufficient to pay the debt at the time it was taken.

These and other practical problems can be resolved by requiring any such suits to be filed before foreclosure and by returning to the practice of allowing a taxpayer to resolve the suit by delivering a quit claim deed. That would require further amendment of Sections 47 and 98a of the General Property Tax Act. Alternatively, if the present practice is to continue, local units bringing such suits should be required to specifically plead and prove that the value of the property was not sufficient to pay the tax debt at the time the owner and party assessed ceased to be the owner.

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Tampa Realtor indicted for foreclosure, bankruptcy fraud

A Tampa Realtor who allegedly tried to stop Fannie Mae from foreclosing on a property so that he could sell it himself has been charged with bankruptcy fraud and falsification of records in a bankruptcy proceeding, according to a report by the United States Attorney’s Office, Middle District of Florida.

David Lyle Morgan, 53, allegedly filed fraudulent bankruptcy petitions in a homeowner’s name without their knowledge right before a scheduled foreclosure sale, preventing Fannie Mae from conducting a foreclosure sale and obtaining the title to the property.

Then Morgan allegedly kept trying to sell the property and earn, as the U.S. attorney put it, “illegal real estate commissions.” He had entered a contract with the homeowner to sell the property, according to the report.

Morgan is also accused of lying in the bankruptcy petition he filed, the U.S. attorney said.

U.S. Attorney for the Middle District of Florida Maria Chapa Lopez unsealed the indictment against Morgan on Thursday. The Florida Realtor could face up to 30 years in federal prison.

The Federal Housing Finance Agency’s Office of Inspector General investigated the case. Special Assistant U.S. Attorney Chris Poor will prosecute the case.

Email Emma Hinchliffe

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A Closer Look at the Problem of California Divorce and Foreclosure …

Foreclosures are predictable and avoidable, but always require a well thought out response. Homeowners in Fresno California have several ways to deal with foreclosures, according to Luxury Property Acquisitions, the real estate experts in foreclosures.

Foreclosures bring about an undeniably a very stressful period of time, especially when homeowners are also facing other life emergencies, such as losing a job, a medical emergency or increasing debt. Personal and family issues can compound the challenge, and homeowners may be left with no option but to find a ‘we buy houses Fresno’ deal for their house and obtain immediate cash. There are many benefits in searching for a company like ‘Luxury Property Acquisitions LLC.’ Many homeowners have walked away with all mortgages paid off and money in there bank accounts.

Rise in foreclosures is associated with increase in divorce rates, as being forced to abandon one’s house, moving to another property or staying on rent, and the financial crunch involved case relationships to suffer. The worst scenario is when the property prices have dropped to a significantly low level in the Real Estate Market, requiring the owner to simply sell very quickly, or file for bankruptcy.

The first step is to stay calm and explore the options that are available. The time spent doing research is valuable and can open up new opportunities. The second step is to actually approach the lender to arrive at a viable financial plan to avoid foreclosure. Delays in payments too need to be disclosed early on so as to maintain trust. Lenders have several options at their disposal, such as modifications, repayment options, reinstatement, and even the option to file for bankruptcy. Finally, refinance is always a great way to rescue the situation, modify the loan and start with low payments.

“We buy houses” offers are now increasingly popular in Fresno California to prevent foreclosures or bankruptcy. In case the above fail, selling the house for cash is a good way to stop foreclosure, as ethical and honest dealers stick to their timelines, sell fast and bring in all the cash just as promised. In good conditions, a home sale offer can be made inside a day, and the closure can take place in just a few days. Selling a house for cash also comes with many other benefits, such as no requirements for repairs.

Luxury Property Acquisitions is a trusted foreclosure expert in Fresno California, known for its ethical processes and a sound investment philosophy. The agency offers cash deals for all types of houses in their existing conditions at any locality, and closes within a month. Home owners can thus alleviate their immediate problems without any delays and with assurance of receiving the best deal possible.

“Our service allows Fresno home owners to sell fast, without the need to make any repairs. They also save thousands in fees and commissions that conventional real estate brokers charge, while the sale itself can get delayed. A quick sale and access to cash is our way to help people attend to their immediate challenges,” says a spokesperson from Luxury Property Acquisitions.

For more information, please visit:  

Media Contact
Company Name: Luxury Property Acquisitions LLC
Contact Person: Oswaldo (Ozzie) Colin
Phone: 747-231-7567
Country: United States

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As Fight Continues for Sandy Victims in 2018, NJOP Lays Out Problems, Solutions

On his last day of office, Gov. Chris Christie pocket-vetoed the “clawbacks” legislation that had been in the works since October 2016, but the New Jersey Senate reintroduced it earlier this month. The Southern Ocean County-based advocacy and activism group New Jersey Organizing Project has created a helpful explanatory webpage for those still struggling post-Sandy to read about challenges, solutions and other survivors’ stories.

What are clawbacks? Many residents are being notified by the RREM program, in the form of a letter or verbal warning, they need to pay back a portion of their grant funds. What isn’t always clear is why.

“While in some cases, these debts are likely linked to the DCA’s interpretation of duplication of benefits under the Stafford Act (federal law),” according to NJOP Director Amanda Devecka-Rinear, “there is no way to appeal or adjust the amount based on ability to pay, other than to submit additional receipts. Families are then given 36 months to repay and simply told to send a cashier’s check made out to ‘Treasurer, State of New Jersey.’”

NJOP’s position is that Sandy victims “deserve a real appeals process for clawbacks – one where we can actually understand the calculation, and why we’re being asked to pay the state back,” she said. “We deserve to have the clawbacks eliminated or reduced significantly. Even if the calculations ‘make sense,’ they still don’t – we signed every document, followed every rule and used every dollar to rebuild our homes, and we may still be paying off Small Business Administration disaster loans, or other loans we took out to get home or hang on until we could.”

According to “The Long Road Home,” a report by the New Jersey Resource Project released on the fifth anniversary of Superstorm Sandy, 20 percent of families surveyed in the RREM or LMI programs were told they owe money back to the grant programs, Devecka-Rinear explained. More than a third of this group were informed verbally and never provided with written notice. Just over half reported that they wanted to appeal but did not know how to do so. Of the homeowners who reported a clawback amount, the average amount they were told to repay was $30,643, and nearly 90 percent reported that they could not afford to pay the money back.

“Part of the problem is that New Jersey’s RREM program only gave people up to $150,000 – where New York City, for example, gave up to $300,000,” Devecka-Rinear said. “Many families needed additional funding from other sources covered under the Stafford Act, and that wasn’t a great start. The other part of the problem is largely the inconsistent, confusing way the RREM program was administered.”

Many families have been further delayed by waiting for a charging document from a law enforcement agency to move forward with grant adjustments after contractor fraud. Two thousand days after Sandy, contractor fraud still keeps families out of their homes even if they have engineering reports or other sufficient evidence of fraud.

Where foreclosure legislation is concerned, some people got their banks to comply and others ran into roadblocks.

“All families that need assistance under the Sandy foreclosure legislation should get it,” according to NJOP. “Banks must be made to respect the law, and there are likely families who could still benefit from a forbearance who may not have initially applied. We need to continue to stop foreclosure on Sandy families.”

NJOP believes the best solutions are achieved by community members working together and the best course of action is to enlist the help of new Gov. Phil Murphy and DCA Commissioner Sheila Oliver to support the legislation and expand the beneficial programs that help families who are still putting back together the pieces of their lives.  —V.F.

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Another School Shooting—But Who’s Counting?

Seventeen people were killed in an attack on Wednesday. America’s inability to track gun violence is standing in the way of preventing the next one.

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Police report

Hot Springs Village police received more reports of scams in the past week.

Jan. 31
After an officer responded to a complaint about a man cutting trees in the Fineza Way area, it was found to be a logger with a Property Owners’ Association contract to cut trees.
The driver of a 2017 Ford Fusion that collided with a 2006 GMC Sierra at DeSoto Boulevard and Fresno Road was cited for careless and prohibited driving. Both vehicles had been eastbound. The report said the driver of the Ford told an officer she started to turn left, but decided not to turn. Damage: Ford, $3,000.
The driver of an eastbound Nissan on DeSoto Boulevard said he had to move to the right to avoid a vehicle that had made a sudden stop to turn left onto Emperado Way, and was able to stop, but was hit by a Toyota. Both vehicles had about $1,000 damage each. The Toyota’s driver was cited for following too closely.

Feb. 1
A deer died at the scene after being struck by a truck on Fresno Road, near Vascongadas Way. The truck’s bumper had about $850 damage.
A 2003 Oldsmobile Alero reportedly tailgated in Balboa Gate.
A Mesero Place resident told police a man had entered a neighbor’s house he was watching and was walking around taking measurements, but he would not identify himself. The house is in foreclosure, and it was determined the man had the legal right to be there.
A Villager told police someone had stolen two paddleboards, four paddles and a rack from his patio. One is a 10.5-foot blue-and- white Surf Tech and the other is an 11.5-foot red-and-white BIC. Both are standup boats made of hard plastic, and are valued at $900 and $1,100. The two paddleboard paddles and two kayak paddles had metal handles and plastic on the ends.
A Daganza Place resident told police she had allowed her roommate to use her car to pick up her boyfriend the previous day, and had not seen them since. She had heard they had both been arrested in North Little Rock. The car owner must contact the NLR police to learn how to get her car back.

Feb. 3
A tennis player told police someone broke the window of her parked car at Coronado Tennis Center and stole her purse.
A Trevino Place resident told police she believes a former roommate slashed the rear tires on her golf cart on Jan. 28, and came in the residence and damaged a cabinet door. The cart’s tires had already been changed.

Feb. 4
A man who was recently banned from a Village store left a heavy ice chest at the store, claiming it was a “peace offering.” The chest had random household items, which were logged into the lost and found area.
Two complainants said a Malaga Way resident was either making pictures or shooting a video of a man painting a deck. The resident was told to not be harassing the man and woman. He said he has a restraining order against the two and another man and was documenting their presence. He did not have a copy of the order with him.
An officer found freshly cut medium-sized trees on Felicidad Way.
An officer picked up a medium-sized black dog walking on Cortez Road near Entrada Way, and took it to the animal shelter. It had a collar, but no identification. No homes were nearby.
A tour bus hit Balboa Gate when exiting the Village, breaking off the buses’ mirror and a camera. The gate had no apparent damage.

Feb. 5
A medium sized dog was barking continuously in the backyard of an Esplendor Way home.
The Daganza Place owner of a 1999 blue Honda Civic wanted to press charges on her roommate for not returning the car. She told police she had checked the Pulaski County jail’s website and learned her boyfriend and roommate had been released, but she had not heard from them.
An officer assisted Arkansas State Police with a two-vehicle no-injury wreck on Highway 7.

Feb. 6
A La Vista Place resident said a friend who had borrowed her bar was refusing to return it, and was trying to sell it.
A Villager told police a caller sent a $4,300 scam check. She blocked his number.
Another Villager told police after he responded to an mail soliciting a mystery shopper, he received and cashed a $1,000 money order, most of which was to be sent to two Texas addresses.
A full-sized white truck reportedly was driven erratically on DeSoto Boulevard.

Feb. 7
A deer and vehicle collided on Maderas Drive. The vehicle had $250 damage to its step. The deer died.
The driver of a Toyota missed a turn off West Villena Drive onto Salamanca Way, knocking down a stop sign. Damage: sign, $150.
A red Nissan Frontier reportedly tailgated in Balboa Gate.
A severely injured deer found at Barcelona Way and Campo Way died at the scene. A Villager stopped to comfort the animal before it died. It was unknown if or where a vehicle had struck the deer.

Feb. 8
An Arias Way resident said he would turn the music down for the night.
A dog was barking non-stop in the backyard of an Esplendor Way home.
Officers placed a bat in a holding container to take to the animal shelter.
A white Toyota truck reportedly tailgated in Balboa Gate.
An officer controlled traffic while a tree was cut down at the Barcelona Road-Cortez Road intersection.
Police and firefighters went to La Vista Lane, where the fire department determined a heat and air compressor had malfunctioned.

Feb. 9
An officer went to a family disturbance at Alhaja Way.

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LePage urges taxation committee to back bill to protect elderly from property foreclosure

AUGUSTA — Gov. Paul LePage implored lawmakers Tuesday to work on a bill designed to protect the elderly from tax lien foreclosures, saying that in the last year alone, 12 elderly Mainers have lost their homes to foreclosure.

LePage spoke at length to members of the Joint Standing Committee on Taxation at the State House during a work session on L.D. 1629, An Act to Protect the Elderly from Tax Lien Foreclosures, which he initiated and which is sponsored by Rep. Ellie Espling, R-New Gloucester.

The governor cited a case involving Richard and Leonette Sukeforth, now both 81, who were foreclosed on in 2015 by the town of Albion, which took the Lovejoy Pond shorefront house and land for nonpayment of taxes. On the day the foreclosure was completed, the town refused to accept a Sukeforth friend’s offer to pay the taxes. Instead, the town sold the property in a sealed bid for $6,500 to the grandson of Sukeforth’s next-door neighbor. The Sukeforth friend submitted a sealed bid for $6,000, just $500 less than the higher bid.

LePage tried to help the Sukeforths when he learned of the foreclosure, but to no avail.

In his remarks to the taxation committee today, the governor said the market value of the Sukeforth’s property was $70,000 to $80,000 and Richard Sukeforth, a military veteran, had worked all his life for what he had and lost everything in the foreclosure.

Furthermore, LePage said, the man who bought the property from the town evicted the Sukeforths from the house in the dead of winter as Leonette lay bedridden in the home. The house was torn down and a new building was constructed in its place.

Calling the case “egregious,” LePage specifically urged legislators to ensure that, during the 18 months it takes for a foreclosure to become complete, a town official or another person sits down with the homeowner to discuss alternatives, which could include a tax abatement, a small mortgage or a reverse mortgage.

“The only intention here is for communities to have compassion for the elderly in their communities,” he said.

Second, he asked the committee to ensure the bill mandate that if a municipality does foreclose and sell a person’s property, the homeowner will receive the balance of the property’s market value once the taxes, interest and fees are paid.

LePage said lawmakers will get to meet Richard Sukeforth, as he plans to bring him to the Capitol next week, on Feb. 13, for his state of the state address, which he did last year. The governor said he also plans to discuss the Sukeforths’ fate in a radio message and in op-ed columns.

He told the committee that, in his many years as a city councilor and mayor of Waterville, the city never foreclosed on an elderly person, as he, the city manager or both would work with the homeowner.

“I am a public servant,” LePage said. “The public is the customer and we ought to treat them with respect.”

Taxation Committee Chairman Sen. Dana L. Dow, R-Lincoln, asked LePage whom he would want committee members to work with on the bill. LePage cited his chief legal counsel, Brent Davis, as well as Nick Edelson, a representative for the state Department of Health and Human Services, who also is one of LePage’s senior advisers.

After the discussion Tuesday with LePage, the committee voted to table the matter to allow more time to work on the bill. The committee could have voted ought to pass or ought not to pass.

Committee members and municipal officials at a public hearing on the bill Jan. 25 questioned whether the requirements of the bill would cost money and place a burden on town officials who are not trained to serve as mediators. Committee member Rep. Matthew Pouliot, R-Augusta, raised that issue Tuesday with LePage, saying he is concerned the bill would force a tax assessor, for instance, to be put in the position of giving financial advice.

LePage said what he proposes would not cost any money at all and that he does not think the person who would help the homeowner should be a tax assessor. It should be a public servant, according to LePage, and could be a town or state official or someone knowledgeable about housing. He said he has enlisted help from Pine Tree Legal Assistance Inc. in such matters over the years and the office has always been helpful.

“There’s many different ways that you can help the elderly stay in their homes as long as they can,” he said.

Rep. Gay Grant, D-Gardiner, said she and others share LePage’s concern for the elderly and that some cases are heartbreaking. But she asked LePage for more data, saying the committee needs to know the scope of the problem — how many people have been affected — because they got “two sets of data” at the Jan. 25 hearing.

LePage said he would provide information about the scope of the foreclosure issue in Maine.

“If it happens once, ma’am, it’s too much,” he said.

Grant agreed that once is enough.

“I’d like the numbers and what are the legal holes we need to fill to solve that problem,” she said.

LePage described Mainers who grew up during the Depression as “Depression babies,” who typically do not want to ask for help and do not know where to seek it.

“These folks very seldom ask for help, and they just take what’s handed to them; and in some cases, it’s unfortunate, because they’re taken advantage of,” he said.

Rep. Bruce Bickford, R-Auburn, said an issue the committee ran into in discussions about the bill is that someone worth $5 million or someone worth $20 could stop paying taxes if they chose, and after they die, their heirs would have to face the issue. He raised the question about whether property owners could receive “means testing.” LePage said he did not object to means testing.

Albion officials have said the town paid the Sukeforths’ taxes in past years when the couple did not pay. When they told Richard Sukeforth in 2015 that his property would be taken, he still did not pay his taxes. But family members said they think he suffered from dementia and did not realize the magnitude of what was going to happen.

Amy Calder — 861-9247

[email protected]

Twitter: @AmyCalder17

Send questions/comments to the editors.

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Despite policy, developers still don’t have to pay back taxes to get City Hall incentives

A development project leaving local governments holding the bag for hundreds of thousands of dollars in taxes and infrastructure may seem like a deal-breaker, but it won’t necessarily stop the cash flow to developers from City Hall.

Over a period of about five years, an investment group involving Lawrence businessman Doug Compton racked up delinquent taxes and special assessment payments, but that doesn’t bar him from applying for additional tax breaks. That’s because the city’s economic incentives policy only prohibits those with “currently delinquent” taxes. That means when indebted properties change ownership or are auctioned off due to tax foreclosure — even if the auction leaves the city eating costs — the developers still qualify for incentives.

Some city leaders think the incentives policy, which was overhauled last year, should remain as is, but others think it should be more restrictive. Commissioner Leslie Soden said she thinks the situation takes advantage of the city’s policy.

“That’s how we create a society, is by having what should be a level playing field for individuals, but instead it just seems that there are all these loopholes that businesses find and take advantage of that individual citizens can’t,” Soden said. “And it’s just not fair.”

Soden and Vice Mayor Lisa Larsen said they think the commission does have discretion when considering future incentives under such circumstances, but Mayor Stuart Boley was wary about not following the policy as it stands.

“Rather than make up some criteria for myself outside of our policies, I think it’s important for us to actually communicate with the public and communicate with the development community clearly,” Boley said. “And that’s what we’re trying to do through our policy.”

How much discretion the commission has in deviating from the policy will likely be tested soon, as a pending economic incentives application for a downtown grocery store and apartment project indicates Compton is likely to join the project once he is in good standing with the city’s incentives policy. The situation also calls into question whether the policy as written is effective or whether it should be less forgiving.

When an investment doesn’t pay off

In December 2016, the Journal-World reported that two investment groups that include Compton, Fairfield Investors LLC and Eastside Acquisitions LLC, had fallen behind on the property taxes and special assessments on 18 properties in eastern Lawrence. At that time, those back payments amounted to $1.73 million, but that total increased as additional taxes and interest added up. Though not all the city’s costs have been recouped, those investment groups are now current on their taxes. A combination of events, including substantial payments, brought Compton and his partners back into good standing with the taxing authorities and the city’s incentives policy.

For one, the investment groups paid about $1.58 million in delinquent taxes in July 2017, according to the Douglas County Treasurer’s Office. About $680,000 remains unpaid, but those properties are no longer in the name of the investment groups. In a statement to the Journal-World, Compton said he was largely responsible for addressing the tax issues.

“(Doug Compton) was one of several investors involved throughout the project but has been one of the only ones to get the past due balances paid,” the statement says.

Soden said she thinks it’s great that a large payment was made, but that she finds the situation disappointing.

“Considering that’s his tax liability and responsibility, I’m not going to throw a ticker tape parade for someone who paid their taxes,” Soden said. “And that doesn’t excuse someone for not paying their taxes on other properties. I find it very frustrating and disappointing.”

One of the 18 properties went to tax foreclosure last year and was auctioned for $1, essentially wiping out about $180,000 in delinquent taxes, special assessments, interest and fees. Another five properties owe a combined $680,000 and are scheduled to be auctioned off in the next tax foreclosure sale, according to the Douglas County Treasurer’s Office.

The investment group did not pay taxes on those five properties from 2012 to 2016. Sometime last year, Emprise Bank, which holds the mortgage on the properties, took over ownership. The transfer of ownership puts the investment group in good standing with the treasurer’s office, though, as the last such sale showed, the upcoming auction is not guaranteed to result in the city and county receiving their share of the total amount owed. Proceeds from tax foreclosure auctions generally go first to repay tax debt and then to other lien holders such as mortgagors, according to the treasurer’s office.

When recently contacted about the tax history of those properties, Compton referenced a statement previously provided to the Journal-World, in which he noted he was just one of six parties involved in the investments in eastern Lawrence. The area is located across 23rd Street from Lawrence VenturePark, a city-owned business park that has also struggled to attract buyers. Though the city created a benefit district that fronted the infrastructure costs for the properties, Compton also noted that the group supported the project for well over 10 years with millions of dollars of private investment.

Compton did not directly respond as to whether he thinks the circumstances follow both the letter and spirit of the city’s incentive policy. In addition to pointing to the history of the project, he noted that he has continued to make investments in projects in that area, such as a new apartment complex that will include affordable housing.

Considering tax history

Assistant City Manager Diane Stoddard confirmed that an applicant for incentives only needs to certify that they are not currently delinquent at the time of the application and formal consideration of incentives. Stoddard said the auctions and sales of delinquent properties would technically write off those debts, though it could be a factor when the commission determines whether to proceed with offering incentives, provided the city is aware of the situation.

Larsen said that while she doesn’t want to put it all on Compton’s shoulders, he is a part of the investment group and the tax history should be considered should he apply for additional tax breaks. She said she would ask for city staff’s help to ensure the commission understands the full picture for all incentives requests, which includes whether a developer has a history of being a good taxpayer.

“I think if it comes to the commission, that’s all information that I would need to have in order to make the decision that I believe is in the best interest of the city,” Larsen said.

Boley was more hesitant about deviating from the policy, saying developers look to the policy to know what is expected. He said he was aware of the significant payment that was made, and that not following the policy could be detrimental to future development.

“The reason that it’s important to follow our policy is because developers who are interested in investing in our community look to our policies to see how we do things,” Boley said. “So for us to have a policy and then deviate from it based on other criteria seems to me to be detrimental to our economic development policies and to our actual economic development itself.”

Though Boley said he does not currently have an interest in changing the policy, he said he would consider it if the public is interested in doing so.

Soden said she thinks that if a developer whose name was cleared via tax foreclosure or by the bank taking over can qualify for incentives, it’s a loophole in the city’s incentives policy, and it “still counts, in (her) book” as a violation of the policy.

Should the policy change?

The City Commission rewrote Lawrence’s economic development policy only a year ago, requiring development groups applying for tax breaks to disclose all partners in the project and whether they are involved with a property within the state that currently owes back federal, state or municipal taxes, special assessments or other debts.

Though Larsen said a developer’s tax history should be taken into consideration when considering new incentives, she doesn’t think the city should go as far as changing its incentives policy. She said the commission cannot codify every single thing that could happen.

“You just can’t legislate every single scenario,” Larsen said. “If there is wiggle room, someone will find it. That is where the discretion of the commission is going to come into play.”

Soden said she thinks the policy should change, and that the commission should think about the spirit of the tax provision and spell it out more clearly.

“You look at the spirit of the policy when it was created, and if there’s loopholes that were created, then you close those loopholes,” Soden said. “That’s just standard policy amendments.”

Boley, while open to the discussion, said having “shifting policies” is unfriendly for development.

“If there is a need to change them, we need to change them,” Boley said. “But I think it’s challenging to do development, and to have shifting policies all the time while you’re trying to do that development is not being friendly to people who want to invest in our community.”

The Journal-World reached out to several local development attorneys about whether the tax provision of the city’s incentives policy is easy to work around, but did not hear back from an attorney willing to comment.

Compton is also part of existing incentives agreements, and Stoddard said those agreements, which she noted involve different partners, don’t allow the city to withhold reimbursements due to delinquent payments on other properties. Last year, the city sent developments at 900 New Hampshire Street that include Compton about $425,000 in tax reimbursements, according to figures provided to the Journal-World from the city. Other properties on New Hampshire Street are due to start receiving reimbursements this year.

The five properties previously owned by the investment group, now owned by the bank, that owe $680,000 will be part of an upcoming foreclosure auction, the date of which is yet to be announced. Stoddard said the downtown grocery and apartment project is continuing to address parking issues, and there is not a date set for when the incentives request will go before the commission for consideration.

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Can NJ’s public pension fund help ease Puerto Rican foreclosure crisis?

Advocates for Puerto Rican homeowners are asking that New Jersey use its considerable influence as an investor to encourage lenders to let up on their foreclosure activity on the hurricane-ravaged island.

Puerto Rico is on the verge of a foreclosure crisis, said Jim Baker of the Private Equity Stakeholder Project.

And New Jersey’s government worker pension fund has committed to invest billions of dollars in private equity firms Blackstone Group and TPG Capital, whose affiliates are foreclosing on Puerto Rican homeowners who have fallen behind on mortgage, property tax or homeowners’ insurance payments in the aftermath of Hurricane Maria, he said.

Moratoriums on mortgage and reverse mortgage foreclosures expire March 19, and Baker told the State Investment Council he’s hoping it will halt further investments with the firms and exert pressure on them to extend the moratoriums and work with owners to stay in their homes.

Move will force a big boost in pension price tag

Tom Byrne, chairman of the State Investment Council, said it was easy to accommodate Baker’s first request, as there are no plans for additional investments with Blackstone or TPG in the pipeline.

The council voted to urge TPG to meet with advocates; Blackstone has already agreed to a meeting. Members said they’re open to taking a stronger position to discourage these foreclosures once the Division of Investment can do additional research.

Bryne said they would likely find a sympathetic ear in Gov. Phil Murphy, who toured shelters for hurricane victims in December and expressed support for additional federal relief aid.

“I don’t think any of us are willing to make three extra basis points on this fund by throwing people out of their homes in Puerto Rico,” Byrne said.

More than four months after the powerful hurricane hit Puerto Rico, more than a third of utility customers are still without power. 

Through a translator, Maribel Soto of Elizabeth told the State Investment Council that the aggressive foreclosures are devastating people who are still recovering from the storm.

“When I speak with my family in Puerto Rico, I hear the desperation in their voices. They don’t know when they will find employment again and when they will have stability in their lives,” Soto said. “It’s unjust that companies are taking advantage of people at such a moment.”

The president of the Blackstone affiliate, Finance of America’s reverse mortgage division, said in a Jan. 12 letter to advocacy groups that it services FHA-backed reverse mortgages that must follow U.S. Department of Housing and Urban Development guidelines. 

Finance of America has “virtually no discretion about whether or not to initiate foreclosure proceedings,” Kristen Sieffert wrote, adding the company favors HUD extending the moratorium.


“Given that (Finance of America’s reverse mortgage division) does not have control over foreclosure timelines with respect to insured loans, we believe the best outcome for homeowners in this area would be an extension of HUD’s foreclosure moratorium and intend to advocate for this extension directly to HUD,” she said.

A spokesman for TPG Sixth Street Partners said it and other investors already directed the company that services its mortgages in Puerto Rico to voluntary freeze foreclosures and grant all forbearance requests.

“We are committed to continuing to act with care and understanding during this difficult time,” spokesman Patrick Clifford said in a statement.

Samantha Marcus may be reached at Follow her on Twitter @samanthamarcus. Find Politics on Facebook.

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Marco Rubio wants to know why Florida ended three Hardest Hit …

Florida Sen. Marco Rubio wants to know why state officials ended three Hardest Hit Fund programs to help homeowners avoid foreclosure while they continued a program that helps people buy houses.

In a letter to the Florida Housing Finance Corp., Rubio also urged a quick review of the thousands of applications for the three programs that poured in after the agency announced a Jan. 31 deadline for submission.

“It is important that the general public be made aware of how their tax dollars are being used,” Rubio wrote this week.

PREVIOUS COVERAGE: Floridas $1.1 billion Hardest Hit Fund winding down after some hard knocks

In 2010, Florida was allocated nearly $1.1 billion in federal Hardest Hit funds. Until recently, most of the money was spent in three programs, two of which helped borrowers with their mortgage payments while the third reduced the principal balance on first mortgages by up to $50,000.

On Nov. 30, the housing agency announced it would stop accepting applications for those programs Jan. 31 even though it still had $88 million left in Hardest Hit funds. As evidence that many borrowers were still struggling with their mortgages, more than 3,500 applications were submitted after the announcement with 523 of those coming in during the final three days.

At the same time, the agency said it would continue its ELMORE program for seniors with reverse mortgages and a controversial program that helps first-time homebuyers with downpayment and closing costs. In the past few years, more of the Hardest Hit money has gone to the downpayment program than to the main mortgage assistance programs.

Taylore Maxey, a spokesperson for Florida Housing Finance Corp., said Wednesday that the agency ended the three programs because 94 percent of the Hardest Hit money had been spent. The remainder will be used to “continue funding both current and new eligible applicants,” she said.

More than 45,000 Florida homeowners have received Hardest Hit help although the housing agency has been sharply criticized for being slow in getting the money out, especially during the early years. At one point, Florida had the lowest rate of approving homeowners for assistance and among the longest waiting periods of any of the 18 states with Hardest Hit programs.

Floridas other U.S. senator, Bill Nelson, has long been among the housing agencys harshest critics. At Nelsons request following stories in the Tampa Bay Times, a top federal official investigated Floridas Hardest Hit Fund and issued a scathing report that cited an overall “slowness” in processing applications.

The fund had $70 million left as of Jan. 31, Maxey said.

Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Following @susanskate

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